Oz Uber class action gets complex with service of foreign defendants issue

Uber class action – Tort of conspiracy by unlawful means – Application by Australian defendants to strike out amended statement of claim, or for an order that the proceeding not continue as a class action, or that the class be limited to Victorian class members – Strike out application granted in small part with leave to re-plead, but applications otherwise dismissed – Application by foreign defendants to set aside service on them out of the jurisdiction – Application dismissed – Application by

This is a class action on behalf of licensed participants in the commercial taxi, hire-car, limousine and charter vehicle industry in Victoria, New South Wales, Queensland and Western Australia against the entities alleged to have been responsible for introducing the “UberX” ride-sharing service to Australia in 2014 (Uber entities). Of the seven Uber entities, two are Australian companies (the Australian defendants) and the others are foreign companies or firms (the foreign defendants).

In this judgment, Macaulay J:

  • largely dismissed an application made by the Australian defendants to strike out the plaintiff’s Amended Statement of Claim (ASOC) pursuant to r 23.02 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (Rules);
  • dismissed applications by the Australian defendants for an order that the proceeding no longer continue as a representative proceeding (pursuant to s 33N of the Supreme Court Act 1986 (Vic) (SCA)) or, alternatively, that it proceed on behalf of Victorian class members only (pursuant to s 33ZF of the SCA);
  • dismissed an application by the foreign defendants to set aside service of the writ and ASOC on them out of the jurisdiction; and
  • ordered that the plaintiff provide security for the Australian defendants’ costs up to and including the filing of defences in the aggregate amount of $115,000.

Strike Out Application

The cause of action relied upon by the plaintiff in the ASOC is conspiracy by unlawful means.

The elements of an unlawful means conspiracy are as follows:

  • each of the alleged co-conspirators must have been a party to an agreement or combination with either of the other co-conspirators;
  • the purpose of that agreement or combination must have been to injure the plaintiff(s) by unlawful means;
  • the agreement or combination must have been carried into effect by the commission of agreed unlawful acts; and
  • those unlawful acts must have caused damage to the plaintiff(s).

Broadly, the pleading of conspiracy in the ASOC in relation to each State follows the same essential structure, being that during the claim period:

UberX drivers (known as Partners) operated vehicles which were not authorised to be operated as a commercial passenger vehicle, and did so without holding required driver accreditation, and thereby committed offences;

  • each of the Uber entities knew the essential matters comprising the commission of those offences by UberX Partners;
  • certain of the Uber entities were complicit (in the terms of the relevant local complicity laws) in the commission of the offences by the UberX Partners;
  • the Uber entities agreed or combined, with the intention of injuring the class members (the local licensed, commercial passenger vehicle operators) by establishing, operating and promoting UberX in the State by unlawful means (namely their complicity in the offences of the UberX Partners); and
  • the establishment and conduct of UberX in each State by that means caused economic loss to the incumbent, licensed commercial point-to-point passenger services providers.

The Australian defendants argued that the ASOC ought to be struck out, on the basis that it is embarrassing or does not disclose a cause of action, because it:

  • fails to adequately identify which of the Uber entities were the parties to each of the conspiracies in the four States and does not plead overt acts separately from the agreement itself; and
  • fails to identify how each Uber entity had as its object the injury of the relevant class members.

Justice Macaulay largely rejected the defendants’ arguments. With respect to the first, his Honour observed that by carefully following the cross-referencing in the ASOC, and reading the allegations within the context of the plaintiff’s broader allegations concerning the Uber entities’ corporate structure and overall business strategy, the ASOC adequately informs the reader, in respect of each Uber entity:

  • who is alleged to have combined;
  • when the combination is said to have been made;
  • what unlawful means the alleged conspirators agreed to use and what made those means unlawful; and
  • what unlawful acts were performed pursuant to the combination.

His Honour also rejected the Australian defendants’ criticism of the plaintiff’s use of the phrase “one or more of” where he is presently unable to state affirmatively which of the seven Uber entities was responsible for particular conduct. His Honour said that (at [61]):

In circumstances where the knowledge of which particular entity within the seven Uber defendants was responsible for some particular conduct lies within the Uber defendants themselves, and the particular task has been clearly identified and described, it is difficult to accept that defendants are put to a genuine disadvantage of not knowing what it is that is alleged against them by the plaintiff not spelling out each responsible entity at this stage.

