Uber, SideCar and Lyft Fined, Uber Also Sued by Taxi Drivers

By Cameron Scott 

uber, mobile apps, social appsIt hasn’t been a good week for San Francisco taxi and ride-share apps.

On November 9, two taxi drivers filed what they hope will be certified as a class action lawsuit against Uber stemming from its months-old taxi service in the city.

Yesterday afternoon, Uber, SideCar and Lyft were fined $20,000 each by the California Public Utilities Commission for operating what the state considers unlicensed charter car businesses.

The fines also address the app’s lack of control over drivers, which the CPUC is inclined to see as employees. For instance, CPUC cited the apps for “engaging employee-drivers without evidence of workers’ compensation insurance in effect and on file with the CPUC.”

“If something happens to a passenger while in transport with Lyft, SideCar, or Uber, it is the responsibility of the CPUC to have done everything in its power to ensure that the company was operating safely according to state law. That means that the company has insurance to cover an accident and that its employees are protected and are suitable drivers,” director of the CPUC’s Consumer Protection and Safety Division Brigadier General (CA) Jack Hagan said in a statement.

The companies seized on the regulator’s clumsy description of their business models.

CPUC is “asserting that we are operating a transportation carrier, which is like saying Airbnb is a hotel chain, that Travelocity is an airline, or that eBay is a store,” SideCar CEO Sunil Paul responded on the company’s blog.

Uber, which has faced regulatory challenges in several cities, insists that it works as an electronic hail — changing the method of communication between drivers and riders, but not providing a taxi or limo service of its own.

The company has also maintained that town-car and taxi drivers are happy with the opportunities the app provides to pick up riders during otherwise quiet times.

“Why would anybody want to interfere where both parties are happy and repeatedly enter into the same kind of transaction?” Ilya Abyzov asked in an October interview with SocialTimes.

But the class action suit initiated by taxi drivers suggests that at least some drivers see Uber’s service differently. The lawsuit alleges that because Uber does not comply with the regulations that govern taxi drivers, it is unfairly competing with licensed drivers. (San Francisco taxis are regulated by the Metropolitan Transportation Authority.) The suit cites the use of per-mile rates drawn from GPS and unlawful rates.

Updated at 5:55 EST to reflect information and comment from the CPUC.