FLYWHEEL TAXI SUES THE CPUC

Flywheel taxi filed a lawsuit in Federal Court last week against the California Public Utilities Commission (CPUC) for unfair business practices.

The main complaint is the "uneven manner" in which the CPUC is regulating "e-hail taxi companies (i.e. Uber, Lyft & Sidecar). "The CPUC," the complaint asserts, "in-behind-the-door negotiations allowed these services to obtain a state license that they have since used to circumvent all established municipal taxi rules"

"Flywheel Taxi’s suit seeks injunctive and declaratory relief against the CPUC for the CPUC’s assertion of jurisdiction over e-hail taxi companies, which has prevented municipal agencies from applying the same rules to e-hail taxi companies that are applied to traditional taxi companies, resulting in an unfair two-tier system of regulation that has created an unlevel playing field for on-demand transportation companies."

Hansu Kim (photo), President of Flywheel Taxi, said,

“Calling these new taxi services ‘ride-sharing’ is the height of irony. It’s a type of Orwellian doublespeak intended to make people feel good about them. I mean, who is against sharing? But there isn’t any sharing going on. These are venture capital backed commercial businesses trying to skirt regulatory requirements. This lawsuit is intended to make sure everyone gets to compete while playing by the same rules.”

In a telephone interview, Kim clarified this by saying, 

"Taxicabs are being treated unfairly in terms of rules that we have to follow compared to the e-hail taxi companies ... regulators either have to treat us equally under the law – where we all are regulated similarly – or, if they want to deregulate the industry, then they have to deregulate all of us." 

Flywheel is not suing for money but rather a change in laws.

"All we're asking for," Kim says, "is to be able to compete on an even playing field. ... If we have that I know we can succeed. ... I'm not afraid of technology or new services or competition – I'm all for it. This is about making sure that they have the same costs and provide the same insurance and standards of safety that we do. Even a company like ours that is incredibly innovative and progressive is not going to thrive in an environment where the competition is allowed to endanger the public with cut rate insurance, 3rd rate background checks, phantom vehicle maintenance and zero driver training."

Regulate all or regulate none," Kim concluded, "but don't regulate some."

For a list of regulatory differences between e-hail taxis and real taxicabs, and a copy of the suit – click below.

WHAT THE CPUC DOES NOT REQUIRE OF E-HAIL TAXI COMPANIES:

•   The CPUC does not regulate the number of e-hail taxis on the road.
  
•   The CPUC does not regulate the prices that e-hail taxis can charge passengers and permits
  unlimited surge pricing.
  
•   The CPUC does not require e-hail taxi companies to associate a “medallion” – which costs
  $250,000 in San Francisco – with each vehicle on the road.
  
•   The CPUC does not require e-hail taxi companies to provide workers’ compensation
  insurance for all e-hail taxi drivers.
  
•   The CPUC does not require e-hail taxi companies to include low-emissions vehicles in their
  fleet.
  
•   The CPUC does not limit the age or mileage of vehicles offered as e-hail taxis.
  
•   The CPUC does not require e-hail taxi companies to provide wheelchair-accessible vehicles.
  
•   The CPUC does not require e-hail taxi drivers to transport service animals.
  
•   The CPUC does not require e-hail taxi drivers to accept Paratransit Debit Cards.
  
•   The CPUC does not require e-hail taxi companies to provide in-vehicle equipment for the
  visually impaired.
  
•   The CPUC does not require e-hail taxis to begin and end their shift at the physical location
  of the e-hail taxi company.
  
•   The CPUC does not require e-hail taxis to be painted with a distinguishable color and trade
  dress.
  
•   The CPUC does not require e-hail taxis to be equipped with security cameras.
  
•   The CPUC does not require e-hail taxi companies to provide a lost and found service for
  passengers.
  
•   The CPUC does not limit the number of consecutive hours an e-hail taxi driver can drive.
  
•   The CPUC does not require Department of Justice background checks or Live Scan
  fingerprinting for e-hail taxi drivers.
  
•   The CPUC does not require e-hail taxi drivers to be commercially licensed.
  
•   The CPUC does not require e-hail taxi drivers to obtain a permit from the CPUC before
  driving.
  
•   The CPUC does not require e-hail taxi drivers to complete a certified driver training course.
  
•   The CPUC does not require e-hail taxi companies to provide a telephone dispatch service to
  make transportation available to those without a “smartphone” or “tablet.”
  
•   The CPUC does not require all e-hail taxis to operate each and every day.
  
•   The CPUC does not require e-hail taxi drivers to pick up passengers without regard to race,
  gender, disability, economic status, or geographic location.
  

