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Malden Transportation, Inc. v. Uber Technologies, Inc.

United States District Court, D. Massachusetts

December 29, 2017

Malden Transportation, Inc. et al., Plaintiffs,
v.
Uber Technologies, Inc., Defendant. Anoush Cab, Inc. et al., Plaintiffs,
v.
Uber Technologies, Inc., Defendant. Dot Ave Cab, Inc. et al., Plaintiffs,
v.
Uber Technologies, Inc., Defendant. Max Luc Taxi, Inc. et al., Plaintiffs,
v.
Uber Technologies, Inc., Defendant.

          MEMORANDUM & ORDER

          Nathaniel M. Gorton, United States District Judge.

         This case involves seven consolidated actions by various taxi medallion holders in the Greater Boston area (“plaintiffs”) who allege that Uber Technologies, Inc. (“Uber” or “defendant”) and two of its founders, Travis Kalanick and Garrett Camp (the “individual defendants”) competed unlawfully in the on-demand, ride-hail ground transportation market in and around Boston, Massachusetts. Plaintiffs in all seven actions allege that Uber competed unfairly in violation of the common law and the Massachusetts Consumer Protection Act. Certain plaintiffs also allege that Uber violated state and federal antitrust law, interfered with advantageous business relationships, engaged in a civil conspiracy and aided and abetted unfair competition.

         Before the Court are 1) a motion to dismiss of individual defendants Travis Kalanick and Garrett Camp (Docket No. 70) and 2) defendants' consolidated motion to dismiss plaintiffs' complaints (Docket No. 72).

         I. Background

         The City of Boston has traditionally regulated taxis under a set of municipal rules, ordinances and regulations collectively known as “Taxi Rules”. The Police Commissioner for the City of Boston (“the Commissioner”) is authorized by statute to regulate all vehicles that fall under those rules. Boston Police Department Rule 403 (“Rule 403”) requires that

[i]n the City of Boston, no person, firm, or corporation driving or having charge of a taxicab or other private vehicle shall offer the vehicle for hire for the purpose of transporting, soliciting and/or picking up a passenger or passengers unless said person is licensed as a hackney driver and said vehicle is licensed as a hackney carriage by the Police Commissioner.

         City of Boston Code 16-15.05: Vehicle for Hire Ordinance (Appendix I to Rule 403).

         Rule 403 applies to all vehicles “used or designed to be used for the conveyance of persons for hire from place to place” within the city of Boston.[1] The Taxi Rules impose certain regulations on taxi cabs, such as requiring possession of a taxi medallion, maintaining a properly equipped taxicab and belonging to an approved dispatch service or radio association.

         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.

         In August, 2016, Massachusetts enacted the Transportation Network Companies Act (“the TNC Act”). See M.G.L. c. 159A ½. The statute defines a TNC as an “entity that uses a digital network to connect riders to drivers to pre-arrange and provide transportation.” M.G.L. c. 159A ½ § 1. The law preempts municipalities from regulating TNCs through local Taxi Rules. M.G.L. c. 159A ½ § 10 (“[N]o municipality or other local or state entity, . . . may subject a [TNC]” to requirements besides the Massachusetts Department of Public Utilities and the Massachusetts Port Authority.).

         In the “Taxi Maintenance” action plaintiffs assert claims against Travis Kalanick, Uber's co-founder and former CEO, and Garrett Camp, an Uber co-founder and a current director. The complaint names both individuals as defendants.

         The present litigation involves seven different groups of plaintiffs that represent over 700 holders of taxi medallions in the Greater Boston area. The various 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) on October 5, 2017. On November 13, 2017, this Court entered an order explaining in detail how the cases were to proceed consistent with judicial economy and due process for all parties.

         Before the Court are two omnibus motions to dismiss filed by defendants: one with respect to Uber and the other with respect to the individual defendants.

         II. Analysis

         A. The Motion to Dismiss of Defendants Travis Kalanick and Garrett Camp

         Only the Taxi Maintenance plaintiffs pursue a claim against the individual defendants. Accordingly, defendants' motion to dismiss is directed only at the Taxi Maintenance Corrected Amended Complaint.

         Personal Jurisdiction

         On a motion to dismiss for want of personal jurisdiction, plaintiff bears the burden of showing that the Court has authority to exercise jurisdiction over defendants. See Mass. Sch. of Law at Andover, Inc. v. ABA, 142 F.3d 26, 33-34 (1st Cir. 1998). The Court must take facts alleged by plaintiff as true and construe disputed facts favorably toward plaintiff. See Ticketmaster-New York, Inc. v. Alioto, 26 F.3d 201, 203 (1st Cir. 1994).