Turning to the Australian defendants’ second argument, his Honour reviewed the leading Australian and UK authorities concerning the requirement that the purpose of the conspiracy must have been to injure the plaintiff(s). The authorities distinguish between the plaintiff’s loss or injury being a mere consequence or result of the alleged conspiracy on the one hand (which is not sufficient to satisfy the legal standard) with it being the intended means by which the defendants’ sought to achieve their gain on the other (which will likely be sufficient).

The Australian defendants argued that the plaintiff’s case merely involves an allegation of an intention to compete in the commercial point-to-point passenger transport market, and the class members’ losses rise no higher than mere consequences of such competition.

His Honour rejected this submission, and observed that, reading the ASOC as a whole, the plaintiff puts forward a discernible case that (at [94]):

… the Uber entities intended that the means by which UberX would typically operate in the four Australian States would be through the supply of point-to-point passenger transport services by unlicensed drivers using non-accredited vehicles who would enjoy a competitive advantage over the incumbent licensed participants. Further, by that means of operation, UberX would wrest a share of that market from incumbent licensed participants, otherwise entitled to competition-free operation, diverting some of their income to UberX Partners, thereby causing economic loss to those incumbent participants while achieving the Uber entities’ goal of establishing and operating UberX.

His Honour said that, without wishing to convey any view about merits, the legal standard of intended loss or harm may be satisfied by the plaintiff proving that (at [99]):

… each Uber entity intended that the means by which UberX would be established in each State would be through unlawful competition in an otherwise exclusive market, in circumstances where the economic advantages of that exclusivity to the plaintiff and group members was critical to the maintenance of their incomes and business value, so that the intrusion of the unlawful competition would necessarily cause them loss.

His Honour observed that this formulation of harm is similar to the plaintiff’s ‘discernible case’, reading the ASOC as a whole. His Honour thus held that the pleaded case is not doomed to fail and should not be struck out. However, his Honour accepted the Australian defendants’ complaint that the pleading of intended harm in the ASOC was too general, and ordered the plaintiff to file a further amended statement of claim containing a clearer and more transparent articulation of the intended harm.

Part 4A Matters

As noted above, the Australian defendants made two applications seeking orders under Part 4A of the SCA: first, under s 33N that the proceeding no longer continue as a group proceeding and second, under s 33ZF that the pleading be amended such that it only applies to Victorian class members. The arguments in support of the application can be divided into three classes:

  • that the thresholds of ss 33C(1)(b) and 33C(1)(c) of the SCA were not met;
  • the lead plaintiff, as a Victorian, could not represent the claims of non-Victorian class members and further, his claim did not provide a vehicle upon which evidence relevant only to their claims could be adduced; and
  • the divergence in claims between states was such that it was impracticable and inefficient for them to be heard together.

The s 33C Arguments

In his discussion of s 33C, his Honour noted that the section is to be given a liberal interpretation. In considering the concept of a claim, his Honour endorsed the decisions of Beach J in Webster v Murray Goulburn Co-op Co Ltd (No 2) [2017] FCA 1260 and Lee J in Dillon v RBS Group (Australia) Pty Ltd (2017) 252 FCR 150; [2017] FCA 896 which held that the concept of a ‘claim’ is broader than the concept of a ‘cause of action’.

In considering s 33C(1)(b), his Honour found that the threshold requiring relatedness in the circumstances giving rise to the claims had been met. His Honour noted (at [130]-[131]):

The "claims" of group members in each state, whilst not amounting to exactly the same cause of action because each State conspiracy is different, nonetheless, all share the same legal elements. Moreover, all share the same foundational factual substratum and arise from similar or at least related (alleged) factual circumstances.

Those alleged similar or related factual circumstances include Uber's business strategy applied Australia-wide, directed and coordinated by the same company, Uber Inc; a common general modus operandi for recruiting and entering contracts with UberX Partners; the same use and dependency upon common software infrastructure to operate the UberX service; the same strategy to use, typically, unlicensed drivers who drive non-accredited vehicles offending similar State laws; the same or similar market conditions into which the UberX service was introduced, namely a regulated market with barriers to entry in the form of compliance regulations for drivers and cars; the same or similar approach for dealing with the regulatory regimes and regulatory authorities in each State; and a similar impact upon the incumbent licensed or accredited drivers, owners and operators of point to point passenger transport services from the introduction of UberX in each State.

The Australian defendants also attacked the common issues of fact and law put forward by the plaintiff. They argued that all lack commonality or substance such that the threshold of s 33(1)(c) had not been met. Whilst his Honour found that some of the common questions were expressed with generality, he was nevertheless satisfied that a substantial common issue of fact or law existed in relation to the question of intention to injure for the tort of conspiracy by unlawful means. His Honour also found that questions relating to the elements of the agreement or combination between the Uber entities existed.

