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Uber CEO Faces Class-Action Lawsuit Over Price Fixing (engadget.com) 95

An anonymous reader quotes a report from Engadget: Uber CEO Travis Kalanick will go to court over price fixing claims after he initially tried to get the lawsuit dismissed. U.S. district court judge in New York ruled Kalanick has to face the class of passengers alleging that he conspired with drivers to set fares using an algorithm, including hiking rates during peak hours with so-called surge pricing. According to Reuters, district court judge Jed Rakoff ruled the plaintiffs "plausibly alleged a conspiracy" to fix pricing and that the class action could also pursue claims the set rates led to the demise [of] other services, like Sidecar.
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Uber CEO Faces Class-Action Lawsuit Over Price Fixing

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  • by Type44Q ( 1233630 ) on Saturday April 02, 2016 @09:08AM (#51827407)
    While Uber has definitely engaged in some questionable behavior, this isn't it... and IMHO isn't likely to go very far at all, even in New York.
    • by Anonymous Coward

      What I don't get about all of this is why taxi companies can't just start offering good service. You know, like they fucking should've been doing from the very start!

      It doesn't matter which city you're in. Taking a taxi is a goddamn awful experience. You'll likely end up with a third-world driver who doesn't understand the city's native language(s), nor English (the international language of everyone in the travel industry). These drivers will often drive like they're in a third-world country, putting you a

      • What I don't get about all of this is why taxi companies can't just start offering good service. You know, like they fucking should've been doing from the very start!

        Because meaningful background checks, adequate maintenance, and paying people what they're worth costs more than padding some political pockets.

        • by Anonymous Coward

          Because meaningful background checks, adequate maintenance, and paying people what they're worth costs more than padding some political pockets.

          Yep.

          Whenever I hear business say that they are "following the law" it's a wonderful copout because they are the ones who use their clout to make the laws - the rules. They make the rules so they win and everyone else loses; many times under the guise of "protecting the public".

          And capitalism is supposed to work with some government rules. Without government rules, we'd have Somalia or Mexico - that's what you get when you have a weak federal government. Without some way to enforce contracts, force people

          • Whenever I hear business say that they are "following the law" it's a wonderful copout because they are the ones who use their clout to make the laws - the rules.

            I haven't heard of any Taxi companies setting the laws, however I have heard of Taxi driver unions doing so.

        • Very well said.
      • by Anonymous Coward

        Maybe what you consider a fair price is the price at which you get a "third-world driver who doesn't understand the city's native language(s), nor English".

        • Diff AC here. From the city I live in, I can take a bus or train to other cities hundreds of miles away for less than the price of a short in-city cab ride. These buses and trains aren't particularly full, but they are well maintained. Something is strange when the cost of a 5 mile trip in a normal car driven by somebody with little more than a driver's license costs more than trips 50 times farther in much larger and more specialized vehicles requiring specially trained operators.

      • by gnupun ( 752725 )

        Taxi companies have to pay to purchase, service and garage their taxis whereas Uber pays exactly $0 for the above expensive costs, instead it leeches them from the driver. Given the above, since the driver is doing the bulk of the investing of resources, he should get more than the 70%.

        We can hope there are dozens of internet-taxi booking services like Uber, making their service a commodity. Then we would have to pay only a token service charge around 5% of the fare (instead of 20%-30%) to the internet-taxi

        • Re: (Score:3, Insightful)

          by ooloorie ( 4394035 )

          Taxi companies have to pay to purchase, service and garage their taxis whereas Uber pays exactly $0 for the above expensive costs, instead it leeches them from the driver. Given the above, since the driver is doing the bulk of the investing of resources, he should get more than the 70%.

          As a driver, you have two choices: you work for a taxi company or you work for Uber/Lyft/... Working for a taxi company, you get about $12/hour, at inflexible working hours and little personal freedom. The benefits of the tax

          • Re: (Score:2, Troll)

            by gnupun ( 752725 )

            There won't be if idiots like you keep supporting crony capitalism and keep creating legal hurdles for companies to jump through.

            Speaking of hurdles, isn't this story about Uber setting up financial hurdles to prevent other internet taxi companies from entering the market and bankrupting the existing ones? Hypocritical much, mister crony? It's only bad if others do it, not your favorite company.

          • And what average wage do people make with Uber? I've heard in other threads if you want to make any money at all you have to go out when rates are high, thus losing flexibility on working hours and personal freedom.
            • People are debating that, but it appears that generally, Uber drivers generally make about the same or a bit more than taxi drivers after expenses. You can Google it yourself.

