886 F.3d 332 (3rd Cir. 2018), 17-1871, Philadelphia Taxi Association, Inc. v. Uber Technologies, Inc.

Docket Nº:17-1871
Citation:886 F.3d 332
Opinion Judge:RENDELL, Circuit Judge:
Party Name:PHILADELPHIA TAXI ASSOCIATION, INC; Aamir Trans., Inc.; Aanyia Trans., Inc.; Abaas Trans., Inc.; Abnik Inc.; Amraan Trans., Inc.; Atma Cab Inc.; Aumbreen; Avinith Brothers Corp.; Bains Transportation, Inc.; Balan Cab Co.; Bam Arg Inc.; Billa Cab Co.; B&M Transport Inc.; Chaudhry Cab Inc.; C.S. Cab Co.; Dashmesh Cab Corp.; Daya Enterprises Inc.;...
Attorney:John F. Innelli [ARGUED], Two Penn Center, Stephen R. Bolden, Fell & Spalding, Counsel for Appellants Steven A. Reed [ARGUED], R. Brendan Fee, Morgan Lewis & Bockius, Brian C. Rocca, Sujal J. Shah, Morgan Lewis & Bockius, Counsel for Appellee
Judge Panel:Before: AMBRO, KRAUSE, and RENDELL, Circuit Judges
Case Date:March 27, 2018
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit
SUMMARY

Philadelphia taxicabs were required to have a medallion and a certificate of public convenience, which required that vehicles be insured and in proper condition, and mandated that drivers be paid the prevailing minimum wage, be proficient in English, and have appropriate drivers’ licenses. In 2014, 1610 medallions were each worth about $545,000. Uber began operating in Philadelphia without... (see full summary)

 
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886 F.3d 332 (3rd Cir. 2018)

PHILADELPHIA TAXI ASSOCIATION, INC; Aamir Trans., Inc.; Aanyia Trans., Inc.; Abaas Trans., Inc.; Abnik Inc.; Amraan Trans., Inc.; Atma Cab Inc.; Aumbreen; Avinith Brothers Corp.; Bains Transportation, Inc.; Balan Cab Co.; Bam Arg Inc.; Billa Cab Co.; B&M Transport Inc.; Chaudhry Cab Inc.; C.S. Cab Co.; Dashmesh Cab Corp.; Daya Enterprises Inc.; Daya Transportation Inc.; Dhamthal Trans Inc.; Dhesi Cab Co.; E&S Trans Inc.; Golden Temple Corp.; Guru Cab Co.; Guru Trans., Inc.; Gurveer Cab Co.; Harry Dillion Cab Co.; H Bhatti; H&J Cab Co.; HSP Cab Co.; Inder Transport Inc.; I&S, Magassa Inc.; Jai Luxmi Inc.; Jen-Kho Trans.; JFK Transit Inc.; JRK Cab Co.; J.K.P. Transport, Inc.; J&H Cab Co.; Kamal D Inc.; Kashif Corp.; Kejsi & Au Lona Cab Co.; Khadim Trans Inc.; Khayyam Inc.; Khkhoar Taxi Cab; Khokha Group USA; KM Taxi, Inc.; K Singh Cab, Inc.; Maher Cab Co.; Manna S. Inc.; M&M Trans Inc.; Nasrin Trans Inc.; Navid Inc.; Navjot Cab Company; Njjar Cab Co.; One Cab Inc.; Parveen Transport Inc.; Prabh Inc.; Pun Jab Corp.; P.K. Cab; Raja Cab Co.; Rajdeep Cab Inc.; Ramtin Inc.; Rasul Corp.; Saas Cab Co.; Sahota Cab Co.; Sanaz, Inc.; Sardar Cab Co.; Setareh Cab Co.; Shaad Cab Inc.; Shawn Limo; Shivam Cab Corp.; Singh Maan Inc.; T.S. Malhi Cab Co.; Zadeh Inc.; Zahd Trans Inc.; Zari Cab Co.; Panthea, Inc.; Pars Transport, Inc.; City Car Transport, Inc.; Phila Transport, Inc., Appellants

v.

UBER TECHNOLOGIES, INC.

No. 17-1871

United States Court of Appeals, Third Circuit

March 27, 2018

Argued November 14, 2017

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On Appeal from the United States District Court for the Eastern District of Pennsylvania, (District Court No.: 2-16-cv-1207), District Judge: Honorable Juan R. Snchez

John F. Innelli [ARGUED], Two Penn Center, Stephen R. Bolden, Fell & Spalding, Counsel for Appellants

Steven A. Reed [ARGUED], R. Brendan Fee, Morgan Lewis & Bockius, Brian C. Rocca, Sujal J. Shah, Morgan Lewis & Bockius, Counsel for Appellee

Before: AMBRO, KRAUSE, and RENDELL, Circuit Judges

OPINION

RENDELL, Circuit Judge:

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Philadelphia taxicab drivers, aggrieved by the influx of taxis hailed at the touch of an app on one’s phone, brought this antitrust action to protest the entry of Appellee Uber Technologies, Inc. (" Uber" ) into the Philadelphia taxicab market. The Philadelphia Taxi Association (" PTA" ), along with 80 individual taxicab companies (collectively, " Appellants" ), appeal the District Court’s dismissal of their Second Amended Complaint (" SAC" ) alleging one count of attempted monopolization under Section 2 of the Sherman Act, 15 U.S.C. § 2, and seeking injunctive relief and treble damages under Section 4 of the Clayton Act, 15 U.S.C. § 15.

