August 21, 2014

Uber Hearings on Uber-drive

Unable to address all of the issues on the table over the course of two days, the Public Utility Commission has scheduled a third day of testimony in the Uber (Raiser) proceedings to address only insurance issues. This hearing is set late September.

The first two days of hearings focused primarily on fitness - whether Uber has demonstrated that it can safely and lawfully provide for-hire transportation to the public. Testimony addressed drivers, vehicles, pricing - most of the issues covered in my blog posts prior to the hearings. Many felt that the testimony revealed little that we didn't already know. At this point, it seems objectively true that traditional taxis and other veteran transportation providers are subjected to a greater number of safety checks than are their ride-sharing counterparts.

That being the case, Uber has wisely spent considerable energy re-focusing the issue as one of technological innovation versus "big taxi." Uber has painted a picture of itself, ironically, as David in a battle with Goliath, or as Uber CEO Travis Kalanick calls it, the "Big Taxi cartel."

Pretty slick. Can't win the argument about safety and regulation, so change the issue. Seems like the kind of strategy that might be employed by, say, a presidential advisor.

Enter Uber's newest high profile employee, David Plouffe, a former advisor to President Obama.

Whoa.

Continue reading "Uber Hearings on Uber-drive" »

August 19, 2014

Uber Takes the Fifth

The Uber hearings started yesterday. Perhaps the most interesting moment of the day came when Uber manager, Matthew Gore, was asked to answer questions concerning the number of rides given by Raiser-PA, LLC (Uber subsidiary) at key time points, such as before applying for operating authority on April 14, 2014, and after being ordered to cease and desist on July 28, 2014.

In either case, the rides would have been illegal. The witness refused to answer.

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August 8, 2014

The Uber Beef Part Five: Must Be the Money

Is Uber more expensive? I'll make it pretty simple: yes, but only if they feel like it.

The most notable difference between taxi/black car pricing and ride-sharing pricing is flexibility. Philadelphia taxi and black car rates are set by a combination of statute regulations and "tariffs," statements of rates issued (for taxis) or approved (for black cars) by the Philadelphia Parking Authority ("PPA").

For taxis, the basic metered rates are currently as follows: (1) first 1/10 of a mile - $2.70; (2) subsequent 1/10's of a mile - $0.23 each; and (3) wait time - $0.23/37.6 seconds. When comparing uberX, the least expensive Uber option, it doesn't initially seem that there is much of a difference in cost. Presently, uberX charges a $3.00 base fare and then has two different pricing structures that apply during your trip: (1) $0.30 per minute when you are going less than 11 MPH; and (2) $2.25 per mile when you are going any faster. The prices are actually pretty comparable. Perhaps the biggest difference is that Uber can change its rates tomorrow if it wants, while taxis cannot.

With respect to black cars, regulations limit companies to charging customers in a minimum of 30-minute increments. Companies may set their 30-minute rate in the tariff, subject to PPA approval. You probably won't be shocked to learn that Uber has no such restrictions, and the company doesn't have to get its higher-end service rates approved by anyone.

Here's the game-changer: "Surge Pricing."

Continue reading "The Uber Beef Part Five: Must Be the Money" »

August 7, 2014

The Uber Beef Part Four: Do You Really Have to Pay to Play?

The Philadelphia Parking Authority ("PPA") issued their fee schedule last month. This schedule is an annual list of charges that regulated taxis and black cars must pay to operate in Philadelphia. There is no similar list for ride sharing companies because they do not pay any regulatory fees to the PPA.

Is that really such a big deal?

Yes.

A "medallion," basically a license to operate a single taxicab, costs about $500,000. No, that's not a typo. The cost of a limousine (black car) certificate of public convenience, which permits a black car company to put an unlimited number of cars on the street, is the considerably lower, but not insignificant, sum of $12,000. Why is the difference so large? Taxis can pick up street hails, and limousines can't. They're restricted to advance reservation trips only. The point is that they both have to pay (a lot) to get started.

Continue reading "The Uber Beef Part Four: Do You Really Have to Pay to Play?" »

August 6, 2014

The Uber Beef Part Three: Who's Driving This Thing?

