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Uber-Lyft Duopoly Suit Sent Back to State Court at Driver Plaintiffs’ Request

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A four-page opinion issued by the Northern District of California on Monday said that the court does not have federal question jurisdiction over the antitrust dispute and therefore that the drivers’ case against Uber and Lyft must be returned to state court.

Judge Jeffrey S. White recounted that three California rideshare drivers sued Uber and Lyft, two companies based in California, to obtain redress for violations of California’s antitrust and other business practice statutes. They alleged that the companies have formed a “duopoly” that effectively displaced the entire traditional taxi industry in the state.

Further, the plaintiffs said that the companies treat their drivers unfairly through a number of suppressive tactics, including fixed ride prices and withholding key information, such as where the drivers are agreeing to go when they accept a ride.

The case was filed in San Francisco Superior Court in the late summer. In response, the defendants sought removal to federal court on the basis of federal question jurisdiction.

Uber and Lyft argued that the case contains hidden federal claims, thereby transforming it into one arising out of federal law. Specifically, they contended that “the complaint addresses alleged unilateral conduct in abuse of market power and the California Cartwright Act does not apply to unilateral conduct.”

In this week’s opinion, Judge White disagreed, finding that the plaintiffs’ state law claims “do not necessarily turn on any necessary question of federal law.”  The court said that the requirements of federal question jurisdiction were not met as the mere presence of a federal issue does not automatically confer that form of jurisdiction.

Judge White further opined that the plaintiffs’ antitrust claims were not premised upon unilateral conduct. Instead, the court said that their arguments were based on alleged vertical agreements to fix prices and restrain trade through anticompetitive practices such as “minimum acceptance rates and non-linear pricing structures designed to limit the drivers’ ability to switch between rideshare platforms, consequently suppressing competition for the rideshare services.”

The plaintiffs and putative class are represented by Towards Justice and Edelson PC. Uber is represented by Paul Weiss LLP and Lyft by Munger, Tolles & Olson LLP.

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