2016-08-04 / Front Page

Orange Cab Considers Uber Model

By Olga Enger

In response to recently passed legislation aimed at creating a regulatory framework in Rhode Island for ride-hailing companies such as Uber and Lyft, Newport-based Orange Cab is dropping a lawsuit against Uber and may add a similar service to its traditional taxi business.

“We are not going to proceed with the lawsuit. The passage of the legislation renders it moot,” said J. Russell Jackson, the attorney representing Orange Cab.

The state Public Utilities Commission (PUC) regulates local taxi companies, but Uber has operated unregulated in Rhode Island since it entered the local market in 2013. Uber, which does not own cars and developed a smartphone app to connect drivers to passengers, argued that it is a software company and was not subject to existing laws.

Critics, including Orange Cab and state regulators, said the lack of regulation not only presented an unfair competitive advantage over local companies, but was also a public safety risk. Alleging the company was operating illegally in Rhode Island, Jackson filed a civil lawsuit last August on behalf of Daniel Moriarty, owner of Newport’s Orange Cab and Warwick’s Airport Taxi, naming Uber and state regulators as defendants.

“Part of the objective was to create urgency and pressure to get something done,” said Jackson. Similar laws have been passed in 34 states across the country.

The new legislation, which was introduced by House Majority Whip John Edwards, D-Tiverton, and Senate Majority Whip Maryellen Goodwin, D- Providence, requires a transportation network company (TNC) to register their vehicles, provide insurance information, conduct background checks, obtain a permit, and pay an annual fee.

Companies such as Uber and Lyft will also be subject to the same taxation as traditional taxicab companies, including sales and use tax, which was included in this year’s budget bill (Chapter 142, Acts 2016).

The law provides for a tiered application fee: $5,000 for a TNC with fewer than 50 active drivers; $10,000 for a TNC with at least 50 but fewer than 200 active drivers; and $30,000 for a TNC with at least 200 active drivers.

“If you set the fee at a straight $50,000, it makes it inaccessible for a start-up to enter the market,” said Jackson, who added that Orange Cab advocated for the tiered structure.

When asked if Orange Cab was considering adding a ride-hailing element to their business model, Jackson confirmed it was a strong possibility.

“It is something on the horizon for Orange Cab,” said the attorney.

The new law also requires a TNC to implement a zero tolerance alcohol or drug use policy, which Uber said it already has in place. Customer feedback is the primary enforcement method.

“We take feedback seriously. It’s an important component of the process,” said Uber spokeswoman Carlie Waibel.

Although the law by its terms is not effective until 120 days after its passage on June 24 (providing the PUC time to establish new regulations), a local Uber driver was released after being arrested on July 22 for leaving the scene of an accident near O’Brien’s Pub in Newport. A breathalyzer test returned a blood alcohol content of .03 percent, which is under the legal limit for a criminal offense, but violated the existing Uber zero tolerance policy.

“He is no longer active,” said Waibel about the driver, but declined to elaborate on details or how the incident was brought to the company’s attention.

The new law also mandates that customers be notified of the fare in advance and be provided a picture of the driver, along with a license plate number. The bill outlaws cash payments or the acceptance of fares beyond those that are scheduled through the app. Uber maintains these polices are already built into their business model.

“The Rhode Island regulations essentially codified many of the things we were already doing as a company, specifically on background screening and insurance,” said Waibel.

Overall, she said the new legislation “was an embrace of innovation” and the company will continue to operate in the Ocean State.

Jackson said the new law “accomplishes a lot” and is a good starting point to provide a more even playing field for the industry.

“We are happy that something passed. We give a lot of credit to [Reps.] Edwards and Goodwin,” Jackson added.

“There’s no question that these ride-sharing companies are meeting a definite need in the marketplace, and I applaud their efforts and ingenuity,” said Edwards in a prepared statement. “I just want to make certain that they abide by regulatory rules and regulations just like everybody else.”

Although Orange Cab is open to more stringent background checks across the industry, Uber pushed back on fingerprinting requirements.

Two months ago, Uber and Lyft pulled out of Austin, Texas after a battle over fingerprinting. The companies also used similar tactics in Portland, Oregon, Las Vegas, and Miami when faced with fingerprinting requirements, but have since resumed service in those communities.

In neighboring Massachusetts, lawmakers recently passed legislation to regulate ride-hailing companies, but omitted fingerprinting, which has been sharply criticized by the Commissioner of the Boston Police Department.

When asked about the resistance to the fingerprinting requirement in Rhode Island, Uber declined to comment.

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