Last year, 50 lawsuits were filed against Uber in U.S. federal court. You might be wondering whether that’s a lot; after all, Uber operates in 68 countries, employs more than 5,000 people and is the most highly valued start-up in the world. We’re here to tell you that it is a lot, and that all this litigation is a serious problem for Silicon Valley’s favorite start-up.
Let’s compare Uber’s caseload to its tech brethren. Uber’s closest rival, Lyft, was sued less than a third as often. Airbnb, the second most highly valued start-up in the U.S., was sued just five times last year.
So why is everybody suing Uber? The simple answer is lots of different reasons. According to court records, of the 50 or so lawsuits currently pending against Uber in federal court right now, 17 were filed by Uber drivers, 15 by taxi and livery companies, and more than a dozen by customers alleging all manners of sin, including assault, illegal robocalling and deceptive pricing. There’s also suits for trademark infringement, rejected insurance claims and disability discrimination, not to mention more lawsuits than were readily accessible in state and county courts.
The less simple answer is that lawsuits are the cost of doing business when you’re disrupting a very established and highly regulated industry. Like many a Silicon Valley start-up, Uber’s modus operandi has typically been ‘launch first, work out the kinks later.’ That works out okay when you’re selling software or smartphones—you can always just push an update to fix a bug. It works less well when you’re dealing with the physical world, moving around thousands upon thousands of people, subject to hundreds of different local laws and regulations. When you’re dealing with the physical world, it turns out, you get sued. A lot.
Lawsuits have long been the proverbial thorn in the side of the gig economy. The most high-profile of Uber’s legal lot is a class action challenging Uber’s classification of drivers as independent contractors, as Uber claims they are, rather than employees. That suit, if successful, might entitle up to 160,000 drivers to recoup back wages from Uber and fundamentally change Uber’s business model. The case is slated to go to trial in San Francisco in June. It has inspired at least a dozen copycats in other states.
The same type of legal threat has led to serious changes at other on-demand start-ups. Last year, the housecleaning start-up Homejoy claimed that a similar lawsuit was the reason it shut down. And the threat of being sued inspired Instacart to offer some of its contractor workers the option of becoming employees.
Uber’s drivers don’t want Uber to go away; they just want to make more from the company. Uber’s competition on the other hand is trying to sue it out of existence. In more than a dozen cities, local taxi companies have launched challenges to Uber’s legal authority to operate, and that’s on top of cities and countries that are challenging Uber themselves.
Quantifying Uber’s legal threat underscores just how big it really is. Even Facebook, when it was Uber’s age and had surpassed 350 million users, had not faced anywhere near as much legal opposition.
Uber declined to comment on the record about either the number of lawsuits against it or the size of its legal team. Uber is, of course, either larger in size and scope than most of the companies I’ve compared it too, or tackling a more complex business. But those caveats still don’t undermine the extent of the risk.
Taking a peek at the size of Uber’s mounting legal arsenal speaks to just how seriously Uber is taking the threat: at present, Uber has 27 job openings for attorneys worldwide. On LinkedIn, more than 50 people in the U.S. list in-house counsel at Uber as a current job. (Uber declined to comment on those numbers as well.) At Airbnb, which like Uber has faced intense opposition from competitors and local governments, fewer than 20 lawyers in the U.S. list the company as their employer on LinkedIn.
If Uber is building up a legal army, it is because this is an existential war.