A group of drivers for Uber (UBER) and Lyft (LYFT) on Tuesday accused the companies of unfairly controlling how much passengers are charged for rides in an antitrust lawsuit in California state court.
The lawsuit seeking class action status in San Francisco Superior Court alleged violations of California antitrust law, and state law prohibiting unfair business practices.
The drivers claimed that if they were able to offer lower prices to the consumers, it would provide drivers with “the most competitive compensation.”
“By preventing drivers from doing so, Uber and Lyft harm competition in both the labor market as well as the consumer market,” the complaint alleged. “Customers pay more, and drivers earn less.”
An Uber spokesperson said in a statement that the “complaint misconstrues both the facts and the applicable law and we intend to defend ourselves accordingly.”
A representative from Lyft did not immediately respond to messages seeking comment.
Uber and Lyft label their drivers independent contractors and not employees, the centerpiece of many legal challenges in recent years in state and federal courts across the country.
The plaintiff drivers in the new lawsuit contend Uber and Lyft “deprive those drivers of economic independence” by fixing the prices that drivers must charge.
The drivers are represented by Denver-based Towards Justice and the Edelson plaintiffs’ firm.
“For a decade, Uber and Lyft have been trying to have it both ways,” Rachel Dempsey of Towards Justice told Reuters. “They’re trying to avoid the responsibilities of an employer, while also maintaining a level of control over the transaction that is inconsistent with the idea that these drivers are independent contractors.”
The drivers named as plaintiffs in the lawsuit previously opted out of arbitration agreements with Uber and Lyft, allowing them to contest employment-related matters in court.
A group of drivers for Uber Technologies Inc and Lyft Inc on Tuesday accused the companies of unfairly controlling how much passengers are charged for rides in an antitrust lawsuit in California state court.
The drivers claimed that if they were able to offer lower prices to the consumers, it would provide drivers with “the most competitive compensation.”
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“By preventing drivers from doing so, Uber and Lyft harm competition in both the labor market as well as the consumer market,” the complaint alleged. “Customers pay more, and drivers earn less.”
An Uber spokesperson said in a statement that the “complaint misconstrues both the facts and the applicable law and we intend to defend ourselves accordingly.”
A representative from Lyft did not immediately respond to messages seeking comment.
Uber and Lyft label their drivers independent contractors and not employees, the centerpiece of many legal challenges in recent years in state and federal courts across the country.
The plaintiff drivers in the new lawsuit contend Uber and Lyft “deprive those drivers of economic independence” by fixing the prices that drivers must charge.
The drivers are represented by Denver-based Towards Justice and the Edelson plaintiffs’ firm.
“For a decade, Uber and Lyft have been trying to have it both ways,” Rachel Dempsey of Towards Justice told Reuters. “They’re trying to avoid the responsibilities of an employer, while also maintaining a level of control over the transaction that is inconsistent with the idea that these drivers are independent contractors.”
The drivers named as plaintiffs in the lawsuit previously opted out of arbitration agreements with Uber and Lyft, allowing them to contest employment-related matters in court.
(Reporting by Mike Scarcella in Washington; Editing by Matthew Lewis)
Three ride-hailing drivers in California sued Uber Technologies Inc. and Lyft Inc. on Tuesday, accusing the companies of antitrust violations that include price-fixing in a lawsuit seeking class-action status.
The lawsuit, filed in San Francisco Superior Court, alleges that Uber UBER, -0.14% and Lyft LYFT, +3.48% fix ride prices using algorithms that are disclosed to neither the drivers nor customers. While the companies consider the drivers independent contractors, the drivers have no control over ride prices, which is harmful for competition and hurts both drivers and consumers, the three plaintiffs say in a lawsuit that seeks class-action status for the Uber and Lyft drivers in the state who have 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.
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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 do have a duopoly.”
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There are an estimated 200,000 ride-hailing drivers in California. The lawsuit seeks an end to the plaintiffs’ allegation of price-fixing and withholding of fare and destination data from drivers, as well as damages for “suppressed compensation,” among other remedies.
“This complaint misconstrues both the facts and the applicable law and we intend to defend ourselves accordingly,” an Uber spokesman said Tuesday. Lyft did not return a request for comment.
Rachel Dempsey — an attorney for Towards Justice, a nonprofit that brought the suit on behalf of the driver plaintiffs — said that although states’ competition laws vary, she could see the lawsuit’s arguments being made in other states. The core argument, she said, is that the companies cannot unilaterally decide prices if the drivers are not employees.
“If Uber and Lyft are employers, the 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 neither.”
The lawsuit mentions Proposition 22, the voter-approved California law that ensures independent-contractor status for Uber and Lyft drivers but which was ruled unconstitutional and is now in limbo. If Prop. 22 is upheld, the lawsuit says nothing in it “immunizes defendants from California law prohibiting unfair competition and unlawful 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 some choice over how much they could charge for rides, but ended that program once the ballot measure was approved.