Case 3:18-cv-07440-JCS Document 90 Filed 05/01/20 Page 1 of 19
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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
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`SC INNOVATIONS, INC.,
`Plaintiff,
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`v.
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`UBER TECHNOLOGIES, INC., et al.,
`Defendants.
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`Case No. 18-cv-07440-JCS
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`
`ORDER REGARDING MOTION TO
`DISMISS SECOND AMENDED
`COMPLAINT
`Re: Dkt. No. 76
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`I.
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`INTRODUCTION
`Plaintiff SC Innovations, Inc. (“Sidecar”) is a defunct “transportation network company”
`that offered services matching passengers with drivers for on-demand transportation, also known
`as “ride-hailing,” through a smartphone app. Sidecar claims that it was driven out of business by
`Defendants, Uber Technologies, Inc. and a number of its subsidiaries (collectively, “Uber”).1 The
`Court previously dismissed Sidecar’s first amended complaint with leave to amend its Sherman
`Act claim, and with prejudice as to its claim under California’ Unfair Practices Act. Sidecar filed
`a second amended complaint, and Uber now moves once again to dismiss. The Court held a
`public hearing by videoconference on April 24, 2020. For the reasons discussed below, Uber’s
`motion is DENIED, except as to the Unfair Practices Act claim previously dismissed with
`prejudice, which is STRICKEN from the second amended complaint.2
`A case management conference will occur on July 31, 2020 at 2:00 PM. The parties shall
`file a joint case management statement no later than July 24, 2020.
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`1 The remaining defendants are Rasier, LLC; Rasier-CA, LLC; Rasier-PA, LLC; Rasier-DC, LLC;
`Rasier-NY, LLC; and Uber USA, LLC. The parties do not suggest that there is any distinction
`among the various defendants relevant to the present motion.
`2 The parties have consented to the jurisdiction of the undersigned magistrate judge for all
`purposes pursuant to 28 U.S.C. § 636(c).
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`Case 3:18-cv-07440-JCS Document 90 Filed 05/01/20 Page 2 of 19
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`II.
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`BACKGROUND
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`A. Procedural History and Previous Order
`Sidecar filed this action on December 11, 2018. On May 2, 2019, the Court granted a
`motion to disqualify Sidecar’s previous counsel based on a conflict of interest. See Order Re Mot.
`to Disqualify Counsel (dkt. 41).3 Uber moved to dismiss Sidecar’s initial complaint on July 10,
`2019 (dkt. 57), Sidecar elected to file its first amended complaint (dkt. 60) rather than oppose the
`motion, and the Court denied that first motion to dismiss as moot on September 25, 2019 (dkt. 63).
`On January 21, 2020, the Court granted Uber’s motion to dismiss the first amended complaint,
`dismissing Sidecar’s Sherman Act claims with leave to amend and its Unfair Practices Act claim
`with prejudice. See generally Order Granting Mot. to Dismiss Am. Compl. (“Order re FAC,” dkt.
`71).4
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`The Court held that Sidecar’s allegation of a relevant market—app-based ride-hailing
`services, excluding taxis—was sufficiently plausible to survive a motion to dismiss. Id. at 10–11.
`The Court also rejected suggestions by Uber that Sidecar had not alleged below-cost pricing, id. at
`12, as well as arguments that Uber’s delayed entry to the non-limousine ride-hailing market and
`asserted pro-competitive purposes were sufficient for dismissal at the pleading stage, id. at 16–18.
`The Court nevertheless dismissed Sidecar’s Sherman Act claims for failure to provide sufficient
`allegations of market power, particularly its failure to allege “that Uber has the power to raise
`market prices above competitive levels simply by reducing its own output, or that Lyft”—
`allegedly Uber’s only remaining competitor—“could not respond to such a reduction by
`increasing its own output.” Id. at 12–14. Absent such allegations, the Court held that Sidecar
`alleged no more than a “disciplined oligopoly,” which the Ninth Circuit has held insufficient to
`state a claim for either monopolization or attempted monopolization, due to “a gap in the Sherman
`Act that allows oligopolies to slip past its prohibitions,” in Rebel Oil v. Atlantic Richfield Co., 51
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`3 SC Innovations, Inc. v. Uber Techs., Inc., No. 18-cv-07440-JCS, 2019 WL 1959493 (N.D. Cal.
