Ezeokoli v. Uber Technologies CA1/3 ( 2021 )

Filed 1/26/21 Ezeokoli v. Uber Technologies CA1/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION THREE
BENEDICT EZEOKOLI et al.,
Plaintiffs and Appellants,
A156445
v.
UBER TECHNOLOGIES, INC., (Alameda County
Super. Ct. No. RG14747166)
Defendant and Respondent.
Plaintiff taxi drivers Benedict Ezeokoli, Zine Salah and Leon Slomovic
appeal from a summary judgment in favor of defendant Uber Technologies,
Inc. (Uber) on their action for false advertising under the Lanham Act (15
U.S.C. §1125(a) et seq.). We conclude, as did the trial court, that (1) Uber
established a prima facie showing that plaintiffs could not prove they were
harmed by the alleged false advertising, and (2) plaintiffs failed to rebut that
showing. We therefore affirm the judgment.
BACKGROUND
I. The Complaint
Plaintiffs’ fifth amended complaint, the operative pleading, alleges that
Uber disseminated four categories of false or misleading statements and that
plaintiffs lost ridership and income as a result.
1
More specifically, the complaint alleged four general categories of
misrepresentations: that Uber: (1) misrepresented the availability and
proximity of rides through cartoon images of cars displayed on its consumer
app; (2) misrepresented the safety of its service; (3) misrepresented the
legality of its operations at certain airports; and (4) made false and
misleading statements about driver gratuities. Plaintiffs alleged these
misrepresentations induced members of the public to use Uber’s services
rather than plaintiffs’ taxis. Plaintiffs also sought to certify a plaintiffs’ class
of 4,000 taxi drivers in eight California cities.
II. Summary Judgment Motion
Uber moved for summary judgment on grounds including that plaintiffs
could not show they had suffered harm or that any harm was caused by the
alleged false advertising. Uber also argued plaintiffs lacked standing because
they lacked necessary permits or licenses during some of the relevant period.
At the same time, it opposed plaintiffs’ motion for class certification on the
ground that none of the elements of the alleged Lanham Act violations were
susceptible to class treatment.
In support of summary judgment, Uber provided evidence that (1) the
plaintiffs could not show reduced income from driving taxis during the
relevant period; and (2) they could not show that any economic harm was
caused by the alleged misrepresentations. Plaintiffs could not establish
proximate cause, Uber argued, because their alleged losses “could have
resulted from any number of reasons other than customer reliance on the
challenged statements,” and, as to the challenged statements related to
safety concerns, only a very small percentage—fewer than 2.5 percent—of
Uber users would have seen them.
2
In opposition, plaintiffs argued Uber failed to show they were unable
to establish injury and causation. Alternatively, they argued that even if
Uber satisfied its initial burden to show a lack of injury and causation, they
responded with sufficient evidence on those issues to defeat summary
judgment.
Plaintiffs’ opposition relied heavily on deposition testimony from Salah,
Ezeokoli and Slomovic that (1) they were working more, but earning less,
than before Uber became a competitor for ride services; (2) they suffered
injury to their business goodwill; and (3) these changes were due to Uber’s
false advertising.1 In addition, plaintiffs submitted an expert report from
economist Leslie Shafer, Ph.D., that proposed a methodology for estimating
their damages based on data “that was known to be available or . . . likely to
be available” after anticipated surveys were performed, data was collected, an
econometric model was developed, and appropriate variables were identified.
Survey data regarding consumer deception was to be provided at some future
date.
Alternatively, plaintiffs argued that Merck Eprova AG v. Gnosis S.p.A.
(2d Cir. 2013) 760 F.3d 247 (Merck) and related cases provided a presumption
of injury and causation when direct competitors make deliberately false
comparative statements. Plaintiffs argued this presumption applied to their
claims, and relieved them of the need to prove causation and harm because
Uber’s summary judgment motion did not contest their status as competitors
or their allegations of false advertising.
Plaintiffs subsequently abandoned their claims of harm to their
1
businesses as taxi owners and now apparently seek redress only for alleged
lost income in their work as taxi drivers.
