On Tuesday, three California taxi drivers sued Uber Technologies Inc. and Lyft Inc., accusing the companies of antitrust violations including price fixing in a lawsuit seeking class action status.
The lawsuit, filed in San Francisco Superior Court, alleges that Uber UBER,
and Lyft LYFT,
set the prices for trips using algorithms that are not disclosed to drivers or customers. While companies view drivers as independent contractors, drivers have no control over ride prices, hurting competition and harming both drivers and consumers, all three plaintiffs say in lawsuit seeks class action status for Uber and Lyft drivers in the state that opted out of arbitration.
“Defendants maintain their duopoly and exploit their drivers through persistent violations of California antitrust and consumer protection laws,” the lawsuit states.
Uber and Lyft “are completely opaque in the prices they set for passengers and drivers,” said Len Sherman, an adjunct professor at Columbia Business School who writes about Uber and other gig companies. “They have a duopoly.”
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There are approximately 200,000 VTC drivers in California. The lawsuit seeks to end plaintiffs’ allegation of price-fixing and withholding of drivers’ price and destination data, as well as damages for “suppressed compensation,” among other remedies.
“This complaint misinterprets both the facts and the applicable law and we intend to defend ourselves accordingly,” an Uber spokesperson said Tuesday. Lyft did not return a request for comment.
Rachel Dempsey — an attorney for Towards Justice, a nonprofit that brought the lawsuit on behalf of the driver plaintiffs — said that while state competition laws vary, she could see the lawsuit’s arguments being made in other states. The central argument, she said, is that companies cannot unilaterally decide prices if the drivers are not employees.
“If Uber and Lyft are employers, companies can tell their employees what prices to charge for rides,” she added. “It has to be one or the other, it can’t be either.”
The lawsuit cites Proposition 22, the voter-approved California law that guarantees independent contractor status to Uber and Lyft drivers, but was ruled unconstitutional and is now in limbo. If Proposition 22 is upheld, the lawsuit says nothing “immunizes defendants against California law prohibiting unfair competition and illegal and fraudulent business practices.”
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In an interview with MarketWatch, Dempsey pointed out that prior to the passage of Prop. 22, Uber briefly introduced “fare multipliers” that gave its drivers a choice of how much they could charge for rides, but ended that program once the measure was voted on. approved.
“It is my understanding that [Prop. 22 and its aftermath] is definitely something that helped motivate this lawsuit,” she said. “Drivers were frustrated and upset when they were promised independence. As soon as this law was passed, that independence was not protected.
According to the lawsuit, one of the reasons drivers aren’t truly independent is that even though companies say drivers are free to drive for more than one application, drivers are incentivized to stay with Uber or Lyft for try to win bonuses. One of the plaintiffs, a Southern California driver named Taje Gill, currently chose to drive primarily for Lyft for this reason, according to the lawsuit.
Catherine Fisk, a professor who teaches labor and employment law at UC Berkeley, said the lawsuit “illustrates how companies are getting all the benefits of wage and price controls they would have if drivers were employees without any responsibility”.
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