Uber Battle Spreads to Philadelphia

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Summary: Dozens of Philadelphia cab companies have filed suit against Uber, alleging unfair competition and false advertising.

The legal trouble for ride-sharing service Uber continues. According to the Pittsburgh Post-Gazette, 45 Philadelphia taxi companies have filed a federal lawsuit against the company, claiming that Uber is conducting unfair competition against medallion owners who may only operate under state law.

  

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Checker Cab Philadelphia is one of the leading companies in the suit. It has accused Uber of racketeering. The suit reads, “Not since the days of bootlegging has there been a criminal enterprise so brazen and open as to attract hundreds of millions of dollars in investment from investment bankers and to operate in blatant violation of federal and state law as Uber.”

Checker Cab Philadelphia and the other plaintiffs filed suit against Uber; Travis Kalanick, Uber’s chief executive officer; Google Ventures, which invested $258 million in the company; and Delaware-registered entities that are connected to Uber.

In addition, 18 individuals are named as defendants in the suit, including drivers for Uber that the plaintiffs allege are operating illegally. The Public Utility Commission in Pennsylvania recently gave UberX permission to operate in the state, but prohibited the service in Philadelphia, where the Philadelphia Parking Authority regulates taxi services.

The plaintiffs claim that UberX drivers are operating illegally under the federal Racketeer Influenced and Corrupt Organizations Act (RICO), which decreases the value of taxi medallions.

Currently, a taxi medallion costs roughly $520,000 in Philadelphia. According to the complaint, the total value of medallions that permit cabs to operate in Philadelphia is estimated to be around $880 million. The suit claims that, as a result of the “unlawful competition of these defendants, the medallion taxicab plaintiffs suffered a significant reduction in the value of their medallions.”

Earlier this year, Uber was sued in Boston.

Michael Henry of Salaman Grayson & Henry P.C. represents the plaintiffs. His law firm specializes in commercial litigation matters. Checker Cab has also accused Uber of false advertising. On October 24, email and website messages from Uber claimed, “In October, the largest taxi insurer in Pennsylvania went bankrupt….there’s no guarantee that your taxi ride will be insured.”

First Keystone Risk Retention insured many of the city’s taxi drivers. The company is now obsolete, and its policies were set to expire on November 30. However, the plaintiffs’ attorneys argued that all taxicab medallion plaintiffs were able to obtain replacement coverage by October 24.

Uber’s trouble is spreading across the globe. South Korea recently charged Palanick, Uber, and the head of South Korea’s domestic business partner, MK Korea Co., with violating transportation laws.

Read about the South Korean suit here. 

In addition, as Uber tries to spread throughout Asia, it is met with increasing protests from cab drivers and taxi operators. Uber and other similar companies have faced parallel challenges in various cities in the United States.

Seoul’s Metropolitan Government said earlier this year that it may ban Uber’s services and similar applications, alleging that they are not safe and compete with licensed taxi services. Next week, the government will provide rewards of up to $905 to citizens who provide information about Uber services.

An official with the Seoul Central District Prosecutors’ Office said that Uber’s South Korea Unit and MK Korea were illegally operating rental cars as taxis.

For now, Uber is allowed to operate in France.

Uber has stated that it will fully cooperate with the investigation and remains positive that the court will hand down a fair and sensible judgment. Its South Korean public relations representative said, “We firmly believe that our service, which connects drivers and riders via an application, is not only legal in Korea, but that it is being welcomed and supported by consumers.”

Uber is operating in Pittsburg under temporary permission from the Pennsylvania Public Utility Commission.

Photo credit: newsworks.org