In a series of consolidated cases (discussed further here and here), a large number of Boston-area cab companies accuse Uber, as well as Uber founders Travis Kalanick and Garrett Camp, of unfair competition in violation of Massachusetts state and common law, and some of the plaintiffs further allege that Uber violated state and federal antitrust law, interfered with advantageous business relationships, engaged in civil conspiracy and aided and abetted unfair competition. Kalanick and Camp both moved to dismiss the claims against them as individuals. Judge Gorton granted this motion, finding that the plaintiffs had failed to allege specific facts demonstrating either general or specific jurisdiction – the complaint alleged only that the two formed Uber while in California and that Uber had undertaken activities in Massachusetts, but failed to identify any activities the individuals, as opposed to the company, had directed towards this forum.
As to the claims against Uber, Massachusetts passed a law in August 2016, the “TNC Act,” that pre-empts local municipalities from regulating ride-sharing companies like Uber, and the plaintiffs agree that this precludes Uber’s post-enactment activity. With respect to the pre-enactment activity, Judge Gorton found that, absent the TNC Act, Uber’s activities fell within the Boston municipal taxi regulations. Accordingly, allegations that Uber did not comply with the taxi regulations or incur the concomitant costs to gain an unfair advantage and cause economic injury sufficiently stated a cause of action for the statutory and common-law unfair competition claims. The court likewise denied the motion to dismiss with respect to claims that Uber conspired with its independent contractor drivers to violate the taxi rules. Judge Gorton allowed Uber’s motion to dismiss claims that Uber and its drivers, as an employer and employees (as opposed to independent contractors – it is not yet clear what status the drivers will ultimately be deemed to have held), conspired to violate the taxi regulations, because with the individual founders having been dismissed, this would effectively allege that Uber conspired with itself to do so, a claim that is untenable. Judge Gorton dismissed claims for interference with advantageous business relationships because the complaint did not allege interference with any specific anticipated business relationship, and the plaintiffs’ allegations regarding interference with people seeking for-hire ride services generally was not sufficiently specific. Finally, Judge Gorton also dismissed the antitrust claims. Those claims were based on a predatory pricing theory whereby a company sells products or services below its costs, hoping to drive competitors out of the market, at which point the company can raise its prices due to its monopoly position. The complaint did allege that Uber had lost “billions of dollars” (which seems to be accurate), but this was found to lack the particularity required of the antitrust laws.
A class action complaint was filed against Eversource Energy and Avangrid, Inc., accusing the companies of manipulating the flow, and thus price, of natural gas into New England, with a resulting increase in the price of electricity. Both companies are accused of systematically over-ordering natural gas from the Algonquin gas pipeline, the biggest supply line into the region, and then cancelling a portion of the order at the last minute, making it unavailable for other electricity generators. Eversource and Avidgrid own companies that operate as Local Distribution Companies that allow them, through legacy contracts, to adjust orders of natural gas throughout the day without penalty; it is this possibility that enables them to order more gas than they expect to use and cancel portions of the order when the gas cannot be purchased and put to use elsewhere. The two companies are alleged to be the only two companies to operate large-scale natural gas and electric companies in the area, giving them unique capabilities for this type of behavior. The complaint alleges that this practice resulted in customers paying a minimum of 20% more for electricity than they should have, costing consumers $3.6 billion over a three-year period from 2013-2016. Plaintiffs bring antitrust claims as well as unjust enrichment and unfair competition under New England states’ consumer protection laws.
