With Uber ruling, taxi companies ‘are running out of legal theories’ against ride-hail companies

Jonathan Wiggs/Globe Staff/File/Globe Staff

A federal judge in Boston handed a win to Uber, legal experts said Sunday, by rejecting a complaint from area taxi companies that the ride-hail giant violated the state’s consumer protection law by operating in Boston during a three-year period starting in mid-2013.

Uber did not follow the city’s taxi regulations during that time period, but US District Judge Nathaniel M. Gorton found that “does not establish ‘unfair’ conduct” under the consumer protection law, according to his decision, issued Friday.

Erik Gordon, a professor at the University of Michigan’s Ross School of Business, said the ruling means taxi companies “are running out of legal theories” to use against ride-hail companies.

“As a precedent, it makes it more difficult for private plaintiffs — taxi companies that are competing with Uber and Lyft — to go to court and win monetary damages from ride-share companies,” Gordon said by phone Sunday.

In his decision, Gorton wrote that Boston officials did not forbid Uber from operating in the city, and the company entered Boston’s ride-hail market only after companies like Sidecar and Lyft began working there without “consistent observance” of the city’s taxi rules.

“Although the plaintiff corporations compete with Uber for riders in the for-hire vehicle industry,” Gorton wrote, “they have failed to prove that Uber, under the totality of the circumstances, committed an extreme or egregious wrong when they launched and continued to operate [the] UberX P2P” service in Boston during the period of June 2013 to August 2016.

“Uber acted in accordance with the standard of the commercial marketplace.”

Raymond P. Ausrotas, a Boston attorney who specializes in business and commercial litigation, called the decision a “win for Uber” and the company’s decision to roll out UberX with drivers who weren’t part of the existing taxi regulatory system.

“The court found that the lack of clarity in the law and spotty enforcement at the municipal level actually showed that Uber was essentially acting in a commercially reasonable way as a competitor in the marketplace, at a time when Lyft and other ride-share services were about to jump in,” Ausrotas said Sunday.

Ausrotas said the plaintiffs could take the case to the Court of Appeals for the First Circuit but would face a challenge.

“An interesting aspect of the decision is that the judge entered findings [that found] the plaintiffs’ experts unreliable — leading to them not having a basis to suffer damages — which faces a higher hurdle on appeal than questions of law,” he said.

Gordon, who follows the business and law associated with the ride-hail industry and teaches a course on the subject, said it would have been surprising if the ruling had gone against Uber. “The judge’s reasoning is pretty standard,” he said. “This would not be a controversial ruling.”

The case was filed in December 2016 by a group of companies owned and operated by the Tutunjian family, which runs the city’s biggest taxi fleet.

Lawyers representing the plaintiffs did not respond to requests for comment Sunday.

A spokeswoman for Mayor Martin J. Walsh said the city would review the decision.

In a statement, Uber praised Gorton’s decision.

“We are extremely pleased with Judge Gorton’s thorough ruling which makes it clear that Uber was welcomed to operate in Boston,” the company said. “As the opinion confirms, local and state officials understood the benefits that Uber provides Commonwealth riders and drivers — from an affordable, reliable transit option to flexible earning opportunities.”

In Boston, taxi companies must obey rules that include going through a permitting process, meeting standards for vehicles, and charging fares set by the city.

Gorton dismissed a claim for damages after an expert witness for the plaintiffs offered testimony that “lacks probative value and is unreliable,” Gorton wrote.

Friday’s decision follows years of court fights between the taxi industry and ride-hail companies like Uber. In 2015, the Boston Taxi Owners Association sued the city and accused city officials of violating their constitutional rights by allowing companies like Uber to operate without following the same rules as taxi companies.

Gorton, who also heard the association’s suit, ordered Boston officials in early 2016 to revise taxi rules to include ride-hail companies.

But later that year, Governor Charlie Baker signed into law a measure to regulate ride-hail companies like Uber, requiring them to conduct background checks on drivers and follow other rules.

And city officials later argued that any such changes were unnecessary, since the state had already adopted regulations governing the ride-hail industry earlier that year.

Gorton ultimately dismissed the taxi owners association’s claim, saying it was irrelevant after passage of the state law.

And in early 2017, Gorton dismissed a claim by the taxi association that the state law put taxi companies at a competitive disadvantage with ride-share companies.

On Sunday, Ausrotas said he is sure Uber will point to this decision if it faces similar claims under unfair trade statutes in other jurisdictions.

“If this had gone the other way it would be a real issue for Uber, but it really does seem to reward the company’s strategic decision to move aggressively when it did,” he said.