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Cab companies sue city over rules for ride-sharing companies

Updated: March 8, 2014 6:22AM

Yellow Cab and several other big taxi companies are suing the city, calling Mayor Rahm Emanuel’s proposed ordinance regulating ride-sharing companies discriminatory and helping to create an “exclusionary, elitist taxi system.”

“It is discriminating against taxi owners who have played by the rules, paid their taxes and complied with safety and licensing requirements, while the city at the same time is allowing unregulated companies (that) provide identical service to make up their own rules,” said Michael Shakman, an attorney for the cab companies and independent cab operators, in announcing the federal lawsuit Thursday.

Earlier this week, Emanuel moved to close a “regulatory vacuum” that has given ride-sharing companies an unfair advantage over taxicabs with no safeguards to protect consumers.

He introduced a 20-page ordinance that would license ride-sharing companies as “transportation network providers” and require them to obtain insurance and pay an annual $25,000 fee, plus $25 per driver, as well as the city’s $3.50-a-day-per-vehicle ground transportation tax.

But the cab companies argue the fees that ride-sharing companies such as Uber, Lyft and SideCar would have to pay are tiny compared with the $24 million per year the taxi industry pays to the city.

Shakman described Emanuel’s ordinance as “bad public policy” intended to benefit a group of “Silicon Valley” companies and a small portion of riders — the city’s most affluent.

Ride-sharing cabs aren’t currently required to offer vehicles for the disabled, and, unlike regular taxi services, they aren’t required to take customers to less-wealthy neighborhoods, Shakman said.

“The city now encourages a special class of unlicensed taxis, ... available only to people with smartphones and credit cards who live in neighborhoods their drivers are willing to serve, which means mainly downtown and a few neighborhoods on the North Side and Hyde Park,” Shakman said. “They are not available at all to people who are disabled or people who pay with cash.”

To guarantee passenger safety, Emanuel’s ordinance would require licensed ride-sharing companies to train and administer drug tests to their drivers, conduct regular criminal background checks and make certain that their ride-sharing vehicles pass an annual, 21-point inspection.

But instead of setting fares, as City Hall already does with taxicabs, ride-sharing drivers and passengers would be allowed to negotiate the fare “based on distance traveled, time elapsed during service, a flat pre-arranged fare or suggested donation.”

Two influential aldermen — Finance Chairman Edward Burke (14th) and Transportation Committee Chairman Anthony Beale (9th) — countered with their own resolution demanding that the city move immediately to shut down ride-sharing companies.

The aldermen argued that Uber, Lyft and other ride-sharing companies are violating a city code that states, “It is unlawful for any person to operate a motor vehicle ... for the transportation for hire within the city unless it is licensed by the city as a taxicab ... or as a public passenger vehicle.”

Burke argued that ride-sharing companies that charge riders more when demand is higher are taking money out of the pockets of hard-working cabbies, who’ve been waiting nine years for a fare increase.

“They tell me today that the surge pricing is now charging people using the service four times what they ordinarily charge because of the bad weather conditions. Is that good for consumers?” the alderman said.

“Or does this continued unfettered growth of a new business destroy a taxicab industry that has existed here in Chicago since the late part of the 19th century?”

Emanuel countered that shutting down ride-sharing is the wrong way to go. He wants to encourage innovation and give Chicagoans as many transportation alternatives as possible.

“This is a growing, burgeoning industry. I want to make sure we have the type of oversight so people have the peace of mind to know it’s a safe ride and it’s a secure ride ... and do it in a way that allows both the taxi industry as well as this industry to prosper,” the mayor said.

“We’ve been working on this with both parties for over six months. Given their reaction, I think we have it just about right, since both are upset.”

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