[By Alaina Lancaster]

A California appeals court has joined a choir of federal courts who have ruled that Uber is a public utility service and entitled to certain exemptions around below-cost sales.

Taxi company plaintiffs had alleged Uber employs a predatory pricing model meant to undercut the competition.
But California’s First District Court of Appeal ruled Monday the state’s Unfair Practices Act does not apply to Uber, whose rates are governed by the California Public Utilities Commission.

Although the CPUC has conducted “extensive regulatory proceedings,” it has yet to set the rates for Uber’s services. The taxi companies and taxi medallion owners who brought the appeal asserted that the exemption only applies when the commission actually sets rates.
The First District disagreed, echoing three different California district court judges in other UPA cases who have found the exemption applies to Uber.

“In short, while the CPUC may be seeking information on how Uber sets its rates, there is no evidence that in the seven years the rulemaking proceeding involving Uber has been ongoing the commission has set its sights on setting Uber’s fares,” wrote Associate Justice Kathleen Banke, joined by Administrative Presiding Justice Jim Humes and Associate Justice Sandra Margulies. “It may do so in the future, but that is not sufficient to divest the jurisdiction of the courts.”

A Morgan, Lewis & Bockius team represented Uber in the case.
The appeals court decision affirms a ruling from San Francisco Superior Court determining that the CPUC has rate-setting power over Uber in the coordinated action, which incorporated complaints from Yellow Cab Company Peninsula Inc., Friendly Cab Co., Inc., and taxi medallion owner Eyad Ariekat. The plaintiffs, represented by Prometheus Partners in San Francisco, alleged that Uber set its prices below total costs for the “specific purpose of injuring and eliminating its competitors in the traditional taxi business,” according to the decision.

But the First District said Uber had the “better view.”

“The Public Utilities Code ‘expressly provides that it is within the CPUC’s discretion to regulate public utilities within its jurisdiction, including by setting rates, but that the CPUC is not required to do so in all instances,’ ” wrote Banke, citing Diva Limousine v. Uber, a federal case where a limo company made similar UPA claims.

Uber and Morgan Lewis’ Brian Rocca and Thomas Peterson did not respond to a request for comment at the time of publication. Prometheus Partners also did not respond to a request for comment Tuesday afternoon.

~source