Malden Transportation, Inc. et al v. Uber Technologies, Inc. et al

Filing 153

Judge Nathaniel M. Gorton: ENDORSED ORDER entered. MEMORANDUM AND ORDER.For the foregoing reasons, defendants' partial motion to dismiss the antitrust claims in the Malden, Dot Ave, Max Luc and Taxi Maintenance amended complaint (Docket No. 109 ) is ALLOWED.So ordered. (Franklin, Yvonne)

Case 1:16-cv-12538-NMG Document 153 Filed 06/18/18 Page 1 of 13

United States District Court
District of Massachusetts
Malden Transportation, Inc. et
al.,
Plaintiffs,
v.
Uber Technologies, Inc. and
Raiser, LLC,
Defendants.
Anoush Cab, Inc. et al.,
Plaintiffs,
v.
Uber Technologies, Inc. and
Raiser, LLC,
Defendants.
Dot Ave Cab, Inc. et al.,
Plaintiffs,
v.
Uber Technologies, Inc. and
Raiser, LLC,
Defendants.
Max Luc Taxi, Inc. et al.,
Plaintiffs,
v.
Uber Technologies, Inc. and
Raiser, LLC,
Defendants.

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Civil Action No.
16-12538-NMG

Civil Action No.
17-10142-NMG

Civil Action No.
17-10180-NMG

Civil Action No.
17-10316-NMG

Case 1:16-cv-12538-NMG Document 153 Filed 06/18/18 Page 2 of 13

Gill & Gill, Inc. et al.,
Plaintiffs,
v.
Uber Technologies, Inc. and
Raiser, LLC,
Defendants.
Sycoone Taxi, Inc. et al.,
Plaintiffs,
v.
Uber Technologies, Inc. and
Raiser, LLC,
Defendants.
Taxi Maintenance, Inc. et al.,
Plaintiffs,
v.
Uber Technologies, Inc. and
Raiser, LLC,
Defendants.

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Civil Action No.
16-12651-NMG

Civil Action No.
17-10586-NMG

Civil Action No.
17-10598-NMG

MEMORANDUM & ORDER
GORTON, J.
This case involves seven consolidated actions brought by
various taxi medallion holders in the Greater Boston area
(“plaintiffs”).

Plaintiffs allege that Uber Technologies, Inc.
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and its wholly-owned subsidiary, Raiser, LLC (“Uber” or
“defendant”) competed unlawfully in the on-demand, ride-hail
ground transportation market in and around Boston,
Massachusetts.

More particularly, plaintiffs complain that the

subject competition 1) violates the common law and the
Massachusetts Consumer Protection Act, 2) violates state and
federal antitrust law and 3) amounts to a civil conspiracy and
the aiding and abetting of unfair competition.
Before the Court is defendant’s motion to dismiss the
amended antitrust claims in the Malden, Dot Ave, Max Luc and
Taxi Maintenance amended complaints (Docket No. 109).

I. Background
Uber entered the Boston market for private transportation
services in 2011 and launched its UberX service in 2013.

The

company provides a digital tool for requesting private vehiclesfor-hire by users who download Uber's free “smart phone
application” (“the Uber app”). Users who open the Uber app on
their mobile phones are shown a map of their location or
designated pick-up point and the available Uber-affiliated
vehicles in that vicinity.
This litigation involves seven groups of plaintiffs that
represent over 800 taxi companies in the Greater Boston area.

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The seven complaints were filed in this district between
December, 2016, and April, 2017.

The Court consolidated the

cases pursuant to Fed. R. Civ. P. 42(a)(2) in October, 2017. See
Malden Transportation, Inc. v. Uber Techs., Inc., No. CV 1612538-NMG, 2017 WL 6759425 (D. Mass. Oct. 5, 2017).

In

December, 2017, this session ruled on Uber’s consolidated motion
to dismiss. See Malden Transportation, Inc. v. Uber Techs.,
Inc., 286 F. Supp. 3d 264 (D. Mass. 2017) (“Malden I”).

The

Court held that plaintiffs had stated claims for 1) unfair
competition under the common law and the Massachusetts Consumer
Protection Act, M.G.L. c. 93A, 2) aiding and abetting unfair
competition and 3) civil conspiracy to commit unfair
competition.

The Court allowed the defendants’ motion to

dismiss as to two of Uber’s founders for want of personal
jurisdiction and with respect to plaintiffs’ antitrust, tortious
interference and civil conspiracy claims. See generally id.
After the issuance of that memorandum and order, plaintiffs
amended their complaints.

Four of the plaintiff groups have

added additional factual allegations, which bear upon the claims
of violation of state and federal antitrust law.
Before the Court is Uber’s motion to dismiss those amended
antitrust claims.

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II. Analysis
To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to “state a claim
to relief that is plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007).

In considering the merits of

a motion to dismiss, the Court may look only to the facts
alleged in the pleadings, documents attached as exhibits or
incorporated by reference in the complaint and matters of which
judicial notice can be taken. Nollet v. Justices of Trial Court
of Mass., 83 F.Supp.2d 204, 208 (D. Mass. 2000), aff’d, 248 F.3d
1127 (1st Cir. 2000).