3
III. The Trial Court’s Ruling
The trial court disagreed. It found that (1) Uber met its burden of
showing a prima facie absence of evidence regarding causation; and (2)
plaintiffs failed to respond with admissible evidence that any injury they
suffered was caused by the alleged misrepresentations or that the
presumption of harm and causation should apply.
The court found plaintiffs’ deposition testimony inadmissible “insofar
as the Plaintiffs offer answers asserting that Defendants’ misstatements
caused Plaintiffs to lose business. Plaintiffs’ deposition transcripts uniformly
offer no foundation for Plaintiffs’ belief that it was Uber’s false statements,
rather than the new competition Uber brought to the market, that caused
Plaintiffs’ taxi business to decline.” The court also sustained hearsay
objections to news articles plaintiffs offered as evidence of a number of the
alleged misleading statements. “Although the statements of Uber
representatives quoted in the stories might qualify as party admissions, the
statements by the authors of the articles themselves are not subject to any
hearsay exception and are not adopted or authenticated by their authors.”
Next, the court found Uber established a prima facie showing of
absence of causation through evidence, also offered in its opposition to
plaintiffs’ contemporaneous motion for class certification, “that few to no
passengers even saw the misrepresentations at issue and that they therefore
cannot have caused Plaintiffs’ injuries.”
When it considered plaintiffs’ rebuttal evidence, the court found their
“very limited testimony regarding the causation of their injuries is
speculative. Although Plaintiffs are competent to testify to the fact that the
number of passengers they picked up declined after Uber entered the market,
Plaintiffs offer no foundation for how they know that those passengers are
4
leaving because of Uber’s false advertisements. In short, Plaintiffs offer no
reason to believe that their loss of business is the result of false statements,
rather than mere competition.”
The court also rejected plaintiffs’ reliance on the presumption of injury
and causation. First, plaintiffs alleged only two instances of false advertising
that directly compared Uber to the taxi industry. The court explained,
“Plaintiffs do not show evidence that Uber made actionable comparative
statements in the context of advertising. ‘Statements made to the media and
published in a journalist’s news article concerning a matter of public
importance are not commercial speech and are protected under the First
Amendment.’ ” One of the two direct comparisons was a statement by Lane
Kasselman, Uber’s Head of Communications for the Americas, to a local news
affiliate that Uber was “ ‘confident that every ride on the Uber platform is
safer than a taxi.’ ” The court found that plaintiffs failed to offer evidence
that Kasselman actually made the statement, or that it was “made as part of
a coordinated advertising campaign or with the intent to influence consumer
opinion.”
The court then turned to the second comparative statement that
allegedly caused plaintiffs to lose business, Kasselman’s comment in a blog
post that “[u]nlike the taxi industry, [Uber’s] background checking process
and standards are consistent across the United States and often more
rigorous than what is required to become a taxi driver.” Here, too, the court
found plaintiffs offered “no evidence that th[is] statement was made.”
Finally, the court found that the presumption of injury and causation
could not be based on implied, rather than express, comparisons to taxis,
such as statements that Uber offered the “ ‘safest rides on the road’ ” and
“ ‘always the safest experience,’ ” employed “ ‘an industry leading background
5
check process,’ ” and “ ‘thoroughly screened’ ” its drivers “ ‘through a rigorous
process we’ve developed using industry-leading standards.’ ” The court
explained the presumption can apply to such statements, which merely imply
a comparison to another product, only where “a typical consumer would
nevertheless know who was being referenced,” such as in a “ ‘two-player
market.’ ” Here, the evidence showed that Uber “exists in a complex market
for personal transportation, and taxis are not its only, or even its primary,
competitor” so any business gained by Uber did not necessarily mean lost
business for taxi drivers. Accordingly, the presumption did not apply to
relieve plaintiffs of their burden to show causation and injury.
The trial court granted summary judgment and entered judgment in
favor of Uber. Plaintiffs’ motion for class certification was dropped as moot.
This timely appeal followed.
