United States District Court, D. Massachusetts
BOSTON CAB DISPATCH, INC. and EJT MANAGEMENT, INC., Plaintiffs,
UBER TECHNOLOGIES, INC., Defendant.
MEMORANDUM & ORDER
NATHANIEL M. GORTON, District Judge.
Plaintiffs Boston Cab Dispatch, Inc. ("Boston Cab") and EJT Management, Inc. ("EJT") allege that defendant Uber Technologies, Inc. ("Uber") violates various unfair competition and racketeering laws by providing a private car service that allows users to call taxicabs associated with Boston Cab and other dispatch services without complying with Boston taxicab regulations.
Plaintiffs' amended complaint asserts causes of action against Uber for 1) violation of M.G.L. c. 93A, § 11 based on unfair competition (Count I), 2) unfair competition under Massachusetts common law (Count II) and 3) various violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1962(a-c) (Counts III-V).
For the reasons that follow, the motion will be allowed, in part, and denied, in part.
The subject dispute arose after Uber entered the market for private transportation services in Boston. The crux of plaintiffs' complaint is that Uber has gained an unfair competitive advantage over traditional taxicab dispatch services and license-holders because it avoids the costs and burdens of complying with extensive regulations designed to ensure that residents of Boston have access to fairly priced and safe transportation options throughout the city and yet reaps the benefits of others' compliance with those regulations.
The main source of regulation of the Boston taxicab industry is the Police Commissioner for the City of Boston ("the Commissioner"), who is authorized by statute to regulate the taxi business in Boston. In exercising that authority, the Commissioner requires anyone who drives or is "in charge of" a "hackney carriage" (i.e. taxicab) to possess a license known as a "taxicab medallion". Applicants for taxicab medallions must satisfy certain criteria with respect to driving and criminal history. In 2008, the Commissioner issued a comprehensive set of regulations under Boston Police Department Rule 403 ("Rule 403"). That rule requires all taxicab operators to, inter alia, possess medallions, maintain a properly equipped and functioning taxicab, refrain from cell phone use while operating a taxicab and belong to an approved dispatch service or "radio association".
Pursuant to Rule 403, radio associations are required to provide 24-hour dispatch capability, two-way radio service and discount reimbursements for the elderly. They must also keep records of their dispatch services and, specifically, where each taxicab is dispatched at any given time. Moreover, each radio association maintains specific colors and "markings" approved by the Inspector of Carriages and taxicab operators must paint their taxicabs in the colors and markings of the association to which they belong.
Plaintiff Boston Cab is an approved radio association under Rule 403. It has contracted with the owners of 500 medallions (i.e. 500 licensed taxicab operators) who pay weekly membership fees to Boston Cab and paint their taxicabs with Boston Cab's colors and markings in exchange for Boston Cab's dispatching services.
Plaintiff EJT has contracted with the owners of 370 Boston medallions to manage all aspects of the ownership, licensing and leasing of the owners' medallions and the taxis bearing these medallions. It also has the authority to seek the protection of those 370 taxicab owners/medallion holders' rights against all forms of unfair competition and trademark infringement.
Defendant Uber provides a tool for requesting private vehicles-for-hire to 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. The user can select a kind of car based on price and the number of seats they need. Uber offers four kinds of vehicles-for-hire: 1) "Uber Black Cars", which are unmarked four-seat sedans, 2) "Uber SUVs", which are unmarked SUVs that seat six passengers, 3) "Uber Taxis", which are vehicles operated by Boston taxicab drivers and 4) "UberX, " which are cut-rate, unlicensed personal vehicles owned by individual drivers.
Uber requires all drivers of Uber-affiliated vehicles to carry mobile telephones. They must respond to assignments generated by the Uber computer system "within seconds" or they will lose the job. The fare for each ride arranged through the Uber app is charged automatically to the customer's preauthorized credit card and therefore Uber-affiliated drivers cannot accept cash or other credit cards.
Uber does not own any taxicabs or taxicab medallions. Instead, taxicab drivers who are subject to Rule 403, own or lease medallions and belong to radio associations such as Boston Cab have agreed to be available for hire through Uber while they are working shifts and subject to dispatch by their radio associations. Their fares are calculated based on the flat rate applicable to all Boston taxicab drivers. Uber adds a $1 "fee" and a 20% "gratuity" to the flat rate and therefore the final charge exceeds the maximum that taxicabs are permitted to charge under Rule 403. While Uber's website represents that the 20% gratuity is "for the driver", drivers in fact only receive a 10% gratuity and Uber retains the other 10%.
Uber Black Cars, Uber SUVS and UberX, in contrast to Uber Taxis, do not comply with Rule 403 regulations with respect to, inter alia, 1) membership in approved radio associations or dispatch services, 2) regular inspections, 3) partitions between drivers and passengers, 4) panic buttons and GPS tracking to allow customers to alert police when they are in danger, 5) criminal background checks of drivers, 6) non-discrimination with respect to passengers with handicaps, 7) use of mobile telephones and 8) taximeters and flat rates.
II. Procedural history
Plaintiffs filed suit against defendant in Suffolk Superior Court in March, 2013, alleging 1) violation of § 43(a)(1)(B) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B) (Count I), 2) violation of § 43(a)(1)(A) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(A) (Count II), 3) violation of M.G.L. c. 93A, § 11 based on Uber's allegedly unfair and deceptive acts and practices (Count III), 4) violation of c. 93A, § 11 based on Uber's unfair competition (Count IV), 5) unfair competition under Massachusetts common law (Count V), 6) interference with contractual relationships (Count VI) and 7) various violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1962(a-c) (Counts VII, VIII and IX).
Uber timely removed the case to this Court and filed a motion to dismiss the complaint in its entirety the following month. That motion was referred to Magistrate Judge Marianne Bowler for a Report and Recommendation ("R&R"). Magistrate Judge Bowler issued an R&R in February, 2014, recommending 1) dismissal of Count I with prejudice, 2) denial of the motion to dismiss with respect to Counts II through V and 3) dismissal of Counts VI through IX without prejudice. Uber timely objected to Judge Bowler's recommendations with respect to Counts II through V. Plaintiffs did not file an objection.
In March, 2014, this Court accepted and adopted the Magistrate Judge's recommendations with respect to Count I and Counts IV through IX but sustained Uber's objections with respect to Counts II and III and dismissed those Counts with prejudice.
Plaintiffs filed an amended complaint in July, 2014. Uber moved to dismiss the amended complaint the following month and the Court held a hearing on the ...