Nasir and Matt kick off the week by talking about Uber's deceptive tactics against Lyft. They also answer the question, "I recently incorporated in California, but when I tried to file for a DBA, my name was taken. Should I be concerned about this?"
NASIR: Welcome to Legally Sound Smart Business. This is Nasir Pasha.
MATT: And this is Matt…
NASIR: And I’m Matt Staub – oh.
MATT: You’re both people today. Well, I’m Matt Staub, but you can be both of us if you can emulate my voice.
NASIR: And we’re both Matt Staub and welcome to the business podcast where we cover business in the news and add our legal twist and also answer some of your business legal questions that you, the listener, can send in to firstname.lastname@example.org.
MATT: All right. Well, I’m going to jump into it and I tease this a little bit if anyone follows me on Twitter that we were going to talk about this again because one of our favorite topics – or maybe not “favorite” but one of our most talked about topics – is Uber and it looks like they’re at it again. I think this is the most interesting story we’ve talked about with them.
Basically, there’s been some investigative work by Lyft. For those of you that don’t know, Uber and Lyft are both essentially taxi cab-like services, more or less. So, Uber, what they’ve been doing over the last couple of years is ordering and cancelling rides through Lyft and a lot of them have been to Uber employees that have been doing it. They say roughly 5,000 rides from Lyft have been ordered and cancelled. You would think, you know, “Why would they do this?” It’s basically just to eat up Lyft’s time so they can’t take other rides because, supposedly, if someone would be deciding between the two, I guess, if you tried to get a Lyft and it was really backed up, you would just go to Uber. I only use Uber so I don’t know but I guess I know people that use both so maybe it’s whichever one is most available.
Anyways, they’ve been doing that which is obviously an issue. And then, two, Uber employees have been requesting short rides via the Lyft drivers and, more or less, have been trying to convince them to switch over to Uber. That’s just a couple of things that have been going on.
NASIR: We were thinking about covering this earlier. This has been happening for a while now. There’s been a lot of stories about Uber’s very aggressive marketing tactics – both here and abroad – and, of course, there’s also the legal issues with the taxi cab industry, with whether they need to be licensed or not in particular cities, and that’s a separate issue. But one thing I noticed is that, this issue with Lyft, it’s not unique to that. Even the city of Seattle had issues with how they were marketing. They were gluing up stickers and flyers up on so-called city property and that would otherwise require a permit so they weren’t too happy about that. what I do notice, though, in most cases, especially with this whole cancelling of Lyft and so forth and trying to convince Lyft drivers to join up to Uber, they’re specifically trying to stay on the legal line of things in the sense that they’re getting right to the edge. I mean, there are laws about unfair business practices, and even dealing with competitors, but usually those unfair business practices are for protections of the consumer. Right now, it’s kind of crappy what they may be doing, but I don’t see a lot of legal liability there when it comes to it. What do you think?
MATT: Yeah, and that’s what we’re going to get down to – the legal side of it.
Unfortunately, you’re right. I will say one thing about Uber; they’ve really done their research – not just with this but in general – and they’ve really pushed the legal limits of what they can do and I think they even had a statement come out saying, “We recruit hundreds of thousands of entrepreneurs to build their own small businesses on the Uber platform where the economic opportunity for drivers is unmatched in the industry.” That was their statement following this news so not even really addressing anything. I mean, they’re basically not going to take any blame for doing this.
NASIR: But look at that statement in itself. I mean, them claiming that each of these drivers are entrepreneurs and so forth, it’s a little bit of a lie because, at the end of the day, an Uber driver can’t grow their business because they’re limited by they’re an individual. To me, an entrepreneur is somebody that can multiply themselves, that can scale and grow. How is an Uber driver supposed to scale or grow their business? It doesn’t make any sense.
MATT: Yeah, that’s a good point.
NASIR: It’s a job.
MATT: Yeah. I mean, but there was another issue in New York. I’m just building off what you said there because they were talking about, you know, in New York, a bunch of the Uber drivers got a message saying, “You can’t do trips with your vehicle unless it’s with Uber,” because drivers are trying to basically use Uber or whatever company was available and take as many rides as possible.
