GRINDING UBER INTO THE DIRT?
by Naja and Arnaud Girard…….
“I was the first to qualify as a Uber driver in Key West,” says Hank Allen with a look of disillusionment. We caught up with him on the steps of the Monroe County court house last Tuesday where he was on his way in to face the criminal charges the City of Key West had brought against him for driving his Uber car without a City permit.
Just what Uber is [or isn’t] depends entirely on who you talk to. According to its foes, Uber is nothing more than a Taxi company that uses a smartphone app as a dispatch system and is attempting to simply bypass every licensing and insurance requirement out there. However, according to Uber, the company is strictly a technology firm – it doesn’t own any vehicles and Uber drivers are not “employees.”
The San Francisco based company is a $40 billion new technology sensation and its “ride-sharing” system is rapidly invading the antiquated, and arguably, overpriced world of taxicabs.
How Uber Works:
Independent “Uberx” drivers enlist with the company but are equipped with their own private cars, which must be no older than a 2000 [2005 in some States], and must be insured according to State laws. Uber conducts background checks on drivers and provides one Million dollars of insurance coverage for incidents that occur while the driver is “matched” with a customer. The “match” begins the moment the driver has agreed to provide a ride and continues until the moment the customer[s] exits the car. When the driver is only “logged in” to the app, looking for a fare, Uber insurance coverage is limited to $50,000 per person with a cap of $100,000 per accident. When a driver is using the car strictly for personal reasons Uber provides no coverage and the driver is to rely on his personal coverage.
Both drivers and clients are rated online as a function of the same smartphone “app” that enables them to find each other in the first place. In some cases complaints may win a client a discount on a future ride. An excessive number of complaints gets the driver removed from the network.
According to Hank Allen, Uber sets the price of the fares, which are relatively low and in some cases can be as low as half of the Key West rate for taxicab services. Uber retains 20% of the fare. One Key West Uber driver told us he could make up to $400 on a really good day.
In contrast, traditional taxicabs, licensed in Key West, are only obligated to have liability coverage of $50,000 per person with a $100,000 per accident cap. In addition to background checks Key West cabbies are required to provide a physician’s declaration that the driver is not addicted to drugs and not carrying an infectious disease. Most Key West taxicab drivers begin every workday with a deficit of around $175, which they must pay to the Cab company to cover rental of the cab, the dispatch system, and insurance.
The City of Key West has capped the number of licenses it will issue. Three Key West cab companies and a handful of independents own all 72 available licenses. Even if Uber drivers applied for a taxi license, there are simply no licenses available.
One Key West cab driver said on a twelve-hour shift he averages around $200 free and clear. The cabbies we talked to believe that Uber drivers will cut into their income by lowering the fares and multiplying the number of available rides.
And so began the Taxi Wars.
Grinding Uber into the Dirt?
This week the Key West Police Department issued a warning to all potential Uber drivers: You will be arrested and face up to 60 days in jail for not having the unobtainable license.
If KWPD carries through with the threat, Key West will, apparently, become the only City in America to put Uber drivers in jail for not having a permit. In France, recently, police arrested two of the company’s top executives, but no drivers. In Australia, Russell Howarth, a lone avenger, has made eight “citizen arrests” of Uber drivers, but police always let them go.
“How ironic,” says John Murpy, “if memory serves me, the City Commissioners criminalized that licensing ordinance in order to put me out of business. You remember where that got them?”
What Murphy was referring to, of course, is the Duck Tour debacle, another transportation war which 10 years ago became a landmark legal disaster with a $13.5 million jury award against the City of Key West.
John Murphy’s “Duck Tours” featured a fleet of World War II amphibious vehicles. For a few months in 1995 they took tourists through Key West streets before splashing into the harbor for an offshore sightseeing tour. But, not unlike today, with taxicab drivers, the City’s laws at the time served to protect another tourism feature from outside competition: the Conch Train.
