United States District Court, D. Massachusetts
MEMORANDUM OF DECISION
Nathaniel M. Gorton United States District Judge.
case involves a suit by the Anoush plaintiffs (taxi medallion
holders in the Greater Boston) who allege that Uber
Technologies, Inc. and Raiser, LLC (collectively
“Uber” or “defendants”) competed
unfairly in the on-demand, ride-hail Boston transportation
market in violation of M.G.L. Chapter 93A, § 11 and
Massachusetts common law.
Court presided over a seven-day bench trial in late July,
2019, and early August, 2019, and now publishes its findings
of fact and conclusions of law pursuant to Fed.R.Civ.P.
Anoush plaintiffs (“plaintiffs” or
“plaintiff corporations”) are 34 corporations in
the business of leasing City of Boston taxicabs (and
medallions that authorize their use) to independent drivers.
All 34 corporations are owned and operated by the Tutunjian
family which collectively controls 362
medallions. The plaintiffs' taxicabs are branded
under the name “Boston Cab.”
plaintiff corporations do not have employees themselves but,
pursuant to individual and identical management agreements
with EJT Management, Inc. (“EJT”), EJT conducts
most of their day-to-day business. EJT is also owned by the
Under the individual management agreements, EJT serves as an
agent for the plaintiff corporations with respect to the
collection of leasing revenue and the maintenance of leased
taxicab vehicles for which it charges management fees. It
also pays taxes and bills for plaintiffs. EJT does not,
however, own any of the medallions at issue.
Boston Cab Dispatch, Inc. (“Dispatch”), also
owned by the Tutunjian family, is a radio association that
provides taxi dispatch services to its
“membership.” The 34 corporate plaintiffs are all
members and pay membership fees to “Dispatch.”
Tutunjian (“Mr. Tutunjian”) was the controlling
shareholder of all 34 plaintiff corporations for most of the
period of alleged unlawful conduct, i.e., June 4,
2013, through August 4, 2016 (“the conduct
period”). He transferred his ownership interest in all
the Tutunjian entities (34 plaintiff corporations, EJT and
Dispatch) to his wife, Nancy Tutunjian, for no consideration
Tarpy (“Ms. Tarpy”), the daughter of Ed and Nancy
Tutunjian, is the president, secretary and treasurer of all
34 plaintiff corporations and is the president of EJT and
Dispatch. She has managed the day-to-day operations of the
plaintiff corporations and EJT since mid-2013. As the
corporate secretary, Ms. Tarpy is also responsible for the
corporate books and records of all plaintiff corporations and
Weeden (“Mr. Weeden”) serves as the accountant
for the plaintiff corporations. While Mr. Weeden maintained
separate trial balances for each of the plaintiff
corporations, EJT would compile the daily leasing
transactions and corporate expenses (mostly transactions with
EJT) within a general ledger.
2013, Dispatch and EJT sued Uber for unfair competition. That
lawsuit was dismissed with prejudice in July, 2016.
is a Delaware corporation with its principal offices in San
Francisco, California. It is a technology company that uses a
mobile software application (“app”) to match up
potential riders with drivers seeking customers for
Uber began providing transportation services in Massachusetts
in 2011, well before the launch of its disputed ridesharing
or peer-to-peer (“P2P”) service, UberX P2P.
October, 2011, Uber began a service called UberBLACK in
Boston which allowed consumers to use an app on their phone
to prearrange a ride in a livery vehicle with a livery
licensed driver. In Fall 2012, Uber began providing UberTAXI
in Boston which allowed riders to arrange traditional taxi
rides from medallion-licensed taxicabs through the Uber app.
In February, 2013, Uber offered UberX Livery which allowed
riders to request rides from drivers with livery plates via
the Uber app. UberX Livery fare rates were lower than
UberBLACK which Uber considered a premium product.
Rasier, LLC (“Rasier”) is a wholly owned
subsidiary of Uber that operates as a transportation network
company (“TNC”) in Massachusetts. References to
“Uber” operating as a TNC apply equally to
Chapter 93A Liability
Historically, the City of Boston has regulated taxis under a
set of municipal rules, ordinances and regulations
(“Taxi Rules”) and the Boston Police Commissioner
(“the Commissioner”) has the authority to
regulate hackney carriages and stands. The Commissioner may
delegate his authority to the Inspector of Carriages, who is
the Commander of the Hackney Carriage Unit (“HCU”
or “Hackney Unit”). The Hackney Unit has
approximately 12 assigned police officers but typically only
two of those officers serve on the street during any one
2008, the Commissioner 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 defines a “hackney carriage” as a
vehicle used or designed to be used for the conveyance of
persons for hire from place to place within the city of
Boston. . . . Also known as a taxicab or taxi.