Furthermore, the Court must accept all

factual allegations in the complaint as true and draw all
reasonable inferences in the plaintiff's favor. Langadinos v.
Am. Airlines, Inc., 199 F.3d 68, 69 (1st Cir. 2000).

If the

facts in the complaint are sufficient to state a cause of
action, a motion to dismiss the complaint must be denied. See
Nollet, 83 F.Supp.2d at 208.
Although a court must accept as true all of the factual
allegations contained in a complaint, that doctrine is not
applicable to legal conclusions. Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009).

Threadbare recitals of the legal elements

which are supported by mere conclusory statements do not suffice
to state a cause of action. Id.

Accordingly, a complaint does
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not state a claim for relief where the well-pled facts fail to
warrant an inference of any more than the mere possibility of
misconduct. Id. at 679.
1.

Attempt to monopolize under the Sherman Antitrust Act,
15 U.S.C. § 2 and the Massachusetts Antitrust Act,
M.G.L. c. 93 § 5

Plaintiffs assert claims for attempt to monopolize in
violation of the Sherman Antitrust Act and the Massachusetts
Antitrust Act, M.G.L. c. 93 § 5.1
Plaintiffs argue that Uber has attempted to drive taxi
companies out of business through the use of its allegedly
predatorily priced UberX service.

Defendants respond that

plaintiff has not met the high burden of alleging a predatory
pricing claim and has not alleged an injury to competition.

Section 2 of the Sherman Act makes it illegal to
monopolize, or attempt to monopolize, or combine or
conspire with any other person or persons, to monopolize
any part of the trade or commerce among the several States,
or with foreign nations.
15 U.S.C. § 2.
To state a monopolization claim under § 2, a plaintiff must
adequately allege that defendant (1) has monopoly power in the
relevant market and (2) has engaged in illicit “exclusionary

1

Neither party contends that the legal standard varies for the
state law claim.
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practices” with “the design or effect of protecting or enhancing
its monopoly position.” Sterling Merch., Inc. v. Nestle, S.A.,
656 F.3d 112, 125 (1st Cir. 2011) (quoting Coastal Fuels of
P.R., Inc. v. Caribbean Petroleum Corp., 79 F.3d 182, 195 (1st
Cir. 1996) (internal citation omitted)).
One kind of exclusionary practice is the practice of
“predatory pricing”.

In this scheme, a company reduces the

price of its product to below cost, hoping to drive competitors
out of business and then raise prices once it has achieved a
monopoly position. See Matsushita Elec. Industrial Co. v. Zenith
Radio Corp., 475 U.S. 574, 584-585, n. 8 (1986).

To succeed on

a predatory pricing claim a plaintiff must demonstrate that
the prices complained of are below an appropriate measure
of its rival’s costs . . . [and that the competitor had] a
dangerous probability of recouping its investment in belowcost prices.
Brooke Grp. Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S.
209, 222, 224 (1993).
Because an economically unsound approach by a competitor
could actually benefit consumers, plaintiffs must explain with
particularity “just what the arrangements were and why they
plausibly constituted antitrust violations.” See Am. Steel
Erectors v. Local Union No. 7, Int'l Ass’n of Bridge,
Structural, Ornamental & Reinforcing Iron Workers, 815 F.3d 43,

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71 (1st Cir. 2016) (quoting Stop & Shop Supermarket Co. v. Blue
Cross & Blue Shield of R.I., 373 F.3d 57, 65 (1st Cir. 2004)).
Plaintiffs fail to allege facts supporting a predatory
pricing claim.

The new allegations do not cure the deficiencies

that doomed the Malden I plaintiffs. See Malden I, 286 F. Supp.
3d at 279-280.
Plaintiffs do not allege that Uber’s services were priced
below Uber’s costs.

They do not “explain in detail” why Uber’s

conduct constituted an antitrust violation. See Am. Steel, 815
F.3d at 71.

The second amended complaint alleges that Uber

“deflated the UberX fares to below cost in order to drive out
the taxi drivers.” But such “threadbare recitals of a cause of
action’s elements, supported by mere conclusory statements, do
not suffice” to survive the motion to dismiss stage. Iqbal, 556
U.S. at 678 (citing Twombly, 550 U.S. at 555).
Basic facts such as what an average or median “ride” in the
Boston area costs Uber, or costs a taxi, are absent.

Plaintiffs

attempt to bolster the factual allegations found lacking in
Malden by attaching a report from the Wall Street Journal
showing that, worldwide, Uber’s costs exceed its revenue.
Uber’s global performance, however, does not constitute an
allegation as to Uber’s costs in the “ride-hailing market in the
City of Boston.”

Plaintiffs complain that they are unable to
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obtain Uber’s pricing information without discovery because Uber
is a private corporation that does not disclose such figures.
But the difficulty of satisfying the pleading standard does not
excuse plaintiffs from meeting that standard. See Affinity LLC
v. GfK Mediamark Research & Intelligence, LLC, No. 12-cv-1728RJS, 2013 WL 1189317, at *4 (S.D.N.Y. Mar. 25, 2013), aff’d, 547
F. App'x 54 (2d Cir. 2013) (dismissing predatory pricing claim
because plaintiff failed to plead defendant’s actual costs in
the relevant market).
In a similar vein, plaintiffs fail to allege facts
demonstrating Uber’s intent to monopolize.