In 1996 the City was denied an injunction against the Duck Tour operation. But who needs an injunction in the Conch Republic? The City Commission held a now infamous closed-door session where it was decided they would continue to “grind (the Duck Tours) into the dirt.”
“I never closed down Duck Tours,” said the fiery Murphy when we interviewed him this week at his Key Haven home. “They shot me down. After they lost their injunction case, they criminalized the Vehicle for Hire ordinance, they threatened my Captains with arrest and my vehicles with impoundment. Understandably, all of my Captains left.”
After years of litigation, a jury, obviously shocked by the banana republic methods used against Murphy, awarded the Duck Tours owners $13.5 million in damages. [The suit was later settled for $8 million during the appeal process.]
“The legal claim will probably be different for Uber,” says Murphy, but some elements are the same. “I for one have always believed that nobody can tell me what business I can or can not do in my own country.”
No one can predict exactly what Uber’s legal strategy will look like here in Key West, but we do know that the $40 Billion company has been very successful in maintaining its presence most everywhere, even when facing fierce opposition – such as from not so shy New York cabbies.
‘Uber just came into town and began conducting business,” said City Manager, Jim Scholl, “We are not against Uber, but we have rules and regulations and they have to be followed. We are always open for talks and there are procedures for changing the status quo. They could make a presentation to the City Commission. If the City tells me to change the process, we will do that.”
But Carolyn Walker, head of the licensing department, says that, unless the Vehicle For Hire ordinance itself is changed, there is little chance that Uber drivers could fit in. First off, it would require the applicant to conduct an expensive traffic study to convince the commission to add more taxi permits. But even if the Commission did free up more licenses, there would be no guarantee that the new applicant, who had put in the expense and the effort, would even get to have one. New permits would automatically go into an open lottery system.
There is clearly no hostility at the City government level against Uber. Jim Young, head of Code Enforcement, says his Department has received dozens of complaints against Uber, but they have all come from cab drivers or cab company owners. Carolyn Walker has had the same experience, “It looks like the only people who are complaining about Uber drivers, at this point, are the cab companies.”
But even the cab drivers we talk to can not help but soften their opposition a bit when they think about the possibility of lifting the cap on licenses and being able to own their own cab instead of starting each workday with a $175 debt.
Happened Before
Actually, the cap on taxi licenses was lifted once before. Commissioner Emma Cates, the mother of present Mayor, Craig Cates, championed the freeing up of the vehicle for hire permits. It reportedly took 17 City Commission meetings to get there, but Commissioner Cates and two fellow Commission members, George Halloran and Mayor Richard Heyman, finally made it happen and the cap on taxi licenses was abandoned. That was 1985.
John Murphy was one of Emma Cates’ most enthusiastic supporters.
“In 1985 we rode the horse of competition,” says Murphy who was one of the first to obtain a new license. “With competition you’re going to get the best service and the best price. Competition makes things innovative and certainly the Uber system is very clever. Sure keeps up with technology and appears to be very popular.”
In recent years, those making legal challenges against taxi license limitations have sharpened their tools. Free enterprise is a “liberty interest” which cannot be denied without a showing of a paramount state interest — which is sometimes very difficult for a local government to prove: Just how will more taxis substantially affect the public health, safety and welfare? Will traffic actually increase or decrease? What about issues with parking? What about drunk driving?
The effects of curtailing competition create suspect privileges that many find out of place in a free society. A taxi license [aka ‘medallion’] in New York City sells for over $1 million. Here in Key West word is they go for about $200,000. But a system that creates enormous financial assets out of restrictive regulations doesn’t always sit well with the Courts.
