Taxicabs v Chicago

7/27/2019 Taxicabs v Chicago

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

Illinois Transportation Trade Association,)

Yellow Group LLC, Yellow Cab )

Affiliation Inc., Taxi Affiliation Services )

LLC, YC1 LLC, YC2 LLC, YC17 LLC, )

YC18 LLC, YC19 LLC, YC20 LLC, )

YC21 LLC, YC22 LLC, YC25 LLC, )

YC26 LLC, YC29 LLC, YC32 LLC, )YC37 LLC, YC49 LLC, YC51 LLC, )

YC52 LLC, YC56 LLC, Transit Funding )

Associates LLC, 5 Star Flash, Inc., )

Chicago Medallion Six LLC, Chicago )

Carriage Cab Corporation, Royal 3CCC )

Chicago Taxi Association, Tri Global )

Financial Services, Inc., Chicago Elite )

Cab Corporation, Chicago Medallion )

Brokers One Hundred Eleven Corporate )

Case: 1:14-cv-00827 Document #: 1 Filed: 02/06/14 Page 1 of 67 PageID


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(CM6), Chicago Carriage Cab Corporation (Carriage), Royal 3CCC Chi

Association (Royal), Tri Global Financial Services, Inc. (Tri Global), Chicago

Corporation (Elite), Chicago Medallion Brokers (Brokers), One Hundred Eleven

Medallion Owners Association (111 Medallion Owners), Emilys Limousin

Company (Limousine), Francis Koblah (Koblah), Emanuel Ofosu (Ofosu)

Saul (Saul) (ITTA, Yellow Group, Yellow Affiliation, TAS, the YC Medallio

Funding, Flash, CM6, Carriage, Royal, Tri Global, Elite, Brokers, 111 Medallio

Limousine, Koblah, Ofusu and Saul are collectively referred to herein as Plain

Plaintiffs other than Saul are collectively referred to as Transportation Plaintiffs)

against defendant City of Chicago (City) as follows:



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transportation by taxi. Taxi owners and operators worked in a competitive enviro

subject to the same regulations until the advent of the unregulated providers that g

this Complaint.

3. An established market for the purchase, sale and financing of medallthat is recognized, supported and regulated by City ordinances and regulations. In

this structure, taxi owners, operators, lenders and others, including the YC Medallio

CM6, 111 Medallion Owners, Koblah, Ofosu and others similarly situated, have

medallions and operated taxis, directly or through leases to drivers. The City has i

from time to time sold some of) the approximately 6,800 medallions in the Chicago m

Plaintiffs Funding, Tri Global and others like it are in the business of lending to



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City of Chicago created for its citizens a public market place for the assignmenits taxicab licenses. Thus, the taxicab licenses in reality became more than j

mere personal permits granted by a governmental body to a person to pursome occupation or to carry on some business subject to regulation under police power. . . . In a functional sense, the taxicab licenses embraced the esseof property in that they were securely and durably owned and marketable.

Since Boonstra, the City has created and supported an additional twenty-two

investment-backed expectations, now totaling over $2 billion in property value, in the

based market.

6. Starting in approximately 2011, certain transportation providers begtaxi and limousine services in Chicago in open and blatant disregard of applicable

ordinances and regulations. These providers (referred to in this Complaint as the

Transportation Providers) include Uber Technologies Inc (Uber) Lyft Inc (



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services they offer are actually de facto taxi services because their fare structure is

based on time and distance, as in the case of taxis.

8. Despite the fact that there is no meaningful difference between licbusinesses and the businesses of Uber, Lyft and Sidecar, the City has applied virtua

the requirements of the City Taxi Regulations to the Unlawful Transportation Prov

described later, this has apparently been due to a directive from the Office of the Mayo

9. The Citys decision not to apply the City Taxi Regulations in any meanto the Unlawful Transportation Providers has disrupted long-settled expectations an

very serious adverse consequences for the Transportation Plaintiffs, who have enga

taxi and limousine business in Chicago in costly reliance upon and in complianc



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medallion market the City created. Because most purchasers of medallions must fi

investment, taxi medallion lenders, such as Plaintiffs Funding and Tri Global, that ho

interests in medallions will see the value of their collateral fall if the City permits the

Transportation Providers to continue to operate outside the law. There are currently o

over $700 million in loans to Chicago taxi owner-operators to finance the purchase of

Those loans were made in reliance on the continued application of the City Taxi R

which assure exclusivity and City enforcement of the Regulations. If the medal

continue to drop, these owners may either have to provide cash or other collateral to

may default, and in many cases become liable personally to lenders under personal

Many of these individual owners are immigrants and other small entrepreneurs, lik



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(iii) assuring that taxi and limousine services are available to persons whonot have smartphones, internet access or credit cards, including eld

and low-income persons;

