Uber, Lyft Win Court Fight Over How Long Drivers Can Cruise Without Passengers in NYC

Uber CEO Dara Khosrowshahi.
Uber CEO Dara Khosrowshahi.
Photo: Richard Drew (AP)

Beleaguered taxi giants Uber and Lyft won a break on Monday, scoring victory in a New York state court dispute over a law that would have dramatically slashed the number of cars between jobs that the firms let clog up Manhattan streets, Reuters reported.

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Earlier this year, New York City officials imposed new regulations that would require ride-hailing apps to slash the percentage of the time they let drivers below 96th Street go “cruising,” defined as the time spent driving around either waiting for a customer to hail them or en route to a customer without any passengers on board. In 2018, around 41 percent of driver time was spent cruising—a tactic that cuts down on the amount of time it takes to hail a ride, but almost certainly adds to congestion on the roads. The regulation imposed requirements that the companies get that rate down to 36 percent in February 2020 and 31 percent six months after that, but Uber and Lyft promptly sued.

According to Reuters, Judge Lyle Frank of the state Supreme Court called the new limits “arbitrary and capricious,” adding there was “scant rationale” for the 31 percent target. He also found that cruising rates shouldn’t include time that taxis spend actually driving towards a passenger. The ruling annuls the rule, which both Uber and Lyft had been prepping for by locking out drivers from the apps at certain times of the day or in certain areas of the city.

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The city is in turn looking at its legal options and is still considering an appeal, Reuters wrote. The news agency added that the court’s decision does not impact other regulations NYC officials have put into effect, such as a cap on the number of licenses issued for ridesharing vehicles or a mandatory pay floor for drivers.

“These corporations have flooded our streets with so many cars that more than 40% drive around empty and clog our streets,” a spokesperson for Mayor Bill de Blasio told the Verge in a statement. “These 85,000 new vehicles create significant environmental problems, as well as make it a headache for New Yorkers to get around the City in a timely fashion. We put these rules in place to protect hardworking drivers and New Yorkers—and we’ll fight to keep them.”

An Uber spokesperson was more chipper, telling the Verge that “We are pleased that the Court recognized that Mayor de Blasio’s cruising cap is arbitrary. Uber remains committed to fighting for driver flexibility in the face of politically-motivated regulations and to stand up for policies that actually combat congestion.”

Last-minute legal victories notwithstanding, Uber and Lyft haven’t had the greatest year after mounting backlash to their business models and continued cash hemorrhages. Both companies had disappointing initial public offerings, with Uber’s actually qualifying as the worst in U.S. stock market history. As of last week, the Information reported, both companies were trading at about 34 percent below their IPO price. Both are burning billions with no end in sight; Uber lost $1.2 billion in Q3 2019, while Lyft lost $463.5 million. A major court loss for Uber in Germany last week threatened the viability of its business model there, while both companies are prepping for a legal battle in California over a law that would force them to treat drivers as employees rather than contractors.

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Arcanum Five

Beleaguered taxi giants Uber and Lyft

Hooray! We’ve stopped pretending they’re tech companies!