A quick look at reviews of Key West taxi companies on “yelp” is instructive as to what a little competition might bring to the industry:
“My wedding was scheduled to start at 7pm (we did an elopement package) and the B&B we stayed at called around 3p to arrange for a 6:45 pickup to get me to Ft Zachary (i’m the bride and wanted to not see my future husband while in my dress till at the “altar” so we decided to travel separately) 6:45 rolls around…6:50…no car. One of the employees of the B&B stayed to help me and she called to see where the cab was and the guy claims to know nothing about a pickup then whines that he is shorthanded and can’t get anyone there till AFTER 7PM. He was ARGUING with us! Meanwhile I’m standing in an alley with a full wedding gown and veil trying not to panic or melt from the heat…”
“The worst cab company by far in Key West. Such a shame that they treat their customers as trash! We called them 6x and the cab never showed up. We had someone in our group that was suffering from heat exhaustion and we mentioned this several times and “Jennifer” the dispatcher didn’t care one bit! She’s a royal B—-h I hope Karma gets to her and fast! She hung up on us 3x and then lied when she said a cab was coming what a horrible human being! Never never never call them they are the worst and other people we met said the same thing. I wonder if enough complaints and lack of business will change this horrible service…time will tell!”
The City should remember past experiences before threatening to “arrest” Uber drivers. Perhaps its time to enter into a real 21st century debate over transportation management in Key West.
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Turf wars, Range wars… Somewhat like the ‘Gypsy cab’ versus the ‘Medallion cab’ in NYC…
An agreement will have to be reached among all parties. Hopefully a method can be developed that will draw the best out of both sides, independent of outside interference.
The city government appears to have already taken sides. Perhaps a reminder of the damages that they’ve been forced to pay because of their meddling in ‘private entrepreneurship’, by a reputable law firm, will prompt them to relax the hostile view they have taken towards ‘Uber’.
The side the city has taken is to enforce the democratically decided code/law which is their legal obligation. If the law is to be changed then there is the democratic process that is available to us all to do so. Uber is well aware of this option, so are their drivers, but they have decided to take the ‘it is easier to be forgiven, than to get permission’ route. Meanwhile there are other services that arguably could be provided better and cheaper in this town such as tourist accommodations… talk about overpriced and underserved, but no one seems to advocating for Airbnb and the possibility of turning every other home in their neighborhood into tourist accommodations
I dunno, if it looks like duck, walks like a duck, and sounds like a duck, it’s a duck. Uber is a taxi company, but it’s drivers own the vehicles. A local judge might rule. Then, the judge asks: Does the ordinance give traditional taxi companies a monopoly? Or is the ordinance a reasonable use of municipal power? Well, isn’t the limit on the number of taxi licenses in Key West the result of loud clamoring from citizens, and from elected city officials, to reduce motor vehicle congestion on city streets? I recall hearing that at city commission meetings. In the Duck Tours case, didn’t a city commission instruct the city attorney to grind Duck Tours into dust, to give Historic Tours of America’s conch trains and old town trolleys a monopoly? Is that what we have going on here between the city and Uber, a judge might have to decide? It would be on Uber, or its drivers in Key West, perhaps as a class, to put the case before a local judge. Unless the city commission tells the city attorney to ask a local court for a declaratory judgment, because the city doesn’t know what is legal, or not, in this situation. If the city does that, I imagine that will take take the case in a very different direction than the Duck Tours case went, since the declaratory judgment action is the city asking a court for guidance, instead of the city telling its code enforcement and police to grind Uber and its Key West drivers into dust, according to Uber and its Key West drivers. Or – voila! – the city commission could, as has happened before, eliminate the limits on taxi licences in the city, and avoid the courts altogether, unless the taxi companies decided to sue the city for not letting them have … a monopoly? Or for … congesting city streets even more? Meanwhile, I imagine the city commission could tell the city manager to tell city police and city code enforcement to abate enforcing the city ordinance against Uber drivers, until the city commission eliminates the limitation on the number of taxis, or a court rules on a declaratory judgment action.
