Yucesoy v. Uber Techs., Inc., C–15–0262 EMC

• Decision Date: 12 June 2015
• Docket Number: No. C–15–0262 EMC,C–15–0262 EMC
• Citation: 109 F.Supp.3d 1259
• Parties: Hakan Yucesoy, et al., Plaintiffs, v. Uber Technologies, Inc., et al., Defendants.
• Court: U.S. District Court — Northern District of California

109 F.Supp.3d 1259

Hakan Yucesoy, et al., Plaintiffs,

v.Uber Technologies, Inc., et al., Defendants.

No. C–15–0262 EMC

United States District Court, N.D. California.

Signed June 12, 2015

Shannon Liss–Riordan, Adelaide Pagano, Lichten and Liss–Riordan, P.C., Boston, MA, Matthew David Carlson, Carlson Legal Services, San Francisco, CA, for Plaintiffs.

Debra W. Yang, Theane D. Evangelis, Gibson Dunn & Crutcher LLP, Theodore J. Boutrous, Jr., Attorney at Law, Los Angeles, CA, Marcellus Antonio McRae, Gibson Dunn & Crutcher LLP, Palo Alto, CA, Robert Jon Hendricks, Caitlin Victoria May, Sacha Marie Steenhoek, Morgan, Lewis & Bockius LLP, Joshua Seth Lipshutz, Kevin Joseph Ring–Dowell, Gibson, Dunn and Crutcher LLP, San Francisco, CA, Dhananjay Saikrishna Manthripragada, Gibson Dunn and Crutcher, Washington, DC, Lisa Stephanian Burton, Peter J. Mee, Morgan, Lewis & Bockius LLP, Boston, MA, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS

EDWARD M. CHEN, United States District Judge

I. INTRODUCTION

Plaintiffs Hakan Yucesoy and Abdi Mahammed drove for Defendant Uber Technologies, Inc., in Massachusetts between 2012 and 2014. See Docket No. 27 (First Amended Complaint) (FAC) at ¶¶ 5–6. In June 2014, Plaintiffs filed this putative class action lawsuit in Massachusetts Superior Court, alleging that Uber and individual defendants Travis Kalanick and Ryan Graves¹ violated numerous provisions of Massachusetts law, including misclassifying drivers as independent contractors and failing to remit gratuities to drivers. See Docket 1–1. Defendants removed the case to federal court in Massachusetts, and the case was subsequently transferred to this Court pursuant to the forum selection clause in Uber's contracts with Plaintiffs. Docket No. 14.

Plaintiffs filed a seven-page amended complaint on February 26, 2015. Docket No. 27. The First Amended Complaint alleges the following causes of action against all Defendants on behalf of a putative class of Uber drivers who operated in Massachusetts: (1) Independent Contractor Misclassification; (2) Violation of the Massachusetts Tips Law; (3) Tortious Interference with Contractual and/or Advantageous Relations; (4) Unjust Enrichment/Quantum Meruit ; (5) Breach of Contract; (6) Violation of the Massachusetts Minimum Wage Law; and (7) Violation of the Massachusetts Overtime Law. Defendants have moved to dismiss Counts 2–7 for failure to state a claim. The individual defendants have also moved for dismissal of the Count 2–7 allegations against them for failing to plead sufficient facts to demonstrate a plausible case for individual liability. For the reasons explained below, the Court grants Uber's motion to dismiss in part and denies it in part.

II. DISCUSSION

Defendants challenge the legal sufficiency of Counts 2–7 of the First Amended Complaint. The Court finds that Plaintiffs' Tips Law, tortious interference with advantageous business relations, and quantum meruit claims against Uber are adequately pleaded. However, the Court determines that Plaintiff's remaining claims against Uber and all of Plaintiffs' challenged claims against the individual defendants do not survive Uber's motion to dismiss. That said, the flaws the Court identifies in Plaintiffs' operative pleading could possibly be cured by amendment, and thus the Court will grant Plaintiffs leave to amend the dismissed claims.

A. Massachusetts Tips Law

Plaintiffs' complaint largely targets Uber's alleged retention of tips that it charged riders—tips Yucesoy and Mahammed contend are legally theirs. As Plaintiffs explain in their amended complaint, "Uber has advertised to customers that gratuity is included in the cost of its car service" but "Uber drivers do not receive the total proceeds of any such gratuity." FAC at ¶ 3; see also id. at ¶ 14 ("Uber has represented to customers, including on its website and in marketing materials, that a gratuity is included in the total cost of the car service and that there is no need to tip the driver."); ¶¶ 15–16 ("Uber drivers have not received the total proceeds of this gratuity. Instead, Uber has retained a portion of the gratuity for itself."); ¶ 19 (explaining that by "informing customers that gratuity is included in the costs of its service, and that there is no need to tip the drivers, but then not remitting the total proceeds of the gratuity to drivers, Uber drivers have been deprived of payments to which they are entitled, and to which reasonable customers would have expected them to receive").