Wanna make some extra bucks by giving a paying passenger a ride home? With uberX, you must be at least 21 years old, with a personal license and personal auto insurance. UberBlack requires a commercial license with an unspecified amount of commercial auto insurance. It does not appear in either case that you have to submit proof of the required insurance. For both arms of the company, a background check is required, although it is not clear precisely what that entails - criminal, driving history and/or medical? If you hit "submit" and pass, Uber's website informs its drivers that they can "simply get on the road and start accepting requests. When you have other things to do, go offline until you're ready to drive again."

Easy peasy.

Can you leave work and drive other kinds of taxis or black cars home with paying passengers? Drumroll...uh, no.

Let's start with taxi drivers.

Continue reading "The Uber Beef Part Three: Who's Driving This Thing?" »

August 5, 2014

The Uber Beef Part Two: Disparate Vehicle Requirements?

Can you simply get in your car and start driving for Uber?

"Absolutely. In many cities where Uber is available, drivers have the option of using their personal car to provide rides and earn income," per the Uber website. To drive for UberBLACK, the luxury or "black car" service, you must have a "black sedan, town car, crossover SUV that comfortably seats 4 passengers, or a full-size SUV that comfortably seats at least 6 passengers." To drive for uberX, the option more comparable to taxi service, you must have "[a]ny mid-size or full-size 4-door vehicle, in excellent condition." Id. Basically, get in your car and go.

Presumably, in either case, your car would need to be annually inspected and registered with the Pennsylvania Department of Transportation because failure to do so would mean that you couldn't drive your car for any reason, let alone to provide "ride-sharing" services. So, there is admittedly some level of regulation here.

Can you simply get in your personal automobile and start providing taxi or black car service for any company other than Uber, Lyft, or another TNC?

Absolutely not.

Continue reading "The Uber Beef Part Two: Disparate Vehicle Requirements?" »

August 4, 2014

The Uber Beef: Why Taxi and Black Car Companies Have an Axe to Grind

It's happening in city after city. Uber comes to town, and the people are happy. The cabbies and black car drivers are not. Why? Keep reading, and I'll tell you.

Uber claims that the transportation industry is anti-innovation, preferring to maintain established business models without any threat to market share. Most people, in any industry, would prefer to keep doing what they do without the threat of losing money. Change is hard, and expensive. This blog series, however, evaluates whether the 'ride-sharing' controversy is more complicated than that. Simply posed, this series will ask whether the transportation industry has a legitimate gripe with the apparent under-regulation of new, app-based, 'ride-sharing' companies, also known as "Transportation Network Companies" or "TNCs".

With the Public Utility Commission set to hold hearings for Lyft (August 7-8) and Uber (August 18-19) to determine whether the companies will obtain state-wide regulatory approval to operate (they've been operating without it for months), the question is ripe for discussion. But this series is only going to tackle Philadelphia, which is unique among Pennsylvania counties with respect to taxi and black car regulation.

Philadelphia-based taxis and black (luxury) cars are primarily regulated by the Philadelphia Parking Authority (the "PPA"), as opposed to the Public Utility Commission that regulates these services in the rest of the Commonwealth. The PPA imposes a myriad of regulatory requirements for two stated purposes: (1) to protect the public; and (2) to foster a level of service befitting a city of the First Class. There are five specific areas in which the requirements imposed upon TNCs appear to be decidedly different from that imposed upon companies subject to PPA regulation: (1) insurance; (2) vehicle requirements; (3) driver requirements; (4) regulatory fees; and (5) rate structure. Over the next five days, I'll discuss each item one at a time.

Continue reading "The Uber Beef: Why Taxi and Black Car Companies Have an Axe to Grind" »

June 9, 2014

"If It Looks Like a Duck, And Quacks Like A Duck, It Might Be A - Fiduciary?"

Quack.jpgThe law does not require all business partners to place the interests of their jointly-owned company above their own. Unless, of course, you strike out Item Five.

Item Five?

Continue reading ""If It Looks Like a Duck, And Quacks Like A Duck, It Might Be A - Fiduciary?"" »

March 18, 2014

New Law Imposes Additional Requirements on Residential Landlords in New Jersey

New Jersey residential landlords have one more issue to consider when deciding whether to commence summary dispossession actions against their Tenants. On January 17, 2014, Gov. Chris Christie signed into law Assembly Bill 3851. Pursuant to this new law, every residential lease agreement executed on or after February 1, 2014, which affords a Landlord the right to recover its attorneys' fees and costs incurred in any action against the tenant shall be construed to contain a reciprocal right in favor of the tenant regardless of the express terms of the lease. Luckily, this law does not apply to commercial lease agreement.

