Sheehan & Associates, P.L.C.

As Lyft comes to Detroit, Uber still faces legal issues with city

Detroit area residents and visitors in need of a lift somewhere and don't want to find or pay for a taxi have had the option of getting an Uber vehicle for over a year now. Uber allows people to request a car, complete with driver, via a smartphone app. Now a similar service, Lyft, is also available in Detroit.

Detroit city officials, however, have issues with Uber that could also potentially affect Lyft's ability to do business here. The city contends that Uber is not in compliance with Detroit ordinances regarding background checks and licenses. This was reportedly outlined in a Cease and Desist letter to Uber.

According to the head of Uber's Detroit operation, Uber is a technology company rather than a transportation company. In the WXYZ report, he said that the company does not own or operate any of the vehicles and does not employ any drivers. He asserted, however, that the drivers all carry insurance.

One issue is whether they carry enough insurance to cover a serious crash. A tragic accident involving an Uber car killed a 6-year-old girl on a San Francisco street.

Users of Uber can request everything from a limo to an SUV. However, those who want to save money can use Uber X. With Uber X, drivers use their own cars. According to the televised report, an Uber X driver can be anyone approved by the company to provide service.

The city attorney says that if Uber officials don't agree to follow the city's requirements, they could face monetary penalties or even prison. It remains to be seen whether the same action is taken against Lyft. However, it operates much the same way as Uber does.

Businesses need to ensure that they are in compliance with all local, state and federal laws and regulations. If they are not, they can face stiff penalties and find themselves mired in costly business litigation. It's also not good for a company's reputation -- particularly when it's entering a new geographical market -- to be seen as a business that is not willing to comply with local laws.

Source:  WXYZ-TV Detroit, "Uber, Lyft on legal collision course with City of Detroit" Jim Kiertzner, Apr. 15, 2014

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