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Connecticut taxi companies take aim at Lyft and Uber

Ride-sharing companies accused of promoting illegal activity, and leeching off established companies

Financial trends and news by Steven Loeb
May 22, 2014 | Comments
Short URL: http://vator.tv/n/371c

Ride-sharing services Lyft and Uber should be pretty used to lawsuits at this point. I mean, it seems to happen in just about much every single state either one of these companies enters into. So, no surprise, that one month after they both began offering services in Connecticut, both Uber and Lyft are now being sued.

But there's at least a little bit of a twist this time: the latest lawsuit is not coming from a local government, like many of the previous ones have, but from a large number of cab companies who are accusing the of preying "parasitically on established taxi and livery services.”

In all, a total 14 local cab and car companies filed the lawsuit on Wednesday, say that while they have followed "rules and regulations developed over the last 90 years, which protect customers, ensure public safety, and provide non-discriminatory service," it says in the filing, neither Lyft nor Uber comply with these laws, making them "illegal transportation services."

The suit also alleges that both companies "deceive customers about the fares they must pay, the safety of the cars and drivers transporting them, the insurance coverage available, and the legality of their offered services."

At least part of what is at issue here is the business model of these companies: the suit mentions that Lyft and Uber “own no cars, no certificates, no permits, no plates, and employ no drivers."

Rather, both Lyft and Uber simply book transactions through their app, and then take a cut of the fare from the driver, typically 20%. To them, this cuts down on infrastructure costs. To the established car companies, it makes them leeches.

"In short, the Defendants prefer to pay nothing for infrastructure and profit from the investment of lawful certificate, permit and plate users."

The companies are also being accused of purposely inducing drivers to make decisions that are violations of state laws and regulations.

"In order to stay ahead of their competition (and attract investors), the Defendants violate nearly all substantive Connecticut taxi and livery laws, lying to its customers, forcing taxi and livery drivers who sign up to violate licensing laws and contracts with vehicle owners, and discriminating unlawfully against handicapped, elderly and less wealthy users of public transportation."

The plaintiffs in the case are Greenwich Taxi, Act Taxi Service, Casino Cab Company, Curtin Motor Livery Service, East Hartford Cab Company, Executive 2000 Transportation, Farmington Valley Cab, Groton Cab Company, Lasse's Livery Service, Suburban Transportation, Taxicabs and Livery Council of Connecticut, The Waterbury Yellow Cab & Service, Torrington Valley Cab, Union-Lyceum Taxi Company and Yellow Cab Company of New London & Groton.

Uber and Lyft, as you might imagine, are having none of that.

Both companies have provided VatorNews with statements, both denouncing the lawsuit and accusing those involved with it of having selfish, ulterior motives, ie protecting their own businesses by trying to shut down competition.

"This baseless lawsuit is just another example of taxi company owners who don't want to compete and  who would rather limit consumer choice and driver opportunity. Big taxi's money might be better spent expanding economic opportunity for their drivers - who start the week hundreds of dollars in the hole just to rent their cab  -  and improving customer service for Connecticut residents and visitors," Nairi Hourdajian, a spokesperson for Uber, said in a statement. "Uber will vigorously defend the rights of drivers and riders to connect to safe, affordable and reliable transportation alternatives." 

"The lawsuit is without merit and we look forward to resolving it quickly and effectively. Lyft fills an economic and transportation need for both drivers and passengers in Fairfield County, and we will continue to provide safe, reliable rides that benefit the local community and further public safety," Lyft spokesperson Paige Thelen told me. 

You can read the entire lawsuit (all 42 pages of it) below:

(Image source: unitedliberty.org)


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