(iv) assuring that taxi and limousine services are provided exclusivelyindividuals possessing chauffers licenses who have no criminal rec

are tested annually for drug usage, and are properly insured for

commercial use of their vehicles;

(v) assuring that such services are provided only in safe and inspecvehicles that are four model-years old or newer;

(vi) establishing standardized rates in order to prevent price-gouging or in-



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minimum charge of $4.00. Uber advertises that an individual with a private ca

transportation to the public at a price determined by adding to a base fare a metered r

can be found on Ubers website) based on the time and distance travelled. Such s

provided in vehicles that do not satisfy the insurance, inspection, accessibility or drive

requirements applicable to licensed taxi or limousine operators.

15. Unlike taxis owned by medallion owners, the Unlawful Transportationdo not require drivers or operators to obey City Taxi Regulations that require them to

calls from persons in underserved areas or to serve passengers with disabilities. R

drivers are free to turn down calls and thereby cherry-pick the customers and areas

they deem most desirable, which benefits the affluent in and near downtown to the d



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property under Illinois law, medallion owners, and lenders holding security i

medallions, own property that may not be taken by the City without payme

compensation. Before the City allowed the invasion of the Unlawful Transportation P

someone wanted to provide taxicab services in the City, he or she had to buy or lease a

and comply with City Taxi Regulations. In return, the medallion owner received th

right to provide taxi services in Chicago. Exclusivity was an essential element of the

owners property rights and determined its value. Without compensation to the

owners or the lenders holding security interests in the medallions, the City has per

continues to permit the Unlawful Transportation Providers to usurp and trespass

exclusive property rights of medallion owners by providing those services without



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inspected vehicles; satisfy driver-licensing requirements, and pay thousands of dolla

per medallion in City and State taxes (totaling about $24 million) measured solel

operation of the same sort of taxi businesses that the Unlawful Transportation Pro

permitted to operate without paying such taxes. Taxes paid to the City and State by li

operators aggregate more than $24 million annually. An estimate of those annual rev

forth in the following chart:

Estimated Annual City Taxi Tax Revenues

City share of state useTax

$290,000

Medallion Transfer

Tax

$8,795,000 Actual number from

2012MPEA Ai t T $2 920 000 A



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Transportation Providers keep the unpaid taxes as profit, on top of the additional p

garner by not being required to comply with the myriad other regulations requirin

obtain commercial insurance, submit to inspections, maintain their vehicles, and op

newer cars.

21. Additionally, the Citys failure to apply the City Taxi Regulations to thTransportation Providers violates the equal protection rights of persons with disabiliti

Plaintiff Saul and others similarly situated, who are in need of accessible transporta

City. By refusing to require the Unlawful Transportation Providers to provide

vehicles to persons with disabilities pursuant to the City Taxi Regulations, the City is

treating this population differently from the non-disabled population, permitting th



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24. Count IV seeks damages for the Citys breach of its contracts withThose contracts require that the City limit the conduct of the taxi business exclusively

who hold medallions or other taxi-service related licenses as affiliations or dispatch

and otherwise require compliance with the City Taxi Regulations.

25. The City Taxi Regulations grant the exclusive rights to operate taxrelated businesses only to licensed providers of public transportation services. Their d

comprehensive provisions include guarantees of exclusivity and support for the

system.

26. City Taxi Regulations include the following ordinance provisions regexclusive rights of the owners of medallions to operate taxis:



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to this section. This subsection shall not apply if the vehicle used in the violawas stolen at that time and the theft was reported to the appropriate po

authorities within 24 hours after the theft was discovered or reasonably shohave been discovered.

Chicago Mun. Code 9-112-640(a). This and other enforcement provisions constitu

the promise by the City to medallion purchasers and lenders that the City will s

exclusivity and market value provisions by removing unlawful taxicabs from the

fining violators heavily.

29. By permitting the Unlawful Transportation Providers to operate wicomplying with City Taxi Regulations, the City has breached its contract with the YC

Owner Plaintiffs, CM 6, the 111 Medallion Owners, Koblah, Ofosu and all othe

situated medallion owners It has also breached its contracts based on taxi and limo



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Plaintiffs to provide wheelchair accessible vehicles and to accept government

vouchers in partial payment of taxi fares. By failing to enforce regulations intended to

transportation more accessible to persons with disabilities, the City has breached its

obligations to them.