              • According to what I googled, they make around $36 an hour.. which isn't very much considering it has to cover the cost of the vehicle, maintenance, insurance, et al. If a taxi driver makes $12 an hour, at least that is in the clear.
                • The average cost per mile for US cars is about $0.60/mile. So, an hour or driving at around 20 mph (NYC, SF average speeds) amounts to about $12 in "cost of vehicle, maintenance, insurance, etc.", leaving the Uber driver with about $24/h. But, actually, Uber drivers can substantially lower their average costs per mile, so it's likely even higher.

                  • Perhaps $0.60/mile for maintenance, but you also have to take into account that an Uber driver will be driving that car into the ground a few years before they would if it were a personal car and they're not going to get anything for it at the end. I highly doubt that figure takes into account the actual value of replacing the vehicle.
                    • That includes everything [aaa.com].

                      Why do people like you insist on substituting their own prejudices and superstitions for facts?

                    • These figures are for an average passenger car, not one that is being driven 8 hours a day. Ask a taxi driver if their cars 'depreciate' $3,654 a year and they're likely to laugh in your face!
                    • These figures are for an average passenger car, not one that is being driven 8 hours a day. Ask a taxi driver if their cars 'depreciate' $3,654 a year and they're likely to laugh in your face!

                      Your responses are as predictable as they are stupid. I suggest you figure out for yourself why the depreciation works out better for Uber drivers than for "the average passenger car".

                      I also find it fascinating that people like you try to argue that something results in substandard wages when Uber has 160000 drivers in

              • Also I could find no details on how flexible the hours were if you wanted to make that $36 an hour. I've heard of Uber drivers going out in low times and making $2 an hour. Apparently Uber has a policy against drivers talking about their actual earnings after costs.
        • Given the above, since the driver is doing the bulk of the investing of resources, he should get more than the 70%.

          As he does; with UberX/XL, he gets 80%; with UberBlack 75% and UberSUV 72%.

          • by gnupun ( 752725 )

            But can you explain why the consumer should pay more than 5% of the fare for the simple service of: "I'm at location X, find a nearby taxi willing to go to location Y?" 20% booking commission is outrageous.

            • But can you explain why the consumer should pay more than 5% of the fare for the simple service of: "I'm at location X, find a nearby taxi willing to go to location Y?" 20% booking commission is outrageous.

              Can you name any service that charges less than 10%? Amazon, ebay, itunes, youtube, etc.. all charge a fairly hefty fee for bringing the customer to seller. Craigslist is the exception but they even charge significant prices in certain markets and they only have very basic search functions and have no way to bill or rate the other side. In theory you could hitch a ride on craigslist but not quickly. The best we can hope for is that competition continues to drive the price down but a company that has mor

            • But can you explain why the consumer should pay more than 5%

              I don't need to. Either the consumer is willing to pay more than a given amount or they're not (as the case may be); regardless, that [respective] choice quite effectively communicates everything they need it to (except, perhaps, to fools and shills)

        • Taxi companies have to pay to purchase, service and garage their taxis

          Actually, most taxi companies do none of these things. The taxis are owned by the drivers, and the driver pays a fee to subscribe to a dispatch service provided by the taxi company. In some cases the taxi company will also rent out medallions, but in many cases the driver owns the medallion.

          • by gnupun ( 752725 )

            Actually, most taxi companies do none of these things. The taxis are owned by the drivers...

            You are right, a foreigner who can't speak English, and has no money has the capability to buy a used car, repaint it in the taxi colors, obtain a medallion and operate it using taxi company only for booking. Yeah, right.

            • You are right, a foreigner who can't speak English, and has no money has the capability to buy a used car, repaint it in the taxi colors, obtain a medallion and operate it using taxi company only for booking.

              Most immigrant drivers pool their family money to buy the car, and then drive it in shifts with other family members. If a taxi is operating in three 8 hour shifts, seven days a week, it will pay for itself very quickly. Renting the medallion is a way bigger expense than paying for the car.

              • by gnupun ( 752725 )

                That is a rarity... most taxis are rented.

                When you work for a taxi company who charges you a percentage of your fares for the right to drive the cab, that rate is typically one-third of your overall gross fare income, according to "Forbes." If you bring in $200 in fares during your shift, one-third is about $66. That means you have $134 left, part of which you use to pay for your gas, if required by your company

                http://work.chron.com/much-far... [chron.com]

      • Why the fuck can't taxies just offer good service?

