Ridesharing companies get a lift in New Mexico court

By Rob Nikolewski │ New Mexico Watchdog

Its future may still be uncertain for the long haul but, for now, ridesharing in New Mexico drives on.

New Mexico District Court Judge Nancy Franchini ruled Friday against five taxi cab and limousine owners in the state that wanted a temporary restraining order issued against two ridesharing companies — Lyft and Uber — that are still picking up passengers in Albuquerque while the Public Regulation Commission decides what to do with them.

“Today’s ruling is a positive step forward for ridesharing in New Mexico and recognizes that cities can benefit from a range of transportation options,” said Lyft spokeswoman Chelsea Wilson. “We look forward to continuing to work with the PRC toward a solution that preserves Lyft’s safe, affordable and reliable rides for all Albuquerque residents.”

“We’re disappointed but we’re going to keep fighting,” said Michael Cadigan, attorney for the taxi and limo companies that believe ridesharing unfairly cuts into their businesses and have filed a lawsuit. Cadigan said the suit is pursuing claims for financial damages against Lyft and Uber.

The taxi cab and limo businesses wanted Franchini to issue the restraining order to immediately stop the ridesharing companies from operating, but Franchini said the cab and limo owners did not show they would “suffer irreparable injury” unless the injunction was granted and that “this matter falls under the powers and duties of Public Regulation Commission.”

The PRC has been spending more than three months trying to decide how best to license and regulate Lyft and Uber. The PRC issued a cease-and-desist order against Lyft this summer, but the San Francisco-based company, along with Uber, is still operating. Lyft officials say drivers are taking “donations” when they pick up customers.

The legal action in New Mexico is part of a series of maneuvers to rein in ridesharing companies across the country, but Mark Perry, a professor of economics and finance at the University of Michigan-Flint and a scholar at the American Enterprise Institute, thinks they will fall short in the long run.

“That seems like a losing battle to fight this model that seems to be embraced by consumers around the world as the future of transportation,” Perry told New Mexico Watchdog in a telephone interview Friday. “I think they might win some temporary restrictions, but it seems like consumers in a lot of markets won’t stand for it … People have gotten a taste of that service, and it’s going to be hard for people to go back.”

Unlike traditional cab series, ridesharing companies are summoned by an app on a customer’s smartphone. No cash is passed because passengers enter their credit cards into the app, which the companies provide for free. Drivers, who often work part-time and set their own schedules, are considered individual contractors rather than employees.

Passengers can rate drivers online, and drivers can rate passengers.

But Cadigan says ridesharing companies have an unfair advantage over cabs and limo services that have to abide by the state’s Motor Carrier Act.

“At the end of the day, when you look at what they’re doing, they are a taxi service,” Cadigan told New Mexico Watchdog. “It’s a taxi service that uses contract employees and has a fancy IPhone app and there’s no reason they should be exempt from the rules when all of the legal taxi cabs spend hundreds of thousands of dollars complying with the rules.”

The PRC has been taking public comment about how to proceed. The commission appears divided on which way to go, with some commissioners saying ridesharing companies are no different from cabs and others saying the state should encourage economic innovation.

In the end, the PRC may have to hammer out legislation with the state’s lawmakers in the upcoming 60-day legislative session to settle the issue.