Uber Passenger Says Price-Fixing Arbitrator Acted Out Of ‘Fear’

A lawsuit alleging illegal price fixing by Uber in the United States has re-entered the spotlight, with an Uber customer asking a Manhattan federal judge to overturn an earlier arbitration decision on the grounds that the arbitrator acted out of fear.

Attorney Les Weinstein, a company-appointed arbitrator, decided in Uber’s favour on 22 February and dismissed the price-fixing lawsuit.

But Connecticut Uber passenger Spencer Meyer, who brought the original lawsuit in 2015, argued in the latest filing that Weinstein acted out of “evident partiality”.

A transcript excerpt of the closed-door arbitration, attached to the filing, cites Weinstein as saying, “I must say I act out of fear.

‘Fear’

“My fear is if I ruled Uber illegal, I would need security. I wouldn’t be able to walk the streets at night. People would be after me,” the excerpt continues.

Weinstein also said he doubted whether he had the legal power to challenge Uber’s nationwide business model.

Meyer’s lawsuit challenges Uber’s practice of coordinating price surges during peak periods, via an algorithm that sets prices which all its drivers agree to charge.

The lawsuit claims that if Uber’s drivers are independent contractors, as Uber claims, then the coordinated pricing amounts to an illegal price-fixing conspiracy.

Uber claims the price surges are used to maintain an optimal availability of drivers to passengers during peak periods, but has not allowed outsiders to analyse the algorithms.

Legal question

The company declined to comment on the new filing, according to Reuters, but ahead of arbitration last year it said it was “confident” the law was on its side.

Meyer’s lawsuit went through several courts before being sent to arbitration due to a clause in Uber’s terms of service under which passengers waive their right to sue and must instead settle disputes privately.

At an earlier stage Uber also moved to dismiss Meyer’s claims for “declaratory and injunctive relief”, which would have limited the applicability of any decision against the company to Meyer alone.

Instead, last year an arbitrator ruled that the case could be taken back to the district court if arbitration found that surge pricing was illegal.

That meant the decision could have seen Uber lose the right to control its drivers’ pricing on a nationwide scale.

Profitability

Uber is also facing a legal challenge in California that could see its drivers reclassified as employees in that state, potentially saddling the company with hundreds of millions of dollars in additional labour costs.

Uber loses money under its current business model, and its core ride-sharing revenues have been further hammered by the coronavirus pandemic.

The company said earlier this month it plans to cut one-quarter of its workforce and close or consolidate offices as it looks to turn a profit in spite of the revenue drop.

Uber has one week to respond to the court filing, which was made on Friday.