Uber Goes on Offense Against St. Louis

     ST. LOUIS (CN) – Uber reported a profitable first weekend in St. Louis, after it began operating Friday in defiance of state regulations.
     About 5,000 uberX trips were logged over the weekend, more than 40 percent of them during the peak bar times of 10 p.m. to 3 a.m., the company told the St. Louis Post-Dispatch.
     The St. Louis Metropolitan Taxi Commission voted early Friday to allow Uber to operate, but required that its drivers be fingerprinted as part of the background check.
     Uber claims the requirement is too burdensome, though it complies with state law. It filed a federal antitrust lawsuit against the St. Louis Metropolitan Taxi Commission on Friday, claiming it conspires with the cabdrivers it regulates.
     U.S. District Judge Henry Autrey denied Uber’s request for a temporary restraining order, also on Friday.
     Uber started operating anyway, without any law enforcement interference, though Autrey denied its request for TRO allowing it to operate without fingerprinting its drivers.
     It’s a bold move for Uber, which has been a defendant far more often than a plaintiff since it was founded in 2010.
     It is defending itself in dozens of lawsuits across the country, including one in Washington, D.C., where customers claim an Uber driver attacked them with a knife; labor class actions from drivers who claim the company misclassifies them as independent contractors and swipes their tips; and a class action in Seattle from drivers who want to organize a union.
     Numerous cities in Europe have barred Uber because it attempts to operate with regulation. Cities, consumers and competitors also have filed such lawsuits in the United States. At least 46 U.S. lawsuits have been filed against Uber since 2014, according to the Courthouse News database.
     In its own lawsuit, Uber and four of its drivers claim the Taxi Commission, largely made up of cabbies, abused its authority 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 greatest perceived threat: the entry of ridesharing request services like Uber in St. Louis, 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,” Uber said in its complaint.
     It claims it filed the lawsuit as a last resort, that all it wants is “an equal chance to compete with traditional taxicab and livery companies.”
     “As Uber attempted to comply with the MTC’s ever-higher hurdles to uberX’s launch, however, the MTC simply constructed newer, more onerous barriers to entry, finally settling on a series of requirements that the MTC knew were fundamentally at odds with Uber’s innovative new business model,” the complaint states.
     “The MTC’s pretext for these barriers to entry was ‘public safety’ – but the true purpose of the MTC’s conduct was to bar entry by Uber (and other TNCs) into the marketplace and halt Uber’s competitive model while protecting the entrenched taxi industry, which, along with the Commissioner Defendants and their Defendant Taxi/Limo Companies, have united against Uber.”
     TNC, undefined in the lawsuit, presumably stands for transportation network company, or Internet ride-hailing services.
     Uber claims that St. Louis was the largest metropolitan market without its service, mainly due to the Taxi Commission’s stranglehold on competition.
     “The MTC functions as a cartel in part by statute, and does so without any meaningful supervision by the state,” the complaint states.
     Uber claims that state law requires the Taxi Commission to have four voting members and active participants in the market that it regulates. It claims that the Taxi Commission has “virtually unchecked power” and that has “constructed impossibly high and ever-shifting barriers to entry to foreclose competition in St. Louis” for transportation services.
     It claims the Taxi Commission prevents hundreds of thousands of residents from equal access to transportation and prevents others from earning a living as drivers.
     It claims the Taxi Commission participated in anti-competitive behavior by requiring drivers to have a permit issued by the MTC, “severely” limiting the number of new permits, and making the new permits available through a lottery system that limits new permits to three per company.
     But Uber claims that a Taxi Commission member was able to obtain nine new permits by establishing three new entities and leasing some of the permits to owners who did not win the lottery, and charging them as much as seven times the true cost of the permit.
     “The business model of Uber and other similar TNCs requires that hundreds or thousands of drivers in a market be available to accept transportation requests through uberX,” the complaint states. “Unlike traditional taxicabs, which during times of low demand often wait in line at hotels or drive around city streets with no particular direction seeking street hails or waiting for a dispatcher’s call, drivers who receive requests through uberX respond in real time to rider demand and often go online with uberX only during rush hour or other times demand is high.”
     Uber claims the Taxi Commission is aware of Uber works and has passed numerous restrictions to impair it.
     It claims the Taxi Commission violated the Sherman Act by requiring permits and limiting them through a lottery system; by requiring Uber to adhere to traditional taxicab regulations that do not conform to Uber’s business model; by conspiring to restrict Uber’s entry into transportation markets outside of St. Louis; and by failing to have required monthly meetings.
     “Uber has functioned successfully without the MTC’s rules in hundreds of markets in the United States and internationally,” the complaint states. “Defendants’ intent in enacting the rules is to enable the MTC to fix vehicle-for-hire prices at levels above what could be sustained in a competitive market which includes Uber.”
     Uber claims the Taxi Commission is not immune from antitrust liability because of its status as a government entity. It says the Taxi Commission is controlled by active market participants and Missouri has not articulated a clear policy to allow anticompetitive activity, nor are state officials providing active supervision over the commission.
     It asked the court to enjoin the Taxi Commission’s anticompetitive conduct, and restructure the commission MTC to prevent active market participants from controlling it.
     Judge Autrey did not address that request when he denied Uber’s request for a temporary restraining order.
     Uber is represented by James F. Bennett with Dowd Bennett.
     Adam McNutt, president of Laclede Cab Company, told the Post-Dispatch that Uber’s decision to operate without paying permit licensing fees puts cab companies at a competitive disadvantage, but that so far his business has not been hurt.

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