Cronyism could be behind Memphis order against Uber, Lyft

Chris Butler
|
Jul 21, 2014 5:00 AM
Cronyism could be behind Memphis order against Uber, Lyft

By Chris Butler | Tennessee Watchdog

MEMPHIS — Most Memphis residents already know that city officials, citing public safety concerns, imposed cease-and-desist orders against private ride-share companies Uber and Lyft. But city officials were possibly acting in their own interests instead.

Memphis officials have a strong incentive to help cab companies beat back any competition, said Justin Owen, president of the Nashville-based free market-oriented Beacon Center of Tennessee.

“There have long been cozy relationships between taxi companies and cities all across the country,” Owen told Tennessee Watchdog.

REGULATIONS: Is Memphis trying to drive out Uber and Lyft?

“Taxi industries typically lobby for and receive substantial regulations, which sounds counterintuitive, but they know that they can meet those regulations and others can’t, so it makes it more difficult for their competition to come in.”

Taxi companies, Owen said, have the power to pressure city officials to defend their market and crack down on competition.

Ride-sharing services such as Uber and Lyft allow people to use an app on their smart phones to contact private drivers, instead of taxis, for their transportation needs. These private drivers usually aren’t professional drivers, but they instead are people from other walks of life, such as students, artists or retirees looking to make ends meet, said Lyft spokesman Chelsea Wilson.

Another reason Memphis officials might not like private ride-sharing companies — taxis pay permitting fees to city officials, but Lyft and Uber do not.

“You have a situation where a lone bureaucrat decided to do this arbitrarily without getting approval by elected officials,” Owen said. “These officials aren’t looking out for the best interests of the consumer. They are looking out for the best interests of the taxi industry.”

The lone bureaucrat whom Owen refers to is Memphis Permits Administrator Aubrey Howard.

In response to Owen’s remarks, as well as an opinion piece Owen wrote, Howard said ride-sharing companies must comply, regardless, with city ordinances and let city officials know exactly who they are.  

Justin Owen

A Memphis resident might inadvertently do business with “a known rapist or someone who robbed 12 people in the last four years,” Howard said.

Tennessee Watchdog asked Howard if he knew of any public safety violations Uber or Lyft directly or indirectly caused. He said he knew of none in Memphis or anywhere else.

Howard also said the ordinance applies to shuttles and limo companies and is not aimed exclusively at ride-sharing services.

Unless the ordinance changes, Howard said, nothing will prevent him and members of his office from laying down the law, and that includes ordering police to issue citations.

“People who get citations will go before the Memphis Transportation Commission and it just depends on the charges for doing business without a permit,” Howard said, adding a first citation will cost $1,000 and a second will cost $2,000.

“If it happens a third time it’s $3,000, but very likely if they continue to operate without a permit we will likely go into the environmental court and treat them as a public nuisance, which literally means we can put locks on their doors,” Howard said.

“Uber and Lyft don’t have offices here, but if they did then we would lock their doors.”

In that scenario, Owen said, police could conceivably issue citations to someone who simply drove his or her friend from one point in the city to another, in exchange for gas money.

In an emailed statement, Uber spokeswoman Taylor Bennett told Tennessee Watchdog that company officials hope to work with Memphis officials on a way to keep their company there.

Wilson, speaking for Lyft, expressed the same sentiment to Tennessee Watchdog on Friday.

Lyft spokeswoman Chelsea Wilson

“The media has missed the focus on our safety standards, which go above and beyond,” Wilson said. “We support common-sense regulations, but they have to prioritize consumer choice and public safety.”

Lyft drivers must undergo strict background checks and vehicle inspections, Wilson said, adding the company pays all applicable city taxes and fees.

Owen, who lived in Memphis for three years, said the city’s taxi companies badly need competition, basing the comment on personal experience.

“There were not so clean cars. There was an unwillingness to take credit cards,” he said. “Drivers typically talk on their cell phones while you’re in the car, which is a distraction and it makes it more difficult for you to communicate where you need to go.”

Contact Christopher Butler at chris@tennesseewatchdog.org or follow him and submit story ideas on his official Facebook page.

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