         In a diversity suit, this Court acts as “the functional equivalent of a state court sitting in the forum state.” See Astro-Med, Inc. v. Nihon Kohden America, Inc., 591 F.3d 1, 8 (1st Cir. 2009). As such, this Court must determine whether (1) jurisdiction is permitted by the Massachusetts long-arm statute and (2) the exercise of jurisdiction coheres with the Due Process Clause of the United States Constitution. Id.

         The Massachusetts long-arm statute, M.G.L. c. 223A, § 3, extends jurisdiction to the limits of the United States Constitution. See Tatro v. Manor Care, Inc., 416 Mass. 763, 771 (1994). Accordingly, this Court need not further consider the statute's applicability and may proceed to the due process question. See Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 52 (1st Cir. 2002).

         Due process demands a showing of general or specific personal jurisdiction by plaintiff. See Negron-Torres v. Verizon Commc'n, Inc., 478 F.3d 19, 24 (1st Cir. 2007). Plaintiffs must demonstrate that defendants have made sufficient contacts with the forum state to justify the exercise of that jurisdiction. Id.

         1. General Jurisdiction

         This Court may assert general jurisdiction over a defendant who maintains continuous and systematic activity in the forum state. See United Elec., Radio and Mach. Workers of Am. v. 163 Pleasant St., 960 F.2d 1080, 1088 (1st Cir. 1992). General jurisdiction is only appropriate where the defendant's activity renders him “essentially at home in the forum state”. Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011).

         The Taxi Maintenance complaint states, in conclusory fashion, that the individual defendants are subject to general personal jurisdiction within the Commonwealth of Massachusetts by “regularly engaging in persistent courses of conduct in the Commonwealth of Massachusetts” through the Uber ride-hailing service. Plaintiffs fail, however, to allege specific facts demonstrating that the individual defendants, as opposed to the corporate defendant with which they are associated, should be considered “at home” in Massachusetts. See Id. The plaintiffs' threadbare statement is insufficient to establish this Court's general jurisdiction.

         2. Specific Jurisdiction

         The Due Process Clause of the Fourteenth Amendment requires that a defendant have “minimum contacts” with the forum state such that the “maintenance of the suit does not offend traditional notions of fair play and substantial justice.” Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). The plaintiff must allege that (1) the claim underlying the litigation arises directly out of, or relates to the defendant's forum-state activities, (2) the defendant's in-state contacts represent a purposeful availment of the privilege of conducting activities in the forum state and (3) the exercise of jurisdiction is reasonable. Sawtelle v. Farrell, 70 F.3d 1381, 1389 (1st Cir. 1995) (citing United Electrical Workers v. 163 Pleasant St. Corp., 960 F.2d 1080, 1089 (1st Cir. 1992)).

         “The relatedness requirement focuses on the nexus between the defendant's contacts and the plaintiff's cause of action.” Nowak v. Tak How Investments, Ltd., 94 F.3d 708, 714 (1st Cir. 1996) (citing Ticketmaster-New York, Inc. v. Alioto, 26 F.3d 201, 206 (1st Cir. 1994)) (internal quotation omitted). Personal jurisdiction over an employee does not follow from the fact jurisdiction over the employer exists. Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 781 n. 13 (1984). Instead, there must be “an independent basis for jurisdiction based on an individual's actions.” Rissman Hendricks & Oliverio, LLP v. MIV Therapeutics Inc., 901 F.Supp.2d 255, 263 (D. Mass. 2012) (citations omitted).

         Plaintiffs fail to allege facts that demonstrate a nexus between the individual defendants' contacts and the plaintiff's cause of action.

         No specific facts with regard to Camp are alleged beyond the claim that he founded (and is a director of) Uber and that he resides in California. Plaintiffs attempt to attribute the acts of Uber to Camp through principles of agency law. They fail to allege, however, a single fact indicating that Camp made decisions about Uber's operations in Massachusetts or even traveled to the Commonwealth. Accordingly, plaintiffs have failed to allege that this Court has specific personal jurisdiction over Garrett Camp. Cf. Galletly v. Coventry Healthcare, Inc., 956 F.Supp.2d 310, 314 (D. Mass. 2013) (finding that court lacked jurisdiction over individual defendant because plaintiff's allegations “[did] not suggest that [defendant] played any specific role” in the underlying cause of action).

