Malden Transp., Inc. v. Uber Techs., Inc.

• Decision Date: 18 June 2018
• Docket Number: Civil Action No. 16–12651–NMG, Civil Action No. 17–10180–NMG, Civil Action No. 17–10316–NMG, Civil Action No. 17–10598–NMG, Civil Action No. 17–10586–NMG, Civil Action No. 7–10142–NMG,Civil Action No. 16–12538–NMG
• Citation: 321 F.Supp.3d 174
• Parties: 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. 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.
• Court: U.S. District Court — District of Massachusetts

321 F.Supp.3d 174

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.

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.

Civil Action No. 16–12538–NMG

Civil Action No. 7–10142–NMG

Civil Action No. 17–10180–NMG

Civil Action No. 17–10316–NMG

Civil Action No. 16–12651–NMG

Civil Action No. 17–10586–NMG

Civil Action No. 17–10598–NMG

United States District Court, D. Massachusetts.

Signed June 18, 2018

Thomas C. O'Konski, Daniel J. McGonagle, Joseph S. Sano, Paul J. Hayes, Prince Lobel Tye LLP, Edward F. Haber, Shapiro Haber & Urmy LLP, Boston, MA, Brendan R. Pitts, Colucci, Colucci, Marcus & Flavin, P.C., Milton, MA, for Plaintiffs.

Michael Sheetz, Adam S. Gershenson, Michael E. Welsh, Timothy W. Cook, Cooley LLP, Boston, MA, Beatriz Mejia, Cooley LLP, San Francisco, CA, John C. Dwyer, Cooley LLP, Palo Alto, CA, Christopher G. Timson, Law Offices of Christopher G. Timson, PC, Norwood, MA, for Defendants.

MEMORANDUM & ORDER

Nathaniel M. Gorton, United States District JudgeThis case involves seven consolidated actions brought by various taxi medallion holders in the Greater Boston area ("plaintiffs"). Plaintiffs allege 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. 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 vehicles-for-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. 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 16-12538-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.

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, 127 S.Ct. 1955, 167 L.Ed.2d 929 (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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (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, 129 S.Ct. 1937.

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 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, 106 S.Ct. 1348, 89 L.Ed.2d 538 (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 below-cost prices.

Brooke Grp. Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 222, 224, 113 S.Ct. 2578, 125 L.Ed.2d 168 (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, 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, 129 S.Ct. 1937 (citing Twombly, 550 U.S. at 555, 127 S.Ct. 1955 ).

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 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-1728-RJS, 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...