Uber’s Regulatory Drama Continues: Portland Sues Uber
Yesterday’s post discussed Michigan’s proposed bill HB 5951 which would implement state regulations permitting ride-sharing services such as Uber and Lyft to operate in the state of Michigan provided they met certain regulations that are largely consistent with Uber’s existing practices. That bill would preempt various city regulations (such as Ann Arbor’s), some of which conflicted with Uber and Lyft’s existing practices. Just a few days after Michigan’s house committee approved HB 5951 and recommended the house pass the bill, a strikingly different approach has been taken in Portland, Oregon.
City of Portland v. Uber
On Monday, December 8, the City of Portland sued Uber seeking to enjoin Uber from operating in the city of Portland. This lawsuit comes just days after Uber began operating in Portland on Friday, December 5. The conflict involves Portland City Code Chapter 16.40, which requires as follows:
- “for-hire transportation” drivers must obtain a “for-hire transportation” permit
- for-hire vehicles must have certain decals and plates
- taxicabs must adhere to certain fare and meter rates
- taxicabs must adhere to certain regulations related to wheelchair accessibility
- for-hire vehicles must maintain certain levels of insurance
- taxicabs must maintain a dispatch system in operation 24 hours/day
- taxicabs must service city-wide 24 hours/day, 7 days a week and accept any request received within the city
- taxicab companies must have at least 15 cabs in their fleet and have at least 2/3 of their fleet in service at all times
- for-hire vehicles must pass regular inspections
- for-hire vehicles must be equipped with digital security cameras
According to the City of Portland’s complaint, which can be read here, Uber violates Portland City Code because it:
- does not hold a valid company permit
- all prospective Über customers must first download the Uber app and enter into an online agreement under terms dictated by Uber, including a waiver of any and all liability to Uber
- the customer must provide credit card information to Uber, which is charged, rather than having drivers collect a fare from the customer
- customers hail an Uber vehicle through the Uber app instead of a human dispatcher
- the Uber app calculates fares based on time and distance rather than through a certified taxi meter
- Uber’s drivers and vehicles are personally insured, and Uber does not require its drivers to purchase commercial at insurance
- Uber does not require its drivers to be certified by the City of Portland
- Uber’s drivers are not required to be dispatched to all ride requests in the city, but rather only to passengers who can pay via credit card and have access to the Uber app or website to request a vehicle
Portland’s Cease and Desist Letter to Uber
On December 8, the City of Portland sent a cease and desist letter to Uber demanding that Uber cease operations in the city limits. The cease and desist letter is attached to the complaint as Exhibit A. While there have been varying reports of the city’s enforcement against individual Uber drivers, it does appear the
Support for Uber and Success in Other Markets
As of publication, close to 10,000 individuals have signed a petition to support Uber’s operations in Portland. Uber remains wildly popular and it generally overcomes the legal obstacles it has faced in other markets. As previously reported, Uber faced initial obstacles in Ann Arbor and Detroit. While Ann Arbor sent Uber cease and desist letters, it generally did not crack down on Uber’s operations, and now a Michigan bill is likely to preempt any local regulations. In Detroit, Uber worked with the city to enter into an operating agreement stipulating how the company could operate in Detroit.
Ride-sharing In and Around Portland
While regulatory issues are nothing new to Uber, the situation in Portland is slightly unique. Uber is already operating in several cities in close proximity to Portland, for instance, Vancouver Washington. Additionally, various tweets, such as the one below, were bring broadly disseminated citing the limited availability of traditional taxi services in and around Portland:
Portland: “460 taxi permits for a city of 610K, a 25% pick-up rate on weekend nights, & a board-of-review packed with incumbents” ~@monkbent
— Mike Dudas (@mdudas) December 9, 2014
Going forward, the legal questions related to whether Uber is complying with Portland’s City Code appear to be relatively clear: Uber is not. As in other cities, this is likely not a legal battle, but rather one of politics and policy. If Portland desires to have Uber available in its city, it will ultimately amend its city code to provide for transportation network companies such as Uber, to obtain permits to operate in the city. Alternatively, as happened in Michigan, the state of Oregon could pass statewide regulations that preempt the regulations of any particular municipality, thus permitting Uber to operate statewide as long as it abides by the state-level regulations.
So far, Uber’s tactics of commencing operations and then working out any regulatory hurdles have worked out with staggering success. Indeed, Uber recently raised another $1.2B at an amazing $40B valuation. So far, Uber has proven that massive customer acquisition can cure all evils – even legal and regulatory ones.