UBER recognized as a transport service provider in France

In a landmark decision dated December 12, 2019 in which GOLDWIN SOCIETE D’AVOCATS (Maître Jonathan BELLAICHE, Partner and Maître Olivia ZAHEDI, Counsel) represented a cab booking center, the Paris Court of Appeal ruled that:

– UBER operates a transport service and not a platform for putting people in touch with each other

The Court’s reasoning is as follows:

“However, the Court of Justice of the European Union, in its decision dated April 10, 2018, held that the “intermediation service at issue must be regarded as forming an integral part of an overall service, the main element of which is a transport service, and, therefore, as qualifying (…) as a “service in the field of transport”, within the meaning of Article 2(2)(d) of Directive 2006/123″. It can be deduced from this that the transport service is the main service, so that the matching phase is only preparatory in nature, that the Uber companies are operators of passenger transport and that they are in competition with the activity carried out by the company […]”.

The Paris Court of Appeal then rigorously applied the case law issued by the Court of Justice of the European Union on April 10, 2018 recalling that the main service performed by UBER was indeed a transport service.

– The UBERPOP service is indeed unlawful and must give rise to compensation for damages for the professionals of the T3P (private public transport of persons)

The Court confirmed the jurisprudence already rendered by the Court of Cassation recognizing that the UBERPOP service was illegal.

The Court confirmed the right to compensation of the T3P professionals who suffered a prejudice because of the UBERPOP service.

This is neither more nor less than the application of jurisprudence already rendered in this matter.

– The provisions prohibiting electronic marauding are indeed applicable in France and their violation by UBER constitutes unfair competition.

The Paris Court of Appeal ruled that the platform violated the provisions of the Transport Code which prohibit all transporters other than cabs from marauding on the public highway and canvassing customers without prior reservation, including

– stopping, parking or driving on the public highway, unless they have a prior reservation and do not return to the place of establishment

– informing the customer, before any order or reservation, of both the location and availability of the vehicle.

In entering judgment, the Court noted that:

“Under the terms of its Partner Guide, the platform encourages its drivers to “spread themselves evenly across areas of high demand” in the hope of getting more rides (Exhibit 5f, page 34) and allows drivers to view on a map, in real time, the geographic areas in which booking requests are more or less high (Exhibit 5f, pages 17 and 34), thereby encouraging a driver who does not have a reservation to go to an area of high demand in order to be booked. These elements establish that Uber companies, through the recommendations they issue to VTC drivers, encourage non-compliance with the provisions of articles L. 3120-2, II and L. 3122-9 of the Transport Code. These acts constitute unfair competition.

“It appears from the bailiff’s report dated January 28, 2016 submitted to the debates by the Uber companies (Exhibit No. 34) that :

– the map appearing on the Uber application provides information on the location of vehicles with drivers ;

– the banner “order here”, which appears on the screen of the smartphone, shows the waiting time for the customer to be picked up (Exhibit 34 – pages 9 to 35), information that allows to assess the availability of the nearest vehicle;

so that by informing the customer, prior to the reservation, of both the location and the availability of the vehicle, the application allows the practice of electronic marauding, a practice prohibited by Article L. 3120-2, III 1° of the Transport Code for this category of operators. This element constitutes unfair competition.

This decision confirms the monopoly of marauding for cabs, which are necessarily prejudiced by the practice of electronic marauding and the non-return to base by VTCs.

– The misuse of the LOTI status by UBER has finally been recognized and condemned.

The Court ruled that:

“It further results from the exhibits submitted to the debates that Uber encouraged the use of capacitaries by disseminating information according to which, in order to “become an UberX or Berline driver”, it is necessary to have a “professional license (VTC professional card license and Atout France authorization or capacity to transport people < 9 seats and license from the regional equipment directorate)” (Exhibits […] n°17a, page 8 and 17b).Benefiting from simplified conditions of access to the status of driver compared to those applicable to cab or VTC drivers, “Loti” drivers necessarily provided a competitive advantage to Uber companies. This element constitutes unfair competition.

The misuse of the LOTI status was one of the most important competitive harms for T3P professionals, which has fortunately been sanctioned.

– UBER drivers are not employees for the Commercial Chamber of the Court of Appeal.

The Court ruled that:

“None of the elements invoked could characterize the existence of a subordination link between UBER and the drivers”

The criteria used by the Social Division of the Paris Court of Appeal to recognize the qualification of UBER drivers as employees were submitted to the Court’s appreciation.

With this decision, the Commercial Chamber of the Paris Court of Appeal has diverged from the Social Chamber and has opened the debate on the status of drivers with regard to the applicable rules.

The question of the legal status of UBER drivers is therefore subject to a double assessment between the social chamber and the commercial chamber, which fully reopens the debate on the matter.

Consequently, the Paris Court of Appeal, in its decision, has :

– Declared that the UBER companies committed acts of unfair competition for the operation of the UBERPOP service, through the practice of electronic marauding and the use of drivers operating under the LOTI status

– Ordered UBER FRANCE, UBER BV, and UBER INTERNATIONAL BV to cease inciting drivers to circulate on the public highway in search of customers and to incite drivers not to return to their base or to a place located off the road while waiting for a reservation unless they can prove that they have another reservation in advance

UBER FRANCE, UBER BV, and INTERNATIONAL BV were ordered to pay €106,000 in damages and €15,000 under Article 700 of the French Code of Civil Procedure in addition to costs.