Uber Sued in Boston; Case Could Wind up in Federal Court

3/12/13Follow @curtwoodward

[Updated 5:40 pm Eastern with comment]
Uber, the smartphone-based car-for-hire service that has been running into taxi industry opposition around the country, has just landed in court again. And the case is a doozy.

Two of Boston’s largest cab companies are suing San Francisco-based Uber in a local court, arguing that the heavily financed startup is violating several state and federal laws—including trademark laws and the RICO statutes, famously used to prosecute organized crime syndicates. I’ve embedded a copy of the complaint below.

In their lawsuit, the cab companies lay out in blistering terms how Uber is allegedly ignoring a long list of regulations that govern how taxis and other “black car” services must operate in Massachusetts. Those rules include detailed background checks and licenses for drivers and dispatchers, along with things like the ability to accept transportation vouchers for poor people.

Uber declined to comment on the specifics of the lawsuit, saying that it hadn’t reviewed the case (which was just filed Monday afternoon). Michael Pao, the company’s  general manager for Boston, noted that Massachusetts Gov. Deval Patrick had previously cleared the way for Uber’s smartphone technology to operate under state regulators: “Uber is legal in the Commonwealth of Massachusetts, and we proudly give thousands of riders a safe, reliable ride and hundreds of drivers a new source of income for them and their families.”

The new lawsuit from the taxi companies, however, tackles much broader legal complaints than the matter of how fares are calculated via the Uber app. And since the Boston lawsuit includes complaints that Uber is breaking federal laws, the company could wind up in the federal court system again. “That could be the future of this case,” says Sam Perkins, the attorney representing Boston Cab Dispatch Inc. and EJT Management.

Some sort of legal reckoning seems inevitable for Uber. The startup has attracted vocal fans for its super-slick smartphone app system, which brings towncars and taxis to a person wanting a ride with a few text messages and taps on the touchscreen.

The transactions are handled completely online, with Uber charging the customer’s payment card for the journey and tip. I’ve used it, and it’s definitely a step up from traditional cab rides.

But Uber is trying to enter a highly regulated industry, and it appears to be doing so city by city without getting the permission opponents say it’s supposed to have under various state and local laws. Which is why the taxi companies are miffed—to them, it’s kind of like opening a hot new restaurant without shelling out for a health inspection, fire system inspection, and licensed bartenders.

There’s also the issue of competition. Cities or other local bodies often impose a limit on the number of licensed cabbies who may operate in a certain area. Scarcity keeps income relatively stable for those who have licenses, and also makes it hard to break into the business if you’re a new player.

That’s the case in Boston, where there are only 1,825 legally licensed cabbies, according to the lawsuit.

Uber has initially tried to get around those concerns in some cities by signing up “black car” or private-driver services, which are regulated differently than regular cabs in many places, including Boston. But there are problems there, too—as in Boston, many places require that towncar services be booked in advance, rather than on the spot, and require them to charge flat rates instead of fees based on time and distance.

In any case, Uber has since moved into signing up actual taxi drivers too, the Boston lawsuit says, directly competing with cabbies who already are on the clock with one of the legally sanctioned cab companies. The company also has experimented with UberX, which is an attempt to sign up regular people to give rides for hire, as its competitor Lyft does in San Francisco.

Clearly, innovation is overdue in the taxi industry. And there are actually smartphone apps that may not be quite as slick as Uber’s, but have played by the rules. Boston Cab Dispatch offers one, called “Boston Cab,” and the independent app TaxiMagic also works in the region.

But it looks like Uber is not going to be able to jam its way into the local taxi markets without some nasty fights. At least the startup has raised nearly $50 million to help pay for its strategy’s legal costs.

It’s also worth noting that Uber’s tech-heavy, startup-loving user base has been an effective political lobbying base when the company has encountered government resistance. In one case, the city council of Washington, D.C., moved to peg Uber’s rates far above those of other car services, until a social media campaign led by Uber investor Menlo Ventures turned the tide. Here in Massachusetts, state regulators attempted to shut down Uber, an effort erased by Gov. Deval Patrick after organized outcry from Uber supporters.

But the city of Cambridge didn’t go along with that plan, separately suing Uber in local court. Add another lawsuit to Uber’s docket in Massachusetts, and stay tuned.

Uber Complaint 3-10-2013 by

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

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  • Jered Floyd

    Maybe if Boston Cab is so concerned about competition, they could try offering clean, working vehicles with pleasant drivers? After too many bad experiences in Boston cabs, I switched to Uber and will never go back.

  • http://www.facebook.com/marcus.milz.7 Marcus Milz

    I think the taxi Industry in Boston is a monopoly of medallion owners, who sublease their cars to cab drivers (indentured servants) for profit. They are the organized crime family that want to monopolize the the cab business with made up “self regulation” that has been strangely written into our laws… “fake laws”. They are the only private industry, who have somehow deputized the police force (funded by tax payers dollars) to enforce their business practices under the premise of those “fake laws”. Am I the only one who sees through this public scam?? Basically, the taxi union is saying to you (the general public without access to a car) that if you want to make a spontaneous decision to go somewhere, the only people you can call is a “licensed” cab unless you know someone you can call for a ride. What about those who want to ride in a bit more style than a crappy cab with a cranky, unfriendly, non-english speaking driver… smh. This is a consumer demand! Instead of fighting innovation the state like the Governor should try to embrace it. There is room for Uber in this state and if the taxi industry can’t evolve it must be allowed to go extinct. Monopolies are bad and competition is healthy and serves a public need for consumers, who should be allowed to have choices for the services they use. The state should not be in the business of harboring and protecting a monopoly industry in a free market society, if anything the medallion system should be outlawed!!! If you have enough influence you can convince an unscrupulous government official to create legislation that makes it illegal to do whatever you think is wrong with society. I question the laws protecting the taxi industry, such as with picking up on short notice, Those laws don’t seem to have any “public good” purpose and only seems to be there to protect exclusive business for cab drivers. The funny thing is that all that screening of taxi drivers is producing more bad experiences for passengers when compared to the experiences of Uber drivers. Apparently Uber is doing a way better job of recruiting courteous, respectable drivers!