31. Count V is pleaded in the alternative to Count IV and seeks damaprinciples of promissory estoppel. For many years the City has sold and taxed t

medallions as part of the comprehensive regulatory program it established and fos

among other things, establishes the total number of medallions and guarantees medall

the exclusive right to provide taxi services in Chicago. This regulatory program con

Citys promise to medallion owners and lenders holding security interests in meda



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constitute affirmative acts by the City upon which the Transportation Plaintiffs reason

to their detriment as summarized in the preceding paragraph. The City is estopped fro

a de factosystem under which the Unlawful Transportation Providers are allowed to p

services without being required to comply with the obligations imposed upon Tra

Plaintiffs, who undertook such obligations in reliance on the exclusive, regulated

system.

33. The City has drafted an ordinance that might purport to create a separsmartphone-dispatched transportation providers to accommodate the Unlawful Tra

Providers. If enacted, such an ordinance would merely ratify and codify the Citys

state law violations described herein.



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fairness; (v) the proposed ordinance would impose sharply reduced public safety requi

the Unlawful Transportation Providers, as compared to the Transportation Plaintiffs

vehicle age and other operating requirements; and (vi) the proposed ordinance, when

with the influx of hundreds or thousands of drivers who would pay virtually nothing

to operate as de factotaxis, would destroy the $2.4 billion investment of persons and

have expended large sums to purchase and operate under the Citys long-standing

medallion system. If such an ordinance is adopted, unless its final terms preserve a le

field and the investment-backed expectations of medallion owners and lenders, incl

exclusivity rights to operate taxis, it will violate Plaintiffs rights. Plaintiffs will see

this Complaint accordingly.



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ordinance violations that are the subject of the claims at issue here. Ex. 2 at 2. H

shown in this Complaint, Judge Colemans assumption that the City would enforce it

incorrect: she was unaware that, upon information and belief, the Office of the

quietly handcuffed the Commissioner of Business Affairs and Consumer

(Commissioner) from taking steps to regulate the Unlawful Transportation Provi

result, the City in fact has not been regulating the practices of Uber and other

Transportation Providers, and the harms recognized by Judge Coleman from the

violations have not been and will not be remedied by the City regulatory enforc

assumed would occur.

36. It should be noted that the record developed before Judge Colem



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Transportation Providers. The Citys secret hold had the effect of aiding Uber

position before Judge Coleman, as Uber had asked her to defer entering any injunctio

City acts on its regulations, while the City was quietly holding its regulations in

pending the outcome of that litigation.

39. The Citys secret hold on enforcing the City Taxi Regulations aUnlawful Transportation Providers has enabled the Unlawful Transportation Pr

continue to dispatch well over a million illegal rides in the City, to the financial detrim

Transportation Plaintiffs and to the detriment of public safety, while costing the City

dollars of medallion, tax and fee revenue.

40. The extent of the Citys failure to apply the City Taxi Regulations to th



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The City has applied the City Taxi Regulations to virtually none of these rides, w

collectively now substantially exceed one million rides per year.

41. An additional exhibit introduced at the preliminary injunction hearinghow Ubers rides are heavily concentrated downtown and in affluent wards of the

neglecting poorer and minority wards. Attached as Exhibit 4 is a demonstrative exhib

ride statistics generated by Uber itself are superimposed on a census tract map of Ch

larger colored dots and lines show the greatest frequency of Uber rides. With

exception of Midway Airport, the rides are heavily concentrated in the darker ce

containing the highestper capitaincome. Vast stretches of the south, southwest, sout

and northwest sides have virtually no service from Uber. By City ordinance, the Tra


il d / / f


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include representing and furthering the interests of its members in, among other thing

uniform enactment and enforcement of laws governing the transportation industry.

43. Plaintiff Yellow Group is a limited liability company organized anunder the laws of the State of Delaware. Yellow Group has its principal place of

3351 W. Addison Street, Chicago, Illinois. Yellow Groups principal business activ

of providing taxi transportation services to the Chicago public through its who

subsidiaries.

44. Plaintiff Yellow Affiliation is a corporation organized and existing undof the State of Illinois. Yellow Affiliation has its principal place of business at 3351 W

Street, Chicago, Illinois. Yellow Affiliation is a licensed taxi affiliation in the City


C 1 14 00827 D t # 1 Fil d 02/06/14 P 22 f 67 P ID


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licensed medallion owner owning multiple medallions in the City of Chicago and a

Yellow Affiliation.

47. Plaintiff Funding is a limited liability company organized and existinglaws of the State of Delaware. Its principal place of business is at 3351 W. Addi

Chicago, Illinois. Funding is in the business of providing loans to finance the p

Chicago taxi medallions.

48. Plaintiff Flash is a corporation organized and existing under the laws oof Illinois. Flash has its principal place of business at 9696 W. Foster, Chicago, Illino

principal business activity is as a taxi affiliation providing services, including a com

scheme, dispatch and insurance, to its licensed medallion members.


C 1 14 00827 D t # 1 Fil d 02/06/14 P 23 f 67 P ID


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affiliation is to provide services, including a common color scheme, dispatch and in

its licensed medallion members.

