Judge Slams the Brakes on Black Car Companies’ Claims Against Uber

A federal judge in the Eastern District of New York recently dismissed a suit brought against Uber Technologies Inc. (“Uber”) by black car companies, alleging that certain statements by Uber constituted false advertising and that Uber tortiously interfered with the contractual and business relationships between them and their drivers, among other claims. See XYZ Two Way Radio Service In. and Elite Limousine Plus, Inc. v. Uber Technologies, Inc., et al., No. 15-CV-3015 (FB) (E.D.N.Y September 30, 2016).

The Plaintiffs, two black-car companies, XYZ Two Radio Service Inc. and Elite Limousine Plus Inc., claimed that various statements by Uber about the safety of its service and relationship with its drivers constitute false advertising in violation of the federal Lanham Act and New York General Business Law.  The Lanham Act prohibits any “material false or misleading representation of fact” in connection with commercial advertising or promotion. Id. at *3. The Court explained that “[a] claim of false advertising may be based on at least two theories: ‘that the challenged advertisement is literally false, i.e. false on its face’ or ‘that the advertisement, while not literally false, is nevertheless likely to mislead or confuse consumers.’” Id. (quoting Tiffany (NJ) Inc. v. eBay Inc., 600 F.3d 93, 112 (2d Cir. 2010) (internal quotations omitted). As the Court instructed, “[i]f a statement does not qualify as false advertising under the Lanham Act, it is not actionable under New York General Business Law either.” Id. at *3 (citing ONY, Inc. v. Cornerstone Therapeutics, Inc., 720 F.3d 490, 498 (2d Cir. 2013).

The Plaintiffs offered two categories of statements by Uber that they claim were false or misleading: (1) statements regarding safety and (2) statements regarding the relationship between Uber and its drivers. Id. at *5. The Court rejected both. Id. at *14.

First, with respect to safety, Plaintiffs claimed that statements on Uber’s website, such as “[w]herever you are around the world, Uber is committed to connecting you to the safest ride on the road” and “[f]rom the moment you request a ride to the moment you arrive, the Uber experience has been designed from the ground up with your safety in mind” constituted false advertising because they misled the customers. Id. at *5-6.  The Court, however, found that while the “[o]verall tone is boastful and self-congratulatory” Uber’s statements were “non-actionable puffery.” Id. at 9.  (“No doubt, these statements are intended to covey the impression that Uber takes the safety of its passengers seriously. But they do so in terms that clearly fall within one or more of the accepted definitions of puffery.”).

Second, with respect to Uber’s relationship with its drivers, Plaintiffs pointed to various statements on Uber’s website referring to drivers as “partners,” such as “[w]hen you partner with Uber, we’ve got your back.” Id. at *9. Specifically, Plaintiffs alleged that this kind of language “entice[s] both passengers and drivers to join their service by falsely claiming that there is a partnership between [Uber] and [its] drivers.” Id. The Court rejected this claim, finding instead that “the term ‘partner,’ as used on Uber’s website, reads like euphemistic ad-speak devoid of any inherent meaning.” Id. at *10 (citing Accord Greenwich Taxi, Inc. v. Uber Techs., Inc., 123 F. Supp. 3d 327, 336 (D. Conn. 2015).

Plaintiffs also accused Uber of tortious interference with contractual business relations, “which the Court interpret[ed] to include tortious interference with contract and tortious interference with business relations.” Id. at *11. Plaintiffs claimed that Uber “interferes with both by inducing their drivers to violate the terms of their employment.” Id. Uber responded that the Plaintiffs’ drivers are subject to at-will contracts, and therefore, Plaintiffs cannot support a claim for tortious interference with contract. Id. at *12. (citing Miller v. Mount Sinai Med. Ctr., 733 N.Y.S.2d 26, 27 (1st Dept. 2001). The Court explained that while at-will contracts could support a claim for tortious interference, “unlike tortious interference with contract, tortious interference with business relations ‘requires a showing of malice or wrongful conduct,’” which in this context would mean fraud, threats or a breach of a fiduciary duty. Id. (internal citations omitted). In other words, the Court stated, Plaintiffs would have had to show that Uber directed tortious or criminal conduct at their drivers. Id. at 13. Ultimately, the Court found Plaintiffs’ allegations in this regard vague, noting that “persuasion and offer[s] of better terms” are not wrongful. Id.  Thus, the Court granted Uber’s motion to dismiss in its entirety. Id. at *14.

While Uber successfully defeated this New York action, it still faces similar litigation brought by a group of taxi companies that is pending in California federal court. See  L.A. Taxi Cooperative Inc.,  Yellow Cab Co. et al. v. Uber Technologies Inc. et al.,  3:15-cv-01257 (N.D. Cal. 2015). There, like the New York case, the Plaintiffs allege that Uber violated the Lanham Act by falsely advertising that Uber has the “safest rides on the road.”  We will continue to monitor and report on false advertising cases, like these and others, as they arise.