    • Dissenting View

      You seem to have a limited understanding of how our economy works or the myriad regulations that exist in order to operate a business legally. Restaurants, liquor stores, schools, day cares, health clinics, opticians, tattoo shops, hair salons, barbershops, attorneys, banks, insurers, general contractors, realtors, amusement parks, booking agents, and plumbers are among the many, many businesses that are regulated and licensed. Regardless of the general public’s desire to get “premium” service from unlicensed and unregulated providers, it’s not in the public’s best interest to turn a blind eye.

  • http://www.aussieremovals.co.uk/ Millie Donnel

    All this is happening barbecue of competition and I think not only Boston Cab, but all other moving services providers like Man and Van should upgrade their services and vehicles

  • oli

    The Boston cab dispatch is god awful. I’ve called multiple times, and often the cab never shows up. You call back and they say 5 mins every time. I think its time to do away with this flawed company. Also, all the drivers are rude and are terrible drivers. I came from the airport last night and the driver took storrow when everybody knows its backed up because of maintenance this week. Such a dick, just to jack up the price.

  • tim

    if you want to be the only cab company in haverhill ma all you have to do is be friends with the chief of police and play golf with him and he’ll put your competition out of business or at least harass them

  • Uber Driver NOT PAID

    Am an Uber Driver, I HAVE NOT BEEN PAID MY OVERDUE FEES< as contracted for past three weeks, and I keep being bounced back & forth without any resolution, UBER Financial is a joke, totally un professional Uber do not care for their drivers, not good!
    Uber DO NOT have Customer care or any phone # contact, the only form of communicat is only partners@uber.com , and they do not respond.

  • James Henry

    Get $10 of UBER on your next ride.. use PROMO CODE ubernew10off

  • Bruce

    Talk about arse-holes on wheels. A case of mistaken identity has one of these twerps pick up 4 people including a recovering cancer patient, at POST 390 in Boston MA and takes us half way to our destination and then the jerk gets a call and realizes he has picked up the wrong party. So guess what ! He puts us out of the car in the middle of nowhere in Boston and points to where out hotel might be. No consideration of our ability to get to our destination nor any option to take us back to where he picked us up. Just dumped on the side of the road. What a jackass.
    Don’t use some crap service like this. Taxis must operate within a legal framework. These are hackers of the first order.

    • BruthaManFrmDa5thFlo

      Really. . . Did you IDENTIFY yourself to the driver? Don’t put all the blame on the driver.

  • Joshua Jachimczyk

    Use promo code: ridebos135 to receive your first uber ride for free up to 15$. Code works worldwide and does not expire.

  • Base

    Hello everyone. I might be late to this conversation. Anyhow, Uber is a GREAT app. a two way interference app. The driver communicates with the client, you can see your vehicle as it approaches. You can touch base with the other person without a third party (dispatcher). I don’t think I’ve seen such similar app. Most apps. are a one way. You open /order/ close apps. But that is it. Uber is just an awesome app. However, based on many reasons I’ve came to find out that the people running Uber are crooks. For instance the surcharge.
    Lets just say you have a car. Everyday you drive your car to your local gas station. You pump $10 worth of gas into your car and you go about your day. Fair enough? I would think so. Let’s just say there was a storm coming your way and you wanted to escape before it becomes a natural disaster. You head over to your every day local gas station to pump gas into your car but suddenly right before you start pumping gas into your car you find out the prices have changed into a multiplied X amount. Hahaha but you don’t have a choice. It’s your local gas station and above all you are in need to get out before it becomes a natural disaster. So is it Fair? Of course not. This was the case of Hurricane Katrina in New Orleans. They called it gas gouging. I remember President Obama saying it was illegal. So why is Uber doing it. I would understand if Uber sent me a message in advance letting me know that on a certain day at a certain time my fare would be double/triple so I can at least plan ahead but they don’t. They wait until the time you want to use it. IT’S JUST NOT FAIR AND IT NEEDS TO STOP. Another reason I think people running Uber are crooks is because it’s a software company. They can show you whatever they want, without you being aware of what is really going on. Here in Boston we have Uberx Uber blackcar Uber SUV as well as Uber Taxi. There are times when I see Uber Taxi and Uberx parked empty on the street, when wanting to request an Uber service on my phone all I see are SUV’s and black cars on my screen and the reason being is that Uber makes more money when you use SUV’S and black cars service.

    It’s 2014 and most cab companies have caught up to the app. system trend, so I decided to stop using Uber. After all, cab prices are regulated by the city of Boston for the people of Boston.

    • Craig

      This whole response is ridiculous… If you don’t want to pay for the surge pricing. Call for a taxi instead. Just be aware…. Most of the time, even the surge pricing is cheaper than the taxi ride.

      • DB Cooper

        Just remember that if you get into an accident in a UberX vehicle you will NOT be covered. Uber vehicles have personal insurance which is voided once they use the vehicle for commercial purposes.

        Cheaper – yes Injured – screwed!

    • BruthaManFrmDa5thFlo

      Actually you can see when the surge pricing is on. . . It’s then your CHOICE to request a ride, no one is forced to pay surge pricing.