`May 2, 2019).
`4 SC Innovations, Inc. v. Uber Techs., Inc., No. 18-cv-07440-JCS, __ F. Supp. 3d __, 2020 WL
`353543 (N.D. Cal. Jan. 21, 2020). Citations herein to the Court’s previous order refer to page
`numbers of the version filed in the Court’s ECF docket.
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`F.3d 1421 (9th Cir. 1995). See Order re FAC at 12–16.
`The Court dismissed Sidecar’s Unfair Practices Act claim with prejudice, holding that
`Uber fell within an exemption from that statute for products and services for which rates are set
`under the jurisdiction of the California Public Utilities Commission (“CPUC”), following a line of
`cases construing that exemption as based on the scope of the CPUC’s authority, not based on
`whether the CPUC had in fact acted to set rates for a particular product or service. Id. at 18–21.
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`B. Allegations of the Second Amended Complaint
`Because a plaintiff’s factual allegations are generally taken as true in resolving a motion
`under Rule 12(b)(6), this section summarizes the allegations of Sidecar’s second amended
`complaint as if true. Nothing in this order should be construed as resolving any issue of fact that
`might be disputed at a later stage of the case. Moreover, this summary is intended only as
`background to the issues in dispute in the present motion, and is not a comprehensive recitation of
`Sidecar’s allegations.
`Uber launched its smartphone app in 2009, offering a service for passengers to arrange for
`transportation in limousines driven by licensed chauffeurs. 2d Am. Compl. (“SAC,” dkt. 73) ¶¶ 5,
`42. Sidecar launched its own ride-hailing app in 2012, allowing passengers to hail drivers who
`used their own personal vehicles, and pioneering a number of features including estimated fares
`before booking and carpool rides for multiple passengers traveling in the same direction. Id. ¶¶ 6–
`7, 43, 45–47. Lyft—which is now Uber’s only remaining competitor in the ride-hailing market—
`introduced a similar service the same year. Id. ¶ 44. Sidecar’s app also allowed drivers to set their
`own proposed fares and compete against one another. Id. ¶ 7. Over the course of its existence,
`Sidecar operated in San Francisco, Austin, Los Angeles, Chicago, Philadelphia, New York,
`Seattle, San Diego, San Jose, Boston, and Washington, DC, obtaining market share of between
`10% and 15% in some of those cities. Id. ¶¶ 50–51. Uber, which at the time was rapidly growing,
`accumulating significant investment capital, and becoming the dominant ride-hailing platform in
`the United States, debuted its “UberX” product in 2013, following Sidecar’s lead in allowing
`drivers to use their personal, non-limousine vehicles, and directly competing with Sidecar and
`Lyft, which Uber recognized as threats to its business model. Id. ¶¶ 8, 53–55. Uber operated in
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`all of the same cities as Sidecar by mid-2014, id. ¶ 113, and now has a market share of between
`60% and 75% in each of those cities, id. ¶¶ 133–43.
`Ride-hailing apps allow participating passengers to request rides and drivers to accept
`those requests. See id. ¶¶ 32–34. The passenger pays a fare for the ride, of which a portion is
`retained by the ride-hailing company and the balance is paid to the driver. Id. ¶ 39. Sidecar
`alleges that Uber has, since its inception, consistently set its prices below cost in an effort to
`achieve a “winner takes all” outcome due to the ride-hailing market’s barriers to entry—in
`particular, network effects caused by passengers preferring a platform with a large supply of
`drivers and drivers preferring a platform with a large supply of passengers, because a larger supply
`of both means drivers will make more money by spending less time waiting for passengers and
`passengers will obtain a more convenient service if they do not need to wait as long for rides. See
`id. ¶¶ 2–3, 69–74. The market also includes other barriers and economies of scale, including the
`benefits to customers of knowing they will be able to use the same app in multiple cities, and the
`benefits to the ride-sharing company of collecting data on how large numbers of customers and
`drivers use the service. Id. ¶¶ 78–80.
