California Regulator Can’t Duck Cabbies’ Suit

     SAN FRANCISCO (CN) — A federal judge on Wednesday refused to dismiss a traditional taxi company’s claims that commissioners with the California Public Utilities Commission usurp the authority of cities and counties by regulating Uber and Lyft.
     Desoto Cab Company dba Flywheel Taxi sued the commissioners in September 2015, claiming that while it and other traditional taxi companies are governed by the San Francisco Municipal Transportation Agency, Uber and Lyft have been classified by the commission as transportation network carriers and subject to much less stringent regulation.
     Flywheel says that all taxi companies, whether traditional or ride-hailing upstarts, should be treated equally and regulated by either local municipalities or the commission. The company says San Francisco requires traditional taxi companies to carry $1 million in liability insurance, provide ADA-accessible vehicles, offer workers’ compensation coverage for drivers and limit the number of vehicles on the street, among other strict rules that are not imposed by the commission on Uber and Lyft.
     The commission moved to dismiss, arguing that the Johnson Act bars state utility-rate cases from being heard in Federal Court. And while U.S. District Judge Edward Chen found some of Flywheel’s rationale that the Johnson Act doesn’t apply “problematic,” he concluded the act “is not a bar to Flywheel’s lawsuit” because the company is challenging the commission’s decision regarding insurance and workers’ compensation, not rates as spelled out in the act.
     Chen also rejected the commission’s argument that the issue is not yet ripe for judicial consideration.
     “Even if all of the regulations have not been hammered out as of yet, it is not clear why Flywheel cannot move forward with its challenge to what has been done so far — including, e.g., insurance rules — especially as there is no indication that the commission will backtrack on any regulations regarding transportation network carriers that it has promulgated so far,” Chen wrote.
     “Moreover, under the commission’s position, it would appear that the agency would have to have finalized all regulations on transportation network carriers before it would be appropriate for Flywheel to bring suit. There is increased hardship to Flywheel the longer it has to wait for all regulations to be finalized, and nothing in the record indicates how quickly the commission will move on finalizing all regulations,” Chen continued.
     “The disparities between the two regulatory regimes are sufficiently concrete so as to permit an adjudication of Flywheel’s equal protection claim”
     Chen also rejected the commission’s argument that Flywheel had an obligation to bring all involved parties into the suit, including Uber, Lyft, cities and counties that regulate taxi companies, and every traditional taxi company operating in California. He found that besides making the suit unwieldy, and that the commission cannot show that the motivations of other parties are so different that they can’t be adequately represented by Flywheel.
     Flywheel is represented by attorney Shannon Seibert.
     Commission president Michael Picker did not respond to an email requesting comment.

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