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Uber Sues NYC to Kill Its Ride-Hail Car Cap

Uber's lawsuit over NYC's cap on ride-hail cars is just the latest battle in an ongoing war between the ride-hail industry and the cities trying to rein it in. Spencer Platt/Getty Images

Six months after New York City lawmakers enacted a first-of-its-kind cap on the number of cars driving for ride-hail companies in the city, Uber has sued to make it disappear.

In its lawsuit, filed in a New York state court Friday afternoon, Uber argues that the one-year freeze on ride-hail vehicle licenses is anticompetitive and exceeds the city’s authority. It also argues that there are better policies for fighting traffic, tools that don’t specifically target ride-hail companies.

This latest battle caps off a rollicking few months of ride-hail regulation drama in the city, which has seen the “disruptive” transportation tech upstarts buck against some of the first powerful ride-hailing rules implemented by US city leaders. In January, the city started charging a $2.75 “congestion fee” on each app-hailed trip passing through Manhattan’s most trafficky business district. This month, the city’s Taxi and Limousine Commission implemented a law it says will guarantee ride-hail drivers a minimum wage—and force the companies to cover whatever fares don’t. (Lyft and Juno sued to halt those rules.)

Uber spokesperson Harry Hartfield said Friday that the city’s cap prevents more drivers from taking advantage of that minimum wage law. “We agree that fighting congestion is a priority, which is why we support the state's vision for congestion pricing, the only evidence-based plan to reduce traffic and fund mass transit,” he said in a statement.

Congestion pricing, a policy implemented in cities like London, Milan, and Singapore, charges drivers fees to enter certain trafficky roads, sometimes at busier times of day. New York governor Andrew Cuomo is now pushing for a plan that would raise tolls on all drivers entering midtown and downtown Manhattan .

New York City officials seem raring for the fight. “No legal challenge changes the fact that Uber made congestion on our roads worse and paid their drivers less than a living wage,” Seth Stein, a spokesperson for New York Mayor Bill de Blasio, said in a statement. “The city’s new laws aim to change that.”

Nearly 106,000 for-hire vehicles, including black cars and ride-hail vehicles, are licensed to operate in New York City, up 60 percent since 2016. One recent study suggests that even shared ride-hail trips, like UberPools and Shared Lyfts, have upped the number of miles traveled on city roads, contributing to its traffic issues.

Uber, Lyft, and their competitors have built their businesses in the gray areas of city and state taxi and labor regulations, arguing since their inception that they are technology platforms, not taxi companies. But New York has slotted ride-hail vehicles into its preexisting “for-hire vehicle” category, which gives it more regulatory authority over the companies than other city halls have.

Still, many places are interested in coming up with novel ways to regulate or tax Uber and Lyft, which are both set to IPO this year. Places like Washington, DC, and Chicago have passed laws hiking taxes and fees on ride-hail vehicles, with the money going to public transit . And San Francisco has attempted to track how the companies have contributed to the city’s terrible traffic problem—and convince the state of California to do something about it.

Uber has not played nice with New York, one of its largest markets. In 2015, the company parried an attempt to place a cap on licenses with a “de Blasio mode” feature within its app that showed 25-minute wait times and urged riders to contact local lawmakers if they wanted faster, cheaper rides.

In this latest bout between New York and Uber, the company has argued that capping the number of cars operating in the city would extend wait times and accessibility, especially in minority communities in the city’s outer boroughs. The city’s Taxi and Limousine Commission has said that it monitors for-hire vehicle availability in the outer boroughs, and can lift the moratorium on new licenses in specific neighborhoods if it observes longer wait times.

The Uber lawsuit also gets a dig in at the city’s subway system, calling it “over capacity, underfunded, and poorly maintained.” So at least it has one argument that no judge or jury will reject.

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