52. Plaintiff Tri Global is a corporation organized and existing under the State of Illinois. Tri Global has its principal place of business at 2617 S. Wabash Ave

Illinois. Tri Global is in the business of providing loans to finance the purchase of C

medallions.

53. Plaintiff Elite is a corporation organized and existing under the laws oof Illinois. Elite has its principal place of business at 2617 S. Wabash Ave., Chicag

Elite is a licensed taxicab medallion manager in the City of Chicago.

54. Plaintiff Brokers is a corporation organized and existing under the l


Case: 1:14 cv 00827 Document #: 1 Filed: 02/06/14 Page 24 of 67 PageID


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about April 2013, he pursued the American Dream by purchasing a medallion and op

own taxi. He bought the medallion from a private party for $370,000 and paid the

transfer tax of $18,500. The purchase was financed by a loan secured by the meda

Koblahs revenues have declined materially since the Unlawful Transportation Provi

operating, threatening his ability to continue to make payments on his loans and

business. He and his wife, a nursing student, depend on his taxi earnings.

58. Unlike the drivers deployed by the Unlawful Transportation Providenot only made a substantial investment in a medallion and paid substantial taxes to the

required to comply with the City Taxi Regulations. For example, when he sought

medallion with his 2009 Toyota Camry Hybrid, the City refused because of its rule




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sustain his business. On a typical day his revenues have declined 30-40%. He

marked decline in street hails since the Unlawful Transportation Providers began

Unlike the Unlawful Transportation Providers, he pays approximately $146 per w

affiliation in order to carry the commercial liability insurance required by the

Regulations.

60.

Plaintiff Saul is a Chicago resident, successful entrepreneur and

advocate for the rights of disabled persons. Among his many accomplishmen

following: He is the founder and CEO of Matrix Media, United Broadcasting Co

WebTalkRadio.net, and pioneered a number of broadcast firsts. Traditional

accomplishments include the creation of the Sears College Football Game of the We




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61. Defendant City of Chicago is a municipal corporation created pursuanlaw. The City is authorized by statute to regulate taxis and all others pursuing like o

See 65 ILCS 5/11-42-6.

62. The Commissioner is the highest-ranking City administrative officer rfor the enforcement of the City Taxi Regulations. The Commissioner is not formall

her official capacity because it would be duplicative of joining the City.

Transportation Services Provided

by the Unlawful Transportation Providers

63. Uber is a corporation organized and existing under the laws of thDelaware. Uber maintains its principal place of business at 182 Howard St. #8, San

California Uber currently offers three forms of taxi service in Chicago through a




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UberX were: $3.15 base fare, plus $0.40 per minute for speeds unde

per hour, $1.75 per mile for speeds above 11 miles per hour, with a $6

fare and a $5 cancellation fee. On or about January 9, 2014, Uber

standard UberX rates to a $2.40 base fare, plus $0.24 per minute plus $

with a $3.20 minimum fare and a $5 cancellation fee. However, as

described below, through its surge pricing program, Uber regula

these rates by factors of two to eight during periods of high dem

comparison, the Citys established base taximeter rates for licensed tax

date for a single passenger were: $3.25 base fare, $1.80 for each mile

for each 36 seconds of time elapsed, with no minimum (other than the




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$0.85 per minute for speeds under 11 miles per hour, $3.50 per mile for speed

miles per hour, with a $15 minimum fare and a $10 cancellation fee. On or abo

9, 2014, Uber adjusted the UberBlack minute and distance rates to $0.35 per m

$3.25 per mile. Prior to January 9, 2014, the standard rates in Chicago for Ube

a $14 base fare, plus $1.05 per minute for speeds under 11 miles per hour, $4.5

for speeds above 11 miles per hour, with a $25 minimum fare and a $10 cance

On or about January 9, 2014, Uber adjusted the UberSUV minute and distan

$0.55 per minute plus $4.05 per mile. The fare is paid to Uber via the passen

card registered with Uber. Upon information and belief, Uber remits 80% of the

driver and keeps 20% as its fee.




