Uber taps recent Supreme Court ruling to fight cab companies
Are taxi companies conspiring against Uber? The car-hailing service, which lets users summon a ride with a smartphone app, has said so for years but hasn’t really had a legal leg to stand on–until now.
The difference today is a recent Supreme Court decision over when it’s possible to sue local licensing groups under antitrust laws. The case in question was about North Carolina dentists, who used a licensing board to squash teeth-whitening shops, but Uber sees a parallel with taxi commissions that want to limit its operations.
In a lawsuit filed last week in St. Louis federal court, Uber cited the Supreme Court case in a complaint against the Metropolitan Taxicab Commission, alleging the MTC is engaged in an illegal conspiracy on behalf of cab companies. In the past, the MTC could have blown off the complaint by invoking states’ antitrust immunity, but the new high court decision makes this much harder.
As a result, the taxi commission will likely have to answer accusations that its newly-imposed “safety” rules on ride-hailing services, which require a special permit and finger-printing process, are illegal.
“[T]he MTC, by law, is controlled by the traditional taxicab industry; it is the proverbial fox guarding the henhouse,” states the Uber lawsuit. It adds the “Supreme Court recently confirmed that where […] active market participants control a nominally public body like the MTC and no independent governmental agency or official actively supervises its conduct, that body’s conduct is not immune from antitrust liability.”
The complaint itself seeks an injunction and damages against the MTC, and was filed in the name of Uber and others affected by the regulation. These others include a blind woman, who says the rules make it more difficult to obtain a taxi, and would-be Uber drivers who argue the MTC is harming their ability to make a living.
To make the case that the MTC is carrying out a conspiracy, the plaintiffs point out that the MTC’s eight-member board is basically controlled by the cab companies. As evidence, they note that one board member is the wife of a large cab company owner, and that its chairman is a taxicab lobbyist. (The complaint also cites an alleged tweet by the chairman that tells an Uber supporter on the board: “you are an insufferable douche…If you don’t like it take your toys and go home.”)
While Uber has been embroiled in fights with taxi regulators across the country, the Supreme Court changes the legal balance of power. The reason is that bodies like the MTC can no longer invoke a rule that automatically protected state bodies from antitrust scrutiny. Now, such bodies are open to challenge in the event such boards are composed of “market participants” that can act without meaningful oversight.
More broadly, the St. Louis lawsuit appears to validate a recent claim by Ted Ullyot, a former Facebook general counsel who is now advising startups at VC firm Andreessen Horowitz, that the Supreme Court case is a boon for startups that face questionable regulation.
Meanwhile, in St. Louis, Uber launched its “Uber X” service this weekend and transported thousands of passengers in apparent defiance of the city’s licensing rules.
Here’s a copy of the Uber complaint with some key parts underlined:
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