A plaintiff alleging

an attempt to monopolize must establish “specific intent” to
destroy competition. Home Placement Serv., Inc. v. Providence
Journal Co., 682 F.2d 274, 281 (1st Cir. 1982) (citing TimesPicayune Pub. Co. v. United States, 345 U.S. 594, 626 (1953)).
Plaintiffs generally state that Uber’s intent to monopolize “has
been made clear” through the statements of its former CEO and
its advertising materials.

However, the amended complaints do

not include satisfactory examples of such statements.

Finally,

plaintiffs argue that the UberX price itself demonstrates
specific intent.

That argument lacks merit.

Without an

unlawful intent, “increasing sales and increasing market share
are normal business goals,” not verboten practices. U.S. Steel
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Corp. v. Fortner Enterprises, Inc., 429 U.S. 610, 612 n.1
(1977).

Low prices are a reasonable way to achieve those goals.

No specific facts in the amended complaint demonstrate that Uber
intended to obtain a monopoly in the Boston ride-hailing market.
Equally important, plaintiff fails to show an injury to
Boston consumers.

This omission is fatal because antitrust

plaintiffs must show that “defendants’ actions caused an injury
to competition, as distinguished from impact on themselves.”
R.W. Int’l Corp. v. Welch Food, Inc., 13 F.3d 478, 487 (1st Cir.
1994).

According to plaintiff’s complaint, Uber’s entry caused

the supply in the ride-hailing market to increase and the price
to diminish.

Those allegations fail to demonstrate an injury to

competition. See Sullivan v. Nat’l Football League, 34 F.3d
1091, 1096 (1st Cir. 1994), as amended on denial of reh’g (Oct.
26, 1994) (“Anticompetitive effects, more commonly referred to
as injury to competition or harm to the competitive process, are
usually measured by a reduction in output and an increase in
prices in the relevant market.”) (internal quotation marks
omitted) (citation omitted).
taxi medallions is immaterial.

A decrease in the value of Boston
Plaintiffs’ allegation that Uber

discriminates against the poor and disabled is similarly
irrelevant.

The Sherman Act prohibits “attempt[s] to

monopolize”, not unlawful discrimination. 15 U.S.C. § 2. See
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also Brooke Grp. Ltd. v. Brown & Williamson Tobacco Corp., 509
U.S. 209, 225 (1993) (reiterating that the Sherman Act does not
“purport to afford remedies for all torts committed by or
against persons engaged in interstate commerce”) (quoting Hunt
v. Crumboch 325 U.S. 821, 826 (1945)).
Finally, this Court finds the analysis in Philadelphia Taxi
Ass’n, Inc. v. Uber Techs., Inc., 886 F.3d 332 (3d Cir. 2018),
applicable and persuasive.

In that case, Philadelphia taxicab

drivers and taxicab companies alleged that Uber’s entry into the
Philadelphia taxicab market violated the Sherman Act. Id. at
336.

Just as plaintiffs do here, the Philadelphia plaintiffs

argued that Uber’s actions were
illegal, predatory and led to a sharp drop in the value of
taxicab medallions as well as a loss of profits.
Id.
The Third Circuit Court of Appeals (“Third Circuit”)
affirmed the district court’s dismissal of plaintiffs’
complaint, holding that the plaintiffs had failed 1) to state a
claim for attempted monopolization or 2) to allege a legally
cognizable antitrust injury. Id.

The Third Circuit reasoned

that Uber “bolstered competition”, “operate[d] at a lower cost”
and attracted taxi drivers “due to its cost efficiency and
competitive advantage”, but that such conduct does not

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constitute anticompetitive conduct violative of antitrust law.
Id. at 340-41.

The same can be said here.

Moreover, the

Circuit found that plaintiffs failed to allege specific intent
to monopolize which was significant given that Uber’s strategy
could “be reasonably viewed as predominantly motivated by
legitimate business aims.” Id. at 341 (internal quotation marks
omitted) (quoting Times Picayune Publ’g Co. v. United States,
345 U.S. 594, 627 (1953)).

The amended complaints here suffer

from the same deficiency.
Finally, the Third Circuit observed that plaintiffs had
failed to allege antitrust standing because “harm to
[plaintiffs’] business does not equal harm to competition.” Id.
at 344.

The same applies to the present case.

Plaintiffs’

amended complaints and legal theories are substantially
indistinguishable from those dismissed in Philadelphia Taxi and
this Court sees no reason to diverge from the well-reasoned
opinion in that case.

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ORDER
For the foregoing reasons, defendants’ partial motion to
dismiss the antitrust claims in the Malden, Dot Ave, Max Luc and
Taxi Maintenance amended complaint (Docket No. 109) is ALLOWED.

So ordered.
/s/ Nathaniel M. Gorton_____
Nathaniel M. Gorton
United States District Judge

Dated June 18, 2018

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