Sharing the Road with Uber and Lyft

2017 Spring WSAMA Conference Semiahmoo Resort, Blaine, Washington April 26-28, 2017

Matthew J. Segal Kymberly K. Evanson Pacifica Law Group LLP 1191 2nd Avenue, Suite 2000 Seattle, WA 98101 206.245.1700 Matthew.Segal@pacificalawgroup.com

Sara O’Connor-Kriss Seattle City Attorney’s Office 701 5th Ave, Suite 2050 Seattle, WA 98104 Sara.OConnor-Kriss@seattle.gov

Part I: What are TNCs?

2

“Transportation Network Companies”

• Uber, Lyft, Wingz, Juno, and others • Uber and/or Lyft operate in Seattle, Tacoma,

Everett, Spokane, Bellingham, Olympia, Vancouver, Wenatchee and more

• Hundreds of cities around the world

3

Scope of Operations

• Taxis in Seattle are limited to 1,050 active licenses at any given time by City Ordinance

• As of September 2016, Uber had 14,000 drivers in Seattle. Lyft also had many thousands

4

Seattle: Exponential Ride Growth

5

Like a Taxi, but….

• Uber and Lyft collect massive amounts of data on customers, travel patterns, traffic, and more

• Essentially people movers, adding to congestion, greenhouse gas emissions, and ROW impacts

• Taxis are historically heavily regulated, but TNCs have operated in many jurisdictions without any regulatory structure

• Most drivers work for Uber and Lyft at the same time

6

Equity Concerns

• TNCs require riders to own a smartphone, speak/read English and use a credit card

• TNCs in Seattle do not provide wheelchair accessible vehicles

• Recent studies suggest discrimination against riders of color in Seattle and Boston

• Women taken on longer more circuitous rides • Safety concerns regarding assaults against riders and

drivers, no limits on the amount of time drivers can spend “on app”.

• Driver Equity Issues: displacing taxis, protecting rights of TNC drivers

7

Challenges

• Congestion: More cars on the road, while disincentivizing transit with low prices and convenience

• Increased greenhouse gas emissions • Wear and tear on the ROW • Curb Space Management • Pick-up and drop-off safety • TNC Data and the PRA

8

Opportunities

• Partnership for special events impacting transportation: Seattle viaduct closure

• Potential for carpooling services to reduce SOW vehicle trips

• Potential to increase transit by providing “Last Mile” services

• Programs to reduce drunk driving • Data sharing to promote public purposes

9

PART II – Regulation of TNC’s

10

Local Regulatory Authority The State has delegated broad local regulation of for-hire vehicles and operators to cities, counties and port districts • “For hire vehicle" includes all vehicles used for the transportation of passengers for compensation, except auto stages, school buses… ride-sharing vehicles…limousine carriers…vehicles used by nonprofit transportation providers for elderly or handicapped persons…vehicles used by auto transportation companies…vehicles used to provide courtesy transportation at no charge to and from parking lots, hotels, and rental offices, and vehicles used by charter party carriers of passengers and excursion service carriers…. • “For-hire operator" means and includes any person, concern, or entity engaged in the transportation of passengers for compensation in for hire vehicles.

• RCW 46.72.160 Local regulation.

Cities, counties, and port districts may license, control, and regulate all for hire vehicles operating within their respective jurisdictions. The power to regulate includes:

(1) Regulating entry into the business of providing for hire vehicle transportation services; (2) Requiring a license to be purchased as a condition of operating a for hire vehicle and the right to revoke, cancel, or refuse to reissue a license for failure to comply with regulatory requirements; (3) Controlling the rates charged for providing for hire vehicle transportation service and the manner in which rates are calculated and collected; (4) Regulating the routes and operations of for hire vehicles, including restricting access to airports; (5) Establishing safety and equipment requirements; and (6) Any other requirements adopted to ensure safe and reliable for hire vehicle transportation service.