WHAT SAN FRANCISCO REQUIRES OF TAXI COMPANIES:

•   San Francisco limits the number of taxis on the road.
  
•   San Francisco regulates the prices that taxis can charge passengers and prohibits surge
  pricing.
  
•   San Francisco requires taxi companies to associate a “medallion” – which costs $250,000 in
  San Francisco – with each vehicle on the road.
  
•   San Francisco requires taxi companies to provide workers’ compensation insurance for all
  taxi drivers.
  
•   San Francisco requires taxi companies to maintain a fleet of at least 90% low-emissions
  clear air vehicles.
  

San Francisco:

• limits the age or mileage of vehicles offered as taxis.
• requires taxi companies to provide wheelchair-accessible vehicles. requires taxi drivers to transport service animals.
• requires taxi drivers to accept Paratransit Debit Cards.requires taxi companies to provide in-vehicle equipment for the visually impaired.
• requires all taxis to begin and end their shift at the physical location of the company.
• requires taxis to be painted with a distinguishable color and trade dress.
•  requires taxis to be equipped with security cameras.
• requires taxi companies to provide a lost and found service for passengers. 
• limits the number of consecutive hours a taxi driver can drive.
• requires Department of Justice background checks for taxi drivers, including Live Scan fingerprinting.

•   San Francisco requires taxi drivers to be commercially licensed.
  
•   San Francisco requires taxi drivers to obtain a permit from the city before driving.
  
•   San Francisco requires taxi drivers to complete a certified driver training course.
  
•   San Francisco requires taxi companies to provide a telephone dispatch service to make
  transportation available to those without a “smartphone” or “tablet.”
  
•   San Francisco requires all taxis to operate each and every day.
  
•   San Francisco requires taxi drivers to pick up passengers without regard to race, gender,
  disability, economic status, or geographic location. 
  

Shannon Seibert (CBN 240317) seibert@ssjblaw.com
Joe Bautista (CBN 255708) joebau@ssjblaw.com

SEIBERT & BAUTISTA
100 Pine Street, Ste. 1250 San Francisco, CA 94111 Tel: 415.954.9455
Fax: 415.494.8115
Attorneys for Plaintiff

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION

DESOTO CAB COMPANY, INC., d/b/a FLYWHEEL TAXI,
Plaintiff, vs.
MICHAEL PICKER; MIKE FLORIO; CATHERINE J.K. SANDOVAL; CARLA J. PETERMAN; LIANE M. RANDOLPH, in their official capacities as Commissioners of the Public Utilities Commission of the State of California; and DOES 1 through 20, inclusive,
Defendants.

CASE NO.:
COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF

_________________________________________________________________________________________________
COMPLAINT -1-

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Plaintiff DeSoto Cab Company, Inc. d/b/a Flywheel Taxi hereby complains against Defendants, and each of them, and alleges as follows. PARTIES 1. Plaintiff DeSoto Cab Company, Inc. d/b/a Flywheel Taxi (“Flywheel Taxi”) is a California corporation. Flywheel Taxi is a taxi company that maintains its headquarters and principal place of business in the City and County of San Francisco, California. 2. Defendants Michael Picker, Mike Florio, Catherine J.K. Sandoval, Carla J. Peterman, and Liane M. Randolph are Commissioners of the California Public Utilities Commission (“CPUC”). The CPUC is an agency of the State of California that maintains its principal offices at 505 Van Ness Avenue, San Francisco, California 94102. The Commissioners are sued in their official capacities only. 3. Flywheel Taxi is unaware of the identity of those Defendants sued as Does 1 through 20, inclusive, and they are therefore sued under those fictitious names. Flywheel Taxi is informed and believes, and thereon alleges, that it is entitled to the relief requested in this complaint from these Doe defendants and will seek leave of this Court to amend this complaint to reflect these defendants’ true names and identities when ascertained. 4. Flywheel Taxi is informed and believes and thereon alleges that each of the defendants named herein was the agent, employee or representative of each of the remaining defendants and in doing the things mentioned herein, was acting in the course and scope of such agency and employment. Flywheel Taxi further alleges that in doing the acts or omissions complained of herein, Defendants, and each of them, acted or omitted to act in concert as agents of and/or on behalf of the other defendants named herein. VENUE AND JURISDICTION 5. Jurisdiction is conferred upon this Court by 28 U.S.C. §§ 1331 and 1343 and 42 U.S.C. § 1983. Plaintiff’s claims arise under the Constitution and law of the United States, including the Due Process Clauses of the Fifth and Fourteenth Amendments to the United States Constitution. 6. Venue is proper in this district pursuant to 28 U.S.C. § 1391. Defendants are sued in their official capacities as Commissioners of the CPUC. The CPUC is located in California and _________________________________________________________________________________________________ COMPLAINT -2-

