21 Comments

Summary:

San Francisco cab drivers are bringing a class action suit against Uber, claiming that the car service should be regulated like other taxis. The suit is part of a nationwide dispute pitting upstarts against the incumbent taxi industry.

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The nationwide battle between the taxi industry and Uber took another twist this week as San Francisco cabbies filed a class action lawsuit, claiming the upstart car service is engaged in unfair competition and illegal interference in business relations.

In a complaint filed in California Superior Court, cab drivers Leonid Goncharov and Mohammed Edine say Uber drivers are breaching San Francisco taxi laws by, for instance, not accepting cash and failing to use meters.

The two drivers say they have brought the case on behalf of all other San Francisco cabbies, and are seeking an injunction to shut Uber down and an order for the company to hand over its profits since 2010.

The case turns on the distinction between taxis and “limousines” or black cars which are not permitted to take street hails. Uber claims it is part of the former class while the lawsuit points to Uber’s “e-hails” and dispatch service to say it is the latter. In other words, if it acts like a taxi, it should be regulated like a taxi. (you can read the full filing below).

Update: Uber has retained prominent lawyer John Quinn who said in an email that the company complies with all laws and that, “Uber would rather compete for business on the streets of San Francisco than in the courtroom, but Uber will defend these claims in court and is confident of the outcome.”

Disruption in the taxi industry

This is just the latest legal headache for Uber, which is facing regulatory pressure in Boston and New York and a class action lawsuit brought by Chicago cab companies that accuses it of pocketing tips and catering to rich hipsters.

In the bigger picture, Uber has come under fire because its business model — which allows people to summon cabs based on the GPS in their smartphones and pay with a pre-stored credit card — is proving disruptive to the traditional taxi business.

Outspoken Uber owner Travis Kalanik has been clashing with cabbies head-on. He recently railed against “industry corruption” and said Uber “would continue to fight the good fight,” according to The Next Web, which was first to report the story.

While Kalanik has succeeded in rallying users and tech types to his defense, the story may not be as simple as a hidebound industry resisting an innovator. That’s because taxis provide a vital transportation function like buses or semi-trucks, and cities have long used rules in an attempt to make them safe and available to everyone (that’s not to say the existing system works). While Uber and other upstarts like Hailo appear to have discovered a more efficient distribution model, it appears likely they will have to jump through a hoop or two before becoming a permanent part of the urban transportation eco-system.

IMAGE 11-14-12 114428

(Image by Pius Lee via Shutterstock)

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  1. I guess it would be far too much for them to just improve their own service to remain competitive. Taxi drivers are the only profession I can think of where the “professionals” (the taxi drivers) are worse than the amateurs (regular drivers). More often than not, when I am in a taxi, I am amazed at the poor quality of driving. This does not even take into account the overall customer experience that Uber has sought to improve.

  2. I love my uber it’s clean , on time, courteous and Always on time !!!! Go ahead ! Hail a cab see what u get!!!

  3. Much of the Uber spin on this issue portends them to be some sort savvy of savior of the ride starved masses. Their arrogance and contempt for the existing laws and well intentioned but perhaps cumbersome regulations put in place around the country has not helped them. The Taxi industry welcomes innovation, and also has problems with many of the crippling regulatory issues in their business, but Uber, Lyft, Sidecar and others are not the solution. Governemnt has a responsibility to regulate transportation, which is an essential civic function, Uber’s bold, but misguided attempt to supercede these just make them a rogue player like a corner thug arms dealer competing with a licensed gun dealer. Merely being a self proclaimed “disruptive” technology is akin to being a greedy self absorbed brat demanding attention in a classroom while the other kids are behaving and paying attention. Grow Up!

    1. You raise a fair point that there are two sides to every story. Taxi service in many cities and the associated regulations really need some disruption, but not all regulation is bad, particularly when it is about customer safety. Your closing metaphor is really weak though, IMHO. Uber is innovating, and that usually ruffles feathers when there are existing established players who view anything other than the status quo to be a threat.

    2. Terrible analogies. Uber is not selling a dangerous product – their drivers have so far all been far more professional than most taxi drivers I’ve ridden with (they know about turn signals, for one thing…). And how does offering something that other people qualify someone as a self-absorbed brat? Suing to prevent people from having access to a clean, safe service, on the other hand – that epitomizes bratty behavior.

      There are a lot of good taxi drivers out there, and I know it’s a tough business to survive in. But that’s no excuse for abusing the courts to restrict competitors and deny better choices to their customers.

    3. Government should not have the “responsibility” to regulate transportation.. Taxi industry in sf is a Gov aided Monopoly, which has led to higher prices,huge barriers to entry and a low quality of output. Holy Econ 101.Here is a radical idea..Government lets taxi participate in a model of capitalism?

    4. Wholly incorrect statement regarding the taxi cab welcoming innovation. Cab drivers in San Francisco are still such whiney a-holes when you want to pay with credit card.

