MacCausland v. Uber Technologies, Inc. et al

Filing 72

Judge Nathaniel M. Gorton: ENDORSED ORDER entered. MEMORANDUM AND ORDER.For the foregoing reasons, defendants' partial motion to dismiss the antitrust claims in the second amended complaint (Docket No. 64 ) is ALLOWED. So ordered.(Franklin, Yvonne)

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United States District Court
District of Massachusetts
)
Raymond P MacCausland,
)
)
Individually and on Behalf of
All Persons Similarly Situated, )
)
Plaintiff,
)
)
v.
)
)
Uber Technologies, Inc. and
)
Rasier, LLC,
)
)
Defendants.
)
)

Civil Action No.
17-10253-NMG

MEMORANDUM & ORDER
GORTON, J.
This is a putative class action brought by Raymond
MacCausland (“MacCausland” or “plaintiff”) on behalf of taxi
drivers in the Greater Boston area.

Plaintiff alleges that Uber

Technologies, Inc. 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.

Plaintiff alleges that Uber competed unfairly

and deceptively in violation of the common law and of the
Massachusetts Consumer Protection Act, that Uber violated state
and federal antitrust law and that Uber engaged in a civil
conspiracy and aided and abetted unfair competition.

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Before the Court is defendant’s motion to dismiss
plaintiff’s antitrust claims.
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 potential riders to request
private vehicles-for-hire by using 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 a
nearby designated pick-up point and the available Uberaffiliated vehicles in that vicinity.
According to MacCausland, the City of Boston has issued
approximately 1,825 taxi licenses, referred to as taxi
medallions, subject to a strict and extensive city regulatory
regime.

In contrast, there are over 20,000 cars-for-hire that

currently provide Uber’s ride-hailing service in the Boston
area.
In February, 2017, MacCausland, a Boston taxi driver, filed
this complaint against Uber.

At the same time, taxi medallion

holders sued Uber under the same legal theories that plaintiff
alleges here.

That related action involves seven different

groups of plaintiffs who represent over 800 plaintiff taxi
companies in the Greater Boston area.
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Originally, seven

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

The

Court held that the so-called Malden plaintiffs stated a claim
for unfair competition under the common law and M.G.L. c. 93A
and that plaintiffs stated a claim for aiding and abetting
unfair competition and civil conspiracy to commit unfair
competition.

The Court allowed defendants’ motion to dismiss

claims against two of Uber’s founders for want of personal
jurisdiction.

It also allowed Uber’s motion to dismiss with

respect to plaintiffs’ antitrust claims, tortious interference
claims and failed theories of civil conspiracy. See generally
id.
After the issuance of that memorandum and order, plaintiffs
in the Malden cases as well as the plaintiff in this case
(MacCausland) amended their complaints.

MacCausland’s second

amended complaint mimics the amended complaints in Malden.

He

asserts counts of unfair and deceptive trade practices under the
common law and Massachusetts Consumer Protection Act, as well as
aiding and abetting and unfair competition.
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He has also added

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factual allegations to his complaint which bear upon his claims
of violation of state and federal antitrust law.

In May, 2018,

the parties in this case filed a stipulation of dismissal
against the individual defendants.
Before the Court is Uber’s motion to dismiss MacCausland’s
antitrust claims.
II. Legal Standard
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.
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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
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.
III. Analysis
MacCausland asserts claims for attempt to monopolize in
violation of the Sherman Antitrust Act, 15 U.S.C. § 2, and the
Massachusetts Antitrust Act, M.G.L. c. 93 § 5.1
Plaintiff alleges that Uber has attempted to drive taxi
companies out of business by using its predatorily-priced UberX
service.

Defendant responds 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.
1

Neither party contends that the legal standard varies for the
state law claim.
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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
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 such a scheme, a company reduces the

price of its product to below cost, intending to drive
competitors out of business so that it can then raise prices
after 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 (U.S. 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
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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,
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)).
MacCausland here fails to allege facts supporting a
predatory pricing claim.

His new allegations do not cure the

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

He has failed to “explain in detail” why

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

His 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 a motion to dismiss.
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.
MacCausland attempts 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
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revenue.

Uber’s global performance does not, however,

constitute a relevant allegation as to Uber’s costs in the
“ride-hailing market in the City of Boston.”

Furthermore,

although plaintiff correctly notes that “Uber is a privatelyheld company that [does] not disclose relevant financial and
market information,” that fact does not absolve plaintiff from
meeting the required pleading standard.
In a similar vein, MacCausland fails 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)).
MacCausland generally asserts that Uber
engaged in a scheme to intentionally undercut the taxi
industry [and that Uber was] intent on destroying any and
all competition through drastic anti-competitive pricing.
He also refers to specific statements, such as an Uber
advertisement proclaiming “These fares may only last a limited
time, but the more you ride, the more likely they will last.”
Finally, plaintiff cites a handful of unremarkable statements by
Uber’s former CEO made in entrepreneurial business-speak such as
“I try to push the limits.

Pedal to the metal.”

No specific

facts in the second amended complaint even suggest that Uber
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intended to obtain a monopoly in the Boston ride-hailing market.
Without an unlawful intent, “increasing sales and increasing
market share are normal business goals,” not verboten practices.
U.S. Steel Corp. v. Fortner Enterprises, Inc., 429 U.S. 610, 612
n.1 (1977).
Equally important, plaintiff fails to show an injury to
Boston consumers.

That omission is dispositive, 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.

Such 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).

A decrease in the value of

Boston taxi medallions is superfluous.
Finally, this Court finds the analysis in Philadelphia Taxi
Ass’n, Inc. v. Uber Techs., Inc., 886 F.3d 332 (3d Cir. 2018),
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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 plaintiff does 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 and 2) to allege a legally
cognizable antitrust injury. Id.

The facts in the Philadelphia

Taxi case are strikingly similar to those in this case and there
the Third Circuit:
1) 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 constitute
anticompetitive conduct violative of antitrust law, id.
at 340-41;
2) found that plaintiffs failed to allege specific intent
to monopolize which was insufficient 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)); and

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3) observed that plaintiffs had failed to allege antitrust
standing because “harm to [plaintiffs’] business does
not equal harm to competition.” Id. at 344.
MacCausland’s complaint 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.

ORDER

For the foregoing reasons, defendants’ partial motion to
dismiss the antitrust claims in the second amended complaint
(Docket No. 64) is ALLOWED.

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

Dated May 30, 2017

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