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operates under the laws of the State of California. The CPUC conducts its proceedings in this District, and a substantial part of the events or omissions giving rise to the dispute occurred in this District. INTRADISTRICT ASSIGNMENT 7. Pursuant to Civil Local Rules 3-5(b) and 3-2(c), this action arises in the San Francisco Division of this Court in that the events complained of herein include actions taken by the Commissioners of the California Public Utilities Commission in the City and County of San Francisco. INCORPORATION OF ALLEGATIONS 8. All of the allegations in this Complaint are hereby incorporated into each cause of action to the extent necessary or useful to clarify and complete each stated cause of action, to avoid repetition and redundancy. FACTS COMMON TO MORE THAN ONE CAUSE OF ACTION 9. Prior to September 23, 2013, in California there existed three types of regulated private for-hire ground transportation services: passenger stage corporations (“PSCs”), which are shuttles driven by commercially licensed drivers; transportation charter parties (“TCPs”), which are limousines and luxury sedans driven by commercially licensed drivers; and on-demand transportation carriers, otherwise known as taxis, which are driven by specially permitted drivers. 10. The CPUC has jurisdiction over and regulates charter-party carriers of passengers in California. PSCs and TCPs are charter-party carriers of passengers (“passenger carriers”). 11. PSCs provide shuttle transportation service to the general public on fixed routes or through scheduled service. TCPs are hired on a prearranged basis for the exclusive use of an individual or group. Charter-party carriers of passengers are required to operate on a prearranged basis. To meet this definition, California Public Utilities Code § 5353 requires that the transportation of the prospective passenger must be arranged with the charter-party carrier either by written contract or telephone. //// _________________________________________________________________________________________________ COMPLAINT -3-

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14. On-demand transportation services are generally referred to as taxi services in California. Taxis provide an on-demand transportation service that is requested through smartphone applications, telephone dispatch, and/or street hails. 15. The CPUC does not have jurisdiction over and cannot regulate on-demand transportation services in California. Pursuant to California Government Code § 53075.5, city and county governments have exclusive jurisdiction over taxi transportation services in California. 16. Flywheel Taxi is a taxi company that operates on-demand transportation services in the City and County of San Francisco and is regulated by the City and County of San Francisco by the San Francisco Municipal Transportation Agency ("SFMTA"). 17. In 2010, Uber began operations in California as a charter-party carrier with vehicles licensed through the CPUC as TCP vehicles. 18. In early 2012, Lyft and Sidecar began operation of on-demand transportation services in California. In July 2012, Uber joined Lyft and Sidecar in offering on-demand transportation services in California with its UberX line of transportation services. 19. UberX, Lyft and Sidecar provide on-demand transportation services that are requested through smartphone applications and/or street hails. UberX, Lyft and Sidecar are not charter party carriers and do not operate on a pre-arranged basis. As such, UberX, Lyft and Sidecar do not fall within the jurisdiction of the CPUC. 20. The transportation services offered through UberX, Lyft, and Sidecar since 2012 are on-demand de facto taxi services that are subject to the exclusive jurisdiction of city and county governments in California. 21. In 2012, efforts were made by a variety of city and county governments throughout California to exercise jurisdiction over UberX, Lyft and Sidecar. 22. Nevertheless, on December 20, 2012, the CPUC instituted a rulemaking process to assess public safety risks created by the operation of on-demand transportation services offered by companies such as Uber, Lyft, and Sidecar. The CPUC did not provide notice to any taxi companies in the State of California, including Flywheel Taxi, of the initiation of the rulemaking process. _________________________________________________________________________________________________ COMPLAINT -4-