11

City of Seattle Ordinances

• In March of 2014, following review of a for-hire industry demand study and extensive public hearings, the City adopted Ordinance 124441, which brought numerous changes to regulations governing local for-hire transportation services.

– Incorporated TNCs into the regulatory scheme as a pilot program – Removed or streamlined existing regulations

• Sought to address the potential public health, safety and consumer protection issues implicated by the rapid growth of the unlicensed TNC companies and remedy the regulatory inequity

• Uber opposed the ordinance, especially the imposition of a cap on the number of vehicles operating at any given time, and filed a referendum

• Mayor convened a mediation with industry stakeholders (taxi, for-hire vehicles and TNCs)

• Agreed mediation terms created a regulatory framework, which was reduced to legislation and passed by the Council in July 2014 (Ordinance 124524)

12

Ordinance 124524

• Removed TNC vehicle caps • Reduced vehicle fee and operator requirements and created

medallion system for incumbent industry • Requires TNC, TNC vehicle and TNC driver licensing

– All licensing fees are paid by TNC via a per ride charge • Streamlined regulations across entire industry

– Requires quarterly data reporting – Allows City-approved third-party vehicle inspections and criminal

background checks – Created an accessible fund to offset higher operational costs of

existing wheelchair accessible taxis (assessed per ride) – Includes application dispatch systems – Requires an annual report to Council for first two years

13

Regulation by other jurisdictions within Washington

New legislation is moving towards a trust but verify model, generally separate from taxi/for-hire regulations • In many cases, TNCs are licensed and certify that drivers and vehicles are compliant (Bellingham, Olympia) • Regulations primarily address:

– Insurance minimums – Licensing (Business and Regulatory) – Operational requirements:

- Vehicle inspections - Driver background checks - Records maintenance - Limited audit powers - Prohibition against hailing - Rate transparency

– Penalties (criminal, civil, or combination thereof) • Some consider the incumbent industry and issues of regulatory parity (Tacoma, entire for-hire industry governed under same chapter) • Accessibility and antidiscrimination measures (Olympia, Tacoma)

14

Regulation by other jurisdictions within Washington (cont’d)

• Operational agreements (Spokane) – Contract governs operations rather than adding TNCs

to the codified regulatory scheme • Regional approaches - Interlocal agreements with

reciprocity (Olympia, Yelm, Lacey, and Tumwater) (also Seattle and King County) – Olympia provides administrative services and

enforcement and retains all TNC fees; other jurisdictions honor Olympia regulatory license; drivers must still obtain a business license in each jurisdiction)

15

Unique Seattle Provisions Driver Rights

Driver rights • In December 2015, the City passed a first of its kind law, providing a framework for

independent contractor for-hire drivers to collective negotiate with the “Driver Coordinators” (Yellow Cab, Lyft, Eastside For Hire, Uber) with whom they affiliate via an “Exclusive Driver Representative” (non-profit entity committed to assisting stakeholders reach consensus agreements related to employers and contractors)

• Ordinance recognizes that drivers may be adversely affected by Driver Coordinators that can unilaterally and without notice establish or change the terms and condition of their contracts with drivers

• Purpose of the ordinance seeks to ensure safe and reliable for-hire and taxicab transportation service by allowing drivers to meaningfully address contract conditions and terms collectively

• Safety and reliability are promoted by reducing turnover, increasing driver commitment and experience, and alleviating the pressure drivers face to provide transportation services in an unsafe manner (such as by working too many hours, operating vehicles at unsafe speeds, or ignoring necessary maintenance)

• The ordinance has a series of consecutive milestones that are triggered by an initial commencement date of September 2016, and later extended to January 17, 2017

