Rideshare Firms Ask Judge To Toss Cab Companies' Lawsuit

Updated 03/25/14 - 11:33 a.m.

CHICAGO (CBS) -- Ridesharing companies competing with cab drivers for fares were fighting back against a federal lawsuit seeking to force the city to regulate the new business the same way as traditional cab companies.

WBBM Newsradio's Mike Krauser reports drivers for Lyft, UberX, and Sidecar went going to federal court on Tuesday to ask a judge to dismiss a lawsuit filed by several cab companies and drivers.

"Sharing is not a crime," said Dan Burgess, who drives for Lyft, UberX, and Sidecar rideshare services. "People enjoy this innovative way of getting around Chicago. It offers another option."

Anthony Sanders, an attorney at the non-profit Institute for Justice, represents the rideshare companies in the case.

"There is no constitutional right to be free from competition, and there is no constitutional right to have the government arrest your business competitors," he said.

Cabbies sued the city last month, claiming the city has allowed a discriminatory taxi "caste" system, by allowing rideshare services to cater only to customers who have credit cards and smartphones , without requiring the companies to provide services to the disabled, or people who can pay only with cash.

Attorney Michael Shakman, who represents the plaintiffs, alleged at the time that the city "encourages a special class of unlicensed taxis" in violation of the law.

"It is an exclusionary, elitist taxi system, operated side-by-side with the lawful, highly-regulated taxi system," Shakman said.

While a lawsuit filed by cab drivers and taxi companies does not go so far as to accuse ridesharing services of a crime, the plaintiffs do seek to force the city to impose the same regulations for ridesharing services as cab companies already face.

"By the cab companies' reasoning, customers are their property," Institute for Justice spokesman J. Justin Wilson said in an email.

The ridesharing companies say taxi regulations are outdated, and result in long waits for cabs, and poor service, because the city limits the number of taxis on the streets.

"If entrenched interests like the taxicab owners have their way, Chicagoans would still be hailing horses and buggies," he said.

Sanders said the city ought to embrace an emerging industry.

Indeed, the Emanuel administration has proposed new regulations for ridesharing companies, but cabbies have said they are not strict enough. Under the proposed rules, rideshare services would be required to have insurance, pay a $25,000-a-year fee, and pay a $3.50-per-day-per-vehicle ground transportation tax.

Cab companies argue those fees are insignificant compared to those imposed on the taxi industry, noting the medallion required for a licensed taxi costs about $350,000.

While the city sets the fares taxis are allowed to charge their customers, the mayor's proposed regulations for ride-sharing services would allow drivers and passengers to negotiate prices based on time and distance. Ride-sharing companies also would be allowed to charge customers much higher prices based on demand, such as when there is bad weather.

Meantime, taxi drivers have gone nine years without the city allowing a fare hike.