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Pursuant to this provision, at certain times Uber charges its customers fares to ride

UberX cars or UberBlack or UberSUV cars at double or even higher rates than

permissible under the taximeter rates established by the City Taxi Regulations. Ube

this practice after gouging customers in New York City following Hurricane Sandy in

Uber continues to employ surge pricing in Chicago, and did so, for example, on Fr

September 27, 2013, at which time some UberX riders were surprised to be notifie

were being charged double the ordinary UberX rates, which was about double

permissible taximeter rates. In other instances of high demand, such as the recen

snowy New Years Eve, Uber has charged as much as eight times its regular rates duri

periods with much higher minimum fares, such that customers were charged well ov




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administrative fee of up to 20% of each donation. (See Exhibit 6.) Recently, L

away from the fictitious donation system. In Chicago, Lyft now charges based on

distance calculation. As of February 4, 2014, Lyfts charge per mile is $1.25, the cost

is $.30, there is a $2.00 pickup fee and a $1.00 Trust & Safety Fee (Lyft mark

supporting its purported safety standards), with a $4.00 minimum fare and a $5.00 c

fee. Lyft also has its own version of surge pricing, which it refers to as Prime T

During busy peak times, Lyft uses the Prime Time Tips system, under w

determines a mandatory tip percentage to be charged for rides. (See Exhibit 7.) L

customers before they confirm a ride that Prime Time Tips are in effect and the percen

tip. During the December 2013 holiday-period, Lyft advertised that Prime Time




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suggested donation within 24 hours, the passengers card was charged the

donation. According to the Sidecar app, the suggested donation was calculated bas

others are paying for trips of similar distance and time travelled. Sidecar retained a

of the donation. (SeeExhibit 8.) Upon information and belief, Sidecar ended the

fiction, and charges fares in a manner similar to that used by UberX and Lyft.

Uber, Lyft and Sidecar Operate Unlicensed Taxi Businessesin Violation of the City Taxi Regulations

67. Uber, Lyft and Sidecar operate unlicensed taxi businesses providing seare identical in all material respects to the services offered by the Transportation Pla

other firms and individuals that operate in compliance with the City Taxi Regula

Unlawful Transportation Providers do so by providing the following services to the pu

Case c 008 ocu e t ed 0 /06/ age 3 o 6 age



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service requests per month through smartphone apps, as well as nearly

web or text message;

iii) Like the Transportation Plaintiffs, Uber uses a metering system based and time to determine the fare; Ubers metering system is GPS-based

smartphone as the hardware;

iv)

Lyft and, on information and belief, Sidecar also determine the fare ba

time and distance calculation; Lyft and Sidecar charge a fee for arr

transportation;

v) Like the Transportation Plaintiffs, Uber, Lyft and Sidecar accept payment for the fare; all three require payment by credit card prearrang

g g



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ii) UberTaxi imposes, in addition to the meter rate, an additional bookingdefault gratuity, of which Uber receives at least the booking fee a

card processing fee; the City has permitted Uber to charge the bookin

though it rejected previous requests by some Transportation Plaintiffs

booking fee;

iii) City Taxi Regulations require affiliations, medallion owners and taxicash and debit cards from the Taxi Accessible Program (as well as ot

programs), not just payment by credit cards (id. 9-112-510; City

Taxicab Medallion License Holder Rules and Regulations (Ta

TX5.07); Uber, Lyft and Sidecar accept only credit card payments, a

g g



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(Mun. Code 9-112-550; Dispatcher Regs. R. Nos. 1-2, 6); the

Transportation Providers do not have such agreements, yet dispatch to d

vii) City Taxi Regulations require a two-way radio dispatch system (Mun112-320; Dispatcher Regs. R. No. 1(d)); the Unlawful Transportation

have only one-way text transmissions by smartphone (which inevita

incidents of driving-while-texting);

viii) City Taxi Regulations require every taxi driver to have their dispatch raon, and taximeters must be connected to an active dispatch radio (Mun

112-320(c); Taxi Regs. TX5.02(c)(4), 5.10); the Unlawful Tra

Providers do not meet any such requirements;



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Transportation Providers dispatch to drivers who do not hold a chauff

or have insurance covering rides for hire;

xii) City Taxi Regulations require medallion owners to carry public liabilitwith a minimum coverage for each taxicab of $350,000 per occurrence

workers compensation insurance (Mun. Code Sec. 9-112-330); The

Transportation Providers are not required to carry insurance co

commercial, for hire use of the cars or workers compensation

covering the drivers of the cars they operate;

xiii) City Taxi Regulations require affiliations to provide continuing eddrivers (Mun. Code 9-112-350; City of Chicago Rules and Regu



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Code 9-112-180; Chauffeur Regs. Rule CH5.02.); the Unlawful Tra

Providers are, upon information and belief, operating in violation

Regulations in various respects:

(1)their drivers may choose to reject passengers based on destination;(2)the rating systems of the smartphone apps result in passeng

different grades from drivers, thereby encouraging subsequent

reject certain lower-rated passengers in favor other others wit

ratings; and

(3)Lyfts profile of each passenger includes a picture of the passengenabling their drivers to either avoid or prefer certain passenger



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xviii) City Taxi Regulations require medallion owners to submit to regperformed vehicle inspections (Mun. Code 9-112-050, 060, 070;