Appellants urge us to reverse the District Court’s Order, contending that Uber violated the antitrust laws because its entry into the Philadelphia taxicab market was illegal, predatory, and led to a sharp drop in the value of taxicab medallions as well as a loss of profits. They contend that this is evidence that Uber’s operation in Philadelphia was anticompetitive and caused them to suffer an antitrust injury. However, the conduct they allege falls short of the conduct that would constitute an attempted monopoly in contravention of the antitrust laws. Thus, we will affirm the District Court’s dismissal of the SAC for failure to state a claim for attempted monopolization and failure to state an antitrust injury.

I. Background & Procedural History1

From March of 2005 to October of 2014, taxicabs operating in Philadelphia were required to have a medallion and a certificate of public convenience, issued by the Philadelphia Parking Authority (" PPA" ). Medallions are property, and are often pledged as collateral to borrow funds to finance the purchase of the cab or to " upgrade and improve the operations of taxicabs." 53 Pa. C.S.A. § 5712(a). Once medallion-holders comply with the obligatory standards for taxicabs, they may obtain a certificate of public convenience. Those standards, which provide for safety and uniformity among taxicabs, require vehicles to be insured and in proper condition, and mandate that drivers are paid the prevailing minimum wage, are proficient in English, and have the appropriate drivers’ licenses.

As alleged in the SAC, when the medallion system was mandated in Philadelphia in 2005, a medallion was worth only $65,000. In October of 2014, there were approximately 500 taxicab companies in Philadelphia. Together, 7,000 drivers held 1610 medallions, each valued at an average of $545,000.

Appellants are 80 of those 500 companies, which collectively hold 240 of the 1610 medallions, as well as PTA, which was incorporated to advance the legal interests of its members— the 80 individual medallion taxicab companies.

Uber began operating in Philadelphia in October of 2014 without securing medallions or certificates of public convenience for its vehicles. While a potential rider can avail himself of a medallion taxicab by calling a dispatcher or hailing an available cab, to use Uber, he can download the Uber application onto his mobile phone and request that the vehicle come to his location, wherever he is. Passengers enter

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payment information, which is retained bye Uber and automatically processed at the end of each ride. Uber does not own or assume legal responsibility for the vehicles or their operation, nor does it hire the drivers as its employees.2 Uber did not pay fines to the PPA or comply with its regulations when it first entered the Philadelphia taxi market, as is otherwise required for medallion taxicabs. Appellants maintain that this rendered Uber’s operation illegal, and enabled the company to cut operating costs considerably.

In October of 2016, the Pennsylvania state legislature passed a law approving Uber’s operation in Philadelphia, under the authority of the PPA. The law, which went into effect in November of 2016, allows the PPA to regulate both medallion taxicab companies and Transportation Network Companies (" TNCs" )— a classification that includes Uber and other vehicle-for-hire companies that operate through digital apps— in Philadelphia. TNCs must now obtain licenses to operate and comply with certain requirements, including insurance obligations and safety standards for drivers and vehicles. The law also exempts TNCs from disclosing the number of drivers or vehicles operating in the city, and allows TNCs to set their own fares, unlike medallion taxicab companies, which comply with established rates, minimum wages, and have a limited number of vehicles and medallions operating at once in Philadelphia.

Before this law passed, in Uber’s first two years in Philadelphia, nearly 1200 medallion taxicab drivers left their respective companies and began to drive for Uber. In those two years, there were 1700 Uber drivers and vehicles operating in Philadelphia, serving over 700,000 riders, for more than one million trips. Simultaneously, medallion taxi rides reduced by about 30 percent, and thus Appellants experienced a 30 percent decrease in earnings. The value of each medallion dropped significantly, to approximately $80,000 in November of 2016. Fifteen percent of medallions have been confiscated by the lenders due to default by drivers.

The PTA and 75 individual taxicab companies filed a Complaint, alleging three counts: attempted monopolization under Section 2 of the Sherman Act, tortious interference with contract under Pennsylvania law, and unfair competition under Pennsylvania law. Uber moved to dismiss the Complaint.

Appellants, the PTA and now 80 individual taxicab companies, then filed an Amended Complaint, alleging the same three counts. Uber moved to dismiss the Amended Complaint. The District Court granted the dismissal, without prejudice. The District Court noted that Plaintiffs alleged merely harm to their business after Uber entered the Philadelphia taxicab market, and that Plaintiffs pointed to Uber’s supposed illegal participation in the taxicab market as evidence of attempted monopolization. However, the District Court concluded that these harms are " not the type of injuries that antitrust laws were intended to prevent, and thus do not establish antitrust standing." Phila. Taxi Ass’n, Inc. v. Uber Techs., Inc., 218 F.Supp.3d 389, 392 (E.D. Pa. 2016). The Court also dismissed the state law claims, for failure to plead the proper elements of an unfair competition or a tortious interference claim.

Appellants then filed the SAC, alleging one count of attempted monopolization under

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Section 2 of the Sherman Act and seeking treble damages under Section 4 of the Clayton Act. Uber responded with a Motion to Dismiss, which the District Court granted, with prejudice. Phila. Taxi Assn, Inc. v. Uber Techs., Inc., 2017 WL 5515953 (E.D. Pa. Mar. 20, 2017). The District Court held that Appellants, in spite of...

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