IN FOCUS

by Matthew W. Daus, Esq.
President, International Association of Transportation Regulators
Distinguished Lecturer, University Transportation Research Center, Region 2
Contact: mdaus@windelsmarx.com • 156 West 56th Street, New York, NY 10019
T. 212.237.1106 • F. 212.262.1215

 

ROCKY ROAD AHEAD FOR ROGUE APPS IN COLORADO - A KEY BATTLEGROUND STATE IN THE WAR AGAINST ROGUE APPS

IATR INTERVENES AND OBTAINS VICTORY BEFORE COLORADO PUBLIC UTILITIES COMMISSION!

By Professor Matthew W. Daus, Esq.[1] President, IATR

It appears that the Centennial State may be one of the few jurisdictions that are listening to the public safety concerns of customers and regulators when it comes to rogue transportation application companies. The IATR has been on the front lines before the Colorado Public Utilities Commission (PUC) in Denver, Colorado over the past few months. In the war against rogue apps, this battleground state is shaping up to be significant and a "must win" for regulators and the legitimate taxicab/for-hire industry.

While the thin air in the Mile High City may have caused some observers to catch their breath, when some well coached alleged passengers and drivers were trotted out to testify at a hearing claiming rogue apps "transformed their lives," common sense and fairness seems to be prevailing so far with the Administrative Law Judge.

On Monday, March 11, 2013, the Colorado Public Utilities Commission ("PUC") held a hearing to discuss proposed amendments to the state’s transportation rules that would effectively drive Uber out of the state.[2] The new rules originally proposed would:

(i) require limousine companies to charge a "specific fixed price" and, as such, prohibit them from charging by distance (Transportation Rule 6301(a));

(ii) prohibit limousine drivers from "cruising" the downtown areas of the state and, accordingly, further enforce the prearrangement requirement (Transportation Rule 6309(c)); and

(iii) expand the definition for "motor carrier" to include any person that advertises or otherwise offers to provide transportation services (Transportation Rule 6001(ff)).


In quite an unusual and suspicious development, although the PUC did not request the submission of written comments from the public, on March 7, 2013, the Federal Trade Commission ("FTC") submitted a letter to the PUC asserting that the proposed new rules may "significantly impair competition in passenger vehicle transportation services". The FTC's letter urges the CPUC to "update existing rules . . . to allow competition to flourish, while still maintaining appropriate, reasonably tailored consumer protections." No mention was made in the FTC's comments of the proliferating private lawsuits being commenced against rogue apps.

These lawsuits are based upon alleged violations of federal laws and similar state laws that the FTC and its state counterparts have the ability to enforce against, including deceptive trade practices and false or misleading advertising.

I attended the hearing and testified on behalf of the IATR in support of Colorado's proposed amendments. A copy of my IATR testimony can be accessed at:

http://www.windelsmarx.com/public_document.cfm?id=169&key=28J1.


Several Uber representatives[3] testified, including its general manager, a very articulate alleged average customer of Uber who was trotted in with cameras in tow to testify, and a couple of drivers who bungled their testimony. They were unable to articulate Uber's policies regarding whether passengers are made aware of a driver's license number or the vehicle license number when a reservation is made.

While the hearing may have initially started off in Uber's favor, Uber's position began to implode after the Judge interrogated Uber's liability disclaimer and heard our IATR testimony as well as testimony by counsel for interested transportation companies.

The Judge ultimately appeared to be very much concerned about the unregulated Uber business model at the conclusion of the hearing. The Judge said on the record that while Uber may not satisfy the definition of a "motor carrier", Uber may be considered a "transportation broker" as referred to in the definition of "chartering party" under Rule 6201(d) and Rule 6301(b). [4]

On March 27, 2013, the Judge issued newly revised proposed amendments to the Colorado transportation rules which suggest that he listened to the sound reasoning and recommendations of testifying parties, like the IATR, that Uber should be regulated by the PUC and be licensed as a common or contract carrier. It appears that the rulemaking proceeding is moving in the right direction.

On April 16, 2013, I will appear again before the PUC on behalf of the IATR alongside the Taxicab, Limousine and Paratransit Association (TLPA), in solidarity on this issue for the second hearing related to this proceeding. I will deliver further testimony in support of the revised rules in hope that the Colorado PUC stays the course in putting the public’s safety first by requiring the licensure of rogue app transportation companies.

The Colorado PUC proceeding is incredibly important, and is a must win situation. To date, rogue apps have been successful at disrupting markets by launching in jurisdictions where they operate on the fringes of the law, and then utilize smoke-and-mirror social media and grass roots lobbying efforts to change the laws or their business model to continue to exist after they have acquired a local passenger base.

I have said from the beginning that the war against rogue apps is going to be a long one, with hand-to-hand combat in local cities and states, and so far the industry has been losing this battle. Many have been slow to mobilize, but now various stakeholders are picking up steam and coordinating efforts.

I am proud of IATR's partnership with TLPA on this issue, and if we all work together we will win some key battles in this war and turn the tide. Colorado's regulators are reasonable and conscientious, and basically acted upon and sought to adopt the spirit, intent and language of our IATR App committee's model regulations. The strategy is now working. We need to back them up and carry this temporary win over the goal line. The rogue app companies will be giving it everything they have on this one, and we need to ensure they waive the white flag, and that IATR plants its victory flag on top of the Rocky Mountains.

 

  1. Jasmine Le Veaux, an associate with the transportation practice group at Windels Marx, assisted in the preparation of the IATR testimony before the Colorado PUC and in the drafting of this article.
  2. Proposed Rules available at http://www.scribd.com/doc/122690162/
    Colorado-PUC-Docket-No-13R- 0009TR-with-Proposed-Rule-Changes.
  3. It should be noted that Uber hired the former chairman of the Colorado PUC as their lawyer and spokesperson. It is rumored that Uber has also hired lobbyists to convince the Colorado legislature to issue an amendment to the Transportation Rules that would exempt Uber from regulation.
  4. “Chartering party” is defined as a person or group of persons who share a personal or professional relationship whereby all such persons are members of the same affiliated group, including, a family, business, religious group, social organization or professional organization. “Chartering party” does not include groups of unrelated persons brought together by a carrier, transportation broker, or other third party. Colorado Transportation Rule 6201(d).

 

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