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November 17, 2014

Ride-sharing expands into Hartford despite legal challenge

PHOTO | Contributed San Francisco ride-sharing firm Uber recently started offering its app-based taxi services in Greater Hartford. Lyft, another California ride-sharing company, is offering services in Fairfield and New Haven counties.
Marco Henry, president, Yellow Cab Company of Connecticut

A federal lawsuit aiming to block two out-of-state ride-sharing companies from operating in the state hasn't stopped the expansion of mobile app-based transportation services in Connecticut, particularly Greater Hartford.

San Francisco ride-sharing firm Uber started operating in Fairfield and New Haven counties in April and last month began taking on passengers and drivers in the Hartford region.

The expansion was driven exclusively by Greater Hartford residents requesting rides, said Josh Mohrer, general manager for Uber in Connecticut, New York, and New Jersey, adding that the company was unfazed by a May lawsuit filed by 13 Connecticut taxi companies that accused Uber of violating federal and state laws and regulations.

Mohrer said they've faced similar legal challenges elsewhere.

“The demand for Uber is a reflection on the taxi industry,” Mohrer said. “When you disrupt an entrenched industry, it is always easier for them to oppose you than to compete with you.”

Lyft, another San Francisco-based ride-sharing firm that was targeted in the Connecticut lawsuit, has been operating in Fairfield and New Haven counties this year as well, although the company has no plans right now to expand into Greater Hartford, said Lyft spokeswoman Katie Dally.

Any Lyft expansion plans will be based on business decisions, and the lawsuit — which is without merit — will be resolved quickly and effectively, Dally said.

Legal fight

Uber and Lyft describe themselves as technology companies, rather than transportation businesses. They offer smartphone apps that allow people to request pickups from drivers who are also on the technology network.

In May, a coalition of 13 Connecticut taxi companies filed suit against Uber and Lyft arguing the two California companies are transportation businesses that should be subject to the same regulations as the rest of the taxi and livery industry, which require certain levels of safety precautions, insurance protection, price control, and driver background checks.

Taxi and livery companies in Connecticut are regulated by the state Department of Transportation.

“The biggest concern is consumer safety,” said Mary Alice Moore Leonhardt, an attorney with Hartford law firm Rome McGuigan, who is representing the cab companies. “What we know about the Hartford area is [Uber is] all over the airport, all over the train station, and all over the college campuses.”

The lawsuit still is in the discovery phase, but Leonhardt said she anticipates filing a cease-and-desist request in the near future that would demand Uber and Lyft to stop operating in Connecticut.

“It is like a doctor providing care without a medical license,” said Marco Henry, president of Bloomfield-based Yellow Cab Company of Connecticut. “Basically, Uber does it the same way, not following the rules.”

Henry, whose company is not part of the lawsuit, said his business has not been impacted since Uber started operating in Greater Hartford. Yellow Cab does a lot of dispatch and neighborhood-to-neighborhood transportation; Henry said smaller taxi and livery companies that provide service to places like Bradley Airport in Windsor Locks would suffer more.

Bill Scalzi, president of Metro Taxi Connecticut in West Haven, said he hasn't seen much impact from Uber and Lyft on his business in Fairfield and New Haven, even though the companies have been operating there for more than six months.

Metro Taxi, which also isn't part of the lawsuit, opposes Uber and Lyft's entrance into the market because they are clearly transportation companies whose safety standards aren't regulated, Scalzi said.

“The lawsuit is something you have to do because these companies are clearly operating outside of the regulations,” Scalzi said. “The statement that they are technology companies is full of holes. There is not a person in this country that believes they are operating as anything other than a transportation company.”

Uber and Lyft argue that since they don't own any vehicles, they are technology companies rather than transportation businesses. They enlist drivers who use their own vehicles.

Lyft, like Uber, does vehicle inspections and extensive criminal and driving record background checks on drivers before they are allowed to start picking up passengers, Dally said. Drivers also are covered by $1 million in commercial liability insurance.

Henry and Scalzi said, though, there is not enough insurance to cover passengers, should ride-sharing vehicles get into an accident.

Pricing is also an issue. The rates for Uber and Lyft vehicles are not as established as they are for taxi companies — which post rates on their vehicles — leaving passengers more in the dark about what they will pay at the end of the ride. Drivers for ride-sharing companies don't handle money; passengers are charged through the app. Uber is working with various regulatory agencies to develop rules for ride-sharing companies, said Mohrer. Uber has gotten regulatory frameworks established in 12 states and Washington, D.C., but not in Connecticut.

“We have had a lot of success with regulators for building a framework for what we do,” Mohrer said.

The Connecticut Attorney General's Office is monitoring issues that arise as Uber and Lyft expand further into the state but is not taking any corrective action against their business models at this time, said Jaclyn M. Falkowski, a spokeswoman for the Attorney General's Office.

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