Diva Limousine, Ltd. v. Uber Techs., Inc.
392 F. Supp. 3d 1074
N.D. Cal.2019Background
- Diva Limousine (Diva), a California licensed prearranged limousine/chauffeur service, sued Uber Technologies alleging unfair competition and unfair practices arising from (1) misclassification of Uber drivers as independent contractors and (2) investor-subsidized below-cost (loss-leader) pricing.
- Diva asserted a UCL claim (unfair and unlawful prongs) based on driver misclassification and a UPA claim based on predatory loss-leader pricing; it sought class certification for in-state and out-of-state affiliate businesses.
- Diva moved for partial summary judgment on driver classification under Dynamex; Uber moved to dismiss the First Amended Complaint under Rules 12(b)(1) and 12(b)(6).
- The FAC alleged putative class members include numerous out-of-state affiliates (statistical allegation only); Diva later submitted extrinsic evidence identifying specific out-of-state affiliates.
- The court found the FAC failed on its face to allege CAFA minimal diversity (jurisdictional defect) but allowed leave to amend after noting supplemental facts could cure the defect.
- On the merits, the court dismissed the UPA claim with prejudice (finding §17024 exemption for services under CPUC jurisdiction) and (1) denied the UCL unfair-prong dismissal to the extent based on California labor-law misclassification, (2) dismissed UCL unfairness insofar as premised on Sherman Act claims, and (3) denied Diva’s partial summary judgment motion without prejudice under the one-way intervention doctrine and case-management concerns.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject-matter jurisdiction (CAFA minimal diversity) | FAC alleges many out-of-state affiliates; supplemental declarations identify specific out-of-state affiliates | FAC fails to plead actual citizenship of any specific out-of-state class members; facial jurisdictional attack requires such allegations | Dismissed under Rule 12(b)(1) for lack of jurisdiction; Diva may amend in 30 days to plead citizenship facts |
| UPA (Cal. Bus. & Prof. Code §17043) — applicability | Uber’s pricing is a loss leader and violates UPA | §17024(1) exempts services for which rates are "established under the jurisdiction of the CPUC," so UPA does not apply | UPA claim DISMISSED with prejudice; §17024(1) covers utilities over which CPUC has rate-setting jurisdiction even if CPUC has not actually set rates |
| UCL — "unfair" prong based on misclassification | Misclassification gives Uber unlawful cost advantage, harming competition and violating policy behind antitrust/labor laws | Lower prices benefit consumers; allegations not sufficient to plead Sherman Act violations or monopolization | Unfair-prong claim sustained to the extent tethered to violations of California labor law (Dynamex); dismissed to the extent premised on Sherman Act claims (leave to amend Sherm an Act allegations) |
| UCL — "unlawful" prong standing/causation | Misclassification is a substantial cause of Diva’s injury (specific cost-savings alleged) and therefore satisfies UCL standing; out-of-state affiliates are injured by conduct in California | Harm may be caused by investor-subsidized pricing rather than misclassification; UCL does not apply extraterritorially to out-of-state plaintiffs harmed by out-of-state conduct | Standing satisfied: causation alleged as substantial factor; out-of-state affiliates have standing because alleged injury arises from Uber’s conduct in California; claims not dismissed on this basis |
Key Cases Cited
- Dynamex Operations W. v. Superior Court, 4 Cal.5th 903 (2018) (misclassification of workers may create unfair competitive advantage and violate policy behind labor and competition law)
- Cel-Tech Commc'ns, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal.4th 163 (1999) (UCL "unfair" prong for competitors must be tethered to antitrust policy or actual/threatened competitive harm)
- Abrego Abrego v. The Dow Chem. Co., 443 F.3d 676 (9th Cir. 2006) (CAFA minimal diversity requirements explained)
- Kanter v. Warner-Lambert Co., 265 F.3d 853 (9th Cir. 2001) (party invoking federal diversity jurisdiction should allege actual citizenship of parties)