Another day, another Uber lawsuit making headlines. This time it hails from St. Louis where taxi drivers are suing Uber for stealing their business.
According to the taxi drivers, the services and drivers of Uber are “functionally and legally indistinguishable” from the taxi services and its drivers the populate St. Louis. As such the drivers argue that Uber and its driver should be held to the same standard taxis are, like The St. Louis Dispatch writes:
Drivers for ride-hailing services also are required to possess a class E Missouri commercial drivers license, also known as a chauffeur’s license.
Those requirements are mandated by Missouri law, the commission said. The state law that requires vehicle-for-hire drivers to have fingerprint checks is specific to St. Louis and St. Louis County.
Local cabdrivers also must have drug tests, vehicle inspections and get notes from doctors to prove they’re in good health.
But Uber described the regulations as onerous, saying it conducts its own background checks of drivers, many of whom drive less than six hours a week — but not fingerprint checks.
Short of abiding by the same standards, the cabbies argue, Uber is operating illegally within St. Louis. And if the class action status is granted, the suit could cover up to 1,100 cab drivers licensed by the city.
It’s just as good as any other lawsuit against Uber, which is to say it’s unclear. The ride-sharing app has always operated in a grayer area of the law, flying under or around the radar, minimizing overhead costs and requirements, and focusing all their efforts on providing a cheap, efficient app for their customers. Since the only game in town before them were taxis, it makes sense that the system would feel a hit, especially if Uber was undercutting them in prices and orderliness.
Reportedly St. Louis cab drivers saw a revenue drop of 30 to 40 percent compared to the same time last year. Go figure, that drop also lines up with Uber’s introduction to the city. Those numbers are par for the course, with Seattle taxi revenue falling 28 percent after the introduction of Uber, 65 percent in San Francisco since 2012, 40 percent in New York over the past year and a half—one of the city’s biggest taxi magnates even filed for bankruptcy for 22 companies. Though they aren’t tied to the health of the industry, taxi medallions are seeing their own fluctuations, with the cost of one dropping by a third of the price for the first time ever in New York. Uber’s CEO has even commented that investors are valuing Uber as bigger than the U.S. taxi market.
Whether or not this is the only cause of taxi revenue drops has been hotly debated, but it’s not secret that Uber is at the very least horning in on the market that was poised for disruption; the data seems to be supporting the St. Louis cab drivers’ claims. The problem is proving that means they’re operating outside the law.
Uber is no stranger to lawsuits, fielding over 170 since 2012 in the U.S. alone. But like in its employment classification challenges, the San Francisco-based app has always been a square peg to the round hole of the law. As Evan Mix wrote for the Labor & Employment Law Blog, as courts struggle to figure out what to do with Uber and Lyft employees, they’re increasingly calling for new classifications:
Both courts admittedly struggled to apply the traditional multifactor test to the Lyft and Uber business models, noting that some factors cut both ways while others were ambiguous….Ultimately, both courts found summary judgment inappropriate because a reasonable jury could rule either way on facts material to the employee/contractor test.
Cognizant of the increasing difficulty in applying “California’s outmoded test for classifying workers” to on-demand business models like Uber and Lyft, the Lyft court suggested that the legislature intervene and create a “new category of worker altogether, requiring a different set of protections.”
With Uber suing the taxi companies right back on antitrust grounds, it seems like the St. Louis decision will be settled by courts, not by the city. Whether or not the St. Louis strategy holds up in court, as a class action or not, seems at this point entirely dependent on chance. Sure a class action victory could mean about $5 million in damages, not to mention a change to Uber’s organizational system. But don’t be surprised if there’s equally a good chance that this suit is a dead end.