Meanwhile, I still want to know how much Uber pays its drivers, and how that happens, and if Uber drivers make tips.
sloan back in 1985 there was a taxi monopoly of five sixes only and when deregulated by commissioner cate’s sponsorship is when maxi-taxi was born as I recall.
as to the ducks it was the city attorney diane covan of its day that proposed she continue with her ongoing plan to grind the ducks into the dirt and the city commission of its day said grind on if I read the press correct at the time.
wankjam, is is my understanding, the city attorney asked the city commission if it wanted her to grind Duck Tours into dust, and they gave the nod; although I read something from Covan not all that long ago, where she said it did not happen that way …
I am on a fast learning curve about taxi history in Key West, but if Uber ain’t a taxi company, then I ain’t me … Uber just figured out how to do it smarter, with a lot less exposure and not owing its own taxis .. can’t fault that, and don’t fault it; didn’t care for Uber’s response published by the blue paper, though. Will be interesting to see how it goes from here; will Uber step up to the plate, or leave its local “franchisees” dangling from the yardarm?
sloan she maybe said it didn’t but its in the transcript of that meeting loud and clear and legal transcripts by court reporters don’t lie as you well know. I recall reading it and saying to myself ..’WOW what a despicably callous attitude toward a local business and its owner and employees!!!’
but remember it was a different city commission and attorney of its time back in the duck days of 1996 or so.
current city commissioner Jimmy Weekely was a city commissioner when Covan was given the nod … Later he became mayor, and served a few terms, then he was beaten by Morgan McPherson in 2005, and again in 2007 … McPherson was beaten by Cates in 2009, and at his victory party, Cates and his campaign manager both thanked me for getting Cates elected without a run off; during the run up to the election, in which Mike Mongo and I also were mayor candidates, I kept saying at candidate forums and on my blogs, if you don’t vote for me, vote for Cates; don’t vote for the other two candidates. Naturally, I felt I was the best candidate, and naturally I was in a slight minority :-). If I were mayor now, I’d be hollering for the city commission to amend the ordinance, so that there is no limit to taxi, or taxi like ordinances, and the city would be collected fees for those licenses from Uber as well as from traditional taxis. I would do all I could to prevent the city from being sued for fostering an alleged monopoly, a la Duck Tours. Of course, the mayor only has one vote on the city commission, so several commissioners would have to go along with me. That scenario, of course, if a spin off of Fantasy Fest 🙂
yes that’s right weekly was one of the grinders wasn’t he! don’t forget to thank him next time you see him for his help in paying out $10,000,000 of taxpayer’s money.
also as for uber payment to drivers its all automated where the rider has his credit card charged for the fare and the tip and uber takes 20% and submits the 80% to the driver.
a family member in another state has looked into driving for uber so I believe this info to be correct.
This is a perfect example of Crony capitalism. A term describing an economy in which success in business depends on close relationships between business people and government officials. It may be exhibited by favoritism in the distribution of legal permits, government grants, special tax breaks, or other forms of state interventionism. The cab companies are afraid of competition so they turn to the strong arm of the law to protect their interests. Meanwhile the people who would benefit from Uber (riders and Uber drivers) will lose out. Do we live in a free society? Not by a long shot, and not as long as government controls every inch of our lives. Let Uber be and let the market decide !
I notice that you only address Uber as the alternative. Uber is not free market capitalism, it is a huge corporation. A corporation that makes enough decisions for the so called independent contractor drivers that California has stated that it found a driver to qualify as an employee.
Absolute free market would mean, anyone that met the business standards, decent/safe vehicle, proper insurance and licensed driver, could have a cab or even a fleet, and the market alone would dictate how many taxis are needed. This in turn could lead to hundreds of taxis on the road at certain times. I believe from my 15 years of hacking, that certainly mehem would soon ensue as competition heated up and drivers were pressed to drive faster and more aggressively in order to make ends meet. This also would minimize profit for the drivers to the point where you’d have drivers living out of their cabs. Since this is one of the top 5 cities in America in rent.costs, this is not stretching one’s imagination!
There is an app that is legal, it uses only licensed cabs and function much the same as UBER. You can order your ride with the push of a button and track your cab via GPS.
Check us out at http://www.taxiasap.com.
TaxiASAP – Simply the quickest and easiest way to order a cab!
Thanks, and no thanks. It’s obvious you’re anti-Uber, so your recommendation to use an Uber-like service makes you a hipocrite (and also pathetic).
