Quinn Emanuel Urquhart & Sullivan chipped away this week at an unfair competition lawsuit over client Uber Inc.’s practices in Chicago. But the upstart transportation company isn’t even close to freeing itself from similar cases around the country.
In a ruling issued on Monday, U.S. District Judge Sara Ellis in Chicago trimmed a proposed class action brought against Uber by taxi and livery drivers in the windy city. Ellis dismissed claims that Uber engaged in unfair competition by using smartphones to calculate fares, rather than charging a fixed fee. But while the judge rejected allegations that Uber “operates illegally and misrepresents the illegal nature of its services,” he refused to toss a separate claim that Uber is duping the public about what a 20 percent “gratuity” actually covers.
Uber offers a smartphone app that connects passengers with drivers looking to earn extra income. In many cities, Uber allows customers to arrange a ride in privately owned vehicles, medallion-bearing taxis, or licensed livery cars. For taxi rides in Chicago, a 20 percent gratuity is added to the bill, half of which goes to the driver and half of which goes to Uber.
Hall Adams III, a Chicago-based solo practitioner, brought a class action lawsuit against Uber in February 2013 on behalf of taxi and livery drivers in the windy city. The main allegation in the suit is that Uber dupes customers into thinking that the 20 percent gratuity for taxi rides goes entirely to the driver, thus violating the Illinois equivalent of the federal Lanham Act’s unfair competition provisions. Adams’ lead plaintiffs also argued that Uber is liable under the law because it uses a smartphone’s GPS feature to determine fares. According to Adams, smartphones are no different than taxi meters, which Chicago’s city government prohibits in favor of flat fares.
Stephen Swedlow of Quinn Emanuel, who is defending Uber in similar litigation nationwide, urged Ellis to dismiss the case back in April. In Uber’s motion, he called the putative class action an “improper attempt by members of Chicago’s taxi and livery industry to create a private right of action under certain provisions of the Municipal Code of Chicago.” In other words, he argued that if the plaintiffs think Uber violated city laws, they need to take it up with the city.
That argument gained some traction in Monday’s ruling. Ellis dismissed the part of the case relating to Uber’s fare calculation methods, holding that the plaintiffs were trying to use a “backdoor method” to enforce the municipal ban on metered fares. The judge also noted that it’s far from clear that a smartphone equipped with the Uber app is analogous to a fare meter, as the plaintiffs claim. The judge allowed the claim over the gratuity charge to proceed, however, ruling that the plaintiffs adequately alleged that calling the charge a gratuity is deceptive and draws customers away from Uber’s rivals.
Quinn Emanuel is representing Uber in parallel unfair competition cases in Massachusetts, Connecticut, California and other states. The firm’s chairman, John Quinn, is involved in the litigation. Swedlow didn’t return a call seeking comment.