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Friday, July 19, 2024 | Back issues
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Lyft Calls Las Vegas Business Fee Illegal

LAS VEGAS (CN) - Las Vegas charges Lyft $100 a year for each "active driver" it employs, an unconstitutionally vague term that includes drivers who work just one ride a month, the company claims in court.

Lyft sued the city in Clark County Court on Thursday, claiming the annual fee also violates state law.

Nevada created three laws in 2015, A.B. 175 and 176 and S.B. 376, "to create a comprehensive statewide system for the regulation and taxation of transportation network companies (TNCs), including Lyft, and drivers who use TNCs as electronic platforms through which to connect with passengers," Lyft says in the lawsuit.

In doing so, Lyft says, "the Legislature adopted an express preemption clause, making clear that local jurisdictions cannot impose additions taxes or fees on TNCs and drivers who use TNC platforms, other than a very specific and narrow exception for imposing a business license that is 'generally applicable to any other business.'"

Nonetheless, on Jan. 20 this year Las Vegas adopted a TNC Fee Ordinance levying a $100 annual fee "specifically on TNCs."

The ordinance requires Lyft to pay an annual fee of $100 per driver - $50 every six months, based on the average number of "active drivers" per month for a licensing period.

"'Active driver' is defined in the TNC Fee Ordinance as a driver who has provided services as least once in every 30-day period," according to the complaint.

Lyft says that fee "is in direct contravention of state law and grossly exceeds the express limitation on the power of local government with respect to business license fees and therefore constitutes an illegal tax."

"Active driver" is also unconstitutionally vague, because, among other things, it has no geographic limitation, Lyft says.

Lyft's competitor Uber was the first such ride-hailing company to try to do business in Nevada, but a court order stopped it after the Nevada Taxicab Authority challenged it as an unregulated business. The Legislature responded by passing the three laws last year, which the governor signed into law.

Lyft says the state laws included "substantial fees to cover the cost of licensing, regulating and policing the operations of TNCs and drivers," and "expressly curtailed" local fees.

Lyft says it already has paid a $150,000 fee to the Nevada Taxicab Authority and will have to pay a $300,000 annual renewal fee- "the highest of any jurisdiction in which Lyft operates"- and its drivers also must pay state fees.

Lyft sued the city after the Nevada Legislative Commission listened to several hours of testimony for and against the city's fee on Feb. 19, but did not act.

Nevada's Legislative Council Bureau says the city can't levy the fees, but city officials said the state law is ambiguous.

The Legislative Council Bureau is scheduled to address the matter on March 11.

In the meantime, Lyft asks the court to enjoin the city from enforcing the ordinances and charging the fees, and to declare city laws unconstitutionally vague, void and unenforceable.

Lyft is represented by Todd Kennedy with Black & Lobello. Neither he nor city officials could be reached for comment over the weekend.

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