DISCUSSION
I. Summary Judgment Standards
“ ‘To secure summary judgment, a moving defendant may prove an
affirmative defense, disprove at least one essential element of the plaintiff’s
cause of action [citations] or show that an element of the cause of action
cannot be established [citations]. [Citation.] The defendant “must show that
under no possible hypothesis within the reasonable purview of the allegations
of the complaint is there a material question of fact which requires
examination by trial.” [Citation.] [¶] The moving defendant bears the
burden of proving the absence of any triable issue of material fact, even
though the burden of proof as to a particular issue may be on the plaintiff at
trial. [Citation.] . . . Once the moving party has met its burden, the opposing
party bears the burden of presenting evidence that there is any triable issue
6
of fact as to any essential element of a cause of action.’ ” (Ochoa v. Pacific
Gas & Electric Co. (1998) 61 Cal.App.4th 1480, 1485 (Ochoa).)
“In reviewing the propriety of a summary judgment, the appellate court
must resolve all doubts in favor of the party opposing the judgment.
[Citation.] The reviewing court conducts a de novo examination to see
whether there are any genuine issues of material fact or whether the moving
party is entitled to summary judgment as a matter of law.” (M.B. v. City of
San Diego (1991) 233 Cal.App.3d 699, 703−704.) “We accept as true the facts
alleged in the evidence of the party opposing summary judgment and the
reasonable inferences that can be drawn from them. [Citation.] However, to
defeat the motion for summary judgment, the plaintiff must show ‘ “specific
facts,” ’ and cannot rely upon the allegations of the pleadings.” (Horn v.
Cushman & Wakefield Western, Inc. (1999) 72 Cal.App.4th 798, 805.) “While
‘[s]ummary judgment is a drastic procedure, should be used with caution
[citation] and should be granted only if there is no issue of triable fact’
[citation], it is also true ‘[j]ustice requires that a defendant be as much
entitled to be rid of an unmeritorious lawsuit as a plaintiff is entitled to
maintain a good one.’ [Citation.] ‘A defendant is entitled to summary
judgment if the record establishes as a matter of law that none of the
plaintiff’s asserted causes of action can prevail.’ ” (M.B. v. City of San Diego,
supra, at p. 704.)
“[I]t is well settled that on appeal following summary judgment the trial
court's reasoning is irrelevant, and the matter is reviewed on appeal de
novo. [Citations.] We exercise our independent judgment as to the legal effect
of the undisputed facts [citation] and must affirm on any ground supported
by the record.” (Jimenez v. County of Los Angeles (2005) 130 Cal.App.4th
133, 140.)
7
II. False Advertising under the Lanham Act
Section 43(a) of the Lanham Act (15 U.S.C. § 1125(a)) creates liability
for false advertising or promotion that misrepresents the nature,
characteristics, qualities, or geographic origin of goods, services, or
commercial activities (15 U.S.C. § 1125(a)(1)(B)).2
“ ‘The elements of a Lanham Act § 43(a) false advertising claim are: (1)
a false statement of fact by the defendant in a commercial advertisement
about its own or another's product; (2) the statement actually deceived or has
the tendency to deceive a substantial segment of its audience; (3) the
deception is material, in that it is likely to influence the purchasing decision;
(4) the defendant caused its false statement to enter interstate commerce;
and (5) the plaintiff has been or is likely to be injured as a result of the
false statement, either by direct diversion of sales from itself to defendant or
by a lessening of the goodwill associated with its products.’ ” (Franklin Mint
Co. v. Manatt, Phelps & Phillips, LLP (2010) 184 Cal.App.4th 313, 347–348.)
III. Analysis
It is the fifth element of section 43(a) liability that concerns us here.
“To invoke the Lanham Act’s cause of action for false advertising, a plaintiff
must plead (and ultimately prove) an injury to a commercial interest in sales
or business reputation proximately caused by the defendant’s
2“(1) Any person who, on or in connection with any goods or services, or
any container for goods, uses in commerce any word, term, name, symbol, or
device, or any combination thereof, or any false designation of origin, false or
misleading description of fact, or false or misleading representation of fact,
which— ¶ . . . (B) in commercial advertising or promotion, misrepresents the
nature, characteristics, qualities, or geographic origin of his or her or another
person’s goods, services, or commercial activities, shall be liable in a civil
action by any person who believes that he or she is likely to be damaged by
such act.” (15 U.S.C. § 1125(a)(1).)
