A Portland attorney has filed a federal lawsuit challenging the legality of Uber’s business model.
Andrew Schmidt, who has his law practice on India Street in Portland, on Dec. 16 filed a federal lawsuit against Uber co-founder and CEO Travis Kalanick claiming that Uber’s business plan violates federal and state antitrust laws and that Kalanick is the “mastermind” of a price-fixing scheme that hurts consumers.
Uber is the popular mobile app that connects people looking for a ride with drivers for hire. It was founded in 2009 and has raised $8.6 billion over 13 investment rounds, according to CrunchBase.
“Uber has a simple but illegal business plan: to fix prices among competitors and take a cut of the profits. Kalanick is the proud architect of that business plan and, as CEO, its primary facilitator,” the complaint reads.
The “competitors” that Uber is fixing prices among are the more than 150,000 Uber drivers in the country.
At the heart of the lawsuit is the fact Uber does not employ its drivers, but still controls the pricing scheme that all those drivers are forced to use, Schmidt said in a statement provided to Maine Startups Insider.
“Uber’s technology will improve the world by seamlessly connecting drivers with passengers. But Travis Kalanick cannot use his app as a mechanism to fix prices for competitors who by law must be free to compete on price,” Schmidt said. “He must choose either to allow drivers to become employees of a single enterprise that would compete against other similar enterprises or he must allow drivers to compete with each other on price.”
The plaintiff in the case is Spencer Meyer, a Connecticut resident who “has used Uber car services on multiple occasions,” according to the lawsuit. It is riders like Meyer that are hurt by what Schmidt believes is the anticompetitive nature of Uber’s business model.
“Absent Kalanick’s anticompetitive actions, riders would have been able to obtain rates resulting from fare competition among drivers,” the complaint reads.
Meyer is really just a stand-in for all the Uber riders Schmidt hopes to have join the case and had it made into a class-action lawsuit.
I reached out to Uber Thursday night for a comment, and will update the story when I receive a response.
The case will go before a jury and should be ready for trial by July 6, according to a case management plan adopted by the court and signed off on by U.S. Judge Jed Rakoff.
Schmidt is looking for a verdict that would force the company to disgorge “all unlawful or illegal profits received by Defendant as a result of the anticompetitive conduct.” The law firm Harter, Secrest & Emery recently joined Schmidt as co-counsel.