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Uber and Lyft Face Class Action Suit in Memphis

Uber and Lyft Face Class Action Suit in Memphis for Ride Sharing Services

The City of Memphis is the site of the latest legal challenge to the peer-to-peer ride sharing services offered by Uber and Lyft. On March 4th, a federal class action lawsuit was filed against Uber and Lyft on behalf of all individuals and businesses engaged in “for hire” transportation services in Memphis. Like others that have been filed across the country, the Complaint targets the ride sharing companies’ purported “intentional” refusal to comply with local statutes that regulate companies providing “transportation for hire” services in the county. The Complaint specifically highlights the ride sharing companies’ alleged failure to comply with statutes requiring the payment of operating and licensing fees, certain levels of insurance, regulated transportation rates, and those mandating drivers to undergo physical examinations and criminal background checks. Plaintiffs contend that Defendants’ failure to comply with these mandatory requirements (and specifically their “refusal” to pay the mandated fees) has resulted in Defendants’ receipt of “illicit profits to the detriment of Plaintiffs” who have complied with the City’s regulations. Plaintiffs seek damages for Defendants’ alleged intentional interference with their prospective business relationships with customers desiring to hire taxis and for Defendants’ alleged RICO Act violations.

The Complaint also seeks to immediately enjoin Defendants from operating in Memphis under their current business models. Generally, such a request is granted only upon a showing of “irreparable harm.” However, as the Complaint recognizes, some courts have presumed the existence of irreparable harm where the allegations at issue concern a defendant’s violation of a law or regulation. Thus, because the claims at issue concern Defendants’ alleged violations of local statutes and ordinances, Plaintiffs argue that they are entitled to the presumption and need not demonstrate “irreparable harm.”

However, in Checker Cab Phila. v. Uber Techs., Inc. et al., 2015 U.S. Dist. LEXIS 26471, *14-15 (E.D. Pa. Mar. 3, 2015), a case involving similar claims against Uber and other companies providing ride sharing services in Philadelphia, the Eastern District of Pennsylvania recently rejected this very argument. In Checker Cab, the court denied the plaintiffs’ petition for a preliminary injunction, holding that, in actions between two private parties, irreparable harm is not presumed, even where the injunction is premised on another’s violation of a law or regulation. Thus, because plaintiffs failed to carry their burden of demonstrating a likelihood of immediate irreparable harm if the ride sharing companies were not enjoined from operating (i.e., harm that was not compensable through money damages), the Eastern District of Pennsylvania did not preclude Uber’s continued operation in the city.

To the extent that Plaintiffs seek preliminary injunctive relief in the Memphis litigation, we can likely expect Defendants to raise the same arguments that were successful in Philadelphia.

Michael C. McLaren

Michael McLaren