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Uber must face lawsuit over gratuity charge - court ruling
September 18, 2014 / 3:46 PM / 3 years ago

Uber must face lawsuit over gratuity charge - court ruling

SAN FRANCISCO (Reuters) - A U.S. judge rejected a bid by the online for-hire car service Uber to dismiss a civil lawsuit that accuses the company of charging customers a 20 percent driver gratuity but pocketing most of the additional revenue instead.

An illustration picture shows the logo of car-sharing service app Uber on a smartphone next to the picture of an official German taxi sign in Frankfurt, September 15, 2014. A Frankfurt high court will hold a hearing on a recent lawsuit brought against Uberpop by Taxi Deutschland on Tuesday. San Francisco-based Uber, which allows users to summon taxi-like services on their smartphones, offers two main services, Uber, its classic low-cost, limousine pick-up service, and Uberpop, a newer ride-sharing service, which connects private drivers to passengers - an established practice in Germany that nonetheless operates in a legal grey area of rules governing commercial transportation. The company has faced regulatory scrutiny and court injunctions from its early days, even as it has expanded rapidly into roughly 150 cities around the world. REUTERS/Kai Pfaffenbach (GERMANY - Tags: BUSINESS EMPLOYMENT CRIME LAW TRANSPORT) - RTR468Z2

In a ruling late on Wednesday, U.S. District Judge Edward Chen in San Francisco said Uber must face multiple civil counts, including an allegation the company violated California’s unfair competition laws.

A company representative could not immediately be reached for comment.

San Francisco-based Uber raised $1.2 billion (735.84 million pounds) from mutual funds and other investors in a June funding round, which valued the fast-growing service at $18.2 billion at the time. Uber faces an array of regulatory and legal challenges, however, as it seeks to expand into new markets.

An Uber customer filed a proposed class action lawsuit against the company earlier this year, saying the 20 percent rider gratuity is “false, misleading, and likely to deceive members of the public” because Uber keeps a substantial portion of the money.

The judge’s ruling dismissed a breach of contract claim against Uber, but ruled there was sufficient detail in the lawsuit for it to move forward on other counts.

The case is Caren Ehret vs. Uber Technologies Inc in U.S. District Court, Northern District of California, No. 14-0113.

(This version of the story has been corrected to change day to Wednesday instead of Tuesday in paragraph 2)

Reporting by Dan Levine; Editing by Grant McCool

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