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23. On September 23, 2013, the CPUC issued a Decision Adopting Rules and Regulations to Protect Public Safety While Allowing New Entrants to the Transportation Industry (the “Decision”). 24. In the Decision, the CPUC improperly asserted jurisdiction over de facto taxi services such as Uber, Lyft, and Sidecar and created a new category, called “Transportation Network Companies,” for the de facto taxi companies. 25. By occupying the field, the CPUC has prevented city and county agencies in California generally, and in the City and County of San Francisco specifically, from regulating the on-demand transportation services provided by de facto taxi companies. 26. In the Decision, the CPUC promulgated rules and regulations to govern the provision of on-demand transportation services by de facto taxi companies. The regulations adopted by the CPUC include a requirement of insurance coverage but only while a passenger is in the vehicle, ineffective background checks on drivers, and a driver “training” program left entirely to the companies. The CPUC did not adopt any regulations requiring the de facto taxi companies to comply with the Americans with Disabilities Act, no requirements for anti-discrimination or harassment training, and no requirements for the provision of workers’ compensation protections for drivers. Further, the CPUC placed no restriction on the number of vehicles that can be licensed as TNCs or the rates that de facto taxicab companies can charge the public for transportation services. 27. In contrast, the regulatory requirements of traditional taxi companies in San Francisco, including Flywheel Taxi, require that the companies provide $1 million in liability insurance that covers the car, driver, and third parties at all times, that they provide ADA-accessible vehicles, that the companies provide workers’ compensation coverage for all drivers, that they maintain a fleet of at least 90 percent fuel-efficient vehicles, that they limit the number of vehicles available on the street, that vehicles may only pick up passengers within the City and County of San Francisco, that all vehicles contain metered devices that are certified and approved by the State of California Department of Agriculture’s Division of Measurement Standards. Additionally, the rates that may be charged for transportation services provided by taxicab companies is rigorously regulated and controlled by city and county governments. _________________________________________________________________________________________________ COMPLAINT -5-

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28. Drivers of traditional on-demand taxi services are further required to be commercially licensed, to submit to a thorough background check, to accept all ride requests without discrimination, to submit to a rigorous training course administered by an approved third-party institution, and to comply with price controls put in place by city and county agencies. 29. The regulatory framework and requirements placed on traditional taxi services, including Flywheel Taxi, by city and county governments are far more stringent and protective of the public than the regulatory framework and requirements placed upon de facto taxi companies by the CPUC. 30. The regulatory framework and requirements placed on traditional taxi services by city and county governments are far more costly to provide and maintain than the regulatory framework and requirements placed upon de facto taxi companies by the CPUC. 31. Prior to issuing the Decision, the CPUC lacked the leadership, ability or resources to adequately enforce the regulations that were previously enacted with regard to PSCs and TCPs in California. The Commission was aware of these deficiencies and its inability or unwillingness to enforce regulations before claiming jurisdiction over de facto taxi companies. 32. Prior to issuing the Decision, the CPUC was aware of the regulatory efforts made by city and county governments throughout California and, specifically, by the SFMTA in San Francisco. The CPUC knew the regulatory standards adopted by city and county governments in California, including the SFMTA, would be more stringent, more protective of the public, and more effectively enforced than the regulatory framework created by the Decision. 33. By occupying the field, the CPUC has prevented city and county agencies in California generally, and in the City and County of San Francisco specifically, from regulating the de facto taxi services. 34. The CPUC acted capriciously and arbitrarily and without justification by claiming jurisdiction over and adopting new regulations for de facto taxi companies while failing and refusing to exercise jurisdiction over and regulate traditional taxi companies. _________________________________________________________________________________________________ COMPLAINT -6-

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35. The CPUC’s actions have led to disparate treatment of de facto taxi companies and allows them to operate without regard of the rules and regulations that govern all other on-demand transportation services and without incurring the associated costs of compliance. 36. The unequal treatment of Flywheel Taxi and the de facto taxi companies by the CPUC is fundamentally unfair and unconstitutional. FIRST CAUSE OF ACTION EQUAL PROTECTION (U.S. CONST., AMEND. XIV; 42 U.S.C. § 1983) (Against all Defendants) 37. Flywheel Taxi is entitled to equal protection of the laws pursuant to the Fourteenth Amendment of the United States Constitution. 38. The CPUC’s actions in claiming jurisdiction over some, but not all, on-demand transportation services in California has deprived Flywheel Taxi of the equal protection of the laws by allowing de facto taxi services to operate free from the regulations with which all other on- demand transportation services must comply. 39. The CPUC, by adopting exceedingly lenient regulations with regard to de facto taxi services while failing to do the same with regard to all on-demand ground transportation services has deprived Flywheel Taxi of equal protection of the law, in violation of the Fourteenth Amendment to the United States Constitution. 40. The CPUC, by failing to adopt rigorous regulations with regard to de facto taxi services has denied Flywheel Taxi equal protection of the law, in violation of the Fourteenth Amendment to the United States Constitution. 41. The CPUC, by failing to enforce existing regulations with regard to de facto taxi services has denied Flywheel Taxi equal protection of the law, in violation of the Fourteenth Amendment to the United States Constitution. 42. The CPUC had no rational justification for claiming jurisdiction over de facto taxi services, for adopting exceedingly lenient regulations, for failing to adopt regulations, and for failing to enforce regulations of de facto taxi companies. The CPUC’s decision to exercise jurisdiction over de facto taxi services, thereby occupying the field and preventing city and county agencies from _________________________________________________________________________________________________ COMPLAINT -7-