`Uber has engaged in predatory pricing on each of the two “sides” of the ride-hailing
`market, offering above-market incentive payments to drivers, and offering below-market fares to
`passengers. Id. ¶¶ 11, 96. Uber has in at least some circumstances priced its rides below the costs
`that it pays drivers, and has lost billions of dollars in the process. Id. ¶¶ 9, 102. According to
`Sidecar, Uber’s strategy is premised on the goal of establishing a monopoly and reaping the
`reward of supracompetitive monopolist pricing in order to recoup early losses. Id. ¶ 4. Uber
`would recoup the losses it has accrued by lowering payments to drivers and raising fares for
`passengers. Id. ¶ 11.
`Uber has also engaged in what Sidecar characterizes as price discrimination, initially by
`using “surge pricing” to set higher prices at times of high demand, and later by using “dynamic
`pricing” to set different prices for different users based on factors including the users’ perceived
`price sensitivity and ability to pay. Id. ¶¶ 84–85.
`In addition to Uber’s pricing strategies, Sidecar contends that Uber has sought to
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`Case 3:18-cv-07440-JCS Document 90 Filed 05/01/20 Page 5 of 19
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`monopolize the ride-hailing market by interfering with its competitors Lyft and Sidecar, engaging
`in “clandestine campaigns”—with names like “Project Hell” and “SLOG”—to either submit
`fraudulent requests for rides on competitors’ platforms and cancel before the drivers arrived, or
`have Uber representative request rides in order to start a conversation with Sidecar and Lyft
`drivers and convince them to work exclusively for Uber. Id. ¶ 13. Those tactics violated
`Sidecar’s terms of service and increased wait times for both drivers and passengers to obtain
`legitimate rides, causing them to become frustrated with Sidecar. Id. ¶¶ 14, 116–17. As a result of
`network effects, reduced numbers of passengers and drivers created a vicious cycle of declining
`usage. Id. ¶ 118. Unable to compete with Uber’s predatory pricing, Sidecar exited the ride-
`hailing market in December of 2015. Id. ¶¶ 8, 123.
`Uber has begun to increase its prices since Sidecar ceased operations, including in the
`particular geographic markets where Sidecar formerly competed. Id. ¶¶ 103–04. Uber has also
`reduced payments to drivers by increasing the “commission” percentage of each fare that it keeps
`for itself in cities including San Francisco, San Diego, and New York, and “effective”
`commissions have risen in other cities due to booking fees and other charges. Id. ¶¶ 105–07, 109.
`Uber’s ride-hailing business became profitable by at least one measure (“positive EBITDA”) in
`2018. Id. ¶ 109.
`Lyft’s ability to act as a check on unilateral supply constriction and price increases by Uber
`is of particular importance to the parties’ arguments on the present motion. Sidecar’s allegations
`relevant to that issue include the following:
`
` .
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` . . In addition, because of the network effects resulting from Uber’s
`size and dominance on both the customer and driver side, and because
`of and because of [sic] Uber’s discriminatory pricing, Lyft is unable
`to respond effectively or to increase its own share of rides as a
`restraint on Uber’s pricing. Further, Lyft’s current status as a public
`company requires it to recoup its own massive losses through higher
`prices. Thus, Lyft has not been willing, even if it were able to do so,
`to respond to Uber’s price discrimination strategy by expanding its
`output or seizing significant additional market share through price
`competition. Uber now is able to impose its will on both passengers
`and drivers in the form of higher, supra-competitive prices. Indeed,
`drivers are now receiving reduced compensation; and passengers
`must endure discriminatory pricing tactics, such as surge pricing, and
`more recently, “dynamic pricing.” Uber has begun to reap supra-
`competitive profits in ways that have become increasingly difficult
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`Id. ¶ 12.
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`Id. ¶ 85.
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`for any competitor or customer to address or constrain Uber’s
`monopoly power.