16

Unique Seattle Provisions Data Reporting

Seattle Municipal Code 6.310.540 requires all companies to provide the City with quarterly reports of the following information: 1. Total number of rides provided by each taxi or for-hire vehicle license holder or individual Transportation Network Company; 2. Type of dispatch for each ride (hail, phone, app, etc.); 3. Percentage or number of rides picked up in each zip code; 4. Pick up and drop off zip codes of each ride; 5. Percentage by zip code of rides that are requested but unfulfilled; 6. Number of collisions; including the name and number of the affiliated TNC, taxicab,

and for-hire driver, collision fault, injuries, and estimated damage; 7. Number of requested rides for an accessible vehicle; 8. Crimes against driver reports; 9. Passenger complaints; and 10. Any other data identified by the Director to ensure compliance. Part III of this presentation will discuss the litigation ensuing from this requirement

17

State TNC legislation

• In 2015, TNCs pushed for statewide TNC regulations (SB 5550) – Sought to preempt local regulation – Did not address accessibility or data sharing – Did not require annual driving and background checks – Did not provide penalties or effective local enforcement – Ultimately, a substitute bill passed that only addressed vehicle liability insurance for

“commercial transportation services” (RCW Chapter 48.177) and removal of mandatory industrial insurance for all for-hire drivers

• In this legislative session, the TNCs again pushed for statewide TNC regulations (SB 5260)

– In addition to concerns addressed in 2015 proposal, this legislation also: – Exempted all TNC records under the PRA – Created a TNC definition apart from other for-hire entities and the accompanying obligations

thereof (higher standard of duty to public, ADA) – DOL had sole authority to enforce, with a $.10/ride fee for statewide operational costs – Defined drivers as independent contractors – Passed in the Senate and died in the House

18

Successes and Pitfalls

• Accessibility fund is offsetting higher owner and driver costs;

– There is an interest in increasing number of accessible vehicles • Legislation is complicated and lengthy • Penalties – harsh company revocations for driver action or inaction is impractical • Lack of regulatory parity persists; incumbent industry is declining • Social justice issues for immigrant drivers • Social justice issues for passengers who do not have a credit card or smart phone • Licensing of tens of thousands of vehicles and drivers is administratively

burdensome and inefficient • Trust but verify only works if City can meaningfully verify compliance • Data – litigation, can use to assist in transportation planning, congestion,

deadheading, but restricted ability to share publicly for transparent conversation about impact on streets and community

19

Part III - Litigation

20

“Data Companies”

• Uber and Lyft promote themselves as “data companies” • But see O’Connor v. Uber Technologies, Inc., 82 F. Supp.3d

1133, 1141 (N.D. Cal. 2015); Cotter v. Lyft, Inc., 60 F. Supp.3d 1067, 1078 (N.D. Cal. 2015)

• “Uber does not simply sell software; it sells rides. Uber is no more a ‘technology company’ than Yellow Cab is a ‘technology company’ because it uses CB radios to dispatch taxi cabs, John Deere is a ‘technology company’ because it uses computers and robots to manufacture lawn mowers, or Domino Sugar is a ‘technology company’ because it uses modern irrigation techniques to grow its sugar cane.” O'Connor, 82 F. Supp. 3d at 1141

21

Please take this data…

22

...but not that data

Lyft, Inc. et al. v. City of Seattle et al.

Public records at issue: 1) the total number of rides provided by each TNC 2) the percentage or number of rides picked up in

each zip code 3) the pick-up and drop off zip codes for each trip 4) details of crimes against passengers and drivers 5) the number of requests for wheelchair

accessible vehicles 24

Lyft, Inc. et al. v. City of Seattle et al.

A third-party moving to enjoin disclosure of public records has the burden to establish both a valid statutory exemption from disclosure, and that disclosure would “clearly not be in the public interest and would substantially and irreparably damage any person, or would substantially and irreparably damage vital government functions.” RCW 42.56.540 (emphasis added).

25

Lyft, Inc. et al. v. City of Seattle et al.