        Until Uber arrived on the scene, they clearly didn't feel they needed to.

        • In Ottawa at least Uber came and they still haven't felt the need to offer good service. I should note that I have come across the rare good taxi driver so they do exist in Ottawa but the majority of them are more interested in their phones, for personal use, than dealing with their clients.

    • by Anonymous Coward

      How is this not price fixing? Do Uber drivers have the capability to set their own rates -- or are they all colluding and charging the same rate?

      • by TheRaven64 ( 641858 ) on Saturday April 02, 2016 @10:02AM (#51827545) Journal

        Presumably they are free to set their own prices if working independently, but then they wouldn't be covered by Uber's insurance or booked via their app. I think the problem is likely to boil down to Uber's desire to have the drivers treated as independent contractors. 'CEO conspires with employees to set the price for services' isn't something that would make the news, it's what companies do. But if Uber is trying to pitch itself (to avoid being regulated as a taxi company) as a simple matchmaking service that pairs customers with independent drivers then also setting prices makes it look a lot more like a company that's offering a taxi service.

      • How is this not price fixing? Do Uber drivers have the capability to set their own rates -- or are they all colluding and charging the same rate?

        Do taxi drivers have the capability to set their own rates, or are all the ones working for the same company colluding and charging the same rate?

        I can understand the uproar from entrenched industry over an upstart company that's cutting into their profits, but let's at least stick to debate points where they differ.

        • Re: (Score:3, Insightful)

          by ooloorie ( 4394035 )

          Do taxi drivers have the capability to set their own rates, or are all the ones working for the same company colluding and charging the same rate?

          There, the price fixing happens via the government. Getting screwed and overcharged is OK if it's the government screwing you and the inflated prices and bad service happen as the result of lobbying and crony capitalism. Progressives, in fact, welcome that.

          • What a lot of people don't get is 'the law' is a culmination of the decisions of an entire population. If 'the law' says taxis should cost x, then in one way or another all the citizens that are governed over had had a hand in making that decision. If you don't like it, you must have voted for the wrong person. Now with that said, I can understand how people are confused about this in this day and age. Also, I think this is the crux of the whole problem.... Governments have long stopped representing us
        • by ShanghaiBill ( 739463 ) on Saturday April 02, 2016 @10:49AM (#51827693)

          Do taxi drivers have the capability to set their own rates, or are all the ones working for the same company colluding and charging the same rate?

          Neither. The prices are fixed by law. Price fixing is not illegal if the government does it.

          • Do taxi drivers have the capability to set their own rates, or are all the ones working for the same company colluding and charging the same rate?

            Neither. The prices are fixed by law. Price fixing is not illegal if the government does it.

            Ah! So it's like the lottery and killing people.

      • How is this not price fixing?

        In the same way that kissing your sleeping boyfriend in the morning [thecollegefix.com] might meet some legal definition of "non-consensual sex" but probably shouldn't be counted as such in a court of law. Price fixing laws, whether they technically apply or not, shouldn't apply.

    • by whoever57 ( 658626 ) on Saturday April 02, 2016 @11:41AM (#51827923) Journal

      Perhaps the real purpose of this lawsuit is to put Uber into the position of recognizing that its drivers are not "independent contractors".

      Uber is probably going to attempt some kind of "Schrodinger's driver", where the drivers are simultaneously both contractors and employees.

      • Perhaps the real purpose of this lawsuit is to put Uber into the position of recognizing that its drivers are not "independent contractors".

        Hardly. You can most definitely be an independent contractor and still need to obey the rules of the contract set out. I believe these include discussions on prices pretty much 100% of the time.

        • You can most definitely be an independent contractor and still need to obey the rules of the contract set out. I believe these include discussions on prices pretty much 100% of the time.

          So what you are saying is that two independent business entities have agreed on the price to be charged to a third party? That's pretty much the textbook definition of price fixing.

          It would not be price fixing if the drivers were employees.

          • So what you are saying is that two independent business entities have agreed on the price to be charged to a third party?

            No what I'm saying is two independent business entities *under contract* have agreed on the price to be charged *as per the contract* to a third party.

            That's the textbook definition of drawing up a contract.

            • No what I'm saying is two independent business entities *under contract* have agreed on the price to be charged *as per the contract* to a third party.

              So you agree that Uber (and its drivers) are engaged in (possibly illegal) price fixing?

              • No I agree that Uber and it's drivers are engaged in a contract with a fixed price.

                A distinct and perfectly normal situation from a legal standpoint.