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`. . . Uber’s only remaining significant competitor, Lyft, is unable to
`expand its ride offerings in the face of price discrimination because
`the network effects of Uber’s vast driver pool render that impossible
`or ineffective. Further, the financial pressures on Lyft and its status as
`a public company with a need to recoup its own enormous financial
`losses, means that Lyft has no incentive to undercut Uber. In fact, in
`response to Uber’s conduct, Lyft is itself implementing a similar
`dynamic pricing model, substantially reducing Lyft as a competitive
`constraint on Uber’s unilateral ability to exercise monopoly power
`through recoupment and supra-competitive pricing. Lyft has a strong
`incentive to adopt such a dynamic pricing model because in order for
`Lyft to attract Drivers to Lyft’s platform, Lyft cannot undercut the
`higher prices that the Drivers would otherwise obtain from customers
`if they were to drive for Uber instead of Lyft
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`As a result of Uber’s monopoly conduct (predatory pricing and
`tortious conduct), Lyft has become a less effective competitor. Lyft
`has incurred enormous losses and faces significant pressure to achieve
`profitability and recoup prior losses now that it is a public company
`with more of a need to focus on short term results. Given these factors,
`and because of (a) Uber’s monopoly power arising from network and
`brand effects and economies of scale, and (b) Uber’s use of its
`monopoly power to engage in price discrimination, Lyft has no ability
`to respond to Uber’s imposition of monopoly pricing and no incentive
`to do so given its own urgent need for short term profits. Lyft also has
`been limited in its ability to capture market share with regard to the
`more profitable segments of the ride-hailing market (e.g., business
`users and the higher end rides designated as “premium” in Uber’s
`platform, i.e., Uber Black and Uber Black SUV).
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`Id. ¶ 90.
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`the ride-hailing
`in
`Uber’s actions have harmed competition
`applications market by eliminating an innovative maverick in Sidecar
`and severely weakening Lyft. Given the enormous losses suffered by
`Lyft, it remains to be seen whether Lyft will remain a viable
`competitor in the market over the long term. Even if it remains,
`however, Lyft will not, and cannot, act as a check on the ability of
`Uber to charge supra-competitive prices, above the level that would
`have prevailed if Sidecar had been able to remain in the market, as a
`result of network effects, the two-sided nature of the market, Lyft’s
`own financial losses which it must recoup, and Lyft’s own adoption
`of dynamic pricing
`Id. ¶ 92; see also id. ¶ 76 (“Significant new rivals have not emerged to challenge Uber’s market
`dominance, which it has maintained, with a weakened Lyft as its only significant competitor in the
`relevant geographic markets.”); id. ¶ 83 (“Lyft is subject to the same constraints as other market
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`entrants in trying to compete with Uber’s vast network and the strong network effects created by
`Uber’s dominance of drivers and riders.”).
`Sidecar asserts the following claims for relief: (1) monopolization in violation section 2 of
`the Sherman Act, based both on predatory pricing and on exclusionary tortious conduct, id.
`¶¶ 130–59; (2) attempted monopolization in violation of section 2 of the Sherman Act, id. ¶¶ 160–
`68; and (3) violation of the California Unfair Practices Act, id. ¶¶ 169–75, despite the Court
`having previously dismissed that claim with prejudice, see Order re FAC at 18–21.
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`C. The Parties’ Arguments
`Uber argues that Sidecar has not cured its previous failure to allege market power because
`Sidecar still does not allege that Uber has the unilateral power to raise market prices by reducing
`its own output. Mot. (dkt. 76) at 3–4. According to Uber, Sidecar’s new allegations of price
`discrimination cannot substitute for the ability to restrict output. Id. at 4–5. Uber also argues that
`Sidecar has not sufficiently addressed both parts of the “two-sided transaction market” for ride-
`hailing platforms, instead focusing on passengers and neglecting the effect of the symbiotic market
`for drivers. Id. at 5–8. Uber relies on the Supreme Court’s decision in Ohio v. American Express
`Co., 138 S. Ct. 2274 (2018), which held, in the context of terms imposed on merchants by a credit
`card company, that courts should analyze two-sided markets as a whole because network effects
`can cause a reduction of supply in one side of the market to reduce demand in the other. See Mot.
