Uber litigation and the lessons for lawyers

Another angle in the regulatory fightback against the Uber business model came to light over the last few days. A US district judge in a federal court in Manhattan gave the green light to a lawsuit alleging that the head of Uber is involved in a price-fixing conspiracy with drivers who use the company’s smartphone app to find passengers.

A customer alleged that a price-setting algorithm included in the app violates anti-trust law, because it coordinates pricing among drivers whom Uber claims are independent contractors. The app provides for pricing depending on variables such as the weather and the number of customers looking for cars on particular days. The case is Meyer v. Kalanick, 1:15-cv-09796, U.S. District Court, Southern District of New York (Manhattan).

In one of the articles covering the new case, a law professor is quoted as saying that the case has only a remote chance of success. But there are interesting lessons all the same from this and other Uber litigation.

The biggest US case is the ongoing class action in California, where Uber drivers are claiming that they are not independent contractors, but employees entitled to be reimbursed for their expenses, such as gas and vehicle maintenance. The drivers also challenge Uber’s practice of telling passengers that the gratuity is included, and so there is no need to tip the drivers.

Just a few days ago, the judge overseeing the Californian case denied Uber’s motion for a summary judgment, and decided that the case will go to trial before a jury, set to begin in late June.

Why is this relevant for lawyers? First, it is another illustration of how regulatory matters can be settled not by official regulators, but by courts through the creative use of lawsuits. And, more importantly, with our own professional values threatened in the near future by non-lawyer-owned electronic platforms not regulated by anyone, it is an instructive example of how what seems to be a vision of the irresistible future can indeed be resisted on compelling and rational grounds.

The so-called sharing economy is being looked at critically. Tom Slee’s ‘What’s Yours Is Mine: Against the Sharing Economy’ makes the case that companies like Uber have turned their business model into a movement, and so outsourced the policy lobbying to starry-eyed consumer followers. These companies have monetised private acts (giving someone a lift in your car, letting someone stay in your house), and made a fortune by disregarding the regulation that such acts rightly attract when they are publicly offered.

Interestingly, Uber attracts by far the most lawsuits when compared to other companies in the sharing economy. Fifty or so lawsuits were launched against it just in US federal courts last year, and there were copycats launched in other states based on the Californian case mentioned above. It appears that it has a much larger in-house legal department than its competitors.

As a different example of the cases against it, it has recently offered to settle two class actions for $28.5m (£20m). These cases accused Uber of charging a fee of up to $2.30 per trip for what it called industry-leading background checks on would-be drivers. However, Uber did not carry out the kind of fingerprint checks needed of taxi drivers. Uber also said it would stop using certain ‘safety-related’ advertising language and would rename its Safe Ride Fee as a Booking Fee.

What seems to be a vision of the irresistible future can indeed be resisted on compelling and rational grounds

Here in Europe there are two important Uber cases going to the Court of Justice: Case C-434/15 Asociación Profesional Élite Taxi v Uber Systems Spain, S.L. and Case C-526/15 Uber Belgium BVBA v Taxi Radio Bruxellois NV. Their outcome will be very significant, particularly in deciding (as laid out in the Spanish case) whether Uber is providing an information society service or a taxi service. If it is an information society service, national taxi regulations will not apply.

In our own country, regulation is regarded by our leaders as uncool and only to be tolerated with a lot of eye-rolling. Regrettably, our own profession is regulated by those who are easily distracted by the new and the shiny. The lesson of the wide range of Uber litigation is that we must not give up on insisting on proper regulation, equivalent to what is offered through traditional modes of delivery.

It is true that these modes have failed to guarantee access to justice for a distressingly wide range of citizens, but the answer is not to remove client protection to increase access. There are other solutions (we used to do it through increasing levels of legal aid eligibility).

If our regulators won’t take action to protect the values of the legal profession, then the courts may offer some hope for the future.

Jonathan Goldsmith is a consultant and former secretary-general at the Council of Bars and Law Societies of Europe, which represents around a million European lawyers through its member bars and law societies. He blogs weekly for the Gazette on European affairs