THE LAW AND THE TAXI: THE RIGHT REGULATORY MIX – THE CHALLENGE OF EMERGING TECHNOLOGIES AND SMART PHONE APPLICATIONS Presented By Professor Matthew W.

THE LAW AND THE TAXI:  THE RIGHT REGULATORY MIX – THE CHALLENGE OF EMERGING TECHNOLOGIES AND SMART

PHONE APPLICATIONS

Presented ByPresented ByProfessor Matthew W. Professor Matthew W.

Daus, Esq.Daus, Esq.

Presented ByPresented ByProfessor Matthew W. Daus, Professor Matthew W. Daus,

Esq.Esq.

Distinguished Lecturer, UTRC Distinguished Lecturer, UTRC President, COTAPresident, COTAPresident, IATRPresident, IATRPartner & Chairman, Transportation Partner & Chairman, Transportation

Practice GroupPractice Group– Windels Marx Lane & Mittendorf, LLPWindels Marx Lane & Mittendorf, LLP

Contact: Contact: [email protected] West 56th Street | New York, NY 156 West 56th Street | New York, NY

1001910019T. 212.237.1106 | F. 212.262.1215T. 212.237.1106 | F. 212.262.1215

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In July 2012, the Windels Marx In July 2012, the Windels Marx Transportation Practice Group Transportation Practice Group Published A Report  Entitled:Published A Report  Entitled:

“ “Rogue” Smartphone Applications Rogue” Smartphone Applications for Taxicabs and Limousines: for Taxicabs and Limousines:

Innovation or Unfair Competition?Innovation or Unfair Competition? A National Regulatory Review of A National Regulatory Review of

Safety, Accountability and Safety, Accountability and Consumer Protection Legal Issues. Consumer Protection Legal Issues.

http://www.windelsmarx.com/resources/documents/Roguehttp://www.windelsmarx.com/resources/documents/Rogue%20Applications%20Memo%20(updated%208.6.12)%20(10777883).pdf%20Applications%20Memo%20(updated%208.6.12)%20(10777883).pdf

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TaxiTaxicabs and cabs and Limousines…….Limousines…….

Yes, there is an app for that, Yes, there is an app for that,

but…but…

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Is it the “Wild West”?Is it the “Wild West”?

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Smartphone AppsSmartphone Apps– New apps are constantly entering the marketNew apps are constantly entering the market– Apps are used for electronic hailing Apps are used for electronic hailing – Arrange rides or share ridesArrange rides or share rides– Expedite paymentsExpedite payments

How Does It Work?How Does It Work?

Run the app and locate a service

Download an app

Book a Taxi/Limo

Payment via text, email or other payment processing devises

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ALL APPS ARE NOT CREATED EQUAL!

Prearrangement or Electronic Street Prearrangement or Electronic Street Hail? Hail?

• Smartphone apps have introduced Smartphone apps have introduced “electronic hail.”“electronic hail.”

• An “electronic hail” is similar to a street An “electronic hail” is similar to a street hail, but through an individual’s hail, but through an individual’s smartphone.smartphone.

• Some regulators have not addressed this Some regulators have not addressed this new concept in their regulations……yet.new concept in their regulations……yet.

Legal Issues Identified with Rogue Apps

• New York City (TLC) has proposed rule New York City (TLC) has proposed rule changes that includes; changes that includes;

• Defining E-HailDefining E-Hail and amendments to and amendments to prohibit drivers from charging prohibit drivers from charging passengers passengers any additional fee for an E-Hail trip;any additional fee for an E-Hail trip;

• Establishing restrictions on when and Establishing restrictions on when and where drivers can use E-Hail applications;where drivers can use E-Hail applications;

• Requiring drivers to utilize E-Hail Requiring drivers to utilize E-Hail applications licensed and approved by TLC applications licensed and approved by TLC and;and;

• Amendments regarding owner payments Amendments regarding owner payments to drivers for E-Hail trips. to drivers for E-Hail trips.

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Taxi & Limousine DistinctionTaxi & Limousine Distinction What is the distinctions between a What is the distinctions between a

taxicab and limousine in post-taxicab and limousine in post-smartphone app world?smartphone app world?

Is an on-demand electronic street hail Is an on-demand electronic street hail a prearranged service? a prearranged service?

Most jurisdictions have yet to answer Most jurisdictions have yet to answer these questionsthese questions..

Legal Issues Identified with Rogue Apps

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Legal Issues Identified with Rogue AppsSafety ConcernsSafety Concerns

Rogue” Apps cut out the dispatch Rogue” Apps cut out the dispatch companies and deal directly with drivers.companies and deal directly with drivers.

This will make it difficult to ensure all This will make it difficult to ensure all vehicles picking-up passengers are vehicles picking-up passengers are licensed.licensed.

• There is no guarantee if these vehicles are There is no guarantee if these vehicles are insured and are being driven by properly insured and are being driven by properly licensed drivers.licensed drivers.

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Legal Issues Identified with Rogue AppsApplication Name ConfusionApplication Name Confusion

The use of the terms “taxi” or “cab” The use of the terms “taxi” or “cab” adjacent to an app does not mean vehicles adjacent to an app does not mean vehicles and drivers dispatched by the app are and drivers dispatched by the app are licensed or meets the definition of a taxi.licensed or meets the definition of a taxi.