`at 5–8. In Uber’s view, Sidecar’s complaint still ultimately relies on an oligopoly theory of
`market power of the type the Ninth Circuit rejected in Rebel Oil. Id. at 8–10. Uber contends that
`Sidecar’s theory of likely recoupment through an oligopoly with Lyft is similarly not cognizable.
`Id. at 10–12. Uber argues that Sidecar’s claim for tortious interference under the Sherman Act
`also must be dismissed, not only because Sidecar has not alleged cognizable market power, but
`also because Sidecar’s allegations that the purported tortious conduct harmed competition are
`speculative at best. Id. at 12–15. Finally, Uber asks the Court to strike Sidecar’s claim under the
`Unfair Protection Act, which Sidecar includes once again in its current complaint despite the
`Court having previously dismissed that claim with prejudice. Id. at 15.
`Sidecar acknowledges that to make a circumstantial showing of monopoly power, it must
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`“‘(1) define the relevant market, (2) show that the defendant owns a dominant share of that
`market, and (3) show that there are significant barriers to entry and show that existing competitors
`lack the capacity to increase their output in the short run.’” Opp’n (dkt. 77) at 4 (quoting Rebel
`Oil, 51 F.3d at 1434). Sidecar argues, however, that its allegations of price discrimination, in
`conjunction with Uber’s large market share and the ride-hailing market’s inherent barriers to entry,
`are sufficient to imply market power and monopoly power. Id. at 4–6. Sidecar also contends that,
`contrary to Uber’s argument that it failed to address both sides of the relevant market, its
`allegations cover both payments to drivers and fares charged to passengers, including allegations
`that Uber has increased its commission rates and thus reduced the share of passengers’ fares that it
`pays to drivers. Id. at 6. According to Sidecar, the lack of correlation between fares charged to
`passengers and rates paid to drivers demonstrates that the market is not behaving as a competitive
`two-sided market should. Id. at 6–7.
`Sidecar argues that its allegations go beyond mere oligopoly by alleging that Lyft cannot—
`as opposed to merely will not—check anticompetitive conduct by Uber, because Lyft trails Uber
`in the same network effects and other barriers that prevent new entrants from competing
`effectively in the market. Id. at 8–9. Sidecar contends that it has plausibly alleged a dangerous
`probability of recoupment based on Uber’s market share and the market’s barriers to entry, and
`that Uber’s intent, while not sufficient in itself to support an antitrust claim, is relevant to whether
`Sidecar’s allegations are plausible. Id. at 9–11. Sidecar also alleges that its Sherman Act claim
`based on tortious interference should proceed, whether viewed independently or in conjunction
`with its predatory pricing claim, id. at 11–14, and that the Court should not dismiss its antitrust
`claims based on a footnote in Uber’s motion discussing the CPUC’s regulatory authority, id. at
`14–16. Sidecar acknowledges that the Court dismissed its Unfair Practices Act claim with
`prejudice, and states that it repleaded the claim only in an abundance of caution to avoid waiving it
`on appeal. Id. at 16.
`Uber argues again in its reply that Sidecar has neither alleged that Uber can raise prices by
`restricting its own output nor sufficiently addressed the two-sided nature of the ride-hailing
`market, and that other allegations, such as purported price discrimination in the passenger market,
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`cannot substitute for either of those requirements. Reply (dkt. 78) at 1–9. Uber also argues that
`Sidecar’s own allegations indicate that its theory of recoupment is premised on an oligopoly
`between Uber and Lyft, which the Ninth Circuit has held is not sufficient to support a claim for
`actual or attempted monopolization. Id. at 10–11. Uber argues that Sidecar’s tortious interference
`claims are subject to dismissal because Uber had a legitimate business purpose of recruiting
`drivers, and because Sidecar has not alleged that Uber’s conduct was sufficiently pervasive to
`have more than a de minimis effect on competition. Id. at 11–13.
`
`III. ANALYSIS
`A. Legal Standard
`A complaint may be dismissed for failure to state a claim on which relief can be granted
`under Rule 12(b)(6) of the Federal Rules of Civil Procedure. “The purpose of a motion to dismiss
`under Rule 12(b)(6) is to test the legal sufficiency of the complaint.” N. Star Int’l v. Ariz. Corp.