TX3.03); the Unlawful Transportation Providers do not submi

inspections;

xix) City Taxi Regulations require medallion owners to meet specific drequipment requirements (Mun. Code 9-112-140; Taxi Regs. TX6.01

Unlawful Transportation Providers do not;

xx) City Taxi Regulations prohibit medallion owners from leasing to drivenot licensed chauffeurs in good standing or are otherwise below a c

have negative driving records or criminal records, or who fail an annua



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(Mun. Code 9-112-250); upon information and belief, the

Transportation Providers do not impose such restrictions or monitor wh

drivers work excessive hours;

xxiii) City Taxi Regulations require medallion owners to equip all taxis with meet standards published by the National Institute of Standards and T

and that must be active whenever the taxi is engaged for hire in the C

have the meters inspected and tested annually (Mun. Code 9-112

Regs. TX5.02-5.05); the Unlawful Transportation Providers use smart

as the metering device that are not subject to use limits or calibration te

xxiv)

City Taxi Regulations require medallion owners to collect taxi data, to



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i) The Unlawful Transportation Providers are subject to Illinois law requirinwith the State of proof of commercial liability insurance (625 ILCS 5/8-10

information and belief, the Unlawful Transportation Providers have not com

ii) The Unlawful Transportation Providers do not comply with the Illinois TAct of 2007, which requires that the taxi drivers picture, license or

number, and exterior identification number be visibly posted in each cab;

telephone number for the passenger to call be visibly posted so that the pas

report reckless driving. 625 ILCS 55/5. The cars dispatched by UberX

Sidecar have no driver identification, photograph or phone number posted

indistinguishable from ordinary passenger cars (except that Lyft u



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The Citys Discrimination On the Basis of Disability, Race and Other Fact

73. The City Taxi Regulations contain several regulations intended to services more accessible to persons with disabilities. Plaintiff Saul and other pe

disabilities are the intended beneficiaries of these accessibility provisions.

74. As noted above, a licensee that owns or controls 20 or more licensewheelchair accessible vehicles for at least five percent of its fleet. (Mun. Code 9-1

Upon information and belief, each of the Unlicensed Transportation Providers contrac

controls more than 20 vehicles, each of which should be licensed under the City Tra

Regulations. However, probably none is wheelchair accessible, and, in any ev

Providers currently have no means on their systems to dispatch such accessible vehicle



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subsidized by PACE. Such persons can pay $5.00 for a credit of up to $13.50 per ta

and redeem the subsidy by swiping a debit card in the credit card reader taxicabs are

maintain under the City Taxicab Regulations. Compliance with T.A.P. includes acc

processing T.A.P. forms of payment, such as the T.A.P. swipe card. (Id.) The Tra

Plaintiffs typically do not receive payment from PACE for rides provided to T.A.P.

for 30-45 days. Moreover, because PACE sometimes determines that certain rider

qualified for the subsidy, the reimbursement rate is less than 100%, and the Tra

Plaintiffs lose thousands of dollars each year for such unreimbursed rides.

77. The City is not requiring the Unlawful Transportation Providers to cothese accessibility obligations. They do not provide wheelchair accessible vehicles, a



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first of whom can only request rides from and obtain governmental subsidies t

Transportation Plaintiffs and other regulated taxicab services, while the second of

request rides from any taxicab, whether or not regulated.

80. As stated above, the City is also failing to require the Unlawful TraProviders to comply with the provisions in the City Taxi Regulations that taxicabs co

all Federal, State and City anti-discrimination laws, respond to dispatches to anyw

City, accept cash, and not refuse a ride based on the passengers destination. Th

Transportation Providers are free to pick and choose passengers based on who they

they will be picked up and where they will be dropped off. This enables the Provid

riders and neighborhoods based on perceived race and ethnicity. Additionally, the Ci



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Plaintiffs, to be required to compete against unlawful taxi services that do not comp

regulations. 1 Referring to companies like Lyft and Sidecar, Kalanick said that

engaging in regulatory arbitrage, and that each ride they arranged in violation

constituted a separate criminal misdemeanor. He complained that they opera

carrying insurance. Because they operate outside the regulatory structure and the co

imposed he said that they eat you up from the bottom up.

83. Rather than insist on compliance with the law, Mr. Kalanick admittedhas developed a playbook under which it would (and did) join the other lawb

markets, like Chicago, where they operate. Uber notified municipal authorities that

not enforce the law within thirty days against the violators (Lyft and Sidecar), U



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transportation by working exclusively with unlicensed, non-commercially insured ve

drivers. Uber stated:

Over the last year, new startups have sought to compete with Uberby offering transportation services without traditional commercialinsurance or licensing. Uber refrained from participating in thistechnology sector known as ridesharing due to regulatoryrisk that ridesharing drivers may be subject to fines or criminalmisdemeanors for participating in non-licensed transportation forcompensation.