NASIR: Oh, like, whether it’s Lyft or Uber, they would just pick and choose whoever they get a ride from.
MATT: That’s entrepreneurial but, if Uber is saying they can’t even do that, then they’re basically lying about their own statement.
NASIR: Yeah. I think the only way they can be entrepreneurial is if Uber provided a platform to run your own private taxi cab town car or private car service where you can hire other drivers, you can have multiple cars, but I don’t think the economics are even there for that, even if they would allow that. But Uber obviously is a lead in the industry and some may say there’s a reason for that. It’s because of their aggressive style of competing and, sometimes, you can’t argue with success – sometimes, you can.
MATT: Yeah. So, I guess we keep an eye on this to see what happens.
NASIR: What do you think should happen, though?
MATT: What should happen?
NASIR: Do you think they should be prohibited from doing these kinds of things?
MATT: Well, yeah, because there’s normal competition – nice, healthy competition – and then, there’s things like this which is I would say Uber and Lyft are just straight up each their biggest competitors, but you have to play it fair. I guess they’re kind of playing by the rules but they’re really pushing the limits. I mean, I’m trying to think what Lyft could do. If they have a number that keeps cancelling rides, I guess they can ban their numbers. But some of these people, like, one employee had 21 different phone numbers cancel 1,500 rides. That’s the problem. It’s not hard to get a phone number so they’ll just keep getting new and new numbers, more and more numbers.
NASIR: I feel like there’s some creative lawyer that can come up with some kind of lawsuit there. There’s something that sounds wrong about that, right? But, at the end of the day though, Lyft, I think is also doing the right thing. I mean, they’re doing what they can. They’re making it public and so forth. Even though Uber denied it at first and I don’t know if they still are or not – you know, I think they just blame it on certain groups of people in certain cities that are a little bit more aggressive than others or whatever but the point is that, as a consumer, knowing this information and it could possibly change people’s decision-making if they have a choice between Lyft and Uber. Of course, Uber responds saying that the only reason Lyft is complaining is because Lyft is upset for Uber not acquiring them because, apparently, they were in acquisitions talks as well.
MATT: That’s true. I think you’re right. There’s some lawsuit in here. Someone will figure it out and someone will file something or at least attempt to file something or threaten to file something and maybe they’ll stop doing it. I guess just getting this out there is going to be bad PR for Uber maybe but that’s the best they can do right now. If you’re Lyft, it’s probably not even worth it to bring a lawsuit, in my opinion.
NASIR: Yeah. I mean, it depends if you have any backing behind it. Sometimes, it’s the only thing you can do – to be aggressive back.
MATT: I do need to take a cab later and I’m probably going to take Uber.
NASIR: Not Lyft? After all that?
MATT: Yeah, it’s only one that I have on my phone and I don’t live in a spot where taxis just normally drive by so it’s pretty much my only option because I don’t use Lyft.
NASIR: I don’t know. You should just stand outside your house and just hope a taxi drives by.
MATT: Yeah, it’s pretty rare.
NASIR: Or just hail down random people. What’s the difference, you know?
MATT: Actually, an ambulance just drove by. That’s pretty rare. Wow. Maybe there is a taxi today. All right!
NASIR: You know what I was thinking? If there’s a culture where you can hire private drivers through Uber, if we lived in a world where people are willing to just pull over and be paid, you could hail any private car and they’d be willing to pick you up and give you a ride, then this whole Uber-Lyft thing would be a non-issue. I think we should start that.
MATT: This isn’t Grand Theft Auto, the game.
NASIR: Well, I didn’t say hi-jack them.
MATT: Take people’s cars.
NASIR: That would be helpful, too.
MATT: It’s like a PC version of Grand Theft Auto.
NASIR: All right, let’s get to the question of the day.
MATT: “I recently incorporated in California but, when I tried to file for a DBA, my name was taken. Should I be concerned about this?” This comes from somebody in Los Angeles.
NASIR: DBA, this is jumping right in here.