      Government does have a responsibility to ensure that its citizens are kept safe from physical danger and from financial scheming regarding transportation but they do not have the ability to block private entity from operating a legitimate business that people are willing to pay for (ie they’re not selling illegal narcotics). That there are currently legal issues only shows that these laws are antiquated and need reform. And they will be changed as is what always happens with change.

      You are free to get left behind.

  4. I hope the judge throws this out, it does not appear to be comparing apples to apples, but apples to oranges!

    1. That was my take: Uber is at best going to take away the very upper end of the taxi customer base. This lawsuit would be the equivalent of Delta suing Netjets because Delta now has less people willing to pay for a first class seat.

  5. I think they will lose. How is what Uber is doing different from me sending an email to a Limo company that I have an account with? Or going to a website and ordering a limo with a few clicks and a Paypal account? Aren’t those examples of ‘eHails’ too? Uber is streamlining the process and making it easier to order a ride from mobiles, but I don’t see the legal problem. I do see the service benefits: Uber is improving service for the customer and reducing cost for the operators. All Uber needs to do now is sell me on customer safety.

  6. Uber “SCABS” coming to a city near you.

  7. Lots of litigation points to fairly quick disruption. Doubtful that the legal infrastructure can change pace quickly enough. I certainly hope so as the taxi cab situation in San Francisco is ridiculously low quality and much more expensive relative to any other major metropolitan city in the US.

  8. Sounds like taxi companies are scared of change and competition. They should study up on what happened to music companies when they failed to update with the times’.

  9. So why didn’t Uber just start a new cab company, buy an existing company or partner with cab companies? The numbers tell the real story. Everything is about the dollar. As for the comparisons about the driving skills of Uber drivers and taxi drivers I suspect perceptions would change if Uber cars had a name and phone number on the side. Taxis are an un-subsidized piece of the urban transit infrastructure. There’s more than what meets the eye. Just imagine how much money Chevron could make without burdensome regulations…

    1. Regulations haven’t prevented cab drivers from rendering poor service. Regulations are designed to reduce competition as much as “protect” consumers.

    2. Uhh what point is your comment about having names/phone numbers on the side of the car trying to convey? Über not only gives me a name and a photo they provide a very tight star and comment feedback mechanism. The ONE time I submitted anything less than 4* I got an email following up on how they could improve. Let me know when cab companies car that much!

      Sincerely,
      A rider en route to SFO in an Über right now (thanks “Moses” for such a great quiet ride!).

      P.S. Love the guy who characterized cabbies as being such whiny little a-holes the moment you take out your credit card. They should be fined each time they falsely claim their “machine is broken”.

  10. Cabbies are trying to protect their government-sanctioned monopolies.

  11. Like Sean Fanning was known say “Again, it’s adapt or die.” Time for the transportation industry to cater, (gassp,) to its customers!

    Cant wait to see them win in court over the crybaby cabbies

  12. Tracie Crisante Thursday, November 15, 2012

    ” He recently railed against “industry corruption” and said Uber “would continue to fight the good fight,” hmmmm…..seems like Travis is falling back on the same “urban legends” that illegal taxi companies have been milking for years. I recently watched the “rogue” taxis in our city try the same tactic: cries of monopolies, corruption, payoffs to government. What is this? A Hollywood mafia movie??? The simple fact is: you have no business license, you have no taxi permit, you have no commercial vehicle insurance, you don’t do business. (Please keep in mind most transportation companies are run by their local city governments NOT state) It is a simple solution… really.
    I’ll use an analogy I’ve used before: can I rent a building, get some gas pumps, a cash register, a fuel delivery, an “open” sign and call myself a gas station just because some guys with money to burn told me I could? I don’t have to care about the safety of the people who come to my “business” right? I can charge whatever I want and when I’m too busy I can make people pay more per gallon just because I have sparkly gas pumps!!! Doesn’t quite work that way now, does it?
    On another note: taxi drivers and companies should be paying attention to all the negativity about the industry and actively changing. We’re all in business to make money but not at the expense of crappy customer service.

  13. This is very simple. Uber is not a taxi. You pay a premium to get:
    a) better care
    b) guaranteed pick-up win relatively little time

    I’ve lived in SF for 10 years, and have consistently been amazed by how horrible taxis/getting a taxi is here. They are in such short supply that it is virtually impossible to get a taxi during rush-hour, 6-9pm on Fri/Sat, or if it is raining. Additionally, any person who does not live on union street, chestnut street, union square, north beach, north SOMA or the valencia corridor of the mission can forget about ever seeing a taxi in their neighborhoods. I live in PacHeights next to a hospital and i rarely see taxis. Even if you call ahead, there is no guarantee that a taxi will arrive at your door within 15 minutes. In short, taxis in SF are horrendous.

    To avoid the pain described above, i pay for uber.I’ll say it again — different product, not a taxi.

  14. Tell the cabbies to join the teachers unions in their utter failure to serve their customers.

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