In most cities across the country, regulators have chosen not toenforce against nonlicensed transportation providers usingridesharing apps. This course of non-action resulted in massiveregulatory ambiguity leading to one-sided competition which Uberhas not engaged in to its own disadvantage. It is this ambiguitywhich we are looking to address with Ubers new policy onridesharing:



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services without complying with the City Taxi Regulations. The City has provid

approval by not taking meaningful action to enforce the City Taxi Regulations in t

Ubers public challenge to regulators stated in the White Paper, and repeated re

enforcement from Plaintiffs and others. The Citys tacit approval is also reflected by

public statement of Spielfogel that enforcing rules against Uber and other

Transportation Providers had been put on indefinite hold. The actions of Uber an

constitute and reflect the existence of an agreement between them not to enforce the

Regulations against Uber and other Unlawful Transportation Providers.

88. Contrary to Ubers assertion in the White Paper, there has not been anyambiguity concerning the relevant law and regulations. The extensive City Taxi Regu



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expressly state in capital letters that Uber will not conduct background

be liable for any injury caused by their drivers: THE COMPA

INTRODUCE YOU TO THIRD PARTY TRANSPORTATION PR

FOR THE PURPOSES OF PROVIDING TRANSPORTATION.

NOT ASSESS THE SUITABILITY, LEGALITY OR ABILITY

THIRD PARTY TRANSPORTATION PROVIDERS AND YOU EX

WAIVE AND RELEASE THE COMPANY FROM ANY A

LIABILITY, CLAIMS OR DAMAGES ARISING FROM OR IN A

RELATED TO THE THIRD PARTY TRANSPORTATION PROVID

ACKNOWLEDGE THAT THIRD PARTY TRANSPORTATION PR



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CAUSES OF ACTION OR DAMAGES ARISING FROM YOUR US

APPLICATION OR SERVICE, OR IN ANY WAY RELATED TO TH

PARTIES INTRODUCED TO YOU BY THE APPLICATION OR SE

b. Contrary to Ubers extensive limitations on its responsibilities to its quoted above, Ubers White Paper states: Innovation and consumer s

the core of Ubers culture. . . . We wanted to set the rules in a p

everyone would agree that safety and welfare of consumers was take

Ex. 9 at 6. This is false. It is contradicted by the language quoted abo

as by additional disclaimers in its apps terms and conditions: THE

OF THE TRANSPORTATION SERVICES SCHEDULED THROU



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liability policy provides coverage, which it does not. An agency of t

California recently determined that Ubers excess policy does n

insurance coverage for the UberX drivers, passengers or the public. U

released its insurance policy publicly or filed it (or the policies of its dr

the State as required by 625 ILCS 5/8-101. Even if such covera

existed regarding so-called ridesharing trips, it is misleading and illuso

to tout coverage for liability because the very same disclaimers of liabi

above purport to hold Uber harmless from any potential claim for dama

insurer may have to defend from a passenger involved in an accident.

90. The falsity of Ubers insurance representations was recently e


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TRANSPORTATION THAT IS POTENTIALLY DANGEROUS, OF

HARMFUL TO MINORS, UNSAFE OR OTHERWISE OBJECTI

AND THAT YOU USE THE APPLICATION AND THE SERVICE

OWN RISK. This language comes from Ubers terms and conditio

above in Paragraph 90.

d. In a tweet on October 25, 2013 (Ex. 10D), she tweeted Its the FridStay safe. Take only licensed taxis! Posted below that text is

Ridesharing: Are you covered? over a photo of a totally wrecked ca

by the caption: Standard Auto Insurance will not pay for loss wh

while [your personal vehicle] is being used as a public or livery convey



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with unlawful, unlicensed operators like the Unlawful Transportation Providers. Th

unlawful discrimination against lawful operators will continue to worsen unless

requires the City apply the City Taxi Regulations impartially and in a non-arbitrary ma

similarly-situated transportation providers while respecting the investment-backed e

the City has created and fostered.

98. The Citys failure to enforce the City Taxi Regulations has alreadyimpact the market value of taxi medallions.

99. As noted above, until recently, the market value of medallions $360,000 or more. In a typical medallion sale, the purchaser would pay 25% of the p

and borrow 75% of the price from entities like Plaintiff Funding, Plaintiff Tri



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collective value of Funding and Tri Globals loan portfolios exceeds $250 million. I

values drop, Funding and Tri Global would be required to post tens of millions of doll

or collateral to avoid default.

101. Because of the Citys failure to require the Unlawful Transportation Pcomply with the City Taxi Regulations, medallion values have already begun to fall

trend continues, the consequences to Transportation Plaintiffs and other medallion o

lenders would be catastrophic: defaults will occur, medallion values will fall further, l

not finance future sales of medallions, medallion owners will be unable to sell, and

including owners, lenders, brokers and affiliations, will collapse.