So, the difference between a DBA and the name that you’re registered in your state should be differentiated here first. First, in California – and most states for that matter – when you register a corporation, the secretary of state is going to do a check to make sure that the name itself complies with the law and that, for example, you can’t have the word “bank” in there or “university” in there in some states unless you’re a bank or a university. And then, it’ll also check if the name itself is duplicate or very similar to another name, and different states have different leeways when it comes to how similar that is and, a lot of times, they’re pretty flexible. But a DBA is a fictitious business name. Basically, you’re operating under a different name than what your business name is and this could be a different name than if you’re operating as an individual or a corporation or an LLC and so forth. When you register that – usually by the county, and there are some states that have DBA state registrations as well, particularly in California – they don’t check to see whether or not there’s any duplicates. So, even if there is a duplicate, they’ll register it accordingly. That’s first of all understanding that premise.
MATT: Yeah, it’s a good sign. I think the more important one is the actual name of the entity when you filed with the state. If it was able to get through that process and the name was approved when it was filed with the secretary of state, then I think that’s definitely a good sign. When they try to file for the DBA, it’s hard to answer this question, obviously, because we don’t know what they’re trying to do. Like, are they just trying to file a DBA? Maybe they have “Inc.” at the end of their actual entity name and they’re trying to take that off?
NASIR: Yeah, that’s a common DBA.
MATT: But I don’t know. Maybe they’re trying to file something completely different? Like I said, we don’t know what the name of the entity is or what the DBA is.
Should they be concerned about it? I think the most important thing is that they were able to get through with the secretary of state. I mean, there might be some area of concern. It just kind of depends on what the name is, I suppose.
NASIR: Yeah, I think the concern should be focused on the trademark aspect of it in the sense that, if someone else is using your name and let’s say it depends what your goals are for that business, obviously, (1) you don’t want to be infringing upon someone else’s trademark. (2) You want to be able to hold your own as far as have rights to your own business name and trademark and be able to assert that against others on a national level. And so, that in my perspective is a little bit more important than someone who filed a DBA because, I mean, if you look at DBAs, I mean, it’s so easy that the number of names that have been registered as a fictitious business name is much more compared to those that have been registered as a trademark and the trademark is much more important – same as the actual entity formation of the state as well.
MATT: I was actually at the county building. This was… I don’t remember how long ago it was now – sometime over the last year
NASIR: Thirty years ago?
MATT: Yeah, thirty years ago. I asked someone in the office where they do the DBAs, I was like, “I actually need to change one. Should I just withdraw or cancel the first one?” She’s like, “Ah, it doesn’t even really matter.” I was like, “Oh, okay.” I was like, “I just need to change the address or something.” “You don’t even need to really do anything.” I was like, “Oh. Fair enough, I guess.”
NASIR: People get very caught up in the whole DBA thing. I think the most important thing from a legal perspective is that, when people are filing a lawsuit, as attorneys, we look up the fictitious business name registry business sometimes we don’t know if this is an entity or can’t find it as an entity. I’ve seen a lot of times where people may start out with a DBA and then they file an entity and they forget that this other DBA is out there and it could be construed that because that DBA is there that you’re still operating under the DBA and not the entity and maybe old contracts that are under the old name without the “Inc.” or the “LLC.” In other words, it could expose you to personal liability basically defeating the whole purpose of you incorporating in the first place. Just a small tid-bit there with DBAs.
MATT: Do you prefer DBAs or fictitious business names?
NASIR: Good question. I just follow whatever the state follows. Texas uses assumed names and I think a lot of states use assumed names in their legal language. I think fictitious names and DBAs are kind of interchangeable.
MATT: I think, I want to say at least in San Diego, they use fictitious business name, I thought.
NASIR: Yeah, they do.
NASIR: But they use both, too, because, in the forms, I think it says “doing business as still…” It’ll still use that language within the actual form but I haven’t filled one myself in a while so I may be wrong.
MATT: Yeah, all right. Well, before we confuse people too much here, I think we’ll cut it off.
NASIR: Let’s cut it off. Thank you for joining us, everyone.
MATT: Yeah, keep it sound and keep it smart.