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Germany: Federal Court of Justice Prohibits Uber Black App

(Feb. 11, 2019) In a decision published on January 29, 2019, the German Federal Court of Justice (Bundesgerichtshof, BGH), Germany’s supreme court for civil and criminal cases, held that booking cars for hire with professional drivers through the app Uber Black, the luxury chauffeur service, is prohibited. (BGH, Dec. 13, 2018, Docket No. I ZR 3/16, ECLI:DE:BGH:2018:131218UIZR3.16.0, BGH website.) The Court stated that the Uber Black app violates section 49 of the German Passenger Transport Act, which provides that chauffeur services  may accept only those assignments received at the chauffeur company’s place of business. (Personenbeförderungsgesetz [PBefG] [Passenger Transport Act], Aug. 8, 1990, BUNDESGESETZBLATT [BGBl.] [FEDERAL LAW GAZETTE] I at 1690, German Laws Online website.) In the opinion of the Court, the prohibition is compatible with the European Union (EU) freedom to provide services codified in article 56 of the Treaty on the Functioning of the European Union (TFEU). (BGH at 1; Consolidated Version of the Treaty on the Functioning of the European Union [TFEU], 2016 O.J. (C 202) 1, EUR-Lex website.)

Facts of the Case

The plaintiff is a taxi company from Berlin. The defendant, Uber Black, a company headquartered in the Netherlands, provided chauffeur services with professional drivers via its smartphone app. To provide such services, the defendant collaborated with companies that had licenses for passenger transport. The cars used by these companies where labeled as “Uber.” The pricing, processing of payments, and advertising were provided by the defendant, and rides were subject to its general terms and conditions. (BGH, para. 1.) Requests for cars were routed via the defendant’s server in the Netherlands to the driver who was closest to the passenger. When the driver confirmed the ride request, an email was simultaneously sent to the chauffeur service company that owned the car. (Id. at 2.)

On August 13, 2014, the city of Berlin prohibited Uber Black and similar apps. (Id. at 3.) In addition, Uber was sued by the plaintiff. The courts held in favor of the plaintiff. (Id. at 8.) The Federal Court of Justice on appeal stayed the proceedings and referred the questions to the European Court of Justice (ECJ) for a preliminary ruling. However, after the ECJ decided a similar case on Uber referred by a Spanish court, the Federal Court of Justice withdrew its request for a preliminary ruling. (Id. at 10–12; for more information on the Uber case referred by the Spanish court, see Catharina Schmidt, Uber at the ECJ – The Legal Saga in Europe Continues, IN CUSTODIA LEGIS (Mar. 8, 2018).)

Ruling

The Federal Court of Justice held that the Uber Black app violates section 49, paragraph 4, sentence 2 of the German Passenger Transport Act. (BGH, para. 31.) The provision states that a chauffeur service may accept only those assignments that were previously received at the place of business of the company or individual that owns the cars. The driver must return to the company’s place of business after the conclusion of the ride. (Id. at 32.) The Federal Court of Justice ruled that the requirement to receive the ride request at the company’s place of business is not fulfilled when the driver receives the request directly, even if the company is informed simultaneously. It is irrelevant whether passengers instruct the driver directly or whether they use an app. (Id. at 33 & 34.) Taxi passengers on the other hand are allowed to directly hail a cab and instruct the driver. (Id. at 33.) The Federal Court of Justice qualifies the requirement for chauffeur services to accept only assignments received at the place of business as an occupational- or professional-practice rule that does not affect the constitutionally guaranteed freedom of occupation, but rather determines only in what manner members of a profession or occupation must carry out their occupational activities. (Id. at 35–37; Bundesverfassungsgericht [BVerfG] [Federal Constitutional Court], 81 Entscheidungen des Bundesverfassungsgerichts] [BVerfGE] [Decisions of the Federal Constitutional Court] 70, at 84–97, DFR website; Grundgesetz [GG] [Basic Law], May 23, 1949, BGBl. I at 1, art. 12, para. 1, German Laws Online website.)

Furthermore, the Federal Court of Justice opined that the prohibition of the Uber Black app is compatible with the EU freedom to provide services codified in article 56 TFEU and the EU Directive on Services in the Internal Market. (BGH, at 45; Directive 2006/123/EC of the European Parliament and of the Council on Services in the Internal Market, Dec. 12, 2006, 2006 O.J. (L 376) 36, EUR-Lex website.) According to article 58 of the TFEU, the freedom to provide services does not apply to transport services. The Federal Court of Justice reiterated that, according to its jurisprudence and that of the ECJ, the services that Uber provides are transport services. (BGH, para. 45.) The intermediation service Uber provides is “an integral part of an overall service whose main component is a transport service.” Uber determines the service conditions—for example, by setting a maximum price—and the passengers would not be able to use the services of the drivers without the intermediation service. (Id. at 46–50.)

The Federal Court of Justice held that it is irrelevant that the ECJ case did not concern professional drivers. (Id. at 52.) The definition of “services in the field of transport” in ECJ case law as “any service inherently linked to any physical act of moving persons or goods from one place to another by means of transport” does not mention nonprofessional drivers. (Id. at 53.)

Finally, the Federal Court of Justice concluded that Uber is vicariously liable for the competition law infringements of the companies and their drivers. (Id. at 62.)