`Comm’n, 720 F.2d 578, 581 (9th Cir. 1983). Generally, a claimant’s burden at the pleading stage
`is relatively light. Rule 8(a) of the Federal Rules of Civil Procedure states that a “pleading which
`sets forth a claim for relief . . . shall contain . . . a short and plain statement of the claim showing
`that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a).
`In ruling on a motion to dismiss under Rule 12(b)(6), the court takes “all allegations of
`material fact as true and construe[s] them in the light most favorable to the non-moving party.”
`Parks Sch. of Bus. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). Dismissal may be based on a
`lack of a cognizable legal theory or on the absence of facts that would support a valid theory.
`Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). A pleading must “contain
`either direct or inferential allegations respecting all the material elements necessary to sustain
`recovery under some viable legal theory.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 562 (2007)
`(citing Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1106 (7th Cir. 1984)). “A pleading
`that offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action
`will not do.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555).
`“[C]ourts ‘are not bound to accept as true a legal conclusion couched as a factual allegation.’”
`Twombly, 550 U.S. at 555 (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)). “Nor does a
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`complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Iqbal,
`556 U.S. at 678 (quoting Twombly, 550 U.S. at 557). Rather, the claim must be “‘plausible on its
`face,’” meaning that the claimant must plead sufficient factual allegations to “allow the court to
`draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (quoting
`Twombly, 550 U.S. at 570).
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`B. Sherman Act Claims
`Section 2 of the Sherman Act prohibits “monopoliz[ing], or attempt[ing] to monopolize . . .
`any part of the trade or commerce among the several States.” 15 U.S.C. § 2. Under the Clayton
`Act, “any person who shall be injured in his business or property by reason of anything forbidden
`in the antitrust laws may sue therefor,” and may recover treble damages. 15 U.S.C. § 15(a).
`“Simply possessing monopoly power and charging monopoly prices does not violate § 2; rather,
`the statute targets ‘the willful acquisition or maintenance of that power as distinguished from
`growth or development as a consequence of a superior product, business acumen, or historic
`accident.’” Pac. Bell Tel. Co. v. Linkline Commc’ns, Inc., 555 U.S. 438, 447–48 (2009) (quoting
`United States v. Grinnell Corp., 384 U.S. 563, 570–71 (1966)).
`
`In order to state a claim for monopolization under [section 2 of the
`Sherman Act], a plaintiff must prove that: (1) the defendant possesses
`monopoly power in the relevant market; (2) the defendant has
`willfully acquired or maintained that power; and (3) the defendant’s
`conduct has caused antitrust injury. SmileCare Dental Group v. Delta
`Dental Plan of California, Inc., 88 F.3d 780, 783 (9th Cir. 1996)
`(citations omitted).
`
`In order to state a claim for attempted monopolization, a plaintiff must
`prove: (1) specific intent to control prices or destroy competition; (2)
`predatory or
`anticompetitive
`conduct
`to
`accomplish
`the
`monopolization; (3) dangerous probability of success; and (4) causal
`antitrust injury. Id. (citations omitted).
`Cost Mgmt. Servs., Inc. v. Wash. Nat. Gas Co., 99 F.3d 937, 949–50 (9th Cir. 1996) (footnote
`omitted; line break added).
`One means of monopolization recognized by the courts—albeit with skepticism—is
`predatory pricing, in which an aspiring monopolist sets “below-cost prices that drive rivals out of
`the market and allow the monopolist to raise its prices later and recoup its losses.” Pac. Bell, 555
`U.S. at 448; see Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 589 (1986)
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`(“[T]here is a consensus among commentators that predatory pricing schemes are rarely tried, and
`even more rarely successful.”). Such a claim requires the plaintiff to show both pricing below
`costs and a probability of recoupment:
`
`“[C]utting prices in order to increase business often is the very
`essence of competition.” Matsushita Elec. Industrial Co. v. Zenith
`Radio Corp., 475 U.S. 574, 594 (1986). In cases seeking to impose
`antitrust liability for prices that are too low, mistaken inferences are
`“especially costly, because they chill the very conduct the antitrust
`laws are designed to protect.” Ibid.; see also Brooke Group [Ltd. v.
