East Bay taxi drivers join class action lawsuit against Uber

California taxi divers face a new frustration: booming competition from companies like Uber and other app-based taxi companies that have recently entered the market with new services, systems and often better cars.

Standing close to his cab in a taxi garage, Ben Ezeokoli, a driver who works at the Oakland Airport, says he has been in business for nearly 30 years. Back when he started driving his taxi, the business was paying off—there were a lot of customers and few taxis. But now private cars are also joining the market.

“Sometime you see the cabs parked and waiting, but suddenly you see a private car comes by,” says Ezeokoli, 55. He used to think that these private cars had drivers there to pick their family members or friends. “But now you know these are Uber drivers,” he said.

By last fall, Business Insider was reporting that Uber was recruiting about 50,000 drivers a month nation-wide. And some of those new drivers work at the Oakland Airport, too. The Uber cars are newer than most taxis, and ride sometimes costs less, and you can get one within 3 to 5 minutes. That makes it hard for Ezeokoli and his peers — the traditional taxi drivers — to make a living.

Now, Ezeokoli has joined a class action lawsuit against Uber Technologies, Inc., accusing Uber of not following the regulations that taxi businesses in East Bay cities must follow. The suit represents at least 500 taxi drivers and owners in Oakland, Emeryville and Berkeley.

The taxi industry is highly regulated by both the state and cities, in order to protect consumers and taxi drivers. There are a limited number of medallions that are issued to taxi drivers, so that there can be fair competition among them, and so that taxi drivers are able to make a living wage.

To operate in the city of Oakland, Ezeokoli had to obtain a fleet management permit, a vehicle permit and an operating permit. According to the lawsuit, in Oakland, getting an operating permit also requires providing many other forms of paperwork, including proof of insurance, a business tax certificate, valid registration with the Department of Motor Vehicles, proof that a certified taximeter has been installed, and proof of the installation of working equipment such as two-way radio and brakes. The rates taxi drivers may charge are set by the city council via an ordinance.

The suit, which was filed in November, 2014, by the Oakland firm of Aiman-Smith & Marcy, accuses Uber of alleged unfair competition in violation of California’s Business and Professions Code, as well as of allegedly interfering with other taxi drivers’ business relationships with their passengers in a way that has resulted in economic damage to them.

Among the allegations, the lawsuit claims that: “Uber provides more cars, above and beyond the limited number of taxicabs permitted by the cities. Uber’s ‘lower cost of transportation” is made possible by Uber not paying any of the fees associated with taxicabs to the cities, by providing an abundance [of] cars so that each individual ride can be charged a lower rate, and by not complying with the meter requirements that taxicabs must follow by the cities’ codes.”

Further, the suit continues, “Uber’s business model cuts corners illegally and undermines critical safety provisions of the taxi laws in the cities and state of California. Its transportation system only succeeds because, unlike lawfully competing taxicabs, it prays [sic] parasitically on established taxi services without paying for them and without obeying the laws designed to protect taxi customers. Uber owns no cars, no permits, no radio associations, and employs no drivers—preferring to pay nothing for infrastructure and profit from the investment of permit owners and radio associations.”

“As a result of Defendant’s unlawful, unfair and fraudulent conduct,” the lawsuit contends, “Plaintiffs and the Plaintiffs class suffered injury in fact and lost money and property to which they were entitled and business expenses that drivers were required to pay.”

In other words, the suit argues, by allegedly violating the rules, Uber creates problems for traditional taxi drivers: They now have more competition, but still have to pay lots of money to obtain a number of permits, licenses and insurance policies. That means they are making less money overall.

“With Uber out there, some of the drivers say they have lost up to half of their fares,” says Hallie Von Rock, an attorney with Aiman-Smith & Marcy, the employment class action law firm that filed the suit for the taxi drivers. “They felt like they were doing everything that was required of them, then suddenly Uber comes in and basically is stealing their fares by not going through any of the same regulations.”

She estimated the lost potential revenue as up to $30,000 or $40,000 a year per taxi.

The lawsuit requests that the court order Uber to make financial restitution, order a permanent injunction to prohibit them from engaging in the practices the lawsuit alleges, and that Uber make compliance reports to the court to show that it is following the injunction.

The lawsuit is in the beginning stages, said Von Rock. The complaint has been filed and the firm intends to amend the complaint to more precisely state its allegations against Uber. “Uber will likely file a motion asking the court to dismiss the complaint before any discovery is done,” said Von Rock. “It’s a typical action that Uber does in most of the complaints that are filed against them,” she continued. “Not this time. We are going to stand and see this class action to the end.”

When asked for comment, Uber’s legal representatives referred questions to the Uber press office. The press office did not respond to multiple requests for interviews.

In an Oakland airport taxi parking lot, some taxi drivers are standing, chatting while waiting for their turn. Others are playing dominoes to pass the time. Like Ezeokoli, most of these taxi drivers have been in business for more that 20 years, and they are worried about their competition from Uber.

Some of the Uber drivers tell other taxi drivers, “You guys are wasting your time,” said Ezeokoli. They don’t have to pay all the fees that taxi drivers do, yet they make more than the drivers, he said. “So it’s not a fair competition,” Ezeokoli said. But he thinks that if the court rules that Uber must use the same regulations and the same rates as taxi drivers do, “I don’t think they will beat us,” he said.

“Well, we don’t have a choice right now,” said Nana Yow Osei Bansu, a taxi driver who is thinking about getting his own car. “If we can’t beat Uber, we all have to make a decision to join them.”

But Ezeokoli disagreed. The issue is that younger people and students are more “cost conscious,” he said, “and more into the technology.” What they don’t realize, Ezeokoli thinks, is that Uber prices go up and down according to rush hour and event pricing, while taxi fares remain constant.

Still, he has his loyal customers whom he trusts, and he thinks it’s all a matter of time before people realize cabs are the way to go. “I don’t think cabs are going to go away, no matter how high the competition is,” he said.