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Albuquerque Cab Company, Inc. v. Lyft, Inc.

United States District Court, D. New Mexico

March 7, 2019

ALBUQUERQUE CAB COMPANY, INC., Plaintiff,
v.
LYFT, INC., UBER TECHNOLOGIES, INC., and HINTER-NM, LLC, Defendants.

          MEMORANDUM OPINION AND ORDER GRANTING MOTIONS TO DISMISS

          STEVEN C. YARBROUGH UNITED STA RB MAGISTRATE JUDG\\ftp\NLL-Case_DC\!!!current\New Hampshire\3_XML\MonikaK\12.08E

         The central question presented in this case is whether two transportation network companies were subject to and liable under the Motor Carrier Act (MCA) for their operations in New Mexico prior to the enactment of the Transportation Network Company Services Act (TNCSA). Defendants have moved to dismiss Plaintiff's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), arguing that the answer to this question should be “no.” See Docs. 10 & 14. The Court agrees that the current complaint is insufficient under Federal Rule of Civil Procedure 8 to state a claim under the Motor Carrier Act and the New Mexico Unfair Practices Act. However, because Plaintiff originally filed the complaint in New Mexico state court, which has a more lenient pleading standard, the Court will dismiss the complaint without prejudice and grant Plaintiff leave to file an amended complaint by April 8, 2019.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         On August 24, 2017, Plaintiff filed a single-count complaint in state court against Defendants for damages arising “under the New Mexico Motor Carrier Act and Unfair Practices Act.” Doc. 1-1 (Compl.) at 1. Plaintiff is a New Mexico corporation with its primary place of business in Bernalillo County, New Mexico.[1] Compl. ¶ 1. Plaintiff is an authorized transportation service[2] carrier under the Motor Carrier Act and holds at least one Certificate[3] issued by the Public Regulation Commission (PRC) to provide services as a motor carrier. Id. Defendants Uber Technologies, Inc. and Hinter-NM, LLC (collectively, Uber) removed the case to federal court on diversity jurisdiction grounds on October 5, 2017. Doc. 1. Defendant Lyft, Inc. (Lyft) filed a notice of consent to removal on that same date. Doc. 4.

         Plaintiff alleges that Defendants began providing “transportation services to the public in Bernalillo County, New Mexico” in or before April 2014. Compl. ¶ 15. Defendants “provided a tool for requesting vehicles-for-hire to users who download their free ‘smart phone application' (‘the App'). Users who open the App on their mobile phone are shown a map of their location or designated pick-up point and the available vehicles in that vicinity.” Compl. ¶ 12. Plaintiff alleges that Defendants were “transportation service carriers” that provided “transportation services to the public for hire, ” and, in return, Defendants received renumeration or compensation, either directly or indirectly from the provision of transportation services. Compl. ¶¶ 11, 13, 14.

         Plaintiff alleges that, although Defendants were “motor carriers”[4] as defined in the Motor Carrier Act, they did not obtain Certificates to operate under the Motor Carrier Act. Compl. ¶¶ 16, 17. Accordingly, on May 23, 2014, the PRC issued an Order to Show Cause and Cease and Desist Order against Defendants, directing them to cease operations in New Mexico “unless and until they obtained a Certificate under the Motor Carrier Act.” Compl. ¶ 24.

         Approximately a week later, on May 29, 2014, Uber applied to the PRC for a Temporary Authority under the Motor Carrier Act to operate a Specialized Passenger Service.[5] Compl. ¶ 18. At the same time, Uber filed a petition with the PRC “seeking waivers from certain operating requirements under the Motor Carrier Act which apply to taxi services.” Compl. ¶ 19. On June 23, 2014, Lyft filed a motion to intervene in the Uber proceeding before the PRC. Compl. ¶ 20. Plaintiff asserts that Defendants' PRC filings “constitute admissions that [they] are operating a transportation service in New Mexico subject to the jurisdiction of the Motor Carrier Act.” Compl. ¶ 21.

         On June 25, 2014, the PRC denied Uber's application for Temporary Authority to operate as a Specialized Passenger Service. Compl. ¶ 22. According to Plaintiff, the PRC issued the denial based in part on its finding that “the proposed service does not meet minimum operating standards for transportation service carriers under New Mexico law.” Compl. ¶ 22. Despite this denial, Plaintiff alleges, Defendants “knowingly and intentionally and unlawfully continued to operate in New Mexico” in violation of the Cease and Desist Order issued by the PRC. Compl. ¶ 23.

         Effective May 18, 2016, New Mexico enacted the TNCSA, which Plaintiff acknowledges “provided a framework to legalize the Defendants' actions”. Compl. ¶ 26. On August 15, 2016, the PRC enacted regulations pursuant to the TNCSA “that allowed Defendants to apply for certificates to operate legally in New Mexico.” Compl. ¶ 28. Lyft did not apply for a certificate under the TNCSA and ceased operations in New Mexico. Compl. ¶¶ 30-31. Uber applied for and was granted certificates to operate under the TNCSA. Compl. ¶ 29. Uber has thus continuously operated in New Mexico since April 2014. Compl. ¶ 32.

