A U.S. judge rejected a bid by Uber to dismiss a civil lawsuit accessing the company of charging customers a 20 percent driver gratuity but pocketing most of the additional revenue instead.
U.S. District Judge Edward Chen in San Francisco said the online for-hire car service must face multiple civil counts, like allegations that the company violated California's unfair competition laws.
San Francisco-based company 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 a number of regulatory and legal challenges as it looks to expand into new markets around the world.
Earlier this year, an Uber user filed a proposed class action lawsuit against the company, saying the 20 percent rider gratuity is "false, misleading, and likely to deceive members of the public" since the company keeps a good amount of the money.
The judge's ruling dismissed a breach of contract claim against Uber, but determined there was enough 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.
Earlier this week a judge overturned nationwide ban on one of the services offered by Uber.
The temporary injunction banned the start-up from offering its UberPop ride-sharing service.
The German Taxi Association, Taxi Deutschland, said that it would appeal the ruling.
"The taxi industry accepts competitors who comply with the law. Uber does not," it said in a statement.
Uber welcomed the judge's decision.
"UberPOP is revolutionizing transport in cities and beyond by helping to create smarter cities with more transport choices," the firm said, according to BBC News. "Demand is so great all across the country that we expect to double in size by the end of the year and plan to bring Uber to more and more cities across Germany."
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