Two of three major ride-sharing companies plan to continue operations in Los Angeles in defiance of the city department of transportation, citing state regulations they believe take precedence.
The Los Angeles transportation department ordered the companies to immediately halt operations within the city limits, handing local taxi drivers a major victory over their chief competitors.
Taxi cab administrator Thomas Drischler sent cease-and-desist letters to Lyft, Sidecar and Uber on Monday, informing company executives and their drivers that operating cars-for-hire without a permit was a criminal offense.
“Due to the fact that your company has no permits or license to transport passengers for hire, in the interest of public safety, Lyft, including all of its agents and contractors, is hereby directed to cease and desist from picking up passengers within the City of Los Angeles,” Drischler said in a letter to Lyft’s president.
Although the three companies’ business models differ, they all allow consumers to arrange a car-for-hire through smartphone apps that provide real-time locations for drivers and their prospective passengers. Lyft and Sidecar rely upon a network of local, part-time drivers who use their own cars to pick up customers, while Uber provides a more traditional experience through trained drivers and a variety of vehicle options.
The innovative companies have cut into taxicabs’ bottom line by providing comparable service at a lower cost. On Tuesday, The Washington Post reported that around 200 taxi cab operators and their vehicles staged an ear-splitting rally in downtown Los Angeles, circling city hall and honking their horns in protest over the presence of ride-sharing businesses in their city.
Rick Taylor, a spokesperson for four city cab companies, called the services “illegal taxis disguised under the digital cloud.”
The companies have faced challenges from municipal governments before, and their responses to Monday’s letter were more defiant than disheartened.
Lyft and Uber both claim that an operating agreement reached in January with the California Public Utilities Commission supersedes any local regulation and classifies the services as limousine companies, which do not fall under the oversight of taxi regulators. Sidecar could not be reached for comment.
“Yesterday’s cease and desist letter from a taxi regulator within the LA Department of Transportation is similar to what we received when we first launched in San Francisco one year ago,” Lyft’s President John Zimmer said in a statement Tuesday. “Since that time, we have signed an operating agreement with the California Public Utilities Commission, which allows us to operate legally throughout California. The CPUC operating agreement clarifies that we are not a taxi and demonstrates that this is a state issue.”
Uber spokesperson Andrew Noyes struck a similar tone in an email to The Daily Caller News Foundation: “The first line of the Los Angeles Municipal Code Sec. 71.00, cited by the LADOT letter: ‘The provisions of this chapter apply when the provisions are not in conflict with any paramount regulations by the state or nation.’ In this case, it’s the state PUC who has jurisdiction, and the PUC has explicitly given the authority for these drivers to operate.”
Noyes pointed to an LA Department of Transportation web page that identifies the State Public Utilities Commission, not the local transportation department, as the sole regulator of limousine services. “We will continue to operate under the PUC guidelines,” he said.
Lyft communications director Erin Simpson also told TheDC News Foundation, “Lyft will continue to operate per our signed agreement with the California Public Utilities Commission, which permits our legal operation throughout the state of California.”
Both companies also took umbrage at the taxi administrator’s claims that their drivers represent a safety concern. “Lyft continues to set the gold standard of safety,” said Zimmer, citing steps such as DMV record checks, vehicle inspection, and a 5-star rating system for its community drivers.
Likewise, Rosen claimed that Uber has complied with a “stringent list of [safety] requirements” laid down as part of his company’s agreement with the commission, including proof of insurance and criminal background checks for drivers.
The cease-and-desist letters suggest that car company leaders “inform all drivers operating in Los Angeles that they are subject to misdemeanor arrest and the impoundment of their vehicle.”
Update: The Daily Caller News Foundation received a response from a Sidecar spokesperson following this article’s publication. She indicated that her company would also continue to operate in Los Angeles under California Public Utilities Commission guidelines and that Sidecar takes a variety of steps to ensure the safety of their passengers and the public.
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