SF Taxi Operator Sues Uber as Low-Price ‘Predator’

Kai Flaffenbach/Reuters
Kai Flaffenbach/Reuters
Newport Beach, CA

Uber picked up its 71st federal lawsuit this week when a venerable San Francisco taxi company filed an anti-trust suit for monopoly, illegal business practices, and predatory pricing.

Prior to the November 2 legal complaint in the U.S. District Court for Northern California, Uber had already faced 70 other U.S. federal lawsuits regarding its “ridesharing” service activities offered in 204 American cities. Most of the pending suits are sponsored by unions and from legacy taxi and limousine companies. Both complain about the convenience, cheaper price and high level of customer satisfaction offered by Uber.

San Francisco’s “Flywheel Taxi” is the successor to the Desoto Cab Company, which was started in 1935 by James F. Waters, who clamed to be the “World’s Largest DeSoto-Plymouth Dealer.” Waters started his San Francisco taxi company as a promotional demonstration to encourage a national sales drive to sell fleets of police and taxi cars.

Taxis fares in San Francisco are “expensive,” according to TripAdvisor.com:

Cab fares start at $3.50; each mile traveled is an additional $2.75 (billed in 1/5th mile increments at $0.55), waiting time is $0.55/minute, and a $2.00 surcharge is applied for trips from San Francisco International Airport. Trips of more than 15 miles from the city limits or from the airport and not in the direction of the city are billed at 150% of the rate indicated on the taxi’s meter.

Despite being a very compact town, Flywheel Taxi charges $20 for a short minivan ride across the city. That compares to a $15-$16 toll for a ride in an UberX hybrid car. As a result, fewer San Francisco residents take taxis.

In an effort to have the courts force Uber to raise prices, Flywheel’s lawsuit complains:

In reality, Uber has done little more than implement a business strategy that openly flouts the law while shifting many of the costs and nearly all of the risks of providing ride-hail services from itself to its drivers and passengers while forcing a race to the bottom through predatory pricing tactics — where, propped up by billions of dollars in venture capital funding, Uber will remain until its illegal strategy has forced all other competitors from the market.

Flywheel alleges that the taxi industry has experienced a 65 percent decline in ridership, and that more than 30 percent of its drivers have left as a result of Uber’s “illegal actions.” Due to Uber’s convenience, cheaper price and high level of customer satisfaction, Flywheel Taxi is seeking greater than $5 million in damages and an order for Uber to cease and desist its unfair and illegal business model.

An Uber spokesman replied to the lawsuit by commenting that Uber competes with many companies and forms of transportation: “Our goal is to provide a credible alternative to the private car. Our technology lets us make our network more efficient over time, and innovations like uberPOOL are further lowering prices, making ridesharing more available to more people.”

With operations in 323 cities in 76 countries outside the U.S., Uber is also the target of dozens of other kinds of lawsuits. Last week, an employment tribunal in the U.K. ruled that British drivers are workers — not self-employed contractors. Uber is battling a number of similar class-action lawsuits in the U.S. and abroad that are trying to have drivers designated as “employees,” so they can be unionized.