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Uber sues St. Louis Metropolitan Taxi Commission

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In this week’s article we return to examining antitrust lawsuits involving the travel industry, of which there have been several recent examples [see Best Price or Lowest Price guarantees: What do t

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In this week’s article we return to examining antitrust lawsuits involving the travel industry, of which there have been several recent examples [see Best Price or Lowest Price guarantees: What do these words mean?, www.eturbonews.com (December 19, 2014); Hop-on, Hop-off bus tour market in New York City, www.eturbonews.com (5/20/2015); In-flight WI-FI-high barriers to entry?, www.eturbonews.com (6/4/2015)]. This week we take a look at the complaint in Wallen v. St Louis Metropolitan Taxicab Commission, Case No. 4:15-cv-1432, United States District Court, Eastern District of Missouri, filed September 18, 2015. “Uber, well-known as a disruptive force in the vehicle-for-hire industry, has decided to cause some disruption in the world of antitrust. In September, Uber filed an antitrust lawsuit against the St. Louis Metropolitan Taxicab Commission (MTC), the organization’s commissioners and a number of St. Louis taxi companies. The (Wallen) suit…alleges those groups’ regulatory conduct constitutes an illegal combination in violation of Section 1 of the Sherman (Antitrust) Act”. [Goldfein & Keyte, Uber Seeks Antitrust Scrutiny of Taxicab Commission, New York Law Journal (11/10/2015)].

Travel Law Update

Uber Drivers May Unionize In Seattle

In Wingfield & Isaac, Seattle Will Allow Uber & Lyft Drivers to Form Unions, nytimes.com (12/14/2015) it was noted that “The Seattle City Council voted unanimously to approve a bill allowing drivers for Uber, Lyft and other ride-haling apps to form unions…The vote is a victory for the App-Based Drivers Association, or ABDA, of Seattle, an organization of on-demand contract workers that lobbied with the local Teamsters union for the legislation. It is a fight that other drivers around the country have watched closely; union organizers in California have said that the outcome of the Seattle vote could influence actions taken in their own cities”.

Drone Registration Rules Announced

In Kang, Drone Registration Rules Are Announced by F.A.A., nytimes.com (12/14/2015) it was noted that “The (FAA) on Monday announced new rules that will require nearly all owners of remote-controlled recreational drones to register the machines in a national database, an attempt by the agency to address safety fears. Federal officials have rushed to issue new rules on drones before the holidays, when an estimated 700,000 new drones are expected to be bought. Drone owners will be required to submit their names, home addresses and email addresses to the F.A.A., disclosure meant to encourage users to be more responsible, officials said”.

Drones In Canada

In Transport Canada encourages new drone users to learn rules before flying, www.eturbonews.com (12/12/2015) it was noted that “Drones…are sure to be a popular gift this holiday season. With ownership comes great responsibility and new operators must learn how to fly safely and legally”. Rules and suggestions for safe recreational and commercial drone use are set forth in article.

Delta Bans Hoverboards

In Delta Air Lines bans hoverboards, etrubonews.com (12/10/2015) it was noted that “Employee and passenger safety remain the airline’s top priority, driving Delta to disallow hoverboards and all lithium battery powered sale-balancing personal transportation devices in carry-on and checked baggage effective December 11. Poorly labeled, powerful lithium-ion batteries powering hoverboards are the issue. Delta reviewed hoverboard product specifications and found that manufacturers do not consistently provide detail about the size or power of their lithium-ion batteries”.

Chinese Tourists Rescued

In Chinese tourists rescued by Philippine Coast Guard, www.eturbonews.com (12/12/2015) it was noted that “Ten Chinese tourists aboard a motor boat, which reportedly sank during an excursion in Bohol, have been rescued and brought to safety, the Philippine Coast Guard (PGG) said”.

Uber Driver Class Action Expanded

In Kendall, Chen Expands Class Against Uber, The Recorder (12/9/2015) it was noted that “A federal judge Wednesday allowed thousands more Uber Technologies Inc. drivers to join litigation attacking the company’s policy of classifying drivers as independent contractors… (the class was expanded to include) excluded California drivers who sign up with Uber in 2014 or later. (The Judge) also said the class can pursue reimbursement for work expenses, which he’s previously denied”. The case is O’Connor v. Uber Technologies, Inc., 13-cv-03826-EMC (N.D. Cal.). See our previous discussion of the O’Connor case and other Uber lawsuits at The never-ending story: Uber lawsuits update, www.eturbonews.com (4/16/2015).

