A San Francisco-based taxi company has filed a lawsuit against Uber, alleging the ride-hailing company is engaging in anti-competitive and misleading practices.
In its lawsuit, filed on Wednesday in the U.S. District Court for the Northern District of California, Flywheel Taxi says Uber has misled drivers and customers about pricing, safety, driver income, its tipping policy, and even location and response times of cars. The complaint also claims that Uber has violated federal law prohibiting discrimination based on disabilities, California anti-discrimination laws, and San Francisco’s transportation regulations for taxis.
In short, Flywheel says that Uber’s practice of subsidizing rides by pricing them below cost has the effect of forcing competitors like taxis, whose prices are regulated, out of business. This is monopolistic behavior, argues Flywheel.
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“Once all competitors have been forced from the market, Uber, unfettered by competition, will be free to charge exorbitant prices for all ride-hail transportation in San Francisco,” Flywheel said in a statement.
Flywheel also claims that because of Uber’s alleged false advertisements of potential driver income, many taxi drivers and potential drivers have opted to work for Uber instead, which has led to massive business loss for the cab company. Moreover, Uber’s allegedly false statements about ride prices, in which Flywheel also includes Uber’s “surge” pricing hikes, has misled passengers into taking Uber rides instead of taxis, also resulting into business losses for Flywheel.
Uber, of course, disagrees with Flywheel’s claims and characterization of its business.
“We compete with lots of ways to get around, especially car ownership. Our goal is to provide a credible alternative to the private car,” an Uber spokesman told Fortune in a statement. “Our technology lets us make our network more efficient over time, and innovations like uberPOOL are further lowering prices, making ridesharing more available to more people.”
Flywheel, previously known as DeSoto Cab, has been operating in San Francisco since the 1930s, according to the company. In 2014, the taxi business took on the Flywheel name and branding, which belong to a technology company that provides taxis with mobile apps and other tools similar to those of services like Uber, in an attempt to fight off the increasing competition from ride-hailing companies.
Asked if the company plans to file a similar lawsuit against Lyft, Uber’s main competitor in the U.S., Flywheel Taxi president Hansu Kim told Fortune that it’s possible, but “no decision has been made yet.”
Last year, Flywheel also filed a lawsuit against the California Public Utilities Commission that alleged the agency favors so-called transportation network companies over traditional taxis, and regulates them more loosely than taxis. In July, U.S. District Judge Edward M. Chen declined to dismiss Flywheel’s lawsuit against the commission, arguing that it had enough merit to move forward.