8
misrepresentations.” (Lexmark Int’l., Inc. v Static Control Components, Inc.
(2014) 572 U.S. 118, 140 (Lexmark).) To do so, “a plaintiff suing under
§ 1125(a) ordinarily must show economic or reputational injury flowing
directly from the deception wrought by the defendant’s advertising; and that
that occurs when deception of consumers causes them to withhold trade from
the plaintiff.” (Id. p. 133.)
Here, Uber satisfied its initial burden with evidence showing plaintiffs
could not establish the alleged false advertising caused them to lose riders.
According to a report by Uber’s finance, accounting and business valuation
expert Terry Lloyd, “there are too many ‘moving parts’ in the ride-for-hire
market and trying to isolate the effect of just one of them is simply not
possible. The multitude of simultaneous independent variables are what
statisticians refer to as ‘confounding factors.’ ” Plaintiffs’ theory of causation,
Lloyd pointed out, merely assumed without any factual basis that “former
taxi riders switched to Uber simply because of the disputed statements.” To
the contrary, a survey that even plaintiffs’ expert relied on found that riders
chose Uber over taxis and other modes of transportation for a variety of
reasons, including safety, comfort, ease of use and payment, time savings,
and reliability.
Observing that plaintiffs’ proposed models for establishing damages
failed to account for all the reasons people choose one kind of transportation
over another, Lloyd opined that to conclude “a quantifiable amount of money
earned by Uber from 2012 to 2017 in the affected jurisdictions was diverted
from the putative classes as a result of Uber’s allegedly false statements is
simplistic and contrary to facts and common sense. It’s like saying that Big
Band artists should be able to sue Elvis Presley and Chuck Berry for lost
record sales after rock-and-roll displaced 1940’s pop music. While some
9
consumers stayed with the old genre most others migrated for different
reasons.”3
Dr. Maronick, the expert whom plaintiffs asserted was to provide
survey evidence of actual consumer deception had yet to provide evidence of
anything. As Uber observed, “[a] promise of evidence isn’t evidence.”
Moreover, Maronick failed to explain how his survey design would eventually
assess the impact of the alleged misrepresentations on potential riders and
distinguish it from other reasons riders might choose one mode of
transportation over another. Uber also adduced expert evidence that only a
small percentage of riders saw the category of alleged misstatements related
to the safety of its service.
Focusing on this latter point, plaintiffs mistakenly suggest that Uber’s
showing on the lack of proximate cause pertained solely to the safety-related
comments, and disregarded the alleged false advertising that concerned the
availability and proximity of rides, the legality of Uber’s airport operations,
and gratuities. True, Uber’s expert analysis of viewer “hits” was limited in
scope to the safety-related statements. However, Lloyd’s analysis that
plaintiffs were unable to separate out the impacts of the alleged false
3 As observed in a different legal context, “[j]ust as some people prefer
cats to dogs, some people prefer Uber to Yellow Cab, Flash Cab, Checker Cab,
et al. They prefer one business model to another.” (Il. Transp. Trade
Association v. City of Chicago (7th Cir. 2016) 839 F.3d 594, 598.) Judge
Posner identified a number of factors that might account for such
preferences, such as “the storage of payment information, so that one does
not need to be carrying cash or a credit card; the ability to see a time estimate
of how long a pickup will take and also a driver’s rating by past users; and
the ability to request a ride from wherever one is (e.g., from the comfort of
home, inside during the rain rather than by hailing on a street). (Id. at
p. 596.)
10
statements from the effect of multiple other factors pertained to each of the
four groups of alleged false advertising.