The evolution of “paying for a ride” has happened with Uber. I suggest the stupid city get with the program. Uber is here to stay and nothing is going to stop it. It is called progress. Any action towards Uber will simply cost the city and therefore the taxpayer. Tell those idiots who spend most of their time trying to screw people that they will be personally held accountable for any future lawsuits. Maybe then they will think about what is good for the city. The old taxi cab companies will soon be history. Realize that and get over it.
Carl stated the case for both sides better than anyone else I have heard.
Here is a fair proposal for everyone. The city should increase the number of licenses to a reasonable level…say up to 100 from the current 56 (I believe that is the current number). From that point forward, 10% of the licenses would come up for lottery every following year. People who have met the licensing qualifications and have a vehicle that meets the specific requirements and is titled in their name (or their company’s name) are eligible to apply for a non-transferable license on the basis of one application per person or company. That will give everyone a fair chance at a license while maintaining a level of control. It will also bring new people and technology into the system while also giving those who have a license a minimum of 10 years to operate within the law.
What we need to remember is that the city has a legitimate reason for controlling the number and qualifications of the people/vehicles that transport others on our streets. The drivers don’t own the streets; the citizens do.
As you can see from the report at the following link, Broward County has already booted Uber, and Palm Beach County is not far behind:
http://www.cbs12.com/news/top-stories/stories/vid_27229.shtml
Key West and even Monroe County, as a whole, should follow their examples to keep from facing another lawsuit of some sort or another.
I can understand limiting the number of taxi cabs that are driving around a city, making the roads more congested as many are trying to find a rider where Uber drivers would be staying off the roads unless they already have a rider. I don’t see Uber riders really adding to congestion like I would see taxis. If I am right on this it would be up to Uber to self regulate and the city should be kept out of the loop unless it is proven that Uber in a particular city can not self regulate.
I would think a cab driver would want to be self employed with their own vehicle and not start the day off with a $175 in the hole and then have to hunt up riders all day to recoup the $175 plus make a profit. I would think a Uber driver would have much less stress than a tax driver; therefore, it would be much safer for the passenger.
My family has used UBER extensively across the US in several US cities. The result has always been extremely positive and in every aspect exceeded our experiences with local “brick and mortar” taxi companies.
Safety:
Every UBER cab I have been in was much more respectful of defensive driving techniques. I have never has an UBER cab doing 75+ in a 55 zone. I have never had an UBER cab hitting the gas and slamming on the brakes like I experience with regular cab companies. They do not seem in a rush to make more money or get to the next fare.
Insurance:
UBER requires all drivers carry an appropriate minimum insurance coverage. You can learn more about this at their website.
Quality:
The cars are always clean and fairly new ( every car I have been in is less than 4 years old). They have always been spotlessly clean like they just came from a car wash. They do not smell like cigarette smoke or driver body odor.
Price:
Prices are less overall than a regular taxi company (because fewer layers have their hands in the “till”, more on this later….). Example: a 40 minute drive from Delray Beach FL to FLL airport was $42.00 while regular taxi companies wanted over $100 with tip for the same ride.
Driver Pay:
I have asked the drivers how this works. They get 80% of the fare, UBER gets 20%
Tipping:
There is no tipping. You pay the fare using the app and rate the driver and car. If they get bad ratings they get kicked out. They want a good rating, that’s it!
Service:
When you go on the app you see where the available cars are and when the assigned car will get to you…. Live via GPS. And they also know where you are using GPS as well so there is no confusion about which address or which corner you are on.
Why does this work:
• At 80% of these lower rates the driver can provide a decent car and feel comfortable with the resulting pay. This is because only UBER and the driver are involved in the transaction.
• Fares on UBER are based on demand. When there is more demand the price rises which causes more UBER drivers to head out to meet the demand. In essence, more demand… more cars.
