Uber’s CEO faces a passenger fare-fixing lawsuit

Jonathan Stempel

NEW YORK (Reuters) – Travis Kalanick, the chief executive of Uber Technologies Inc, failed on Thursday to get a dismissal of an antitrust lawsuit accusing him of conspiring to raise prices for passengers using the popular ride-sharing service.

U.S. District Judge Jed Rakoff in Manhattan said Kalanick must face allegations that he conspired with drivers to ensure that rides were charged prices set by an algorithm on Uber’s smartphone app, including “fare increases” during times of peak demand. .

Riders, led by Connecticut-based Spencer Meyer, alleged that drivers conspired with Kalanick to charge fares set by the algorithm, under the assumption that other Uber drivers would do the same, even if they could achieve better results acting on their own.

Rakoff said the plaintiffs “likely alleged a conspiracy” to fix prices this way and may also raise claims that Kalanick’s actions drove out rivals like Sidecar by enabling Uber to control 80 percent of the ride share generated by mobile apps.

“Advances in technology for orchestrating large-scale price-fixing conspiracies need not leave antitrust law in its wake,” the judge wrote.

Meyer’s lawsuit seeks class-action status on behalf of Uber riders across the country who used the app and an underclass of high-fare riders.

Uber takes a share of the revenue generated by drivers.

“We disagree with this ruling,” Uber said in response to a request for comment on behalf of Kalanick and the San Francisco-based company. “These claims are baseless and have no basis in fact.”

Andrew Schmidt, Meyer’s lawyer, welcomed the decision.

“By creating Uber, Kalanick orchestrated price fixing among independent drivers who should compete with each other on price,” he said. “Today’s decision confirms that apps are not exempt from antitrust laws.”

Uber was not named as a defendant despite being valued at well over $50 billion in recent funding rounds.

Rakoff said in a footnote that Uber riders are subject to “user agreements” requiring them to resolve various disputes through arbitration.

He said that while the claims in the lawsuit against Kalanick were “strictly based on and related to user agreements,” Kalanick was not seeking to force arbitration and passengers were not barred from suing him in federal court.

The case is Meyer v. Kalanick, United States District Court, Southern District of New York, No. 15-09796.

(Reporting by Jonathan Stempel in New York; Editing by Cynthia Osterman and David Gregorio)