Uber's german drivers need right answer to 250,000-euro question

Uber Technologies Inc. drivers in Germany need to be wary of passengers asking questions. The wrong answer might cost 250,000 euros ($324,000).

A group of German taxi dispatchers said it will quiz Uber drivers to ensure they have the proper licenses to carry passengers after winning a court ruling that subjects the company to fines of as much as a quarter of a million euros for each violation. San Francisco-based Uber said it wouldn't alter its services in light of the court order that banned its operations in the country.

"Uber told me not to discuss the business with passengers," an Uber driver in Berlin, who identified himself as Burhan, said last night. "They told me they'll handle any penalties. I really can't afford to pay 250,000 euros. I can't understand what those taxi drivers are on about, but I'm glad Uber is keeping it up."

Governments and regulators in cities around the world are restricting Uber's business on the grounds it poses safety risks and unfairly competes with licensed taxi services. Cabbies with permits that can cost 200,000 euros apiece have staged protests in European cities including London, Madrid, Paris and Berlin.

Uber is active in more than 40 countries and raised $1.2 billion in June, giving it a value of $17 billion. Investors including Goldman Sachs Group Inc. and Google Ventures are putting money into the burgeoning market for apps that let users order taxis and cars or share rides using their smartphones.

'Small Change'

Anja Floetenmeyer, a spokeswoman for Taxi Deutschland Service Gesellschaft fuer Taxizentralen eG, which won the Germany-wide ban, said the group will be making test rides on Uber to show the company is violating the order. Still, she doesn't think fines will have much of an effect.

"They'll pay that with small change," said Floetenmeyer. "This is billions of capital from Goldman Sachs and Google. It's not a small start-up we're talking about."

The company responded to the Frankfurt ruling by saying "you cannot put brakes on progress" and announced that it will continue to operate. Uber filed a bid to lift the German ban and ask the judges to stop Taxi Deutschland from enforcing it while the case is pending.

A German spokeswoman for Uber said she couldn't immediately comment and referred to an earlier comment by the company that the company stands behind its drivers. Any fines in the Frankfurt ruling would only apply to the company.

The German press scolded the company for "laughing off" the court ruling. Uber's attitude may also annoy judges, said Magnus Hirsch, an intellectual property litigation lawyer at SKW Schwarz Rechtsanwaelte in Frankfurt.

No Thrill

"To speak out against the ruling so bluntly, isn't exactly thrilling the judges," said Hirsch, who isn't involved in the case. "It is an own-goal. No judge likes it if his orders are so openly ignored."

The same judges who issued the Frankfurt order under emergency proceedings will now also rule on Uber's bid to lift it. The app maker had unsuccessfully tried to prevent the ban by filing a "protective brief" a few days before Taxi Deutschland approached the court.

The court issued its ruling on the day Taxi Deutschland filed its motion without scheduling an oral hearing.

"That's a pretty clear message," said Hirsch.

Hamburg and Berlin authorities issued bans of their own which are independent of the Frankfurt case. Uber is fighting them in separate courts. Munich's city government has said it will target the drivers and impose fines unless they have the necessary permit.

Meter Running

Depending on how many violations Taxi Deutschland can demonstrate in court, the bill could add up, as each case carries its own sanction, Hirsch said. Ignoring the order intentionally might force the court to impose payments of more than 250,000 euros.

If the financial penalties don't deter Uber, the court could also decide to have the chief executive officer of the company's Dutch unit taken in custody to make it comply. While it's unlikely that this can be enforced in the Netherlands, he faces the risk if he sets foot on German soil, said Hirsch. Uber's Dutch unit is the defendant in the Frankfurt case as it is running the app in Germany.

If a private party enforces a preliminary court order in Germany, it may have to pay damages if the other side later overturns the ruling in court. A similar ruling won by a cab driver in Berlin earlier this year wasn't enforced because of the risk. That case is pending on appeal.