Plaintiffs also argue the court erred in relying on Uber’s expert
evidence that few potential riders actually saw the challenged statements
because that point was not raised in Uber’s motion or separate statement of
undisputed facts. Not so. Uber made the point in its summary judgment
memorandum, albeit briefly, and referred to a fuller discussion and
supporting evidence provided in its opposition to class certification filed the
same day. Although plaintiffs were thus on notice, plaintiffs failed to object
that the relevant evidence was not included in Uber’s separate statement.
“Whether to consider evidence not referenced in the moving party's separate
statement rests with the sound discretion of the trial court, and we review
the decision to consider or not consider this evidence for an abuse of that
discretion.” (San Diego Watercrafts, Inc. v. Wells Fargo Bank (2002) 102
Cal.App.4th 308, 315−316; Code Civ. Proc., § 437c, subd. (b) [failure to comply
with separate statement requirement “may in the court’s discretion”
constitute sufficient ground to deny motion (italics added)]; but see United
Community Church v. Garcin (1991) 231 Cal.App.3d 327, 337.) Here,
plaintiffs were on fair notice of the omission but raised no objection. The
court’s consideration of the evidence was not an abuse of discretion.
Plaintiffs alternatively argue that, if Uber established a prima facie
lack of causation, they responded sufficiently to defeat summary judgment
“via direct evidence in the form of their Plaintiffs’ testimony, expert
testimony, and the presumption of causation that arises where the defendant
makes false comparative statements.” We agree with the trial court that
plaintiffs’ evidence was insufficient to show the existence of a triable issue of
material fact.
11
As noted, the court excluded plaintiffs’ deposition testimony on
causation because it was lacking foundation and too speculative. We agree.
Asked how he thought Uber’s conduct had harmed him, plaintiff Slomovic
said Uber has “an unfair advantage” because it operates “essentially illegally
with very little, if any, oversight.” But he conceded he did not know why a
consumer will choose Uber over a taxi (“I have no way of reading somebody
else’s mind”), except that it seemed “inevitable” based on unidentified data
and analyses that “Uber is the main cause and that misrepresentation by
Uber to passengers and regulator is the reason why those opinions happen
and why people think the way they do.”
The other two plaintiffs’ testimony on causation was equally
speculative. Salah testified he knew the challenged statements caused him
losses “from my— from what happened with other drivers and what
happened to other businesses, taxi business industry” and because “it’s all
out there to the public and everybody is reading it.” When Ezeokoli was
asked how he could measure the effect of Uber’s false advertising on his
business, he responded, “the way I can say is that, you know, my income is
dropping, and that’s a way, telling me that something is really not going
right” and “I just know it’s because of Uber.” And he conceded he did not
know why passengers would pass up cabs at airports in favor of Uber.
“A triable issue of material fact may not be created by speculation or a
‘stream of conjecture and surmise’ ” (Miller v. Fortune Commercial Corp.
(2017) 15 Cal.App.5th 214, 220.) Summary judgment may be affirmed where
the plaintiff’s evidence is little more than guesswork “ ‘ “in the realm of mere
speculation and conjecture.” ’ ” (Wiz Technology, Inc. v. Coopers & Lybrand
(2003) 106 Cal.App.4th 1, 15].) The trial court properly found plaintiffs’
testimony failed to establish the existence of a material issue as to causation.
12
Taking a different tack, plaintiffs contend their testimony that they
“believed” Uber’s misrepresentations caused them to lose riders was legally
sufficient proof of causation. They observe the Lanham Act expressly
authorizes suit by a person who “who believes that he or she is likely to be
damaged” (15 U.S.C. § 1125(a) (italics added) by false advertising.4
Accordingly, they contend, to defeat summary judgment they were only
required to supply evidence that they believed Uber’s advertising caused
them harm—not that it actually did so. Here, too, they are mistaken. As the
Supreme Court made clear in Lexmark, the Lanham Act incorporates a
requirement of proximate causation “its broad language notwithstanding.”5
(Lexmark, supra, 572 U.S. at p. 132.) “While the statute gives the right to
sue to a person who ‘believes that he is or will be damaged,’ it is clear that to
prevail in such a suit or even, if there is a question, to establish his standing,
4 Under section 1125(a)(1), “Any person who, on or in connection with
any goods or services, or any container for goods, uses in commerce any word,
term, name, symbol, or device, or any combination thereof, or any false
designation of origin, false or misleading description of fact, or false or
misleading representation of fact, which—[¶] (A) is likely to cause confusion,
or to cause mistake, or to deceive as to the affiliation, connection, or
association of such person with another person, or as to the origin,
sponsorship, or approval of his or her goods, services, or commercial activities
by another person, or [¶] (B) in commercial advertising or promotion,
misrepresents the nature, characteristics, qualities, or geographic origin of
his or her or another person's goods, services, or commercial activities, [¶]
shall be liable in a civil action by any person who believes that he or she is or
is likely to be damaged by such act. (Italics added.)