         Plaintiff alleges that from April 2014 until TNCSA certificates were granted, “Defendants operated in violation of the Motor Carrier Act.”[6] Compl. ¶ 33. Plaintiff asserts that it lost revenue due to Defendants' “unfair and illegal activities” and that Defendants' “unfair practices” ultimately led it to cease operations. Compl. ¶¶ 34-35. Plaintiff claims to have been damaged as a result of Defendants' “unauthorized service” because Plaintiff incurred reductions in revenues as potential passengers opted to use Defendants' services instead of Plaintiff's. Compl. ¶¶ 39-40. Plaintiff further alleges that Defendants have not collected gross receipts taxes from passengers in violation of applicable law and that Defendants willfully violated the PRC's cease and desist order. Compl. ¶¶ 45. The complaint brings a single cause of action for “damages under the Motor Carrier Act and Unfair Practices Act.” Compl. at 5-7.

         II. APPLICABLE LEGAL STANDARDS

         Although New Mexico law governs the substantive analysis of Plaintiff's claims, the Court applies federal procedural law in analyzing the legal sufficiency of Plaintiff's complaint. See Brigance v. Vail Summit Resorts, Inc., 883 F.3d 1243, 1249 (10th Cir. 2018); see also Brokers' Choice of Am., Inc. v. NBC Universal, Inc., 861 F.3d 1081, 1099 (10th Cir. 2017) (applying federal law to procedural questions in a diversity case and applying the substantive law of the forum state to analyze the underlying claims). In this case, Defendants seek dismissal of Plaintiff's claims pursuant to Federal Rule of Civil Procedure 12(b)(6). See Doc. 10 at 4, Doc. 14 at 6.

         “[T]o withstand a Rule 12(b)(6) motion to dismiss, a complaint must contain enough allegations of fact, taken as true, to state a claim to relief that is plausible on its face.” Khalik v. United Air Lines, 671 F.3d 1188, 1190 (10th Cir. 2012) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A court considering a challenge under Rule 12(b)(6) may proceed according to a “two-pronged approach.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). First, a court “can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth.” Id. “While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.” Id. Second, “[w]hen there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Id. For purposes of this second prong, the Court “accept[s] the well-pled factual allegations in the complaint as true, resolve[s] all reasonable inferences in the plaintiff's favor, and ask[s] whether it is plausible that the plaintiff is entitled to relief.” Diversey v. Schmidly, 738 F.3d 1196, 1199 (10th Cir. 2013) (internal citations and quotation marks omitted). “A claim is facially plausible when the allegations give rise to a reasonable inference that the defendant is liable.” Mayfield v. Bethards, 826 F.3d 1252, 1255 (10th Cir. 2016).

         “Generally, the sufficiency of a complaint must rest on its contents alone.” Gee v. Pacheco, 627 F.3d 1178, 1186 (10th Cir. 2010).

There are exceptions to this restriction on what the court can consider, but they are quite limited: (1) documents that the complaint incorporates by reference; (2) documents referred to in the complaint if the documents are central to the plaintiff's claim and the parties do not dispute the documents' authenticity; and (3) matters of which a court may take judicial notice.

Id. (citations and internal quotation marks omitted). “If a district court intends to rely on other evidence, it must convert the Rule 12(b)(6) motion to a motion for summary judgment, giving proper notice to the parties.” Id. (citing Fed.R.Civ.P. 12(d)); see also Brokers' Choice of Am., 861 F.3d at 1103 (“When a party presents matters outside of the pleadings for consideration, as a general rule the court must either exclude the material or treat the motion as one for summary judgment.”) (internal quotation marks and citations omitted). Under Federal Rule of Civil Procedure 12,

If, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56. All parties must be given a reasonable opportunity to present all the material that is pertinent to the motion.

Fed. R. Civ. P. 12(d). A court has broad discretion under Rule 12(d) to refuse to accept the extra-pleading materials and resolve the motion solely on the basis of the pleading itself. See Lowe v. Town of Fairland, Okla., 143 F.3d 1378, 1381 (10th Cir. 1998). Reversible error may occur if a court considers matters outside the pleadings but fails to convert the motion to dismiss into a motion for summary judgment. Id.

         Here, the parties have presented numerous documents for the Court's consideration in ruling on Defendants' respective 12(b)(6) motions to dismiss. Specifically, Defendant Lyft has attached several exhibits in support of its motion and reply brief. See Docs. 14-1 to 14-15. Similarly, while Defendant Uber did not initially attach documents to its initial motion, it did file two exhibits in support of its reply brief. See Docs. 30-1 and 30-2. And although no documents were attached as exhibits to Plaintiff's complaint, Plaintiff has also included a number of exhibits with its response brief. See Doc. 27-1.

         The Court will not convert Defendants' motions to dismiss into motions for summary judgment. To do otherwise would require the Court to give notice to the parties and allow each party an opportunity to present any additional extra-pleading evidence - an inefficient process that would be better left for a motion for summary judgment filed in the normal course of the discovery process. The Court will therefore consider only those exhibits that fit within the limited exceptions set forth in Gee - i.e., exhibits that are properly the subject of judicial notice or that are referred to in ...


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