TSI USA LLC v. Uber Technologies Inc

Background

TSI USA LLC and Uber Technologies, Inc. entered into a Services Agreement and a related Statement of Work effective November 24, 2014. The agreements covered global travel-management services for Uber employees and set payment terms based on the volume of travel bookings. They also allowed Uber to terminate the agreements with 90 days’ written notice, while providing that TSI would be entitled to costs already incurred in performing the services.

The agreements contained a limitation-of-liability provision stating that Uber’s total cumulative liability could not exceed the total amount paid to TSI for services performed under the applicable Statement of Work. Uber paid TSI $200,000. After Uber terminated the agreements, TSI sought additional amounts for implementation costs, Project Ginseng costs, monthly service costs, and other expenses. TSI’s remaining claims were breach of contract and unjust enrichment or quantum meruit.

Uber moved for partial summary judgment on three issues: whether the limitation-of-liability provision capped damages at $200,000; whether TSI could pursue unjust enrichment or quantum meruit when the written agreements covered the same services; and whether Uber was entitled to prevail on its affirmative defense that TSI fraudulently misrepresented its abilities before the parties contracted.

Contractual Damages Cap

The court applied California law because the agreements required California law to govern their interpretation. It found that the termination provision and the limitation-of-liability provision were unambiguous and could be read together. The termination provision allowed TSI to recover costs incurred in performing services, but the limitation provision capped those costs at the amount Uber had paid for services.

The court enforced the limitation provision and held that it capped TSI’s contractual damages at $200,000. The court rejected TSI’s argument that the provision should be disregarded as boilerplate or because it conflicted with TSI’s right to recover incurred costs. The court stated that the limitation provision applied to TSI’s breach-of-contract claim, but found no basis to extend it to damages outside the contract.

Unjust Enrichment and Quantum Meruit

Under California law, unjust enrichment may support restitution or a similar implied-contract recovery, and quantum meruit may allow recovery of the reasonable value of services. But those theories generally are unavailable when a valid written contract governs the same subject matter.

The court concluded that TSI’s deposition testimony established that the costs it sought were costs of performing services under the agreements. TSI later submitted a declaration attempting to clarify that some work fell outside the agreements. The court applied the Ninth Circuit’s “sham affidavit” rule, which generally prevents a party from creating a factual dispute by submitting a declaration that contradicts earlier deposition testimony, and struck the declaration to the extent it claimed the costs were outside the agreements.

The court also found that testimony about Project Ginseng did not create a genuine dispute of material fact. It therefore granted Uber’s motion for partial summary judgment on TSI’s unjust-enrichment and quantum-meruit claim.

Fraud Affirmative Defense

Uber argued that TSI had made false or misleading statements before contracting, including statements about its number of employees, cities of operation, visa and passport services, and revenue. Uber argued that it would not have entered the agreements had it known the truth. TSI denied making misrepresentations and argued that Uber understood the size and nature of its global operations, including its use of affiliated agencies.

The court found material factual disputes about whether TSI misrepresented its size, revenue, and structure and what Uber knew about TSI’s operations. Because those disputes required evaluation by a factfinder, the court denied summary judgment on Uber’s fraud affirmative defense.

Disposition

The court granted Uber’s motion for partial summary judgment to the extent TSI sought contractual damages exceeding $200,000. It also granted the motion as to TSI’s unjust-enrichment and quantum-meruit claim. The court otherwise denied the motion in its entirety. TSI’s remaining breach-of-contract claim continued, and the court set a telephonic case-management conference to discuss how to resolve it efficiently. Judge Gilliam signed the order.