By Emily Badger, February 6, 2014
A group of taxi drivers and owners in Chicago who've been steaming over the arrival of unregulated "ride-share" companies like Uber and Lyft finally filed a lawsuit on Thursday against the city in federal court for doing little to rein them in. The 65-page complaint (not counting the many, many appendixes) is novel on several fronts. This is the first time cab drivers have tried suing a city in their escalating war with the new wave of companies providing taxi-like services without the literal taxis.
And their legal logic is provocative (whether you agree with the drivers or not). In short, the taxi companies, alongside the Illinois Transportation Trade Association, are arguing that the city is damaging and discriminating against them by refusing to enforce the same stringent regulations it has long imposed on the taxi industry on these newer "de facto taxi services," which function "in all material respects as taxi companies." (If you've been troubled by the ambiguity of the term "ride-sharing," the lawsuit repeatedly uses this label instead: Unlawful Transportation Providers.)
More specifically, the cabbies argue that they and their investors have purchased taxi medallions from the city – required to operate a cab in most cities – currently worth at least $2.38 billion in property value. And the city is willfully allowing that property to devalue, now that anyone can enter the cabbie business in Chicago without getting their hands on a medallion.
The taxi drivers have also smartly – if a bit disingenuously – cast the suit not as a battle to protect incumbent businesses from innovation, but as a bid to protect taxi riders from price-gouging, criminal drivers, unsafe vehicles, and service that discriminates against anyone who doesn't have a smart phone, or who lives in a neighborhood where an UberX driver simply doesn't want to go.
Earlier this week, Chicago Mayor Rahm Emanuel proposed a city ordinance that would create new regulations for these companies, requiring among other things driver training, background checks, and vehicle inspection. But the taxi industry has complained that the rules wouldn't go far enough (and that it makes no sense to create separate rules for companies that use apps, when taxi drivers use them, too). The lawsuit Thursday also argues that Emanuel's proposal wouldn't do enough to protect riders:
the proposed ordinance would place the City’s imprimatur on a separate and unequal class of public transportation available only to privileged individuals with smartphones and credit cards, resulting in a disparate impact on minority, disabled and elderly populations in violation of the Illinois Civil Rights Act and fundamental fairness...
The city, he added, with language that sounds right out of the Occupy Movement, has allowed the creation of a "taxi caste system."
At the end of the day, though, this is one of the differences that has separated traditional taxi service from "rideshare" companies: The latter group has never claimed to offer universal service. Sidecar, Lyft and Uber are all based on membership systems. Perhaps that distinction will blur as other boundaries between the two business models do, too.