Rule 403 sets forth leasing and shift rates and taximeter
rates. It establishes various vehicle and driver requirements
for hackney carriages, including that each vehicle have a
taxi medallion, be driven by a licensed hackney carriage
driver and bare evidence of membership in a radio dispatch
Rule 403 also recognizes Boston's 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.
From 2007 to 2008, Captain Robert Ciccolo (“Captain
Ciccolo”) served as the Commander of the Hackney Unit.
Captain Ciccolo credibly testified that under his command,
the Hackney Unit issued tickets to unlicensed vehicles
engaged in street hails (in violation of the Boston
Ordinance), but not to vehicles conducting prearranged rides,
regardless of whether the vehicles had livery plates.
some point, after Captain Ciccolo stepped down as Commander
of the Hackney Unit and at the beginning of the conduct
period, he informed the Commissioner (Ed Davis) and the
Civilian Director of Hackney Licensing (Mark Cohen) of the
Hackney Unit's policy of not enforcing Rule 403 with
respect to prearranged livery rides.
November, 2013, William Evans became Police Commissioner of
the City of Boston. He served as Commissioner until the end
of the conduct period in August, 2016.
Captain Steven McLaughlin (“Captain McLaughlin”)
served as Commander of the Hackney Unit from January, 2013,
to May, 2014, under both Commissioners Davis and Evans. When
he was Commander of the Hackney Unit, he instructed his
officers not to ticket ridesharing vehicles unless they were
involved in street hails.
Nelson Nygaard Report
2013, the Boston Globe ran a series of articles on the Boston
taxi industry. Following that publication, Mayor Thomas
Menino (“Mayor Menino”) commissioned the
Nelson/Nygaard Boston Taxi Consultant Report (“the
Although Uber declined to participate in the preparation of
the Report, Captain McLaughlin, while Commander of the
Hackney Unit, asked the drafters of the Report to address how
the Hackney Unit should regulate ridesharing services such as
those provided by TNCs.
Report, which was published in October, 2013 (four months
after Uber launched UberX P2P), concludes that TNCs and
livery vehicles are not regulated and do not have a
regulatory body providing oversight. It further recommended
that the Mayor establish an independent Taxi Advisory
Senior management at Uber read the Report when it was issued
in October, 2013, and concluded that it affirmed Uber's
understanding that the Taxi Rules did not apply to
Ridesharing Competitors and UberX P2P
March, 2013, Sidecar, a competitor to Uber, began the first
P2P ridesharing program in Boston. When that happened,
Michael Pao (“Mr. Pao”), the General Manager of
Uber in Boston at the time, informed Uber executives that the
Boston Ordinance prohibits “for hire” private
Sometime thereafter, Mr. Pao told Uber's Head of Global
Public Policy, Corey Owens (“Mr. Owens”), that
Mr. Cohen (the Civilian Director of the Hackney Unit) had
purportedly stated that there was almost no chance that the
Taxi Rules would be enforced against Sidecar. That led senior
Uber executives in Boston to believe that the Taxi Rules
would not likely be enforced against Uber.
April, 2013, Uber publicly issued its national corporate
policy (“the White Paper”) with respect to P2P
ridesharing in cities where regulatory enforcement was
ambiguous. In the White Paper, Uber's then-CEO Travis
Uber will aggressively roll out ridesharing on its existing
platform in any market where the regulators have given tacit
approval. . . . If a competitor is operating for 30 days
without direct enforcement against transportation providers,
then Uber will interpret that as “tacit approval”
of ridesharing activity.
That same month, Meghan Joyce (“Ms. Joyce”)
succeeded Mr. Pao as Uber's Boston General Manager, a
position she held until early 2015, when she was then
succeeded by Cathy Zhou (“Ms. Zhou”).
May, 2013, Lyft, another Uber competitor began its P2P
ridesharing service in Boston.
Following Lyft's entry into the Boston market, Uber
accelerated its plan to launch its own P2P service, UberX
P2P, which is the disputed conduct at issue in this case.
During the week preceding its launch, Uber had several
intra-management communications relating to the Boston
Ordinance. At that time, Ms. Joyce was familiar with the
Boston Ordinance and was specifically aware of the fact that
violations could result in $500 fines.
While Uber maintains that throughout the conduct period the
Taxi Rules did not apply to ridesharing, just before the
launch of UberX P2P, Mr. Pao stated that “[t]his would
be the first time Uber would be launching in a market without
formal or tacit approval.” Despite that initial
statement from Mr. Pao, the Court finds that such
understanding later changed based on a series of
conversations that Uber management had with City officials.