This creates consumer confusion and This creates consumer confusion and safety concerns.safety concerns.

San Francisco - a cease and desist letter to San Francisco - a cease and desist letter to an app for use of the term “Taxi” in its an app for use of the term “Taxi” in its name.name.

Illegal Service RefusalsIllegal Service Refusals

Apps could allow the driver to accept Apps could allow the driver to accept or decline potential dispatches. or decline potential dispatches.

Thus, there is potential for drivers to Thus, there is potential for drivers to take advantage of the app to take advantage of the app to discriminate against consumers; discriminate against consumers; offering service to some, and offering service to some, and rejecting others.rejecting others.

Legal Issues Identified with Rogue Apps

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““Fair” FaresFair” Fares Some apps operate by charging Some apps operate by charging

passengers at the end of their trip, passengers at the end of their trip, therefore the consumer has no therefore the consumer has no assurance as to the final fare, or assurance as to the final fare, or whether or not it IS fair.whether or not it IS fair.

Some apps have been criticized for Some apps have been criticized for “demand” or “surge” pricing“demand” or “surge” pricing at the at the time of national disaster. For example, time of national disaster. For example, Uber app implemented “surge” pricing Uber app implemented “surge” pricing in the immediate aftermath of in the immediate aftermath of hurricane Sandy in NYC resulting in hurricane Sandy in NYC resulting in excessive trip fare.excessive trip fare.

Legal Issues Identified with Rogue Apps

Is It a Taximeter?Is It a Taximeter?

Taxis are usually required to have a Taxis are usually required to have a taximeter.taximeter.

Only taxicabs charge fares based on Only taxicabs charge fares based on distance and time. distance and time.

These taximeters are regulated by the These taximeters are regulated by the NIST and are calibrated and inspected.NIST and are calibrated and inspected.

Apps might use GPS to calculate the fare Apps might use GPS to calculate the fare based on time, mileage and demand – based on time, mileage and demand – this does not meet taximeter standards. this does not meet taximeter standards.

Legal Issues Identified with Rogue Apps

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Danger to Transportation Businesses• Collaboration with an unruly or rogue app could Collaboration with an unruly or rogue app could

lead to loss of: lead to loss of: • Drivers Drivers • Reputation with customersReputation with customers• Goodwill (Its the app not the company Goodwill (Its the app not the company

that may matter with passengers in the that may matter with passengers in the long run)long run)

• Total dependency to an app companyTotal dependency to an app company• Diminished service coverage to Diminished service coverage to

longstanding corporate clients longstanding corporate clients • Loss of brandLoss of brand• etc…,etc…,

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Next Steps?Next Steps?

How Can You Protect Your Business?

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1.1. Develop your own app (or white label app)Develop your own app (or white label app)

2.2. Contract with those apps that are legalContract with those apps that are legal

3.3. Carefully review all 3Carefully review all 3rdrd party app contracts party app contracts

4.4. Be vigilant to protect your Be vigilant to protect your – business, business, – clients, clients, – drivers affiliated with your base, and drivers affiliated with your base, and – your business reputation and goodwill.your business reputation and goodwill.

Things are moving fast!Things are moving fast!1.1. LitigationLitigation

Cambridge, MA Cambridge, MA Chicago, ILChicago, IL San Francisco, CASan Francisco, CA New York CityNew York City

2.2. IATR App CommitteeIATR App Committee

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IATR App Committee

The purpose of the App Committee is to develop a model code of regulations to ensure smartphone app technology can exist fairly, safely and with accountability to protect the consumer, while also protecting existing businesses against unfair competition.

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IATR App CommitteeIATR App Committee

Professor Matthew W. Daus, ChairProfessor Matthew W. Daus, Chair

BostonBoston New York City Australia New York City Australia ChicagoChicago Philadelphia Philadelphia Montreal Montreal Los Angeles Los Angeles San FranciscoSan Francisco Toronto Toronto AustinAustin Seattle Seattle San Diego San Diego Denver Denver Washington, D.C. Washington, D.C. Houston Houston

NIST (National Institute for Standards & Technology)NIST (National Institute for Standards & Technology) NCWM (National Conference of Weight & NCWM (National Conference of Weight & Measures) Measures)

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IATR App CommitteeIATR App Committee

Will produce model regulations for apps Will produce model regulations for apps standardsstandards

Working with Taxi, Limousine & Paratransit Working with Taxi, Limousine & Paratransit Association (TLPA) App CommitteeAssociation (TLPA) App Committee

The model regulations will be presented for The model regulations will be presented for comment and input at the IATR Conferencecomment and input at the IATR Conference

Regulations & Smartphones – “There’s an App Regulations & Smartphones – “There’s an App for That” (Washington, DC Conference)for That” (Washington, DC Conference)

To be Presented on November 17, 2012To be Presented on November 17, 2012

What is the Right Regulatory Mix?What is the Right Regulatory Mix? Amend the law to close loopholes to allow Amend the law to close loopholes to allow

safe & accurate smartphone app use to safe & accurate smartphone app use to thrive;thrive;

Hold existing licensees accountable and/or Hold existing licensees accountable and/or license companies which produce or operate license companies which produce or operate apps;apps;

Ensure technology has accurate measuring Ensure technology has accurate measuring devices and meets taximeter standards.devices and meets taximeter standards.

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Thank You!Q&A