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March 14, 2014

"YOU WILL REGRET THAT TATTOO (AND PIERCING)"

The primary reason for "incorporation" (in the case of a limited liability company or limited partnership, "formation") is the insulation of shareholders/members/partners from obligations of the corporation/LLC/LP. Normally, limited liability will not be abrogated. However, the "corporate veil" which affords protection to the shareholders/members/limited partners may be "pierced" when the corporate form is used for wrongful purposes (such as fraud or to evade creditors). The doctrine of "piercing the corporate veil" was developed to prevent the corporate form from being utilized to defeat the ends of justice, perpetrate fraud, accomplish a crime, or otherwise evade the law. This doctrine also extends to situations involving multiple corporations which are often effectively managed as a single enterprise. When business is conducted through several corporate entities without distinguishing among them, there is a risk that a court will collapse some or all of the entities into one, imposing liability on the controlling individuals.

Continue reading ""YOU WILL REGRET THAT TATTOO (AND PIERCING)"" »

March 6, 2014

"Bottled Water Bottled Up? Staying Ahead of the Law"

IWaterBottles.jpg Imagine waking up and reading the this headline: "Your City Bans Your Family/Small/Medium/Big Business." This week, the citizens of San Francisco awoke to a unanimously enacted ban on the sale of bottled water on public property. Wow.

This is not an industry that you'd expect to be legislatively shut out of an entire market. But now more than ever, the law and legislation change rapidly and drastically. Information is immediately available. Analyses are deeper and more complete. Public opinion is swift and harsh. The fact that you've been doing business the same way for 30 years does not mean that things won't change tomorrow.

So what do you do?

Continue reading ""Bottled Water Bottled Up? Staying Ahead of the Law"" »

April 28, 2013

A Not So Funny Thing Happened On The Way To The Forum

Contracts are about preparing for the worst. Define your obligations, then limit your liability. Disclaim warranties. Require notice and an opportunity to cure. Nobody wants to think about their relationships going bad when they begin, but NOBODY wants to be the person who didn't do just that..

The "forum selection clause" provides important protection in the new-ish global economy. The forum selection clause is an agreement to an exclusive litigation locale. This can be a particular country, state or even municipality.

When disputes arise, litigation locale can be used as a way to harass or otherwise disadvantage the party being sued. Consider the buyer in New York who purchases goods from a company in San Francisco. If the buyer is not happy, where do you think it's going to sue?

Imagine if Germany could have required Russia to fight on its home field in World War Two. The front on which wars are fought can be outcome determinative.

Absent of a forum selection clause, most courts follow the "first-filed" rule, meaning that the first-filed action is where the parties must litigate. Meaning, if you lose the race to the courthouse, you'd better start asking around for lawyers across the country, hope you have plenty of coverage at the office and buy a plane ticket. Several tickets, actually.. For small and medium sized business, the cost of litigating thousands of miles from home can be devastating.

An enforceable forum selection clause, however, can trump the first-filed rule. That's exactly what happened in Ingres Corp. v. CA, Inc., 8 A.3d 1143, 1145 (Del. 2010). In Ingres, the parties had agreed to litigate disputes exclusively in Delaware or New York. One of the parties, a California company, sued in - you guessed it - California. The defendant then filed a second lawsuit in Delaware, the agreed-upon forum. The California Plaintiff sought to stay the Delaware action on the basis of the prior California case.

The court denied the stay request, holding that the parties "agreed in the [contract to] adjudicate all claims in ... a specific forum. By enjoining the [California Plaintiff] from proceeding in a different forum, I simply hold it to the promises it made-promises that remain binding upon it." The Delaware Supreme Court affirmed, concluding simply that lower court "carefully considered the parties' contractual agreements and enforced the forum selection clause included therein."

Litigating far from home is not always avoidable. It will be anything but a comedy the night before you have to fly to wherever on the eve of trial. But including litigation locale among your usual negotiation points can eliminate the funny business associated with forum selection. At the very least, you can better assess the risks associated with and value of doing business with foreign companies if you know where disputes will be litigated. And once you do that, you can raise a glass and toast the new relationship that isn't ever going to sour. Cheers!