5 Lexmark is primarily addressed to Article III standing to bring a
Lanham Act claim. While standing and proximate cause are closely related
in this context, they are not interchangeable constructs. (See Lexmark at
pp. 129, 134 fn. 6 [“Proximate causation is not a requirement of Article III
standing, which requires only that the plaintiff’s injury be fairly traceable to
the defendant’s conduct”].)
13
there must be a real possibility of his being damaged and not the mere
assertion of a belief.” (D.M. & Antique Import Corp. v. Royal Saxe Corp.
(S.D.N.Y. 1969) 311 F.Supp. 1261, 1269 fn. 6; Chromium Industries, Inc. v.
Mirror Polishing & Plating Co., Inc. (N.D. Ill. 1978) 448 F.Supp. 544, 554.)
Plaintiffs’ reliance on the principle that parties are generally competent
to testify to losses in value of their own property or business (see, e.g.,
Newhart v. Pierce (1967) 254 Cal.App.2d 783, 789) does not solve their
problem. While true as far as it goes, this principle has no bearing on
whether plaintiffs’ losses were caused by the challenged statements.
Plaintiffs also propose they satisfied their burden through evidence
from their expert economist. Dr. Schafer’s report described the market of
regulated passenger transportation providers and proposed “a regression
analysis which permitted calculating how much of the taxi[] industry’s loss
. . . was attributable to Uber exclusively (factoring out all other competitors’
impact).” This, they assert, “when viewed with the uncontested allegations
that Uber made false statements about its competitors, was sufficient” to
trigger the presumption of causation and thus defeat summary judgment.
Not so. At most, Dr. Schafer’s proposed analysis would show losses
attributable to competition from Uber generally, not to those losses caused by
the challenged advertising. Dr. Schafer expressly acknowledged the limits of
her proposed work: “[o]nce the baseline of Uber’s impact on taxi service is
established, the next step is to identify the share of that impact associated
with each of the four [categories of] false representations in Los Angeles.”
She did not claim to be able to measure that impact. Instead, she intended to
rely on the anticipated results of another expert’s survey that had yet to be
undertaken.
14
Once the burden shifts to the party opposing summary judgment, “[i]t
is not enough to produce just some evidence. The evidence must be of
sufficient quality to allow the trier of fact to find the underlying fact in favor
of the party opposing the motion for summary judgment.” (McGonnell v.
Kaiser Gypsum Co. (2002) 98 Cal.App.4th 1098, 1105.) Dr. Schafer’s
proposed study is plainly not “adequate . . . for a reasonable jury to conclude
that Plaintiffs suffered actual injury as a result of Defendants’
advertisements.” (Southland Sod Farms v. Stover Seed Co. (9th Cir. 1997)
108 F.3d 1134, 1146 (Southland Sod); see also Lindy Pen Co., Inc. v. Bic Pen
Corp. (9th Cir. 1993) 982 F.2d 1400, 1411 (Lindy Pen) [plaintiff in trademark
infringement action offered “ ‘credible proof of the fact of damage’ ” based on
evidence a wholesale distributor switched products].)
Alternatively, plaintiffs argue they are not required to show a factual
dispute over injury or causation because those elements are presumed under
the Lanham Act when deliberately false statements are made by a
competitor. “Since Uber did not contest the falsity of its statements,” they
maintain, “it has failed to negate the presumption of causation [and] injury.”