May 30, 2013, Mr. Owens, Uber's Head of Global Public
Policy, emailed Mayor Menino's Chief of Staff, Mitchell
Weiss (“Mr. Weiss”), a letter which was drafted,
in part, by Ms. Joyce. In that letter, Uber stated that it
was “eager to participate in this innovative
model” but only “as long as regulators allow this
type of transportation.” He requested that the City
keep Uber informed of any “changes to Boston's
current policy of non-enforcement.”
That same day Mr. Owens spoke with Mr. Weiss by telephone.
Mr. Owens reported back to his Uber colleagues that Mr. Weiss
said, “just launch.”
following day, on May 31, 2013, Mr. Owens communicated with
Mr. Weiss again and asked him to let Uber know if there were
to be “any impending change to the City's
interpretation or application of existing law in this
Although Mr. Weiss did not testify, the Court finds that the
City's lack of enforcement of the Taxi Rules against Uber
competitors, public statements made after the launch and the
testimony from hackney officers collectively corroborate
Uber's understanding of their communications with City
officials prior to the launch of UberX P2P.
Uber launched UberX P2P on June 4, 2013.
Requirements for UberX P2P Drivers
P2P, Uber did not require its drivers to have a commercial
hackney license, a commercial livery license or a hackney
medallion. Drivers on the so-called “P2P
platform” could drive their personal vehicles with a
personal driver's license and a valid license plate.
Those drivers were, however, covered by Uber's umbrella
commercial insurance policy while transporting riders.
Uber's management knew that its UberX P2P ridesharing
model would save Uber drivers thousands of dollars in fees in
comparison to taxicab drivers. At the time, plaintiffs
estimated that the annual cost of leasing a medallion in
Boston was approximately $26, 000, weekly radio association
fees ranged from $20 to $88 and onetime retrofitting costs
were around $3, 600. By avoiding such fees, Uber expected its
drivers to earn 30% more income than a comparable taxicab
Unlike taxis, which are subject to fixed taxi fare rates,
Uber set the variable prices for how much a customer would be
charged per ride.
Uber engaged in “surge pricing, ” whereby Uber
would charge more when customer demand was higher than driver
supply. Unlike taxis, Uber was able to increase prices during
period of high demand and decrease them during periods of low
October, 2013, Uber advertised to its customers that UberX
P2P in Boston was 30% cheaper than comparable taxi rides.
Ticketing and Government Interactions
July, 2013, Uber became aware that some of its drivers were
receiving citations from local law enforcement. During the
conduct period, out of the millions of Uber trips, Uber
drivers received 497 tickets, of which 277 cited the Boston
Ordinance. Most of those tickets were issued between May,
2014, and December, 2014. In 2015, 46 tickets were issued
under the Boston Ordinance, but in 2016, only three tickets
response to inquiries from drivers about citations received,
Uber employees never told the drivers that UberX P2P was
illegal. Rather, Robert Hoyt (“Mr. Hoyt”), an
Uber employee who managed communications with the drivers,
informed ticketed drivers that the officers were merely
“misinformed” about Uber's commercial
insurance policy and that he would submit the citations to
Uber's legal team. He would then input information about
the citations in a spreadsheet which Uber's legal team
could access. Uber meticulously tracked its drivers'
citations throughout the conduct period.
Uber reimbursed drivers who received tickets for prearranged
rides but did not reimburse any drivers who were cited for
street hails. It did so in order to retain drivers and to
alleviate the cost and hassle of appealing the citations,
although some drivers were successful in appealing citations
on their own.
2014, the volume of citations reached its peak and Uber
internally expressed serious concern. At the height of it,
the Boston Police Department and the Massachusetts State
Police were issuing tickets in the range of $500 to $20, 000
February, 2014, Commissioner Evans stated during a radio
interview that Uber was an unlicensed service but later
rescinded that comment. In April, 2014, Ms. Joyce met with
Massachusetts State Police officers overseeing Logan Airport
who stated they would not relent on ticketing until there was
a legislative change. One month later, however, Mayor Marty
Walsh (“Mayor Walsh”) in response to a caller
inquiry on a Boston radio program stated that the police, and
the City, did not have jurisdiction over Uber.
Internal documents show that during 2014, Ms. Joyce was
skeptical that the Mayor's Office was doing anything to
stop the ticketing. Uber management subsequently heard from
one of its lobbyists that Dan Koh (“Mr. Koh”),
Mayor Walsh's Chief of Staff, was
“dumfounded” as to why Uber drivers were being
ticketed. Mr. Koh later requested that Uber provide him with
information about the citations and Uber complied.
Joyce credibly testified that she had multiple conversations
with Mr. Koh about the driver citations and she believed that
Mr. Koh was in the process of stopping the issuance of