Plaintiffs allege that the above-charged conduct violates the Massachusetts Tips Law, which provides in relevant part that "[n]o employer or other person shall retain ... any tip or service charge given directly to the employer or person." Mass. Gen. L. c. 149 § 152A(b). The law further states that "[i]f an employer or person submits a bill, invoice or charge to a patron ... that imposes a service charge or tip, the total proceeds of that service charge or tip shall be remitted only to the ... service employees...." Mass. Gen. L. c. 149 § 152A(d).

Uber first argues that the Tips Law claim needs to be dismissed because Plaintiffs failed to allege that some portion of the fare paid by riders was intended to be a gratuity for the driver. See Mot. at 6. Uber is wrong. Plaintiffs' complaint clearly alleges that "Uber has advertised to customers that gratuity is included in the cost of its car service" but "Uber drivers do not receive the total proceeds of any such gratuity." FAC at ¶ 3 (emphasis added). The complaint further notes that by "informing customers that gratuity is included in the costs of its service, and that there is no need to tip the drivers, but then not remitting the total proceeds of the gratuity to drivers, Uber drivers have been deprived of payments to which they are entitled, and to which reasonable customers would have expected them to receive." Id. at ¶ 19. These allegations are sufficient to state a claim for violation of the Tips Law, especially when the allegations are viewed in the light most favorable to the Plaintiffs.

Uber next asks this Court to take judicial notice of the terms of its current contract with riders, which Uber contends makes it abundantly clear that no portion of the fare it charges riders is intended to be a tip for the driver. This request is inappropriate at this stage of the proceedings, because a court reviewing a motion to dismiss is typically "confined to reviewing the body of [the] complaint" and any attachments. Sams v. Yahoo! Inc., 713 F.3d 1175, 1179 (9th Cir.2013) (citation omitted).² Uber cites no authority which would permit this Court to consider the terms of its current rider contract and then find, as a matter of law, that no reasonable Uber rider could have believed that any portion of the fare they paid Uber was a gratuity intended for the drivers. "In order to credit [Uber's] argument, this Court would have to read allegations into [Plaintiffs'] pleading that are not there, and/or construe [Plaintiffs'] pleading in the light most favorable to [Uber]—something this Court cannot do." Ladore v. Sony Computer Entertainment America, LLC, 75 F.Supp.3d 1065, 1072, 2014 WL 7187159, at *5 (N.D.Cal.2014). And even if the Court could grant Uber's request for judicial notice, Uber has not established that its current passenger contract has any probative value to the underlying dispute here. Plaintiffs allege that they drove for Uber between 2012 and 2014, see FAC ¶¶ 5–6, and thus the only rider agreement(s) that could possibly be probative of their Tips Law claim are the agreements that were in force when the alleged violations occurred. Because Uber did not submit copies of those contracts, its request for judicial notice is substantively meritless.

Uber's final argument is also without merit. Uber argues that Plaintiffs' Tips Law claim fails because the law only prohibits employers from withholding tips or services charges that were charged to the customer or remitted to the employer "separate and distinct from the underlying bill or invoice." Reply Br. at 3 (emphasis in original). Because Plaintiffs allege that an indeterminate tip was included in riders' total fare without any distinction or separate billing (i.e., riders' bills do not indicate what portion, if any, of the fare is intended as a gratuity for the driver) Uber claims Plaintiffs have not pleaded a viable claim.

Notably, Uber cites not a single case that has held that the Massachusetts Tips Law only prohibits employers from retaining "separately itemized ‘tips' [or] ‘service charges' " as opposed to prohibiting the retention of any and all tips regardless of how those gratuities or charges are billed to consumers. Nor, as Uber contends, does the language of the Tips Law itself compel such a result. Uber argues that the statutory definition of "tip" only covers separately invoiced payments, but Uber is wrong. "Tip" is defined, under Massachusetts law, as "a sum of money ... given as an acknowledgment of any service performed by a ... service employee." Mass. Gen. L. c. 149 § 152A(a). Nothing in this language requires that the "sum of money" given in "acknowledgment of any service performed" be separately invoiced as opposed to being included in one omnibus charge.³ Giving "sum of money" its plain and ordinary meaning, it is clear that a smaller component of a larger undifferentiated charge (say $2 of a $10 fare) could be a "sum of money" given to Uber "in acknowledgment of any service performed." And while Uber is correct that cases successfully prosecuted under the Massachusetts Tips Law have all involved situations where the "tip" or "service charge" was separately billed, nothing in the case law establishes that such a result is required under Massachusetts law. In Cooney v. Compass Group Foodservice, 69 Mass.App.Ct. 632, 637, 870 N.E.2d 668 (2007), the court explained that the statutory language of the Tips Act "reflects legislative intent to...