Editor's Note: This story went to press prior to Tuesday's decision ordering Lyft and Uber to cease operations in the City of Pittsburgh. Our updated stories can be found here and here and we will be following the story in our Blogh as it breaks
Attorneys for ride-share companies Lyft and Uber were in court last week trying to convince a panel of administrative-law judges not to shut down their local operations.
But judges Mary Long and Jeffrey Watson weren't the only ones with a decision to make. Many of the companies' drivers are torn over whether to continue doing a job they enjoy at the risk of steep penalties including revocation of their vehicle registration.
Emergency cease-and-desist hearings were held in Pittsburgh June 26 to determine if Uber and Lyft can continue to operate while their applications for experimental operational permits are considered by the Public Utilities Commission.
Lyft and Uber launched in Pittsburgh without first seeking approval from the PUC. Each company connects contracted drivers with passengers seeking a ride through a smartphone app and charges a fare based on distance and time.
Earlier this year, the PUC told City Paper that it would begin citing the companies and their drivers. That effort began in earnest in April when 23 drivers were cited for transporting passengers without a permit. That was followed by the PUC issuing a cease-and-desist order to the companies on June 16.
In filing the cease-and-desist orders, the PUC also called for an additional $1,000 fine for each driver, plus the revocation of their vehicle registration. According to Title 75 of the state vehicle code, registration can be suspended if the vehicle has been used to transport passengers for compensation without having a certificate of public convenience.
PUC spokeswoman Jennifer Kocher says the revocation of vehicle registration is fairly common. Although she could not provide specific numbers, she says one or two happen each week statewide for running afoul of PUC regulations. Kocher says the drivers either find out about the revocation immediately or when they go to renew their registration for the vehicle.
Uber and Lyft drivers say this is the part of the battle over ride-sharing that concerns them most. The threat has resulted in fewer of Lyft's signature pink mustaches being visible on the road. Several drivers reported pulling the mustache off the front bumper and moving it to either the trunk or backseat to avoid being a target.
One Lyft driver says he no longer displays the mustache because losing his vehicle registration would make it impossible for him to find other employment. The driver, who did not want to be named, says he has been working for Lyft since its February launch. At first, it was part time, but he has been driving full time while waiting to hear if he's landed a new job. And if he gets that job, he says he would need a vehicle to get back and forth to work.
"I usually just leave it off now," the driver says. "The vehicle-registration issue has me worried."
Another Lyft driver says the company has told him not to worry and to just continue driving, but he has also heard of his fellow drivers ditching the mustache, especially when taking fares to the airport. "It is basically asking for trouble at this point," the driver explains.
Luigi Lista, who has been driving for Uber since its launch, was not happy to hear about the possibility of losing his vehicle registration. He says he believed the issues had already been worked out.
He reached out to Uber, but says he was told to "obey all traffic laws and consider the risks for himself."
Not content with that response, Lista followed up. He says he asked Uber specifically about drivers losing vehicle registration, and received an email reply that stated, "Uber cannot give legal advice."
He says they never addressed his particular concerns, but did put out an email to drivers guaranteeing $60 an hour for driving the weekend of June 20-22. Lista says this is the highest incentive that Uber has put out since launching.
In addition to the larger fines and consequences for drivers, the PUC proposed $1,000-per-day fines for Lyft and Uber, retroactive to their launch dates.
Before launching, both companies contended they did not need approval from the PUC and that there were no forms for them to fill out because they did not fall into traditional categories of transportation.
Each has since filled out an application to begin service. The applications have been formally protested by existing taxi and limo companies and the Insurance Federation of Pennsylvania. YellowX, a ride-sharing service proposed by Pittsburgh Yellow Cab, received no protests and was approved in May. Many state officials have also written letters of concern to the PUC stating they would like to see commercial insurance as a requirement before the applications are approved.
Locally, however, Mayor Bill Peduto and several members of Pittsburgh City Council support the companies. In a June 17 letter to the PUC, Peduto wrote: "It is evident that your enforcement activities against these entrepreneurs go above and beyond what is required or prudent. ... The role of government is to facilitate innovation and growth, not to stand in its way."
In the separate, back-to-back hearings last week, a PUC enforcement officer testified that Lyft and Uber are operating without regard to the law and have disregarded sanctions, making an immediate cease-and-desist order necessary.
PUC Western Region Enforcement Manager Charles Bowser was the sole witness at both hearings. Allowing the companies to continue to dispatch drivers without oversight would be "a recipe for disaster," Bowser testified. "They are not submitting to any oversights and we do not know how many drivers they have, who the drivers are or where the drivers are."
Bowser detailed a sting operation conducted in late March and early April that resulted in 23 citations being issued to drivers, 11 working for Uber and 12 for Lyft. He says he downloaded the apps and took rides. Bowser also testified that the PUC bureau of investigation and enforcement has continued to take undercover rides. He said the last undercover rides were taken June 24. No citations have been issued yet for those rides, according to the PUC.
Lyft attorney Adeolu Bakare urged the judges not to issue the cease-and-desist order, saying it is the highest power the commission has and that there has been no proof of a clear and present danger to life or property due to the company's operation.
Prosecutors for the PUC argued the order is appropriate because the companies have applications pending and prior enforcement has not stopped them from operating.
PUC attorney Michael Swindler argued the PUC has the duty to protect the public, and Lyft and Uber have "thumbed their noses" at all sanctions so far.
The two PUC administrative-law justices that heard the cases are expected to rule by July 1, as this issue was going to press. Judges can accept, reject or modify the petition. Then, the PUC commission will vote at its next public meeting on July 9 to accept, reject or modify the judges' decision.
Taylor Bennett, a spokesperson for Uber, called the PUC's action "unexpected and disappointing." Bennett says Uber "looks forward to continuing our work with the PUC to find a permanent home for ride-sharing in Pennsylvania." Lyft officials would not comment on the cease-and-desist action.
Among the several issues addressed in the June 26 hearing is whether the ride-share companies have sufficient insurance. Jamie Campolongo, CEO of Pittsburgh Yellow Cab, along with Lyft and Uber representatives, testified in Harrisburg June 24 in front of the House Insurance Committee about what types of insurance are needed for ride-sharing.
Lyft and Uber drivers rely on their own personal insurance policy first, before excess liability insurances kick in. Insurance companies contend that personal insurance would not cover these drivers or their passengers because they are operating in a commercial manner.
Campolongo says his company's ride-sharing service, YellowX, will roll onto Pittsburgh streets this summer, and while YellowX drivers will use their own cars, Yellow Cab will provide commercial insurance to its ride-sharing drivers — a step he says Lyft and Uber should have taken before they began operating.
State Rep. Tina Pickett, who led the committee's examination of the issue, said in a statement that she appreciates the technological advances of these companies, but consumers have a right to know if they are properly insured.
"The increasing use of ride-sharing demonstrates a clear need for these types of inventive transportation solutions and this online network offers a great way to match up drivers and passengers, but there are still a number of questions regarding liability and insurance coverage should an accident occur," Pickett said. "People have an expectation that when they step into a ride-sharing vehicle, there will be a way to seek redress should something happen."
For his part, Lista says he hopes Uber gets approval from the PUC so he can continue to work for them.
"It is good money and I like it," Lista says. "But I'm looking for other employment in case it doesn't work out."