Greater Hous. Transp. Co. v. Uber Techs., Inc.

• Decision Date: 18 December 2015
• Docket Number: CIVIL ACTION NO. 4:14-0941
• Citation: 155 F.Supp.3d 670
• Parties: Greater Houston Transportation Company, et al., Plaintiffs, v. Uber Technologies, Inc., Defendant.
• Court: U.S. District Court — Southern District of Texas

155 F.Supp.3d 670

Greater Houston Transportation Company, et al., Plaintiffs,

v.Uber Technologies, Inc., Defendant.

CIVIL ACTION NO. 4:14-0941

United States District Court, S.D. Texas, Houston Division.

Signed December 18, 2015

Martyn B. Hill, Michael Andrew Harris, Pagel Davis et al. Daniel K. Hedges, Eric D. Wade, Richard Blake Runions, Porter and Hedges LLP, Houston, TX, for Plaintiffs.

Amit B. Patel, Stephen A. Swedlow, Quinn Emanuel Urquhart & Sullivan LLP, Chicago, IL, Arthur M. Roberts, Quinne Emanuel Urquhart Sullivan LLP, San Francisco, CA, Barrett H. Reasoner, Gibbs Bruns LLP, Houston, TX, for Defendant.

ORDER

VANESSA D. GILMORE

, UNITED STATES DISTRICT JUDGE

Pending before the Court are Defendant Uber Technologies, Inc. (“Uber”)' s Motion to Dismiss Plaintiffs' Third Amended Complaint (Instrument No. 112) and Uber's Motion for Summary Judgment (Instrument No. 129).

I. FACTUAL SUMMARY & PROCEDURAL POSTURE

A. Statement of the Case

This is a suit for false advertising under the Lanham Act, 15 U.S.C. § 1125(a)

, brought by taxicab permit-holders in Houston and San Antonio, Texas, against Uber. Uber is a selfdescribed mobile-based transportation network company (“TNC”) based in San Francisco, California, which enables customers to use smartphone apps to connect with third party drivers for transportation. Plaintiffs are taxicab permit-holders in Houston and San Antonio, who claim that Uber is unfairly competing with the taxicab industry by misrepresenting the safety of its services to consumers. Defendant now moves to dismiss all of Plaintiffs' claims in the Third Amended Complaint. Defendant argues that all of the alleged misrepresentations are mere puffery, not statements meant for the general public to rely upon, and that many of the challenged statements are not commercial speech regulated by the Lanham Act. Defendant further moves for summary judgment on Plaintiffs' claims, alleging that Uber's statements were not false or misleading, and that Plaintiffs have failed to adduce evidence that consumers were deceived by Uber's alleged misrepresentations.

B. Factual Background

Plaintiffs, Greater Houston Transportation Company (“GHTC”), Fiesta Cab Company (“Fiesta”), Pasadena Taxi Co., Inc. (“Pasadena”), Dawit Sahle (“Sahle”), Mersha Ayele (“Ayele”), Mohammed Didi (“Didi”), Greater San Antonio Transportation Company (“GSATC”), and Enterprise Transportation Inc. (“Enterprise”) (collectively, “Plaintiffs”), are licensed taxi operators in Houston and San Antonio. (Instrument No. 86 at 1–5). As in most markets, Plaintiffs' taxis can be hailed by customers on the street or requested by phone or online, to provide transportation to a desired location for a published rate. (Instrument No. 86 at 5). Many of the Plaintiffs also offer smartphone apps, which allow customers to locate, schedule, and track their vehicle service. (Instrument No. 86 at 5).

In order to operate a taxi in Houston or San Antonio, Plaintiffs are required to comply with certain regulations. Municipalities are authorized by Texas law to license, control, and otherwise regulate taxi transportation service. Texas Loc. Gov't Code Ann . § 215.004(a)

(West 2015). Unlike traditional ground transportation services, Uber does not own vehicles or employ drivers. (Instrument No. 10 at 5). Instead, Uber only offers a smartphone app, which allows a passenger to request paid transportation from third-party transportation providers. (Instrument No. 10 at 5).

Plaintiffs claim Uber began operating in Houston on or about February 20, 2014, and in San Antonio, on or about March 24, 2014. (Instrument No. 86 at 6, 25–26). Plaintiffs have alleged that during and since that period of time, Uber has been advertising and promoting the safety of Uber rides as compared to taxis, and boasting of the superiority of its background check process as compared to taxi cabs. (Instruments No. 107 at 7; No. 143). On April 1, 2015, one of Houston's Uber drivers was arrested for allegedly sexually assaulting a passenger. (Instrument No. 107–15). The Uber driver had passed an Uber background check despite having a criminal record. (Instrument No. 107–15).

