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Uber 'Genius' Algorithm Price-Fixing Suit Must Go Forward

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By Jonathan R. Tung, Esq. on April 04, 2016 4:07 PM

Uber wasn't as lucky in its attempt to stop litigation in its tracks as it was in another lawsuit brought against the transport-app company. A US District judge has decided not to grant Uber's motion to dismiss and instead let the price-fixing issues be heard by a jury.

Uber has to do battle on two front's as its Ninth Circuit Case O'Connor et al. v. Uber Technologies has just few months left before it will be heard on the merits.

"Genius" of Kalanik's Algorithm

Allegations that Uber's technology aids in unlawful price-fixing schemes were included in the complaint against the app company. The implementation of such a plan, says defendant Travis Kalanik, is "wildly implausible" and "physically impossible" because such a scheme would require the express or tacit agreement of ride prices among thousands of "independent" transportation providers across the nation.

Federal Judge Rakoff was not convinced by the defense's characterization and even noted that defendant Kalanik's price-algorithm for Uber rides was "genius" and well within Kalanik's capabilities.

"Technology Need Not Leave Antitrust Law Behind"

Judge Rakoff is well known within the legal community for hastening legal proceedings and Uber's lawyers seemed to know this. Reuters' Alison Frankel even noted that this was perhaps the reason the company decided against insisting on arbitration as outlined in its terms of service. It appears that the company's strategy did not work out as well as it had hoped.

Bad Harbinger

Rakoff, in his decision to let the case move forward set a tone that should have Uber worried. It seems the judge is already convinced that there's more to Uber's self-characterization is merely an "app-company" than meets the eye. "The fact that Uber goes to such lengths to portray itself ... as the mere purveyor of an "app" cannot shield it from the consequences of its operating as much more," he said.

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