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IN FOCUS |
by Matthew W. Daus, Esq. |
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"GOING MY WAY?"—THE PROLIFERATION OF ROGUE RIDESHARING SERVICES
IATR Speaks Out Before California Public Utilities Commission
By Matthew W. Daus, Esq. & Jasmine K. Le Veaux, Esq.
Transportation Practice Group
With the increased innovation of technology use in the for-hire transportation industry, new businesses have begun to use the internet and social media to offer new ways of arranging the transportation of passengers.[1] All of us are now familiar with the seemingly endless number of smartphone applications ("apps") sweeping the nation which connect for-hire vehicles and drivers to passengers resulting in the introduction of an "electronic hail" to the industry vernacular.
These apps have made waves throughout jurisdictions as regulators wrestle with how to properly regulate, license and oversee such app companies. However, one form of transportation service that has recently emerged across the country is the use of mobile communications to connect individuals wishing to offer and receive low cost, shared transportation.
Lyft and SideCar, two San Francisco based transportation operating companies, currently offer smartphone applications which provide free online booking for what the companies call “ridesharing” services. Passengers request a car through the application which communicates the passenger's location to drivers via GPS.
The applications communicate to the passenger a "suggested fare" based on similar rides and include an internal rating system.[2] The applications have a rating system that allows for drivers to rate passengers and passengers to rate drivers after the
trip is completed. Passengers' credit card information is saved within the system of the application so that they may be identified for future trips.[3] Any California registered vehicle with valid insurance maybe used to provide these services and any person with a valid driver's license may become a driver.[4] Lyft and SideCar purport to conduct background checks on all drivers.
Naturally, regulators are trying to determine whether this type of business operation is, indeed, a "ridesharing" service.
Among the many questions that need to be answered are:
- do drivers get paid by the companies and how much;
- are "suggested donations" truly voluntary or may passengers receive a negative rating for choosing not to offer a payment; and
- do the companies receive a percentage of the "suggested donation" received by the driver.
Moreover, real public safety concerns arise when:
- unlicensed transportation services are provided by strangers, to strangers, and
- when it is unknown whether drivers maintain the proper level of insurance;
- if drivers are subject to background checks consistent with jurisdictional standards; and/or
- if the vehicles being used are inspected or meet vehicle safety and retirement standards of vehicles licensed to provide transportation services.
In an effort to address these concerns, the California Public Utilities Commission (the "Commission") voted in December 2012 to institute rule making on regulations relating to passenger carriers, ridesharing, and new online enabled transportation
services.[5]
In California, ride share transportation is exempt from regulation when it involves the transportation of persons between home and work locations and when such transportation is incidental to the driver.[6] This exemption does not apply if the primary purpose for the transportation is to make a profit.[7] As such, further investigation and information gathering is necessary for the Commission to fully evaluate the operations of companies like Lyft and SideCar in order to determine whether California regulations must be changed to address a "new" form of transportation, or whether these are merely for-hire transportation companies in disguise, and as such, existing regulations and licensing requirements need simply to be enforced.
Despite initial apprehension, however, it seems that the Commission has recently taken steps to legitimize such companies. On January 30, 2013, the Commission released a statement that said it had reached an agreement that will allow Lyft to operate in the state under the oversight of the Commission to ensure that Lyft adheres to safety requirements like proof of insurance, national criminal background checks for drivers and Department of Motor Vehicle checks.[8] The Commission had previously fined Lyft $20,000, but it says it has now suspended its cease and desist order against the company.
The Commission has also previously fined Uber and SideCar, and the cease and desist orders and fines issued against them remain active.[9] It should be noted that the San Francisco Municipal Transportation Agency ("SFMTA") also issued a cease and desist order against Uber claiming that it was operating an unlicensed taxicab service.[10] In response, the company, among other things, changed its name from UberCab to Uber.[11]
Indeed, as the city where companies like Lyft, SideCar and Uber started their operations, San Francisco has become somewhat of an incubator for technology companies providing transportation services.
At present, these companies are primarily concentrated on the West Coast; however, it appears that they are slowly proliferating throughout the country. Lyft makes note on its website that it is now serving New York and Washington, DC.12 Uber, which operates in several jurisdictions, has also announced that it intends to join the ride sharing fray.[13]
While San Francisco is where the apps all started, and also where ride sharing services were born, it is very apropos that the head of the SFMTA, Ed Reiskin, and his taxicab regulator, Christiane Hayashi, are the first to employ a solution to both control, monitor and police apps while gathering significant data to reform the industry across the board as no other city has done.
The SFMTA has released an RFI for a taxi real time data system[14] in the last few months and will shortly chose a vendor to monitor smart phone apps and other licensed taxicabs. This revolutionary step forward may place San Francisco ahead
of the regulatory pack internationally for many years to come.
The International Association of Transportation Regulators ("IATR") has been on the front lines of the discourse regarding technology transportation companies and recently submitted comments to California's Rulemaking Proceeding regarding ride sharing. A pre-hearing conference and workshops to address the issues raised throughout the comment sharing process will likely be scheduled in the near future.
The Commission has been in contact with the IATR, and we have been working with the agency on adoption in California of our model regulations, the latest draft of which can be found at www.windelsmarx.com.[15] The IATR's public comments to the Commission can also be accessed on the website of Windels Marx Lane & Mittendorf, LLP.[16]
These are exciting times, and we are proud of the SFMTA which is clearly moving in the right direction. We all need to make sure the Commission does the right thing as well. It is up to all of us to speak out and demand safety measures, better customer service and business accountability and not more “rogue” strangers behind the wheel posing a danger to us all!
Matthew W. Daus, Esq. (left), Chair of the Transportation Practice Group at Windels, Marx is joined by Associate and practice group member Jasmine Le Veaux (right), at the law firm's Midtown Manhattan offices.
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Disclaimer: These comments are intended to be for information purposes only and should not be taken as legal advice. Prior results do not guarantee a similar outcome.
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http://transportationreviews.com/news/
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http://allthingsd.com/20120626/sunil-pauls-sidecar-app-will-flag-astrangers-car-for- you/.
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http://www.side.cr/#drive
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http://www.cpuc.ca.gov/PUC/transportation/Passengers/Carrier
Investigations/CPUC_Proposes_to_Evaluate_Ridesharing_Services_Via_New_Proceeding.htm -
See Public Utilities Code § 5353(h).
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http://www.cpuc.ca.gov/NR/rdonlyres/42294D2B-412E-466EA74BF1862BFC6924/0/
PassengerCarriersBasicInfoandApplicantsRev012811.pdf -
http://bits.blogs.nytimes.com/2013/01/30/california-suspends-fineagainst-lyft-a-hail-a- ride-app/. It should be noted that Zimride is the company that operates Lyft. See http://business.time.com/2012/
09/04/need-a-lyft-ride-sharing-startup-zimride-hits-the- gas-pedal/ -
Id.
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http://www.sfgate.com/bayarea/article/Putting-brakes-on-ridesharing-apps- 3927193.php
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http://www.sfgate.com/bayarea/article/Putting-brakes-on-ridesharing-apps- 3927193.php
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http://www.zimride.com/
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http://bits.blogs.nytimes.com/2013/01/31/uber-rideshare/
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http://www.taxi-library.org/sfmta-taxi-data-rfi-rfq.pdf
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The direct link to the latest draft of the proposed model regulations is http://www.windelsmarx.com/resources/documents/
Windels%20Marx%20%20IATR%20Proposed%20Model%20Regulations%20for%20Smartphone
%20Applications%20(10801287).pdf -
The direct link to the Comments is http://www.windelsmarx.com/public_document.cfm?id=158&key=20I2