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Delux Cab, LLC v. Uber Technologies, Inc.

United States District Court, S.D. California

April 13, 2017

DELUX CAB, LLC d/b/a NATHAN CAB, SDC DELUX CAB, and LUX CAB, Individually and on Behalf of All Others Similarly Situated, Plaintiff,
v.
UBER TECHNOLOGIES, INC., UBER USA, LLC, RASIER, LLC, and RASIER-CA, LLC, Defendant.

          ORDER REGARDING DEFENDANTS' MOTION TO DISMISS AND MOTION TO STRIKE [Doc. No. 12]

          HON. CATHY ANN BENCIVENGO DISTRICT JUDGE.

         On January 27, 2017, Defendants UBER TECHNOLOGIES, INC., UBER USA, LLC, RASIER LLC, and RASIER-CA, LLC (“Defendants”) filed a motion to dismiss and motion to strike class averments. [Doc. No. 12.] On March 3, 2017, Plaintiff DELUX CAB LLC d/b/a/ NATHAN CAB, SDC DELUX CHAM and LUX CAB (“Plaintiff”) filed an opposition to the motion. [Doc. No. 15.] On March 17, 2017, Defendants filed a reply to the opposition. [Doc. No. 16.] On March 31, 2017, Defendants filed a Notice of Supplemental Authority. [Doc. No. 19.] On April 6, 2017, Plaintiff filed a response to Defendants' notice of supplemental authority. [Doc. No. 20.] For the reasons set forth below, the motion is granted in part and denied in part.

         ALLEGATIONS OF COMPLAINT

         Plaintiff Delux Cab is an independent California entity operating seven taxicabs in San Diego, California. [Doc. No. 1 (“Compl”) ¶1.] Uber is a transportation network company ("TNC") that competes with taxicab services such as Delux Cab. Specifically, the Company develops, markets, and operates an online-enabled smartphone application and platform (the "Uber App") that connects passengers with drivers who provide transportation services in their personal vehicles. Compl. ¶2.

         The Complaint alleges that for years, Uber has engaged in a campaign premised on false or misleading representations that were intended to and did persuade customers to use Uber rather than taxicabs. Specifically, Uber repeatedly touted false and misleading advertisements regarding the purported exceptional safety of Uber, while at the same time falsely disparaging the safety of taxicab rides offered by taxicab companies such as Delux Cab. Compl. ¶3.

         Plaintiff alleges a single cause of action for violations of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B), on behalf of itself and an alleged class of San Diego taxi operators and owners. Compl. ¶¶ 16, 48-55. Plaintiff alleges that Uber has made false statements relating to the safety of its services. Plaintiff further alleges that these statements falsely suggest that a ride requested using the Uber App is safer than the rides offered by Plaintiff and other operators of taxicabs in San Diego. Compl. ¶¶ 3-5, 30, 37-46, 50. As a result, Plaintiff's “customers were induced to choose Uber's products and services over the products and services of the taxicab industry, including Plaintiff and the Class.” Compl. ¶ 54.

         Plaintiff challenges the following statements made by Defendants:

31. For several years and continuing through at least May 2016, Uber's prominent "Safety" webpage on the Company's website represented, under the tagline "SAFEST RIDES ON THE ROAD - Going the Distance to Put People First, " that "[w]herever you are around the world, Uber is committed to connecting you to the safest ride on the road." The website also boasted that Uber sets "the strictest safety standards possible, " and further explained that:
The specifics vary depending on what local governments allow, but within each city we operate, we aim to go above and beyond local requirements to ensure your comfort and security - what we're doing in the U.S. is an example of our standards around the world.
32. Uber also repeatedly boasted to the media about the supposed superior safety of Uber rides and background checks. For example, on April 24, 2014, Lane Kasselman ("Kasselman"), Uber's Head of Communications, bragged to NBC that: "We're confident that every ride on the Uber is safer than a taxi."
33. Similarly, Uber's Senior Communications Associate, Central North America, Lauren Altmin, issued a statement to NBC which stated, in part, as follows:
What I can tell you is that Uber takes passenger safety very seriously.
We work every day to connect riders with the safest rides on the road and go above and beyond local requirements in every city we operate.
Uber only partners with drivers who pass an industry-leading screening that includes a criminal background check at the county, federal, and multistate level going back as far as the law allows. We also conduct ongoing reviews of drivers' motor vehicle records during their time as an Uber partner.... For more information on what makes Uber the safest rides on the road, please see our website....
34. Uber's supposed "industry-leading" background checks and superiority with respect to safety were again touted in an April 29, 2014 Mashable article entitled, "Faulty Background Checks May Put UberX Passengers at Risk, Report Says." Specifically, Uber's Head of Communications, Kasselman, stated:
Uber's industry-leading background checks help connect consumers with the safest ride on the road…. Our driver-partner background checks are more thorough than those of taxis in most cities and include county, state and federal screens going back seven years. We continue to improve and are always working hard to tighten our policies and processes to ensure that Uber remains the safest transportation option available.
35. The Company's false representations continued for years. For example, on April 25, 2014, Kasselman made the following representations in a blog post:
All Uber ridesharing and livery partners must go through a rigorous background check. The three-step screening we've developed across the United States, which includes county, federal and multi-state checks, has set a new standard.... We apply this comprehensive and new industry standard consistently across all Uber products, including UberX.
Screening for safe drivers is just the beginning of our safety efforts. Our process includes prospective and regular checks of drivers' motor vehicle records to ensure ongoing safe driving. Unlike the taxi industry, our background checking process and standards are consistent across the United States and often more rigorous than what is required to become a taxi driver.
36. In order to reinforce the Company's false superior safety proclamations, from about April 2014 through about March 2016, Uber charged consumers using its UberX service option, the most popular and economical option, a $1 "Safe Rides Fee." After an UberX ride was completed, the "Safe Rides Fee" was separately itemized on an electronic receipt sent to the consumer via Uber's smartphone application and via e-mail. Next to the words "Safe Rides Fee" on the receipt was a hyperlink prompting customers to learn about Uber's justification for the additional $1 "Safe Rides Fee." According to the hyperlink, the "Safe Rides Fee" was used to support, among other things, Uber's "continued efforts to ensure the safest possible platform for Uber riders and drivers, including an industry-leading background check process, regular motor vehicle checks, driver safety education, development of safety features in the app, and insurance."

[Doc. No. 1 at 9 - 11.]

         DISCUSSION

         Defendants bring this motion to dismiss Plaintiff's Lanham Act claim pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. Specifically, Defendants argue the alleged misrepresentations are non-actionable for the following reasons:

         (1) They are classic non-actionable puffery;

         (2) They are statements of ...


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