Uber's regulation challenges clarify 'clear articulation' for antitrust immunity

16 August 2017 6:21pm
Taxi Sign

3 August 2017. By Joshua Sisco.

Uber is batting .500 in two US court challenges of antitrust immunity defenses of municipal regulations that threaten its business model.

Uber's loss Tuesday against the City of Seattle and its October 2016 victory against the St. Louis Metropolitan Taxicab Commission have helped provide some clarity on what is needed to demonstrate a state's clearly articulated policy of displacing competition.

In deciding those cases, the judges relied heavily on the precise language of statutes Uber says violate federal antitrust law.

Under the state action doctrine, states can immunize conduct from federal antitrust scrutiny by clearly articulating and affirmatively expressing an intent to displace competition, as the US Supreme Court held in its 2013 ruling in Federal Trade Commission v. Phoebe Putney. In addition, as the court explained in 2015 in FTC v. North Carolina State Board of Dental Examiners, private actors must be actively supervised by the state in order to receive immunity.

Most recently, Uber sued the City of Seattle and its Department of Finance and Administrative Services, seeking to block an ordinance allowing independent contractors working as for-hire drivers to collectively bargain for pay rates and other working conditions. Seattle based the ordinance on a 1996 Washington State statute stating, "it is the intent of the legislature to permit political subdivisions of the state to regulate for hire transportation services without liability under federal antitrust laws."

Uber and the Chamber argued that the statute was too old and the legislature could not have anticipated a new business model that is not actually a transportation company, but simply a technology platform.

US District Court Judge Robert Lasnik disagreed, citing that direct quote from the statute. "The statutes on which the City relies clearly delegate authority for regulating the for-hire transportation industry to local government units and authorize them to use anticompetitive means in furtherance of the goals of safety, reliability, and stability," Lasnik wrote.

Furthermore, anticompetitive statutes shouldn't be required to account for all future possibilities. "Such a rule would require prescience on the part of the state legislature and deprive municipalities of the flexibility they need to address new problems in the for-hire transportation network as they arise," he wrote.

Lasnik's reliance on the statute comports with a decision by US District Judge Henry Autrey in St. Louis, who sided with Uber in deciding that there was no such authority to displace competition by that city's taxi regulator.

In a 2015 lawsuit, Uber challenged regulations imposed by the MTC that it alleged were unfairly propping up the incumbent taxi industry. State regulations require that four of nine MTC commissioners be from the taxi industry, and Uber alleged that they operated as a cartel to support the existing industry participants at the expense of new entrants.

While the MTC can regulate licensing, rates and safety, "The displacement of competition is not the logical result of the statutory framework, rather, the logical result is providing a public transportation system that is safe and efficient," Autrey wrote. No reference to anticompetitive activity or antitrust immunity is found in the official language describing the role of the MTC.

In a case unrelated to Uber, a California federal judge also disposed of an antitrust lawsuit based on the language of a statute.

Citing state action immunity, US District Judge Josephine Staton threw out a lawsuit from a private ambulance company over allegedly anticompetitive contracts between a competitor and a group of cities. The policy at issue in that case was a California code regulating emergency services that allows for "state direction and supervision over emergency medical services as will provide for state action immunity under federal antitrust laws for activities undertaken by local governmental entities in carrying out their prescribed functions under this division."

Joh Sung-Wook Interview