                • A distinct and perfectly normal situation from a legal standpoint.

                  It would be if the fixed price was what one party pays another. When the agreement is on how much a third party is to be charged, that's called price fixing.

                  • Not at all. It's a standard part in sub-contraction clauses. Downstream costs (i.e. the price contractors are allowed to charge down the chain) is a normal part construction, manufacturing and likely many industries I don't work in.

                    It's only price fixing when multiple parent companies who should be in direct competition with each other provide services for a set price agreed upon. I'm not calling Jim Bob and his Mercedes. I'm calling an Uber. The Uber is and Uber regardless of who the contract driver is. I

                    • Google "vertical price fixing". Idiot.
                    • Google "vertical price fixing". Idiot.

                      Well fuck me you just don't understand the difference between dealing with one company and dealing with multiple do you.

                      Up next, whoever57 (oh I just realised your nickname, it's almost poetic when used in this sentence) decides Apple is price fixing because it's product is the same price regardless of which store I buy it from. OMG THE VERTICAL PRICE FIXING.

                      *sigh* this no child left behind thing really isn't working on your side of the pond.

                    • Let me suggest that you have a discussion with Messers Dunning and Kruger. Of course Apple is engaged in price fixing. The issue (as I alluded to many posts ago) is whether that price fixing is illegal. Vertical price fixing is not per-se illegal, but it can be, depending on the circumstances.
  • by Anonymous Coward on Saturday April 02, 2016 @09:11AM (#51827415)

    Employees of a single company, by definition, can't collude to fix prices. But independent contractors sure can.

    Looks like that whole "uber drivers are independent contractors not employees" thing has a lot of unintended consequences that aren't anywhere near as beneficial for Uber as they assumed.

    • Cab drivers are independent contractors in many places...which is probably where Uber got the idea from. I was a cab driver in New Orleans for six years and know for a fact every cab driver you see there is. Their rates are also set by the local government. When gas prices jumped up, they'd have to ask bureaucrats for a price increase....which meant you'd know something in a year or so if you kept asking. I suppose that's the difference they're trying to exploit between the traditional and uber in this scen

    • by ark1 ( 873448 )
      Isn't Uber pricing set by supply and demand? How is this collusion?
    • Employees of a single company, by definition, can't collude to fix prices. But independent contractors sure can.

      Where did you come up with this notion that Uber's pricing structure was in any way influenced by Uber drivers?!

  • If this is price fixing, then please could the court consider these others:

    * Airlines that charge more or less depending on how full a particular flight is

    * Electricity companies that offer a cheaper tariff at night (white meters)

    * Supermarkets that mark vegetables/... down when they come near to the end of their shelf life

    * Train companies that keep commuter time (rush hour) tickets higher than the middle of the day when the trains are not full

    • For that matter, why not just move on to seasonal pricing? What's the difference?

    • by dapyx ( 665882 )
      Airlines hire their pilots, train companies hire their conductors, etc. But Uber claims that their drivers are not employees, but rather independent contractors. If this is the case, then there is price-fixing.
      • Huh?? The employment status of Uber drivers is entirely orthogonal to the ethics and/or legality of "surge-based pricing." Anyone attempting to conflate these obviously unrelated issues clearly has an agenda.
    • by Anonymous Coward

      Because all of those are single companies making decisions alone. Whereas Uber is conspiring with a set of independent contractors to set the price, because Uber has made it clear that they are NOT employees.

      At least that would be the argument -- not that I necessarily agree with it.

  • including hiking rates during peak hours with so-called surge pricing

    Oh no he's charging more when the supply can't keep up with the demand! how dare he?! Reminds me of the Taiwanese flood that disabled hard drive factories, hard drive prices shot up because supply twiddled. How is that immoral (let alone illegal) in any way? It's completely benign, they should go after assholes like Marty Skreli instead, and assholes that profit only from arbitrage and asshole tactics.

  • The Uber taxi service has been flouting the law since day one. Their taxi service does not pay the same fees, insurance os taxes that every other taxi service does, even though the people they hire are paid by them and rely on the services the Uber taxi service provides.

    Not sure how this isn't obvious. The Uber taxi service is trying to simultaneously claim they don't fix prices while at the same time clearly doing so.

  • Between their licensing violations, classification abuse of contract workers, and their screwiness with pricing, it would be quite good to see the courts turn Uber to (a litigious equivalent of) a smoking crater.

    Get rid of those three issues, and you would have a company that isn't sued for its Shkreli-like existence.

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