Cab, livery companies sue city over rideshare companies

They say Chicago is creating 'caste' taxi system

February 6, 2014

AP Photo/Jeff Chiu
A car that’s part of the rideshare company Lyft, drives next to a traditional taxicab. Friction over separate regulations for the two industries led to a federal lawsuit filed by cab and livery drivers against Chicago.

A group of mostly taxi and livery companies have filed suit against the City of Chicago, claiming that the city has tolerated, and even promoted, “unlawful transportation providers” to undermine their industries. Their case focuses on technology companies Uber, Lyft and Sidecar, which offer smartphone apps that allow people who need rides to find people with cars, for a fare. The suit claims that the city has denied the plaintiffs equal protection under the law, by forcing them to abide by rules and regulations that have not been applied to the technology companies.

At the heart of their complaint is the assertion that the companies, which call their services “ridesharing,” are de facto cab companies.

“This isn’t ridesharing,” said Michael Shakman, an attorney representing the plaintiffs. “They sell services 24/7 to the general public, they charge by time and distance, and they’re an on-demand service. They’re exactly a taxi service, not a rideshare.”

At a press conference Thursday, Shakman accused the city of allowing a taxi “caste” system to emerge, whereby Uber, Lyft and Sidecar are allowed to focus only on passengers who have credit cards, smartphones, and live in high-income neighborhoods.

“They are not available at all to the disabled or to people who pay with cash,” Shakman said. “This taxi ‘caste’ system excludes large portions of the population on racial, economic and disability grounds, and it thereby violates the Illinois Civil Rights Act.”

Also joining the lawsuit is Brad Saul, President of Chicago Disability Transit, a non-profit that provides paratransit options for people with special needs. Saul said on the occasions he attempted to get a car from ridesharing companies, they did not have any that were able to accommodate his wheelchair.

“As a platform, we don’t force drivers to use it a certain way,” said John Zimmer, co-founder of Lyft, “but as a broad platform there’s drivers who do support that.” Zimmer said in many of the 20 markets where Lyft now operates, there are people who drive wheelchair-accessible vehicles.

But while Saul and other plaintiffs argue that the companies should have to serve people in all neighborhoods, and with disabilities, the lawsuit also dwells heavily on the economic injury they say they are suffering. Lyft, Sidecar, and Uber’s ridesharing service, called uberX, typically are cheaper than taxis, although when demand is high, they use a surge-pricing model that can lead to steeper charges.

Additionally, there is a relatively low cost of entry for their drivers. Cabbies must have city-issued medallions, currently priced at roughly $350,000 each, as well as mandated insurance, worker’s compensation, and vehicles that are no more than four years old. Taxi and livery drivers are also required to attend school and be licensed as public chauffeurs, neither of which are necessary for rideshare drivers.

Representatives from Lyft and Uber dispute the underlying characterization of their service as a taxi service — and argue that’s why they shouldn’t be regulated as cab and livery vehicles.

“A taxi can hail someone from the street, and when you have something like a street hail, it creates different dynamics and different safety requirements,” said Zimmer. “You don’t have choice over the company, you don’t have information on the driver, you haven’t agreed to a terms of service, and you have a lot less information. And with a service like Lyft, you’re choosing to use Lyft, you see information about the driver, about the car, and there’s many more differences.”

The lawsuit comes a day after lines of disagreement surfaced at City Hall. Mayor Rahm Emanuel’s office introduced an ordinance to create regulations for the industry, designating a new category of transportation called “Transportation Network Providers.” The proposal would allow the ridesharing services to continue many of their operations, but would require them to register annually with the city, maintain minimum standards of general commercial and commercial vehicle liability insurance, pay the city’s Ground Transportation Tax, and have drivers’ cars inspected annually.

Plaintiffs in the lawsuit say the proposal falls short, and they don’t like the idea of a separate set of rules.

“It’s bad public policy to create a second taxi system designed for the elite who happen to be fortunate enough to live in neighborhoods where taxi drivers are willing to take them,” said Shakman.

At the same City Council meeting, Aldermen Anthony Beale (9th) and Edward Burke (14th) proposed a resolution calling for the Police Superintendent and Commissioner of Business Affairs and Consumer Protection to immediately apply the existing taxicab rules to the ridesharing services.

“We need to make sure that the consumers are protected,” said Beale, “and so we need to take the steps on shutting them down and then work towards a solution to make sure they’re regulated.”

The resolution is not binding, but will go to a joint committee on Transportation and Finance, of which Beale and Burke are chairs, respectively. As such, they may ask enforcement officials to offer testimony as to why the city has not applied its rules on taxicabs and livery to the ridesharing services.

Representatives of Uber and Lyft say they expect there will be regulation of their service, and that they are in favor of measures to promote safety. But they say the push by cab and livery companies to have them adhere to the same rules that they do will stifle technological innovation.

“Hundreds of thousands of Chicagoans rely on uberX precisely because it is a faster, safer, and cheaper way of getting around their city,” wrote Andrew MacDonald, Midwest Regional Manager for Uber, in an e-mail. “After years of neglecting Chicago drivers and passengers alike, the taxi industry has resorted to name-calling and frivolous lawsuits. While they spend time in court, we'll be working with Mayor Emmanuel (sic) to design a forward-looking regulatory regime that creates economic opportunity, prioritizes safety, and ensures access to the best, cheapest rides ever available in the city.”

Odette Yousef is WBEZ’s North Side Bureau reporter. Follow her @oyousef and @WBEZoutloud.