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

United States District Court, D. Massachusetts

July 3, 2019

Malden Transportation, Inc., et al., Plaintiffs,
v.
Uber Technologies, Inc. and Rasier, LLC, Defendants.

          MEMORANDUM & ORDER

          Nathaniel M. Gorton United States District Judge.

         This case involves a suit by taxi medallion holders (“the Anoush plaintiffs” or “plaintiffs”) in the Greater Boston area who allege that Uber Technologies, Inc. and Raiser, LLC (collectively “Uber” or “defendants”) competed unlawfully and unfairly in the on-demand, ride-hail ground transportation market in and around Boston, Massachusetts.

         I. Background

         A. Regulatory Background

         The City of Boston has traditionally regulated taxis under a set of municipal rules, ordinances and regulations (“Taxi Rules”), for which the Police Commissioner has the exclusive authority to regulate hackney carriages and hackney stands. In 2008, the Boston Police Department (“BPD”) issued the Hackney Carriage Rules and Flat Rate Handbook (“Rule 403”), which regulates hackney carriage fares, medallions and hackney licenses, among other things. Rule 403 also incorporates a previously promulgated Vehicle for Hire Ordinance (“the Boston Ordinance”), which provides in relevant part:

no person, firm, or corporation driving or having charge of a taxicab or other private vehicle shall offer the vehicle for hire for the purposes 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; see also Appendix I to Rule 403. The Hackney Department of the BPD is largely charged with implementing these Taxi Rules.

         B. Factual Background

         In June, 2013, following separate conversations between Uber management and the Hackney Department on the one hand, and Uber and senior staff in the Mayor's office on the other, Uber launched its own peer-to-peer (“P2P”) application, UberX. With respect to UberX, Uber did not require its drivers to comply with Rule 403 or the Boston Ordinance because its management believed that the Taxi Rules applied only to taxi cabs, not transportation network companies (“TNCs”) such as Uber.

         Shortly thereafter, uniformed officers began ticketing Uber drivers for violating a variety of municipal and state regulations, including the Boston Ordinance. From roughly July, 2013, to January, 2015, Uber acknowledged hundreds of police citations issued to UberX drivers. Although some drivers successfully challenged those tickets in court, Uber routinely reimbursed all other charged drivers. During this same time period, while Uber reimbursed its drivers for the cost of tickets, the Mayor's office made somewhat contradictory statements suggesting that the Taxi Rules did not apply to TNCs.

         This regulatory uncertainty persisted until August, 2016, when the Massachusetts legislature enacted the Transportation Network Companies Act (“the TNC Act”). See M.G.L. c. 159A ½. The TNC Act preempts municipalities from regulating TNCs through local municipal rules and vests regulatory jurisdiction in the Massachusetts Department of Public Utilities and the Massachusetts Port Authority. See id. at § 10.

         Following this Court's order which allowed, in part, and denied, in part, defendants' motion to dismiss (Docket No. 96), the parties submitted cross motions for summary judgment with respect to plaintiffs' claims for unfair competition from June, 2013, to August, 2016 (“the alleged unlawful conduct period”). Plaintiffs have moved for partial summary judgment on their claim of liability (under Chapter 93A and common law) and defendants' § 3 and superseding cause defenses. Defendants have moved for summary judgment on plaintiffs' claim of liability (under Chapter 93A and common law) and on its res judicata and § 3 defenses.

         For the reasons set forth below, both parties' motions will be denied (with the exception of plaintiffs' motion for partial summary judgment on defendants' § 3 defense) and the Court will promptly convene a bench trial in accordance with this opinion.[1]

         II. Legal Analysis

         A. Legal Standard

         The role of summary judgment is to assess the proof in order to see whether there is a genuine need for trial. Mesnick v. Gen. Elec. Co., 950 F.2d 816, 822 (1st Cir. 1991). The burden is on the moving party to show, through the pleadings, discovery and affidavits, that there is “no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law”. Fed.R.Civ.P. 56(a). A fact is material if it “might affect the outcome of the suit under the governing law”. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A genuine issue of material fact exists where the evidence with respect to the material fact in dispute “is such that a reasonable jury could return a verdict for the nonmoving party”. Id.

         If the moving party has satisfied its burden, the burden shifts to the nonmoving party to set forth specific facts showing that there is a genuine, triable issue. Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). The Court must view the entire record in the light most favorable to the nonmoving party and indulge all reasonable inferences in that party's favor. O'Connor v. Steeves, 994 F.2d 905, 907 (1st Cir. 1993). Summary judgment is appropriate if, after viewing the record in the nonmoving party's favor, the Court determines that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law. Celotex Corp., 477 U.S. at 322-23.

         When parties file cross-motions for summary judgment on a particular count, the Court must assess each motion separately and determine whether there is any genuine issue of material fact and whether either movant is entitled to judgment. Phillip Morris Inc. v. Harshbarger, 122 F.3d 58, 62 n. 4 (1st Cir. 1997).

         B. Cross Motions for Summary Judgment

         1. Chapter 93A Liability

         To be successful under M.G.L. c. 93A, § 11, plaintiffs must establish 1) that defendants engaged in an unfair method of competition or committed an unfair or deceptive act or practice, as defined by M.G.L. c. 93A, § 2, or the regulations promulgated thereunder; 2) a loss of money or property suffered as a result and 3) a causal connection between the loss suffered and the defendants' unfair or deceptive method, act or practice. Auto Flat Car Crushers, Inc. v. Hanover Ins. Co., 17 N.E.3d 1066, 1074-75 (2014).

         a. Liability under § 2(c)

         First, the Court finds that plaintiffs are not entitled to summary judgment on liability based on § 2 per se unfairness. Pursuant to § 2, paragraph (c) of Chapter 93A, the Massachusetts Attorney General promulgated 940 C.M.R. § 3.16, which provides that an act or practice violates Chapter 93A, § 2 if:

[i]t fails to comply with existing statutes, rules, regulations or laws, meant for the protection of the public's health, safety, or welfare promulgated by the Commonwealth or any political subdivision thereof intended to provide the consumers of this Commonwealth protection.

940 C.M.R. § 3.16(3).

         While this Court finds that the Taxi Rules were designed for the public's health, safety and welfare, the First Circuit Court of Appeals (“First Circuit”) has held that § 3.16 does not apply to business-to-business disputes under § 11. See LimoLiner, Inc. v. Dattco, Inc., 809 F.3d 33, 36 (1st Cir. 2015) (concluding that § 3.16 does not apply to business-to-business disputes) but see Limoliner, Inc. v. Dattco, Inc., 57 N.E.3d 969, 976 n.11 (2016) (noting the general dispute among courts as to whether the Attorney General's regulations pursuant to Chapter 93A apply only to consumers).

         Accordingly, this Court declines to find, as a matter of law, that Uber's failure to comply with the Taxi Rules constitutes a per se violation under § 2(c).

         b. Unfair Practices and Competition

         Having disposed with the § 3.16 claim for per se unfairness, the Court turns to the parties' respective arguments on whether Uber's conduct during the alleged unlawful conduct period falls

within at least the penumbra of some common-law, statutory, or other established concept of unfairness; is immoral, unethical, oppressive, or unscrupulous; and causes substantial injury to consumers.

Exxon Mobil Corp. v. Attorney Gen., 94 N.E.3d 786, 792 (Mass. 2018) (defining unfairness ...


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