We disagree. As the trial court found, plaintiffs failed to show the
presumption applies here.
Merck, supra, 760 F.3d 247, discusses the relevant principles.
“In McNeilab, Inc. v. American Home Prods. Corp., 848 F.2d 34, 38 (1988) we
distinguished two types of false advertising cases and the presumptions they
permit: (1) ‘misleading, non-comparative commercials which touted the
benefits of the products advertised but made no direct reference to any
competitor's product,’ and (2) ‘a false comparative advertising claim.’ We
noted that ‘[a] misleading comparison to a specific competing
product necessarily diminishes that product's value in the minds of the
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consumer.’ [Citation.] In the first type of case (i.e., non-comparative
advertising), the injury ‘accrues equally to all competitors; none is more likely
to suffer from the offending broadcasts than any other.’ [Citation.] In those
types of cases, ‘some indication of actual injury and causation’ would be
necessary in order to ensure that a plaintiff's injury is not speculative.”
(Merck at p. 259; Harper House, Inc. v. Thomas Nelson (9th Cir. 1989)
889 F.2d 197, 209-210 [rebuttable presumption does not apply where
defendant misrepresents its own product without targeting any other specific
product]; see Balance Dynamics Corp. v. Schmitt Industries, Inc. (6th Cir.
2000) 204 F.3d 683, 694-695 (Balance Dynamics); Porous Media Corp. v. Pall
Corp. (8th Cir. 1997) 110 F.3d 1329, 1335 (Porous); but see ThermoLife
Intern., LLC v. Gaspari Nutrition Inc. (9th Cir. 2016) 648 Fed.Appx. 609,
615−616 [unpublished memorandum opinion].)
In contrast, where a defendant falsely compares its product to a
competitor’s, “injury may be presumed, because there was not the same
concern of awarding damages for merely speculative injury.” (Merck, supra,
760 F.3d at p. 259.) The “classic instance of comparative advertising” is
“where one company’s advertisement mentions a competitor’s product by
name” (id. at p. 261), but the presumption also applies where, although the
comparison to a competing product is not express, the configuration of the
relevant market is such that the defendant’s gain necessarily comes at the
plaintiffs’ expense. This is so because, in such situations, the “utilization of a
presumption of injury carries no risk of speculative injury.” (Id. at
p. 259−261 [presumption applies in two-player markets; Time Warner Cable,
Inc. v. DIRECTV, Inc., (2d Cir. 2007) 497 F.3d 144, 162-163 (Time Warner)
[satellite television provider falsely advertised its service was better than
16
“cable;” the presumption applied because the plaintiff was the sole provider of
cable in the relevant market].)
Here, plaintiffs assert the presumption applies because Uber made
false statements that, without referring to taxis, implied that Uber rides are
safer than cabs. Such implied comparisons include statements that Uber
offered “the safest rides on the road” and “always the safest experience,”
employed “an industry-leading background check process,” and screened
every driver “using industry-leading standards.” 6 Plaintiffs provided no
admissible evidence showing the presumption applies to these implied
comparisons. To the contrary, Uber’s expert evidence established that the
parties compete in a complex market for personal transportation with
multiple competitors that include personal transportation services such as
Lyft, ZipCar, public transportation, and private shuttles. The court properly
distinguished this situation from those in Merck and Time Warner, where any
business the defendant gained from its false advertising necessarily meant a
loss of business for the plaintiff.
Plaintiffs urge that the presumption extends broadly beyond the
boundaries described in Merck and Time Warner to any situation involving
false statements by competitors, but the authorities they cite do not support
6 The complaint also alleged numerous instances of false advertising
regarding airport pickups, the proximity of rides, and tipping, but those
statements cannot reasonably be construed as implied comparisons to the
taxi industry. “[W]here a defendant is guilty of misrepresenting its own
product without targeting any other specific product, it is erroneous to apply
a rebuttable presumption of harm in favor of a competitor. Otherwise, a
plaintiff might enjoy a windfall from a speculative award of damages by
simply being a competitor in the same market.” (Porous, supra, 110 F.3 at
p. 1334.) Our discussion of implied comparisons is therefore limited to Uber’s
safety-related statements.