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regulating the services, was not rationally related to any legitimate governmental interest and has resulted in an absence of measures to ensure public safety. 43. Flywheel Taxi is entitled to discovery to determine whether the CPUC’s disparate treatment of de facto taxi services and all other on-demand transportation services was motivated by special animus toward Flywheel Taxi or the taxi industry as a whole and/or special favoritism toward the de facto taxi companies for the purposes of determining whether the CPUC has acted with the intent to discriminate against the taxi industry and/or in favor the de facto taxi companies. 44. Flywheel Taxi is therefore entitled to have the CPUC’s September 23, 2013 Decision declared unlawful, to have the CPUC’s claimed jurisdiction vacated, and to have the determination of regulation of de facto taxi companies remanded to city and county officials for determination. SECOND CAUSE OF ACTION DUE PROCESS (U.S. CONST., AMENDS. V, XIV; 42 U.S.C. § 1983) (Against all Defendants) 45. Flywheel Taxi was entitled to due process of law in connection with the CPUC’s establishment of jurisdiction over on-demand transportation services through the Decision. 46. The CPUC did not provide notice to Flywheel Taxi, or to any other taxi companies, of its intent to establish jurisdiction and occupy the regulatory field over some, but not all, on-demand transportation services. 47. The CPUC’s failure to provide notice to Flywheel Taxi of its intent to establish jurisdiction and occupy the regulatory field with regard to de facto taxi companies deprived Flywheel Taxi of the opportunity to respond to the CPUC’s claimed jurisdiction prior to the CPUC’s actions. 48. The CPUC’s establishment of jurisdiction over de facto taxi companies without notice to Flywheel Taxi has deprived Flywheel Taxi of property in the form of lost profits and income. 49. The CPUC’s establishment of jurisdiction over de facto taxi companies without developing a proper evidentiary record has violated the due process rights of Flywheel Taxi and of all taxi companies in California. _________________________________________________________________________________________________ COMPLAINT -8-

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50. The CPUC’s establishment of jurisdiction over de facto taxi companies based on an arbitrary and incorrect interpretation of the term “prearranged” has deprived Flywheel Taxi of property in the form of lost profits and income. 51. Flywheel Taxi is therefore entitled to have the CPUC’s September 23, 2013 Decision declared unlawful, to have the CPUC’s claimed jurisdiction vacated, and to have the determination of regulation of de facto taxi companies remanded to city and county officials for determination. PRAYER FOR RELIEF WHEREFORE, Flywheel Taxi prays for judgment on all causes of action as follows: 1. Declare that the CPUC does not have jurisdiction over companies providing on- demand transportation services, including de facto taxi companies Uber, Lyft, and Sidecar; 2. Declare that by exercising jurisdiction over de facto taxi services while declining to exercise jurisdiction over other on-demand transportation services, the CPUC has violated Flywheel Taxi’s equal protection rights, in violation of the Fourteenth Amendment to the United States Constitution; 3. Declare that by implementing lenient regulations for de facto taxi services while failing and refusing to implement similar regulations for other on-demand transportation services, the CPUC has violated Flywheel Taxi’s equal protection rights, in violation of the Fourteenth Amendment to the United States Constitution; 4. Declare that by issuing the September 23, 2013 Decision, the CPUC violated Flywheel Taxi’s due process rights, in violation of the Fifth and Fourteenth Amendments to the United States Constitution; 5. Vacate the September 23, 2013 Decision in which the CPUC created a category of Transportation Network Carriers and claimed jurisdiction over all de facto taxi companies in California; 6. Enjoin the CPUC from exercising or attempting to exercise jurisdiction over companies providing on-demand transportation services, including de facto taxi companies Uber, Lyft, and Sidecar; _________________________________________________________________________________________________ COMPLAINT -9- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7. Declare that all de facto taxi companies in California, including Uber, Lyft, and Sidecar, must be regulated as taxi transportation services by city and county authorities; 8. Award Flywheel Taxi its costs of prosecuting this action, including its attorneys’ fees, pursuant to 42 U.S.C. § 1988. Dated: September 23, 2015 SEIBERT & BAUTISTA /s/ Shannon Seibert Shannon Seibert Attorneys for Plaintiff