102. The Unlawful Transportation Providers have not been required to


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required to provide to their lenders to maintain the loan-to-

required under their financing agreements;

ii. For the Plaintiffs who extended loans to medallion owners secumedallions, an amount of cash sufficient to restore the rat

amount to medallion value that existed prior to the dim

medallion value caused by the Citys failure to require the

Transportation Providers to acquire medallions and otherwise

the City Taxi Regulations against the Unlawful Transportation P

c. An award of the Plaintiffs attorneys fees and litigation expenses;d. Such other relief as the Court deems appropriate.



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Transportation Plaintiffs so long as it permits de facto taxi operations by the

Transportation Providers on an uneven playing field.

113. The City has not offered any rational justification for the unequal appthe City Taxi Regulations. As described herein, the Citys decision to apply the

Regulations unequally is not rationally related to any legitimate governmental interest

114. Plaintiffs are suffering and will continue to suffer direct and tangibledamages from the Citys actions and inactions in that, without limitation, (i) the m

collateral value of the medallions and their marketability are being or will be redu

unequal application of the City Taxi Regulations, (ii) the Plaintiffs who operate taxis d

being injured in that the revenues derived from their lawful operations will be reduced



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116. Plaintiffs are entitled to the following relief under Count II:a. An injunction enjoining the City from unequal enforcement of the

Regulations;

b. Damages resulting from the Citys unequal enforcement of the Regulations;

c. An award of their attorneys fees and litigation expenses;d. Such other relief as the Court deems appropriate.

Count III Violation of Substantive Due Process Rights

117. Plaintiffs reallege paragraphs 1-117.118. The Citys administration of the City Taxi Regulations, applyin


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133. The City has materially breached the Regulated Taxi Operators Callowing the Unlawful Transportation Providers to offer services that are virtually iden

services offered by the Transportation Plaintiffs, but without requiring that they obta

or otherwise comply with applicable law and regulations.

134. The Citys breach of the Regulated Taxi Operators Contract has daTransportation Plaintiffs by causing loss of revenues and profits, and reducing the va

businesses, assets and their taxi licenses.

135. Plaintiff Saul and others similarly situated are intended third-party benethe Regulated Taxi Operators Contract. The City has materially breached this C

failing to require the Unlawful Transportation Providers to comply with the a


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c. An injunction requiring the City to enforce the exclusive licensing rulein the City Taxi Regulations against the Unlawful Transportation Provi

d. Such other relief as the Court deems appropriate.Count VI Equitable Estoppel

146. Plaintiffs reallege paragraphs 1-146.147. The Citys enactment and past enforcement of the City Taxi Regulatio

as its sales of medallions, constitute affirmative acts by the City over the course of dec

148. The Transportation Plaintiffs substantially and reasonably relied to theiupon these affirmative City acts by, inter alia,investing millions of dollars through

medallions, financing medallions and/or creating and operating taxi affiliations.



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Dated: February 6, 2014 Respectfully submitted,

Plaintiffs,

By: /s/ Edward W. FeldmanOne of their attorneys

Michael L. ShakmanEdward W. FeldmanStuart M. Widman

Melissa B. PryorMILLER SHAKMAN &BEEM LLP

180 N. LaSalle Street, Suite 3600Chicago, Illinois 60601312-263-3700


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Forcast II Hacking Corp.Funny Monica in Chicago Inc.Gala Cab Corp.

Galina Cab Corp.Gap Cab Corp.Gem and R Cab Corp.Geris Cab Corp.Green Eyes Cab Corp.Green Tea Cab Corp.Hail Hacking Corp.Humidity II Hacking Corp.

I&B Midwest Enterprise, Inc.Jasmin Taxi, Inc.July Cab Corp.June Cab Corp.Killer Dog Cab Corp.King Edward Cab Corp.Koshechka Taxi, Inc.Kukla Cab Corp.

Li ht B C b C


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E X H I B I T 3


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E X H I B I T 4


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E X H I B I T 5



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E X H I B I T 6



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E X H I B I T 7


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( f f L ft)



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(no fee for Lyft).

We're also transitioning from donations to regular payments in Chicago

starting today, providing peace of mind to drivers. You can always

check prices in the app or our FAQand request a price review through

your ride receipt if you need to.

And when we say all hands on deck, we mean it! Even our co-founder

John Zimmer will be out driving with Lyft on NYE. :)

Happy New Year!

Emily Castor

Lyft Community Team


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E X H I B I T 10



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E X H I B I T A

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E X H I B I T B

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E X H I B I T C

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E X H I B I T D

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Taxicabs v Chicago

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Transcript of Taxicabs v Chicago