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Uber can be added as defendant to surge pricing lawsuit, says judge

Adding Uber could move the suit against the company's CEO toward arbitration, a desirable outcome for the ride-hailing company.

Uber logo on a smartphone.

Uber's controversial surge pricing has led to legal problems.

NurPhoto/Getty Images

A federal judge says ride-hailing service Uber can be added as a defendant to an antitrust lawsuit against the company's co-founder and CEO, Travis Kalanick.

Uber is a "necessary party" in the lawsuit, US District Judge Jed Rakoff said in a decision made public Monday.

The decision, however, is good news for Uber because it could push the suit toward arbitration, something that Kalanick and the company prefers. Uber's user agreement calls for disputes to be settled through arbitration and Rakoff said the lawsuit was directed specifically at Kalanick to get around that policy.

"While plaintiff now pretends that he 'seeks no relief whatsoever against Uber,' such an assertion is at odds with any fair reading of plaintiff's claim," Rakoff said.

At issue is surge pricing, which happens when demand for drivers spikes, and prices for rides, which are set via algorithm, do too. It's a controversial practice and one that's upset consumers.

The antitrust class action suit was filed in December, saying that Kalanick "had orchestrated and facilitated an illegal price-fixing conspiracy."

The plaintiff, Spencer Meyer, made the claim that "Mr. Kalanick, while disclaiming that he was running a transportation company, had conspired with Uber drivers to use Uber's pricing algorithm to set the prices charged to Uber riders."

The result, he alleges, is less price competition among Uber drivers (even though drivers are classified as independent contractors), which hurts consumers.