17
such a broad application. In TrafficSchool.com, Inc. v. EDriver Inc. (9th Cir.
2011) 653 F.3d 820 (TrafficSchool), the plaintiffs introduced “ample”
evidence that “sales gained by one [were] . . . likely to come at the other’s
expense.” The Ninth Circuit held this was sufficient proof of injury-in-fact to
establish plaintiffs’ Article III standing to enjoin the defendant’s false
advertising under the Lanham Act. (TrafficSchool at p. 825.) Such
“[e]vidence of direct competition is strong proof that plaintiffs have a stake in
the outcome of the suit, so their injury isn’t ‘conjectural’ or ‘hypothetical.’ ”
(Id. at pp. 825−826.) Even so, the plaintiffs were not entitled to recover lost
profits because they produced no proof of past injury or causation and the
challenged advertising did not expressly compare the competitors’ products.
(Id. at p. 831.)
Plaintiffs’ other authorities are also unpersuasive here. In Southland
Sod, supra, 108 F.3d at p.1146, the defendant expressly claimed its product
performed better than the plaintiffs’, and, in any event, the plaintiffs opposed
summary judgment with evidence sufficient for a jury to find they were in
fact harmed by the defendants’ advertisements. In U-Haul Intern., Inc. v.
Jartran, Inc. (9th Cir. 1986) 793 F.2d 1034, 1036, 1040−1041, the challenged
advertising explicitly compared Jartran to U-Haul. Lindy Pen, supra,982 F.2d 1400, concerns trademark infringement claims, not false
advertising, and the plaintiff provided “credible proof” that it was harmed by
the infringing conduct. (Id. at p. 1411.) None of these decisions apply the
Lanham Act presumption of causation to implied comparisons beyond the
boundaries discussed in Merck and Time Warner.
What, then, of the alleged deceptive statements that expressly compare
Uber to taxis? Our review confirms the trial court’s determination that the
complaint alleged only two such statements: Kasselman’s statement to a
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journalist that “every ride on the Uber platform is safer than a taxi,” and his
comment in a blog post that Uber’s background checking was more consistent
and often more rigorous than the taxi industry’s. 7 But Uber’s evidentiary
showing that plaintiffs cannot demonstrate those statements caused them to
lose ridership rebutted any presumption of harm that could have arisen from
them. (See Balance Dynamics, supra, 204 F.3d at pp 694−695.)
Moreover, as the court found, plaintiffs failed to offer evidence that
either statement was actually made. “[A] party cannot rely on the allegations
of his own pleadings, even if verified, to make or supplement the evidentiary
showing required in the summary judgment context. [Citations.] The basic
purpose of summary judgment is to provide a means by which the court
determines whether ‘the triable issues apparently raised by [the complaint
and answer] are real or merely the product of adept pleading.’ [Citation.]
Hence, the moving party must demonstrate the presence or absence of a
genuine triable issue by ‘affidavit’ or other competent means.” (College
Hospital Inc. v. Superior Court (1994) 8 Cal.4th 704, 720, fn. 7.) Plaintiffs did
not do so.8
The trial court got it right. Uber established a prima facie case that
plaintiffs could not prove the alleged false statements caused them harm.
Plaintiffs, in response, failed to offer evidence of actual causation or show the
Lanham Act’s presumption of causation should be applied in this case.
Summary judgment was properly granted.
7 For this reason, we need not also address whether, as plaintiffs
assert, the trial court erred when it sustained multiple hearsay objections to
evidence of a number of unalleged impliedly comparative statements.
8 A plaintiffs’ expert’s analysis of plaintiffs’ allegations about the
various challenged statements does not compensate for their failure to
produce evidence authenticating the alleged statements.
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DISPOSITION
The judgment is affirmed.
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_________________________
Siggins, P.J.
WE CONCUR:
_________________________
Fujisake, J.
_________________________
Jackson, J.
Ezeokoli v. Uber A156445
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