Driver Guild Files FTC Complaint Against Uber Rival
The Independent Drivers Guild, an organization representing Uber Technologies Inc. drivers in New York, sent a complaint to the Federal Trade Commission Tuesday claiming that Juno, an Uber competitor operating in New York, had misled drivers with a stock program that it suddenly cancelled last month after selling itself for $200 million.
Both the IDG and Juno launched last year, each claiming to be dedicated to improving the lot of New York’s 50,000 Uber drivers. From the beginning, the organizations viewed one another with suspicion, and the driver’s guild move against Juno is both an I-told-you-so and an attempt to bolster its credibility as it tries to evolve into something more than Uber’s company union.
At issue is a Juno program for distributing restricted stock units to drivers. The company had said the equity would allow its drivers, who are independent contractors, to share in the upside of an eventual sale or initial public offering. The pitch was convincing enough to drivers to help Juno become a significant player in New York’s ride-hailing industry. Yet the company has acknowledged that the Securities and Exchange Commission has raised concerns about the legality of the program.
According to the IDG’s complaint, Juno told drivers that it was in discussions with the SEC as long ago as last August but kept promoting a program it likely knew wouldn’t pass regulatory muster. “It is clear that Juno misled drivers on both the company’s intention to share a stake with drivers and the value of the shares program," Ryan Price, the executive director of the IDG, wrote in the letter, which was reviewed by Bloomberg.
Price asks the FTC to investigate whether this violates the Federal Trade Commission Act’s prohibition against unfair or deceptive acts and to seek damages for drivers if it determines that Juno violated the law. Earlier this year, Uber agreed to pay $20 million to resolve claims that it exaggerated how lucrative the life of an Uber driver could be. The driver's guild also sent the letter to New York Attorney General Eric Schneiderman and to the city’s Office of Labor Policy and Standards.
For the last year Juno seemed like a local success story. It began breaking even in New York months ago, according to a person familiar with Juno’s finances. The company was able to do this because it had spread almost entirely through word-of-mouth as enthusiastic drivers promoted the service, avoiding the costly incentives that Uber has had to pay when it enters a new market. But it was still having difficulty raising the capital it would need to expand beyond the city, because investors saw it as a pipsqueak compared to Uber and Lyft, this person said. So Juno decided to pursue a sale to Gett. The deal was announced in late April.
As it announced the deal publicly, Juno also sent emails to drivers saying it was cancelling their stock plan and would be offering them small cash payouts within days. It has not yet followed through on these payments, according to two drivers who received the emails.
Juno’s executives haven’t spoken publicly since the acquisition. But last week Ronen Ben-David, the company’s general manager, met with three drivers at its headquarters to discuss their concerns. Steven Savader, one of the drivers present at the meeting, said Ben-David didn't feel that Juno had let drivers down. Keren Kessel, a spokeswoman for Juno, confirmed that the meeting had taken place. She wrote in an email that the company has attracted more drivers than ever in the weeks since the acquisition. Kessel declined to comment further, and a spokeswoman for Gett didn’t respond to an interview request.
Savader has been an active member of the IDG for several months. Because Juno's drivers mostly drive for Uber as well, many of them are already in contact with the driver's guild. Savader said Juno dismissed their requests to accept the IDG as their representative, saying it would prefer to have discussions with individual drivers. This echoes previous comments Talmon Marco, Juno’s chief executive officer, has made about the driver's guild. In October, he questioned the group’s legitimacy. “We will be happy to talk with an organization as long as we feel that this is a genuine grassroots effort from the drivers,” he said. “We haven’t seen any grassroots efforts.”
Price, of the IDG, interprets this as baseline hostility to driver organizing. “It’s something corporations have been doing as long as there have been corporations. You keep everyone separated, and you have power over them,” he said. But skepticism about the guild has extended beyond Juno. The group was founded as a collaboration between Uber and the International Association of Machinists and Aerospace Workers, and Uber helps pay its administrative budget. This can make IDG’s stances against Uber’s competitors seem fraught.
Price's solution is to broaden the group's charge. The IDG has begun to collect dues from some members, which would loosen its financial ties to Uber. It recently succeeded in getting the city’s Taxi and Limousine Commission to commit to developing a rule requiring that all ride-hailing apps include an option to tip the drivers. It’s now pushing New York’s Taxi and Limousine Commission to regulate the pay of ride-hailing drivers and limit the number of drivers on the road. “Whatever the issue is, we want to make some improvements in working conditions,” said Price. “We haven’t gotten to the point where we’re negotiating any contracts or anything. I think it’s just a matter of time.”