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Uber expects long legal fight in St. Louis

(courtesy of Uber)

Updated 1:08 p.m., Sept. 21 with Uber comments - The head of Uber's St. Louis operations says he does not think the legal fight to establish service in the city and St. Louis county will be settled in the near future.

"This is more than a few policy issues," Uber General Manager Sagar Shah said in an interview with  St. Louis Public Radio.

"This is about the lack of understanding or the lack of the ability to welcome new competitive industries into the market."

The ridesharing service  filed an anti-trust lawsuit Friday against the St. Louis Metropolitan Taxicab Commission and launched UberX in St. Louis without the panel's approval.

The company says its drivers carried out around 5,000 trips from Friday morning through Sunday.

When asked how that compares to launches in similar cities, Shah says it's typical for a lot of Uber activity during late nights on weekends, but that eventually balances out with other parts of the day.

Original post below:

The ridesharing company Uber, as well as several potential riders and drivers of the system, on Friday filed an anti-trust lawsuit against the St. Louis Metropolitan Taxicab Commission.

The company also announced that it is launching its UberX service, which allows drivers to use their own cars, in the city of St. Louis and St. Louis County. The company said up until now, St. Louis had been the largest metro area without the ridesharing system in the country.

"I think the county is going to take a real, hard-core stance on these violations," said Commission member J. Kim Tucci.

"They don't like it. They feel like it was a slap in the face."

  Uber and the MTC have been locked in negotiations for more than a year over issues related to its vehicle-for-hire code, such as driver background checks. The legal action came just before the commission voted Friday morning to change the code allowing the service, if drivers are fingerprinted.

But in its lawsuit, Uber accuses the MTC and several of its commissioners, who regulate vehicles-for-hire companies and their drivers, of “anticompetitive conduct.” The company claims the MTC “acted to protect the entrenched taxicab industry from its greatest perceived threat” – i.e. Uber – and thereby destroyed competition. It also claims that by not allowing such competition, the MTC’s actions will cause an increase transportation prices, prevent the creation of new jobs, and reduce transportation options for residents.

Uber said the company has taken pains to make sure its service is reliable and safe, a concern of MTC commissioners. But the company claims the MTC wasn’t really concerned about public safety, but instead acted as a “proverbial fox guarding the henhouse” and as a “cartel” to protect the taxicab industry. The suit claims the MTC created “ever-higher hurdles” in required regulations to effectively bar the company from operating in the city.

One of the plaintiffs in the case, Marsha Robyn Wallen, is legally blind, cannot drive and must rely on taxis and paratransit to meet her needs. According to the suit, paratransit requires advanced notice and taxis have proven unreliable, sometimes leaving her stranded for hours. The suit claims Wallen would have better options if she could utilize uberX.

Another plaintiff in the case is a single mother from St. Louis, Kneeshe Parkinson, who, according to the suit, drives a half hour to East St. Louis -- where uberX is allowed -- to make additional money. The suit said she would prefer to earn those extra wages in her hometown.

The suit also claims that several MTC commissioners have close or direct ties to the taxicab industry, and their actions violate the Sherman Antitrust Act. It points to MTC chairman Louis Hamilton’s role on the board of the International Association of Transportation Regulators, a taxi trade industry group. Several other voting members of the MTC board are owners or presidents of taxi companies. It notes that Missouri law requires that four members of the MTC “be active participants in the taxicab industry,” which the lawsuit claims amounts to being a “pro-taxi body.” It also notes that one defendant and commissioner, Basil Rudawsky’s sister-in-law Kim Garner is the co-owner of Best Tranportation, Inc., Best Black Car, Inc., and Best Sedan Services, LLC. The lawsuit notes emails Garner wrote discussing the potential competition from services like Uber and Lyft, another ridesharing company. In one email, she wrote that such companies are “becoming a serious threat to all of our sedan operators here in St. Louis and across the state” and noted that her brother-in-law was working with a group of taxi operators to form a coalition, and urged more voices to work to “sway the legislators not to take action to create minimal statewide TNC laws.”

The lawsuit also cites a U.S. Supreme Court decision noting that “where active market participants control a nominally public body like the MTC and no independent governmental agency or official actively supervises its conduct, that body’s conduct is not immune from antitrust liability.” The suit also contends that attendance at MTC meetings was “spotty” and vacated seats were not filled for months. It also claims that commissioners connected to the taxi industry constituted a majority of MTC members at four meetings and constituted half of those present at five additional meetings.

Now that the service has launched, the chief of staff for St. Louis Mayor Francis Slay says it might to tough to stop. Mary Ellen Ponder says police might not have time to track down Uber drivers.

"I think we've got an exciting couple of weeks ahead of us," she told reporters shortly after Friday's MTC meeting.

The MTC has granted permission for Uber to operate its "Black" service in the St. Louis region. That service allows people to use a cell phone app to call for an already-licensed premium sedan. It works much the same way as apps that many area cab companies use for reserving taxis. A separate taxi dispatch app, Carmel Car, has been in operation for more than a year.

Uber's decision to launch its UberX app in St. Louis without regulatory permission is similar to the tactic used by Lyft in 2014. The service launched on April 18 of that year, in violation of a cease-and-desist order from the MTC. St. Louis Metropolitan Police officers issues citations to several Lyft drivers, but when the app remained in operation, the MTC went to court for a temporary restraining order. On April 21,  Judge David Dowd agreedthat the MTC would face immediate and irreparable injury if Lyft drivers and the Lyft app were allowed to operate without proper licensing from the MTC, and ordered the service suspended. A preliminary injunction granted by judge Joan Moriarty in July 2014 remains in effect.

The next hearing in Lyft's legal fight is scheduled for December. An attorney for the service directed questions to Lyft, which did not immediately respond.

Rachel is the justice correspondent at St. Louis Public Radio.
Wayne is the morning newscaster at St. Louis Public Radio.