C. Procedural Posture

On April 8, 2014, Plaintiffs filed a complaint and application for temporary restraining order, preliminary injunction, and permanent injunction in the United States District Court for the Southern District of Texas against Defendants Uber and another TNC called Lyft, which was then operating in Houston and San Antonio. (Instrument No. 1).¹ Plaintiffs sought declaratory judgment that Defendants violated the relevant city ordinances in Houston and San Antonio. (Instrument No. 1 at 36–37). Plaintiffs further brought a Texas state claim of unfair competition and claims under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1964

, and the Lanham Act, 15 U.S.C. § 1125(a)(1)(B), related to alleged mail fraud and false advertising. (Instrument No. 1 at 37–38). Plaintiffs claimed that by avoiding permitting fees, Defendants had obtained illicit profits, that otherwise would have gone to Plaintiffs. (Instrument No. 1 at 35–36). Plaintiffs further alleged that Defendant's gained an unfair advantage as compared to the regulated taxi business, because they failed to carry the insurance required of taxicab operators. (Instrument No. 1 at 17–18).

On April 21, 2014, the Court held a hearing on Plaintiffs' motion for a temporary restraining order. The Court denied Plaintiffs' motion for a temporary restraining order. (Court's Minute Entry, April 21, 2014 Hearing). The Court scheduled a preliminary injunction hearing for a future date, but the parties later agreed to cancel the preliminary injunction hearing. (Instrument No. 67). Plaintiffs reserved the right to seek injunctive relief in the future. (Instruments No. 60; No. 63).

On May 5, 2014, Uber and Lyft each filed motions to dismiss all of Plaintiffs' claims. (Instruments No. 28; No. 29; No. 36). Plaintiffs filed an amended complaint on May 12, 2014, and the Court terminated the motions to dismiss. (Instrument No. 39).

On July 10, 2014, Uber and Lyft each filed new motions to dismiss all claims in Plaintiffs' first amended complaint. (Instruments No. 50; No. 51). On August 9, 2014, the City of Houston enacted City Ordinance No.2014–754, which amended Chapter 46 of the Houston Code of Ordinances (“HCO”). (Instrument No. 88–2). The ordinance created a new classification for TNCs and provided permitting and other regulations for such entities. Houston, Tex., Ordinances , ch. 46, art I, § 46–503 (2014). Following this action, Lyft in fact suspended operations in Houston. (Instrument No. 90 at 6). On December 11, 2014, San Antonio's City Council adopted similar amendments to Chapter 33 of the San Antonio City Code of Ordinances (“SACCO”). (Instrument No. 95 at 5). Ordinance Number 2013–12–11–1002 included numerous amendments to the SACCO provisions on vehicles for hire, most notably adding provisions for TNCs. See San Antonio, Tex. Rev. Ordinances , ch. 33, art IX. On October 2, 2014, the Court denied Defendants' motions to dismiss as moot, as Plaintiffs' had indicated they would be filing a second amended complaint as a result of the changes to the city ordinances. (Instrument No. 83). On October 3, 2014, the Court granted Plaintiffs' motion for leave to file a second amended complaint. (Instrument No. 85).

On October 3, 2014, Plaintiffs filed a second amended complaint. (Instrument No. 86). Plaintiffs alleged that Defendants violated the Lanham Act, 15 U.S.C. § 1125(a)(1)(B)

, by using misleading terminology to describe its businesses, and by misrepresenting its insurance coverage and compliance with local ordinances regulating vehicles for hire. (Instrument No. 86). Plaintiffs further alleged that Defendants had tortiously interfered with Plaintiffs' business relations by soliciting independent contract drivers to drive for its allegedly unlawful operations, rather than Plaintiffs. (Instrument No. 86). Plaintiffs also pleaded a Texas common law claim of unfair competition, based on this conduct, and sought a permanent injunction pursuant to 15 U.S.C. § 1116(a). (Instrument No. 86).

On October 17, 2014, Uber and Lyft filed motions to dismiss all claims in Plaintiffs' second amended complaint. (Instruments No. 87; No. 88). On November 7, 2014, Plaintiffs filed responses to Defendants' motions to dismiss. (Instruments No. 90; No. 91). Defendants filed replies on November 12, 2014. (Instruments No. 92; No. 93).

On March 10, 2015, the Court dismissed all of Plaintiffs' claims other than the Lanham Act and state common law claims based on Uber's and Lyft's alleged misrepresentations regarding insurance coverage. (Instrument No. 96). On May 13, 2015, Plaintiffs filed a Third Amended Complaint asserting only claims based on Uber's and Lyft's alleged misrepresentations relating to safety, background checks, and insurance coverage. (Instrument No. 107). On June 10, 2015, Defendant filed the pending Motion to Dismiss the Third Amended Complaint, arguing that Uber's statements about the safety of its service are non-actionable advertising puffery. (Instrument No. 112). On July 1, 2015, Plaintiffs filed a Response in Opposition to the Motion to Dismiss. (Instruments No. 117; No. 118). On July 2, 2015, the Court granted the Plaintiff National Cab Co., Inc.'s motion to dismiss its claims against Uber. (Instrument No. 120). During a July 28, 2015 deposition, the parties stipulated that Plaintiffs' claims regarding insurance misrepresentations would be dismissed, unless they pertained directly to Plaintiffs claim of safety misrepresentations. (Instrument No. 135 at 5–6). On August 31, 2015, the Court granted Plaintiffs' Motion to Dismiss its claims again Defendant Lyft. (Instrument No. 128).

On September 1, 2015, Defendant Uber filed the pending Motion for Summary Judgment arguing that Plaintiffs had failed to prove all the elements of their Lanham Act claim. (Instrument No. 129)...