In King County, the superior court declined to enjoin the County from disclosure in part because it was “unlikely that a court would find that release of the information requested here is not clearly in the public interest.” In Spokane, the Superior Court ruled that “[u]nder RCW 42.56.540, the person, agency, or representative whom the record pertains must show that disclosure of the specific public record would clearly not be in the public interest….’ The Plaintiffs raise a number of reasons of why disclosure would not be in the public interest; none of which hold merit.”

26

Lyft, Inc. et al. v. City of Seattle et al.

To be a trade secret, information must be novel or unique, Woo v. Fireman’s Fund Ins. Co., 137 Wn. App. 480, 488-89, 154 P.3d 236 (2007), such that that it “derives independent economic value from not being generally known or readily ascertainable to others who can obtain economic value from knowledge of its use and… that reasonable efforts have been taken to maintain the secrecy of the information.” Precision Moulding & Frame, Inc. v. Simpson Door Co., 77 Wn. App. 20, 25, 888 P.2d 1239 (1995); see also RCW 19.108.010(4) (defining trade secrets).

27

Lyft, Inc. et al. v. City of Seattle et al.

“[Uber’s] assertion of a trade secret also stems from the apparent fear that, if the information it provides to the Commission is released to the public, its competitors may obtain some economic value from disclosure. Yet [Uber] fails to make a credible argument as to how its competitors can obtain economic value from the information’s disclosure. All TNC drivers are competing for the same pool of potential passengers. All TNC drivers know where the zip codes and neighborhoods are that have the greater chances of securing rides for the day, so any release of [Uber’s] trip data isn’t going to provide the competition with information that they don’t already possess.” 28

Lyft, Inc. et al. v. City of Seattle et al.

If the records are created for the agency and submitted for regulatory purposes, can they be a trade secret? “It is illogical for the Developers to claim the studies were at the outset trade secrets in this context because the studies were produced for the City, not the Developers.” Spokane Research & Def. Fund v. City of Spokane, 96 Wn. App. 568, 578, 983 P.2d 676 (1999).

29

Lyft, Inc. et al. v. City of Seattle et al.

30

Lyft, Inc. et al. v. City of Seattle et al.

31

Driver Rights Litigation

• In March 2016, the US Chamber of Commerce sued the City seeking an order declaring the ordinance unlawful under a number of state and federal theories (including antitrust violation, preemption under NLRA, violations of State Public Records Act and Consumer Protection Act). The complaint was dismissed for lack of standing.

• On January 17, 2017 (the commencement date), Uber sued the City seeking a constitution writ, alleging that the four Director’s Rules issued in December were arbitrary and capricious and improper piecemeal rulemaking. Eastside for Hire and Teamsters Local 117 intervened. Review was granted and the writ was denied on the merits.

• On March 3, 2017, Teamsters Local 117 was designated a Qualified Driver Representative and it provided notice to all 12 apparent Driver Coordinators of its intent to organize their drivers, triggering an obligation for all Driver Coordinators to deliver a list of all “qualifying driver” names and contact information to the Teamsters by April 3, 2017.

• On March 9, 2017, the Chamber of Commerce again sued the City, seeking an injunction. A separate lawsuit was filed the next day by 11 individual drivers, asserting 1st Amendment and privacy violations. A preliminary injunction was issued on April 4th The City has filed motions to dismiss in both cases.

32

“[I]f true, these allegations are very concerning.”

33

PS Sharing the Road with Uber and Lyft

2017 Spring WSAMA Conference Semiahmoo Resort, Blaine, Washington April 26-28, 2017

Matthew J. Segal Kymberly K. Evanson Pacifica Law Group LLP 1191 2nd Avenue, Suite 2000 Seattle, WA 98101 206.245.1700 Matthew.Segal@pacificalawgroup.com Kymberly.Evanson@pacificalawgroup.com

Sara O’Connor-Kriss Seattle City Attorney’s Office 701 5th Ave, Suite 2050 Seattle, WA 98104 (206) 615-0788 Sara.OConnor-Kriss@seattle.gov