Why local taxi companies can’t do this:
Mainly it’s because it is a rigidly controlled entity where there are a whole bunch of players/middle-men with their hands in the “till”:
• You have the local government who gets big bucks in fees for each hard to get taxi license. This is probably the biggest issue. Government entities can’t stand it when new ventures threaten their “cash cow”. Just ask the City of Key West how much all those taxi licenses generate and you will realize it’s all about the money, nothing else.
• Most taxi companies own the cars and lease them to the driver for a fee. This creates an asset that must be “used to death” in order to milk the most value from it. The driver does not identify the car as “his or hers” and therefore cares less about the condition.
• In total taxi companies take a lot more than 20% of the fare from the driver.
• Taxi companies have a limited number of cars on the street at any point in time and do not have as much ability to ramp up when demand spikes.
Reading all the input I’m reading from local taxi drivers and how hard they have to work to make a buck…. I have only one thing to say “you would make more money driving for UBER!”.
The city of Key West makes little to nothing on the taxi licenses. There are no medallions auctioned off like in many of the big cities.
Most drivers care about their cab they regularly drive, they clean it and make sure it is maintained properly.
As far as drivers making more money, that is doubtful, it would mean more drivers and hence less fares per driver and generally at a lower rate… except when it is very busy and then Uber rates are 5-10-15 times more!
This all boils down to, do we want on our highly populated small 4.2 square mile island home, for every third car to be a possible taxi and every third house to be a possible B&B? This isn’t the mainland, we don’t want that level of commercialization in a confined space a hundred miles out in the middle of the ocean. I don’t want my neighbor to run a convenience store from his home either, which is quite common in many parts of the world.
And lastly if I was to “work for myself”, why would I want to cut Uber in on the deal? I already know where most of the rides are most of the time anyway!
BTW, nice copy and paste job…
hunter explained it quite well. Anyone going after uber will eventually fail. The next evolution of Uber will be advertisement. If enough Uber drivers opp for a new vehicle I bet Ford Motor Company would cut them a pretty deal as they do for fleet purchases.
I bet Uber orders driverless automated vehicles ASAP and cuts the drivers out of the equation anyway, as has been their plan all along!
Uber has deeper pockets than KW.
They could put every cab in KW out of business in a day. Just offer FREE rides and then the city will change the law fast.
Personally we use the 66666 cab and find them fast and reasonable and prefer just paying cash but I believe in the right to work and right to compete. Key West best back off before it goes broke in court.
If anything by having Uber you will have fewer drunks on Duval and that is safer.
Supply and demand has always worked.
I see both sides and the city only sees $$$$$$
If you want few drunks on Duval, tell the bars to stop over serving them. If you want less drunks on the road, tell KWPD to pick up where Officer Kevin O’Connell left off when he went to day shift, put someone back in the unmarked Camaro hunting DUIs!
BTW when you offer these “FREE” rides who will provide them? UBER? Remember it is the driver that provides the livery service, they are merely a technology service providing a connection app….
Re the Yelp complaints in your article, which are quite typical in the sense that they are requesting the wrong services.
The first person needed a limo for her wedding needs. Calling Friendly (a company with just 14 cabs under its dispatch) and expecting, on what was probably a busy weekend just after shift change, immediate service from independent contractors is a tall order. She could of done this when she booked the wedding venue.
Second, if it is seriously busy and you need to call 6 times and someone in your party is suffering from heat exhaustion (what can be a serious medical condition in these parts) you probably need an ambulance.
We get this a lot. We also get hollered at for not taking home some folks drunken friends that have gotten sick all over themselves too. I wonder how many 21st century Uber drivers will service them as well….
Key West is a place I love to visit, but when out enjoying the Taxi availability and anything close to being on time for a pick-up is close to non-existence.
We just end up driving to and from our different parts of the Island and our hotel. If we could use our Uber accounts I am sure we would instead of driving! As point of fact we have seen an almost 100% change here among our friends mode of transport here in St. Pete Beach and Treasure Island FL since a good core group of Uber Drivers have become available in this area and are available at all times of the day and night within a few mins of being requested.