Federal judge finds grounds for examining alleged fraud in Uber antitrust case

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An antitrust case filed in a U.S. district court in New York in December 2015 has taken an unexpected turn. U.S. District Judge Jed Rakoff wants information about whether a private investigator hired by Uber concealed his identity — which would constitute fraud — when seeking information about an opponent in the lawsuit, according to Reuters.

The lawsuit, in which Uber CEO Travis Kalanick is the defendant, alleges that Kalanick and Uber drivers are guilty of price-fixing. It alleges, “Uber has a simple but illegal business plan: to fix prices among competitors and take a cut of the profits.” Unlike the other lawsuit involving Uber that has gotten a lot of attention, this is not a lawsuit between Uber drivers and Uber, but against the Uber CEO and the drivers. Uber itself is not a defendant in the case but is nevertheless actively helping Kalanick.

The lead plaintiff in the antitrust suit is Spencer Meyer, who is represented by Andrew Schmidt. The alleged fraud involves an investigative company, Ergo. After originally denying any knowledge of the investigator, Kalanick through his attorneys admitted to hiring Ergo to find information about Meyer and Schmidt, which is legal. Where the alleged fraud may have happened is if an Ergo employee misrepresented himself in his efforts to uncover details about the plaintiff and his attorney.

Kalanick’s attorneys moved to dismiss the suit in March. At the time, the attorneys argued that under the Uber passenger agreement, riders give up their right to bring a class action against the company. Judge Rakoff denied the request.

In the current issue, Rakoff has ordered Uber to submit to the court all documentation between Ergo and the company. Specifically, he wants to see evidence backing Uber’s claim that it did not know anything about the Ergo investigator misrepresenting himself.

“An Ergo investigator hired by Uber in connection with this case made false representations in order to gain access to information about plaintiff and his counsel, thus raising a serious risk of perverting the process of justice before this Court,” wrote Rackoff. The Ergo investigator “falsely stated that he was compiling a profile of up-and-coming labor lawyers in the United States,” Rackoff continued.

Uber’s attorney’s argued that the communications were privileged, but Rackoff denied their request. “The Court finds that plaintiff has provided an entirely ‘reasonable basis’ to suspect the perpetration of a fraud and to suspect that Uber communications furthered such a fraud,” Rakoff wrote.

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