         The handful of statements that plaintiffs attribute to Kalanick do not create a nexus to their cause of action. Plaintiffs provide a smattering of irrelevant comments made by Kalanick, such as that he is a fan of Ayn Rand's novel “Fountainhead” (sic). They do not, however, point to a single decision Kalanick made about Uber's operations in Massachusetts. They do not allege that Kalanick traveled to the Commonwealth regularly, or even at all. Plaintiffs have failed to allege that this Court has specific personal jurisdiction over Travis Kalanick. Cf. Interface Grp.-Massachusetts, LLC v. Rosen, 256 F.Supp.2d 103, 107 (D. Mass. 2003) (determining that Court lacked specific personal jurisdiction because there was “too tenuous a nexus” between the defendant's specific Massachusetts contacts and the injuries suffered by the plaintiff).

         Because plaintiffs have failed to establish the relatedness requirement of specific personal jurisdiction, the Court declines to address the foreseeability and reasonableness requirements.

         3. Piercing the corporate veil

         As an alternative, plaintiffs contend that they have established specific personal jurisdiction over the individual defendants on the basis of an alter ego theory. That theory is inapposite. Under Massachusetts law, courts consider a multitude of factors when deciding whether to pierce a corporate veil:

(I) common ownership; (2) pervasive control; (3) confused intermingling of business assets; (4) thin capitalization; (5) nonobservance of corporate formalities; (6) absence of corporate records; (7) no payment of dividends; (8) insolvency at the time of the litigated transaction; (9) siphoning away of corporation's funds by dominant shareholder; (10) nonfunctioning of officers and directors;
(II) use of the corporation for transactions of the dominant shareholders; and (12) use of the corporation in promoting fraud.

Attorney Gen. v. M.C.K., Inc., 432 Mass. 546, 555 n. 19 (2000) (citing Pepsi-Cola Metro. Bottling Co. v. Checkers, Inc., 754 F.2d 10, 14-16 (1st Cir. 1985)).

         The complaint does not allege facts in support of a single factor relevant to piercing the corporate veil. Accordingly, plaintiffs have not justified the application of such a theory. See Newman v. European Aeronautic Defence & Space Co. Eads N.V., 700 F.Supp.2d 156, 168 (D. Mass. 2010).

         Plaintiffs have failed to establish that this Court has personal jurisdiction over either of the individual defendants. Therefore, the motions to dismiss of defendants Travis Kalanick and Garrett Camp will be allowed.

         B. The Consolidated Motion to Dismiss of Defendants Uber, Travis Kalanick and Garrett Camp

         Defendants contend that plaintiffs fail to state a claim upon which relief can be granted. In summary, Uber avers that it has not been shown: 1) to compete “unfairly” because it was never subject to the Taxi Rules, 2) to present a dangerous probability of monopolizing a market, 3) to interfere with advantageous business relationships or with the market-at-large, or 4) to have been part of a conspiracy or to have aided and abetted the violation of any legal canon. The Court will address these contentions seriatim.

         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 (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 (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 1950.

         1. Unfair competition under the common law and the Massachusetts Consumer Protection Act, M.G.L. c. 93A § 11

         All seven groups of plaintiffs bring claims of unfair competition under the common law and Massachusetts statutory law.[2]

         Plaintiffs theory, in its simplest form, is that the taxi industry in Greater Boston area is a heavily regulated business. Taxi cabs must, for instance, obtain a license, known as a “taxi medallion”, to operate lawfully. Uber, the plaintiffs insist, did not comply with the Taxi Rules, did not incur the concomitant costs, and thereby gained an unfair advantage and caused economic injury to taxi medallion holders and duly licensed fleet owners.

         Uber responds that it is not and has never been subject to the Taxi Rules. Uber submits that the rules have never been enforced against it and furthermore that the Commonwealth of Massachusetts has recently enacted a statute that preempts municipalities from regulating Uber (referring to M.G.L. c. 159A ½, § 10). According to defendants, the TNC Act thus reaffirms that the Taxi Rules do not apply (and never have applied) to Uber.

         Chapter 93A makes it unlawful for a party to engage in an “unfair method of competition” or an “unfair or deceptive act or practice.” M.G.L. c. 93A, § 11. Proponents of such claims must prove they have suffered a tangible loss as a result of the unfair or deceptive conduct. Arthur D. Little, Inc. v. Dooyang Corp., 147 F.3d 47, 56 (1st Cir. 1998).

         To determine whether a particular practice is unfair, courts examine

Whether the practice . . . is within at least the penumbra of some common-law, statutory or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; [and] (3) whether it causes substantial injury to consumers . . . .

Mass. Eye & Ear Infirmary v. QLT Phototherapeutics, Inc., 552 F.3d 47, 69 (1st Cir. ...


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