Claims for Non-Victorian Class Members

The Australian defendants argued that the lead plaintiff, as a Victorian, was not authorised by Part 4A to represent non-Victorian class members. This argument found little support from his Honour, holding (at [150]-[152]):

Here, because the claims of the group members in all states satisfy the s 33C criteria (as I have found they do) and Mr Andrianakis has sufficient interest to bring such a claim of his own, he has standing to be the representative plaintiff for all.

There is no requirement that all must have the same cause of action against the defendants. Section 33C(2)(b)(i) and (ii) (above [118]) make it clear that group members may have causes of action that differ from one another.

Further, not all questions have to be common amongst all group members. As s 33Q of the Act provides (above [119]), when some questions are common to the claims of some group members only, sub-groups may be established and sub-group representatives appointed.

The Australian defendants’ attempts to argue that the lead plaintiff’s claim did not provide a vehicle to adduce evidence relating to the claims of non-Victorian class members also failed. His Honour held (at [154]):

Once properly constituted as a group proceeding, evidence may be admitted that is relevant to the determination of the common questions of fact which arise from the claims of the group members. Some of those questions of fact may concern acts and omissions of a defendant done in relation to individual group members other than [the plaintiff], as contemplated by s 33C(2)(b)(ii)… In due course, directions for the introduction of evidence relevant for the determination of questions common to group members who may have a cause of action different from that of the plaintiff, can be (and commonly are) made for trial management purposes, including the possible use of sample group members.

The ‘Inappropriate and Inefficient’ Argument

The Australian defendants also attempted to argue that the claims ought not be heard together on the basis it would be inefficient and inappropriate to do so (echoing s 33N(c) and (d)). This argument was also dismissed by his Honour, stating (at [169]-[170]):

In my view, at this early stage and considering only the facts alleged by the plaintiff, there is real benefit in having the claims of group members, and the common questions of fact and law that arise from them, dealt with in the one proceeding. Moreover, I see no other reason for it being inappropriate to do so. I reject the argument that the differences in the claims are such as to make the proceeding an inefficient or ineffective means of determining them.

I accept that the proceeding is large, and that determining the non-common issues might be unwieldy due to the diversity and complexities inherent in the claims. But, there are two answers to that concern at this stage. First, it is too early to say just how unwieldy the proceeding might become. Secondly, the court has a range of case management tools to be deployed in dealing with diversity and complexity. At the appropriate time, they will be considered.

Overseas Service

The foreign defendants sought to have service upon them set aside based on two lines of argument:

  • the ASOC had no prospects of success against the foreign defendants; and
  • r 7.02 of the SCR, which permits service out of Australia, was invalid.

As to the first line of argument, his Honour held (at [182]) that, for the same reasons that the strike out application was dismissed, there were real and not fanciful chances of success.

The foreign defendant’s second line of argument was based on the premise that, when r 7.02 was amended in 2016 to allow for service extraterritorially for proceedings alleging torts committed within Australia (previously only Victoria), the rule was an impermissible expansion, by judge-made rule, of the Court’s adjudicatory (as opposed to subject matter) jurisdiction. The foreign defendants attempted to argue that there was no statutory power permitting the judges of the Court to amend the rule in 2016. His Honour traversed the history of the statutory basis for the Court’s rule making powers, holding that the Court had been conferred power to make rules with respect to extraterritorial service in respect of torts occurring in Australia. His Honour therefore rejected the foreign defendant’s objection to service.

Security for Costs

There was no dispute that the plaintiff ought to provide security for the Australian defendants’ costs. However, the Australian defendants’ sought a sum of $500,000, while the plaintiff submitted that $85,000 was the appropriate amount. His Honour accepted the plaintiff’s submission that the amount of security ordered should reflect an apportionment of 'common' costs between the seven Uber entities, and ordered the plaintiff to provide security for the Australian defendants’ costs up to and including the filing of defences in the aggregate amount of $115,000.

Case details

Andrianakis v Uber Technologies Inc [2019] VSC 850

  • Supreme Court of Victoria, Macaulay J,
  • 20 December 2019
  • Plaintiff’s Solicitors: Maurice Blackburn;
  • Defendants’ Solicitors: Jones Day;
  • Plaintiff’s Funder: Harbour

Read more about this case on Austlii: Andrianakis v Uber Technologies Inc [2019] VSC 850

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