FWK Holdings brought this class action antitrust suit, alleging an illegal reverse payment settlement between Shire defendants and Actavis defendants relating to the drug Intuniv, which is used to treat hypertension and ADHD. Each defendant moved to dismiss the complaint for failure to state a claim. The case was reassigned to Massachusetts, as it was related to an existing Massachusetts case, Picone et al. v. Shire I.S., Inc. et al. (16-cv-12396). In the complaint, the plaintiffs allege that Actavis had introduced compelling evidence at an ANDA trial that Shire’s patents listed in the FDA’s Orange Book as covering Intuniv were invalid, and that in April, 2013, Actavis and Shire settled the litigation by having Actavis, the first generic to file an ANDA, agree to delay entry into the generic market until December of 2014 in return for Shire implicitly agreeing not to launch an “authorized generic” (“AG”) during the 180-day period of generic exclusivity for Actavis that followed. The agreement allowed Shire to market its own AG, but prevented it from marketing an AG through a third party; the defendants assert that Shire had in fact agreed not to market an AG itself but avoided putting that into the agreement to avoid antitrust scrutiny. The plaintiffs allege that this scheme constituted an anticompetitive reverse payment agreement, banned under prevailing law, that resulted in Shire earning $424 million in additional sales free from generic competition and in Actavis generating $84.5 million in profits during its period of generic exclusivity. This scheme purportedly cost American purchasers of the drug half a billion dollars. The complaint alleges restraint of trade in violation of Section 1 of the Sherman Act and monopolization in violation of Section 2 of the Sherman Act.
Judge Burroughs recognized that reverse payments, while potentially actionable, are not ipso facto antitrust violations. Courts are to make a rule of reason analysis, looking at the size of the payment in relation to anticipated future litigation costs, and existence, or lack thereof, of other convincing justification to determine whether the payment was made to prevent the risk of competition. She noted that the First Circuit had stated in dictum that no-AG agreements can constitute illegal reverse payments, a position expressly held by other courts, and determined that it formed a sufficient basis for an antitrust complaint here. Applying the rule of reason, Judge Burroughs noted that the plaintiffs had alleged that Shire’s alleged retention of the right to market an AG was illusory, given that common industry practice (and Shire’s own past practice) was to launch such products through bona fide third parties to avoid Medicaid pricing regulations, that Shire had, prior to the settlement, planned to launch an AG through a third party, and that following settlement, Shire never launched an AG. These allegations, combined with the allegation that the defendants settled the underlying litigation only following a trial at which Shire seemed poised to lose, plausibly alleged that an implicit no-AG agreement existed. Accordingly, the motion to dismiss was denied.
Judge Gorton consolidated seven different antitrust actions against Uber for pretrial purposes. Each complaint asserted substantially similar claims and operative facts and involved the same defendants. The main difference in the lawsuits related to alleged violations of local transportation ordinances, and the different cases generally grouped cab companies from individual cities or towns together – I previously commented on the Boston action here. Judge Gorton reserved the question of whether to consolidate the cases for trial. He also set a schedule for Uber’s motion to dismiss, indicating that a decision will issue on the request for dismissal by the end of the year.
A large number of Boston cab companies filed a second amended complaint against Uber, adding ten new companies as plaintiffs to bring the total number of plaintiffs to one hundred and ninety-six. The cab companies allege that Uber controls 80% of the ride-hail market, which is defined as the “low-cost, on-demand, Ride Hail ground transportation services that originate in Boston and that seat 3-4 passengers.” The complaint is specifically addressed to “UberX,” one of Uber’s lower cost options. There are counts for unfair competition under MGL c. 93A, Section 11 and common law unfair competition for operating a transportation service without complying with the laws of Boston and Massachusetts, thus obtaining customers who would otherwise use cab services and devaluing taxi medallions; attempted monopolization, under the Sherman Antitrust Act and under M.G.L. 93A, Section 5, of the Boston “ride-hail” market (somewhat ironically alleging that the purpose of the Act is to “preserve and advance our system of free and open competition and to secure to everyone an equal opportunity to engage in business, trade and commerce for the purpose of ensuring that the consuming public may receive better goods and services at lower cost”). The original complaint followed three other complaints brought by multiple cab companies from Malden, Braintree and Cambridge, each with similar allegations.
The lawsuit follows legislative action, under which the state will impose a 5-cent fee on every trip taken with Uber and Lyft, and funnel that money as “financial assistance” to their taxi competitors. Prior to the introduction of companies like Uber and Lyft, taxi medallions in Boston were capped at 1,825, and sold for as much as $700,000 as late as 2014. In 2014, taxi medallion sold for as much as $700,000. Since the introduction of ride-hail companies, however, taxi ridership dropped about 25%, and the average price for a Boston taxi medallion dropped about 40 percent.