Uber Rewrites Driver Contract

In Kendall, Uber Rewrites Driver Contract to Force Arbitration, law.com (12/11/2015) it was noted that “Uber is taking a new approach in its fight to keep drivers out of court and classified as independent contractors. The company appears undeterred by a federal court ruling earlier this week that rejected its arbitration agreement and expanded a class of drivers seeking employee status and benefits. On Friday, Uber…released a new driver contract that purports to fix problems that U.S. District Judge Edward Chen…said made arbitration requirements in the previous agreement unenforceable”.

Terror In Egypt? Not Really

In Russian plane crash: was it really terror, www.eturbonews.com (12/14/2015) it was noted that “Egypt is fighting to keep tourism alive in Sharm el-Sheikh after a Russian holiday plane crashed and killed everyone on board, with 17 children being among the 224 victims of the catastrophe…And now the bombshell. As reported by AP and immediately circulated by Egyptian media. It may not have been a terror attack after all. Egyptian authorities currently deny the existence of any evidence conclusively proving the crash had been a result of a bomb explosion, despite Russian and British investigations previously concluding a bomb and been planted in the plane”.

Tip-Pooling Class Action Settled

In Seal, Red Robin Tip-Pooling Class Action Settles, law.com (12/11/2015) it was noted that “Lehigh Valley Restaurant Group, Inc., which owns and operates 19 Red Robin restaurant franchises in Eastern Pennsylvania has agreed to a $1.3 million settlement in a class action lawsuit…over minimum-wage violations. (Plaintiffs) brought suit alleging violation of the Fair Labor Standards Act’s minimum-wage requirement, which mandates payment of $7.25 per hour. They alleged they were paid $2.83 per hour, as servers…and took a ‘tip credit’ of $4.42 per hour…But the restaurant’s tip credit policy had a caveat requiring servers to contribute 3 percent of their gross sales to a ‘tip pool’ which was then distributed among other restaurant employees including bartenders, expediters and busboys…The plaintiffs alleged that the other employees worked predominantly in the kitchen and rarely interacted with customers, putting their inclusion in the tip pool in violation of the FLSA…the class stands at around 2,000 members, meaning the minimum average payout is going to be around $400 per member”. For articles on gratuities and tipping in the travel industry see Uber Lawsuits-Gratuities, www.eturbonews.com (October 22, 2014); When a tip is not a tip but a profit center, www.eturbonews.com (2/20/2015).

Hotel Hot Spots Again

In White, F.C.C. Sides With Hot Spots, and Hospitality Industry Feels a Chill, nytimes.com (11/9/2015) it was noted that “Fed up with Internet charges that can range into six figures, more meeting planners are instead using mobile hot spots to connect at conferences and conventions. But their efforts have at times been stymied, when the venues have electronically blocked the transmissions. The Federal Communications Commission (FCC) has recently been intervening in this high-tech game of cat and mouse. Last week, the commission proposed a $718,000 fine against M.C. Dean, the company that provides Internet services at the Baltimore Convention Center, over accusations that the company blocked Wi-Fi hot spots, as well as a $25,000 fine against Hilton Worldwide Holdings for what the agency called ‘apparent obstruction of an investigation’ into Wi-Fi blocking… Last year, the commission fined Marriott International $600,000, then issued a warning in January [see FCC Enforcement Advisory, Warning: Wi-Fi Blocking is Prohibited, DA 15-113 (January 27, 2015)] that blocking hot sports in hotels and ‘other commercial establishments’ was illegal. In August, the agency levied a $750,000 fine against Smart City Holdings, a company that manages Internet services in 28 convention centers. Consumers have a right, the commission said, to use hot spot technology like smartphones and wireless routers like MiFi without interference…The hospitality industry has plenty to lose. While business travelers grumble about having to pay $15 or $20 a night for Wi-Fi access at upscale hotels, those charges are a drop in the bucket compared with what event planners pay for Internet access in hotel conference space and convention centers”. See our earlier article Dickerson, Hotel overcharges: the mini-bar and Wi-Fi access, www.eturbonews.com (10/16/2014).

“Hotels of North America”

In Garner, Review: In ‘Hotels of North America’, Rick Moody Examines the Middle-Aged Male in Free Fall, nytimes.com (11/9/2015) it was noted that “One drawback of American journalism in that newspapers and magazines don’t have hotel critics. Into this cultural void steps Reginald Edward Morse, the hero of Rick Moody’s new novel, ‘Hotels of North America’. Reginald…is a top reviewer on RateYourLodging.com. Little gets past his bloodshot eyes. At the Viking Motel in Eugene, Ore., for example, he slumps to the floor in a moment of loneliness and inebriation and can’t help noting the ‘dust, blood…Ritz Crackers, and insect parts’ mulched into the carpet. It’s the kind of grainy detail for which readers prize his posts”. See also: Moody, Always a Critic, Conde Nast Traveler (November 2015) p. 68 (“When Rick Moody began reviewing hotels for fun, he found the practice thrilling, at times even addictive. So much so he wrote a book about it (and perhaps discovered a second career)”.