April 10, 2013

Cashing In On Cyber Security Checks

private-keep-out-sign.jpg

Beware of the checks your on-line privacy and security policies write. If your you-know-whats can't cash them, plaintiffs might.

Increasingly, plaintiffs are filing lawsuits after "hackers" access their personal information through undersecured websites or electronic databases. Almost every company holds some type of customer information in electronic form. As companies enhance their web presences, many have posted security and privacy policies. If you're a business owner, you likely have one (if you don't, you should). And if you've ever used the internet (if you haven't, you're not reading this article), you've seen links to these at the bottom of web pages, and you've probably ignored them. I certainly have.

Here's the problem for businesses - hackers are hard to find and are usually judgment proof. If your data security is breached, and if your customers want to sue somebody, they are going to sue you.

Most of these high profile lawsuits have been premised on traditional negligence principles, but courts have come to varied conclusions about a business's duty to protect its customer information from hacking. This initial resistance to the imposition of traditional tort liability has led to two things: (1) some states have created statutory duties in this context; and (2) plaintiffs' lawyers have gotten pretty creative, with some success.

In Baidu, Inc. v. Register.com, Inc., a search-engine operator, Baidu, Inc., sued Register.com, its traffic-routing services provider, after a hacker gained access to Baidu's account and directed its web traffic elsewhere. Imagine the business next door diverting all of your phone calls to it. Baidu sued.

Baidu asserted breach of contract, negligence and gross negligence claims. Register.com moved to dismiss, arguing that its security policy contained a broad limitation of liability provision. And it did. But it also contained statements about how Register.com protected its customers' information and employed security measures to guard against data breaches.

Baidu argued that Register.com's failure to follow its own policies constituted a breach of contract and gross negligence. The Southern Distinct of New York agreed. The court held that the limitation of liability provision barred an ordinary negligence claim, but not the breach of contract and gross negligence claims. The court stated that if Baidu proved what it had alleged, "then Register failed to follow its own security protocols and essentially handed over control of Baidu's account to an unauthorized intruder, who engaged in cyber vandalism. On these facts, a jury surely could find that Register acted in a grossly negligent or reckless manner."

A few months later, the case settled for an undisclosed sum.

While we're well settled into the internet age, the age of data security litigation is in its infancy. One way to protect your company is to give considerable thought to your security and privacy policies, and then to abide by them. You can't guarantee elimination of all data breach exposure, but you can put your company in a position to refute the simple, but powerful argument that carried the day in Baidu - that you didn't do what you said you were going to do.

Just as when you're writing actual checks, you've made certain there is money in the bank (I hope), ensure that your operations are consistent with your security and privacy policies. Or you might need more money in the bank.

March 29, 2013

Who Would Want a Lawyer Involved in Business Decisions . . .

A company that wants to lower corporate risks and boost the overall value of a company by nearly 10 percent, that's who.

A recently published article on Law.com discusses a relatively "new" trend among companies regarding lawyers serving on boards of directors, as well as lawyers holding executive positions. In fact, the number of lawyers serving on boards nearly doubled over a ten-year span.

"A lawyer-director increases firm value by 9.5 percent, and when the lawyer is also a company executive, the increase in firm value rises to 10.2 percent," according to the Cornell Law School research paper, Lawyers and Fools: Lawyer-Directors in Public Corporations.

Having a lawyer on the board typically results in a change of management style - one that focuses on taking less risks - reducing the risk of litigation involving the company. The company becomes more financially stable thus increasing its value.

So, it seems, what you get by having a lawyer/director or lawyer/executive is better judgment and management of the company. More often than not, better judgment results in lower risks and higher company valuation.

For further information or assistance, please contact Matthew Azoulay, Esquire: 856.675.1957; mazoulay@dilworthlaw.com.

March 1, 2013

Sandy Update - Deadlines for FEMA and SBA Loan Applications Extended

The NJ Governor's announced the upcoming deadlines for homeowners, renters, and businesses looking to apply for FEMA assistance and SBA loans in the wake of Superstorm Sandy have been extended to April 1, 2013. Those seeking for FEMA individual assistance or SBA physical damage disaster assistance should act quickly. The deadline for application to the SBA's economic injury disaster loan program remains July 31, 2013.

People or businesses with storm losses can register online at www.disasterassistance.gov.

For further information or assistance, please contact Matthew Azoulay, Esquire: 856.675.1957; mazoulay@dilworthlaw.com.