September 18, 2014 / 3:43 PM / 3 years ago

Uber must face lawsuit over gratuity charge: court ruling

An illustration picture shows the logo of car-sharing service app Uber on a smartphone next to the picture of an official German taxi sign in Frankfurt, September 15, 2014. REUTERS/Kai Pfaffenbach

SAN FRANCISCO (Reuters) - A U.S. judge rejected a bid by the online for-hire car service Uber to dismiss a civil lawsuit that accuses the company of charging customers a 20 percent driver gratuity but pocketing most of the additional revenue instead.

In a ruling late on Wednesday, U.S. District Judge Edward Chen in San Francisco said Uber must face multiple civil counts, including an allegation the company violated California’s unfair competition laws.

A company representative could not immediately be reached for comment.

San Francisco-based Uber raised $1.2 billion from mutual funds and other investors in a June funding round, which valued the fast-growing service at $18.2 billion at the time. Uber faces an array of regulatory and legal challenges, however, as it seeks to expand into new markets.

An Uber customer filed a proposed class action lawsuit against the company earlier this year, saying the 20 percent rider gratuity is “false, misleading, and likely to deceive members of the public” because Uber keeps a substantial portion of the money.

The judge’s ruling dismissed a breach of contract claim against Uber, but ruled there was sufficient detail in the lawsuit for it to move forward on other counts.

The case is Caren Ehret vs. Uber Technologies Inc in U.S. District Court, Northern District of California, No. 14-0113.

(This story corrects the day to Wednesday instead of Tuesday, in the second paragraph)

Reporting by Dan Levine; Editing by Grant McCool

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