`Brown & Williamson Tobacco Corp., 509 U.S. 209, 226 (1993)];
`Cargill, Inc. v. Monfort of Colo., Inc., 479 U.S. 104, 121–122, n. 17
`(1986). To avoid chilling aggressive price competition, we have
`carefully limited the circumstances under which plaintiffs can state a
`Sherman Act claim by alleging that prices are too low. Specifically,
`to prevail on a predatory pricing claim, a plaintiff must demonstrate
`that: (1) “the prices complained of are below an appropriate measure
`of its rival’s costs”; and (2) there is a “dangerous probability” that the
`defendant will be able to recoup its “investment” in below-cost prices.
`Brooke Group, supra, at 222–224. “Low prices benefit consumers
`regardless of how those prices are set, and so long as they are above
`predatory levels, they do not threaten competition.” Atlantic Richfield
`Co. v. USA Petroleum Co., 495 U.S. 328, 340 (1990).
`Pac. Bell, 555 U.S. at 451. “That below-cost pricing may impose painful losses on its target is of
`no moment to the antitrust laws if competition is not injured: It is axiomatic that the antitrust laws
`were passed for ‘the protection of competition, not competitors.’” Brooke Grp., 509 U.S. at 224
`(quoting Brown Shoe Co. v. United States, 370 U.S. 294, 320 (1962)).
`Uber argues that Sidecar’s Sherman Act claims are subject to dismissal for failure to allege
`market power, a dangerous probability of recouping losses due to predatory pricing, or sufficient
`injury to competition from Uber’s alleged tortious interference. See Mot. at 2–15.
`
`1.
`Market Power
`In order to state a claim for monopolization, Sidecar must plausibly allege monopoly
`power, which “the Supreme Court has defined . . . as the power to ‘control prices or exclude
`competition.’” Cost Mgmt. Servs., 99 F.3d at 950 (quoting Grinnell Corp., 384 U.S. at 571).
`“Whether monopoly power exists depends on a variety of factors,” with market share relevant to
`that analysis but not the only factor; depending on market conditions, courts have found both
`market power and a lack of market power when a defendant’s market share is in the sixty to
`seventy percent range. Hunt-Wesson Foods, Inc. v. Ragu Foods, Inc., 627 F.2d 919, 924 (9th Cir.
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`1980). The typical way in which an incomplete monopolist—a defendant with less than full
`control of the market—can nevertheless exert monopoly power is when that party controls enough
`of the market that “by restricting its own output, it can restrict marketwide output and, hence,
`increase marketwide prices.” Rebel Oil, 51 F.3d at 1434; see also Am. Express, 138 S. Ct. at 2288
`(“‘Market power is the ability to raise price profitably by restricting output.’” (quoting a treatise;
`emphasis added in Am. Express)). “Prices increase marketwide in response to the reduced output
`because consumers bid more in competing against one another to obtain the smaller quantity
`available.” Rebel Oil, 51 F.3d at 1434.
`As this Court previously held, Sidecar cannot base its Sherman Act claims on a theory that
`Uber has market power through a “disciplined oligopoly” with Lyft. Order re FAC at 12–16. The
`Ninth Circuit has held that any anticompetitive effects of oligopolies constitute a “gap in the
`Sherman Act” that must “slip past its prohibitions” unless Congress alters the scope of the statute.
`Rebel Oil, 51 F.3d at 1443. Accordingly, Sidecar’s allegations that Lyft merely will not constrain
`Uber’s ability to reduce market output and collect supracompetitive prices are not sufficient to
`support cognizable market power. See, e.g., SAC ¶ 85 (alleging that “financial pressures on Lyft
`and its status as a public company with a need to recoup its own enormous financial losses, means
`that Lyft has no incentive to undercut Uber”).
`Unlike Sidecar’s previous complaint, however, the second amended complaint now also
`alleges tha