Airbnb Host Toolkit

In Airbnb unveils expansive suite of personalized tools to empower hosts, www.eturbonews.com (11/12/2015) it was noted that “Airbnb…today announced a new product suite to empower hosts around the globe at its third-annual Airbnb Open host conference. …From pricing to easing the arrival of a guest, the personalized tools let hosts spend more time building lasting connections with guests instead of managing their listings”. The tools involve applications for business travelers, host assist which “allows for easy key exchange and keyless entry”, smart pricing “pulls insights from booking trends and similar listing information and allows hosts to set pricing controls that automatically adjust to demands in order to stay competitively priced”, community center “where hosts can access the wisdom of the Airbnb community”.

Travel Law Article: The Wallen Complaint

The plaintiffs in the Wallen complaint consist of Uber, USA and Raiser LLC and individuals who are either Uber drivers or riders. The complaint starts with the “Nature Of The Action” and set forth the following allegations:

Stifling Competition

“1. The City and County of St. Louis is the largest major metropolitan area in the United States that does not permit ridesharing companies to operate even though these companies are operating safely and efficiently in every State of the Union (except South Dakota) and in over 60 countries across six continents. The Rider/Driver Plaintiffs and the Uber Plaintiffs bring this antitrust action to put an end to the anti-competitive conduct (the MTC) and several of its commissioners…many of whom are active market participants in the very market that the MTC regulates. Acting under the control of these market-participant members, the MTC, which is vested with the authority to regulate vehicles for hire, their drivers and vehicle-for-hire companies…has abused its authority in order to stifle competition. Instead of fulfilling its mandate to serve the riding and driving public, the MTC has acted to protect the entrenched taxicab industry from its greater perceived threat: the entry of ridesharing request services like Uber…and the desires of thousands of diverse riders and drivers who want Uber in the market as a safe, efficient and affordable local transportation request option. Through their concerted activities, the MTC and its market-participant members have destroyed competition, thereby deriving consumers in the St. Louis market of a transportation request option that has proven wildly popular”.

Harmful Activities

“2. For reasons explained below, the concerted conduct of the MTC (and other defendants)…is illegal, will cause irreparable harm to the Ride/Driver Plaintiffs, St. Louis, the Uber Plaintiffs and others, and should be enjoined. Among other harms, the MTC’s and Commissioner Defendants’ conduct has, and will continue to, increase transportation prices, prevent the creation of thousands of new opportunities for drivers to earn a living, and reduce the availability of transportation options for all St. Louis residents”.

The Cartel

“5. The MTC functions as a cartel in part by statute, and does so without any meaningful supervision by the state. State law requires the MTC to include as voting members four active market participants in the very industry that the MTC is charged with regulating. In other words, two taxicab company owners or operators, one commissioner who must be a taxi driver (that position is currently vacant) and a fourth commissioners from either group, possess virtually unchecked power to regulate their industry as voting members of the MTC…Acting in concert through their participating in the MTC, Defendants have constructed impossibility high and ever-shifting barriers to entry to foreclose competition in St. Louis in the relevant market for the provision of passenger motor vehicle transportation services”.

Antitrust Violations

“9. The MTC and the Commissioner Defendants’ conduct constitutes an illegal combination in violation of Section 1 of the Sherman Act, 15 U.S.C. 1. The United States Supreme Court recently confirmed that where, as here, a state has not expressly authorized a body to engage in anti-competitive behavior, or where active market participants control a nominally public body like the MTC and no independent governmental agency or official actively supervises its conduct, that body’s conduct is not immune from antitrust liability. See N. Carolina State Bd. Of Dental Examiners v. F.T.C., 135 S. Ct. 1101 (2015); F.T.C. Phoebe Putney Health Sys., Inc., 133 S. Ct. 1003 (2013). Accordingly…Plaintiffs are entitled to monetary and injunctive relief to redress the antitrust injury that the MTC and kits market-participant members…have causes”.

Conclusion

“The MTC recently moved to dismiss the lawsuit claiming that active market participants do not control the commission, and therefore state-action immunity applies to the antitrust claims even without active supervision from a government body” [Goldfein & Keyte, supra]. Stay tuned.

The author, Justice Dickerson, has been writing about Travel Law for 39 years including his annually updated law books, Travel Law, Law Journal Press (2015) and Litigating International Torts in U.S. Courts, Thomson Reuters WestLaw (2015), and over 350 legal articles. For additional travel law news and developments, especially in the member states of the EU, see IFTTA.org.

This article may not be reproduced without the permission of Thomas A. Dickerson.

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