One day, Hopefully soon...Uber Will Have Its Day of Reckoning

What does an Uber ride actually cost? That simple question is often lost among the many controversies facing Uber, but it is surely one of the most important question of all when it comes to determining the value of Uber which has built its business on massive subsidies to both riders and drivers, producing huge losses in the process, and has yet to show that it can maintain growth without them.

Although a private company dos not need to release its financial data, Uber has started releasing limited financial data, and in May reported a loss of $708 million for the first quarter, down from $991 million in the fourth quarter. While their upcoming financial report may show further improvement on margins, Uber continues to spend heavily on subsidized rides.

The question vexing everyone is what the company is worth. Truthfully, I really don't care. Not just because I am anti-Uber but because their entire business model is based upon explanation of persons and creating the myth of providing jobs when their true intent is to totally divest itself, in due course, of all drivers. How drivers do not see this and continue to driver for them is beyond me. Maybe I am wrong in my forecast or perhaps I just simply do not like illegal monopolies.

Uber’s losses stem from its drive to win global market share at almost any cost. That strategy was built on the assumption that Uber could achieve a dominant position in many big cities quickly and eventually raise prices. Kalanick himself said low fares were temporary. But eight years in, the strategy is now in doubt as competition in many markets continues to intensify. Uber must solve the problem of how to eliminate subsidies without losing customers and thereby undercutting its valuation.

At some point in time, Uber will have its day of reckoning as they will eventually have to raise prices and get rid of driver subsidies. And we all know what happens when you raise prices - demand goes down. And when you give up driver subsidies - supply of drivers goes down.

Regardless of their Valuation, in my humble opinion, Uber has become an illegal monopoly. I have conducted my fair share of research on the Sherman Act and its progeny since the late 1800's when certain monopolies were declared illegal. Monopolies are bad for the public, bad for the economy and bad for competition. Uber will eventually raise its prices and do away with driver subsidies...and then the riding public will see Uber for what it truly is. Not an aid to the Salvation Army, but a money hungry technological monopoly that is built on a house of cards. When one of the cards start to fall, the others shall follow. Then I hope to see Kalanick himself driving around in his own vehicle with the stupid "U" in the front window.

Time for the Public to see Uber for What they Really Are.....and to go elsewhere

Uber’s global pattern of driver mistreatment, corporate bullying and legal transgressions should be tolerated no more.  For years, Uber managed to conceal its bad behavior with expensive P.R. campaigns and by claiming they are a technology company and not a transportation provider. Their games may have worked for a while, but their grand plan is quickly unraveling.

Uber is convenient and fast in New York City. The combination of cashless transactions and location technology make for a great service. But no amount of convenience can cover up the toxic culture that has taken hold at Uber. This hold true now not only in the treatment of its huge driver workforce, but at the company’s headquarters as well. Uber’s CEO has finally been forced to resign, but this is simply not enough.

We all know by now that Uber’s wrongdoing does not end at the door of its corporate headquarters. Just as evil is Uber’s model of “employment”. In my opinion, under New York law, Uber is an employer, but offers no employee benefits to its drivers and does not pay the taxing and regulatory costs associated with employing persons. In the vast majority of cases, Uber drivers are offered low pay, no sick pay, no vacations, no 401K. In return, they are promised “flexibility”, or the freedom to work whatever hours suit them. In practice, many Uber drivers are working long, long shifts for extremely poor pay in order to try to make ends meet. On the other hand, Uber continues to operate outside of the law with impunity.

Politicians are yet to condemn Uber. Perhaps their political contributions are just too large to refuse. I am at the point where I refuse to believe politicians will intervene and Uber is surely not going to change its business model on its own volition. But not using the app will surely send them a clear message. The consuming public needs to use its power as customers to force Uber to change their behavior. The workforce of drivers need to stand up to Uber and say “no more”, by disaffiliating with them and refusing to accept their dispatches.

 While Uber is convenient and fast in New York City due to their combination of cashless transactions and location technology, there are plenty of other car services in New York City that do the same exact thing. The only difference is that Uber operates outside of the law, while the car services that provide the same type of service in New York City have been in business for decades and know who to operate a transportation business. The consuming public and the drivers affiliated with Uber should use their collective power and go elsewhere. Uber is not going to change on its own, but you do have the power to “vote” by not using their service. Uber is no longer the sexy newcomer with a cool service. It is a lawless entity that uses drivers like slaves and laughs at the consuming public along the way. Why should anyone put up with this type of service. The time has come for the public to consider that Uber did force many of the incumbents in the industry in New York City to revolutionize and create their own technology to meet the demands of the public. It is now time to go back to these companies and use their service. You deserve better

The Night Shanker saved NYC from Bankruptcy- 1975

On October 16, 1975, New York City was deep in crisis. At 4 p.m. the next day, four hundred and fifty-three million dollars of the city’s debts would come due, but there were only thirty-four million dollars on hand. If New York couldn’t pay those debts, the city would officially be bankrupt.

At the Waldorf-Astoria, in Midtown, seventeen hundred guests were gathering for the Alfred E. Smith Memorial Foundation benefit dinner, a white-tie fund-raiser for the Catholic charities named in honor of Al Smith, a former governor and the first Catholic candidate on a major-party Presidential ticket. As day turned to night, the bad news continued to come in. Banks were refusing to market the city’s debt, which left New York unable to borrow. Federal help was repeatedly refused by President Gerald Ford and his advisers. The only hope left was pension funds. And the only one that had committed to buying the city’s bonds—the Teachers’ Retirement System—was now pulling back.

The mood was grim as New York’s financial and political élite settled in at the hotel to hear the evening’s featured speakers, Robert Moses and Connecticut’s first female governor, Ella Grasso, try their hands at political comedy.

Abraham Beame, who was in his second year as the mayor of New York, was no stranger to the city’s budget and its challenges. During two stints as comptroller, he had seen the drop in manufacturing jobs, the wave of middle-class families moving to the suburbs, and the massive growth of the city’s labor force. He was aware of, and at times condoned, the gimmicks that were used to mask widening budget gaps, such as borrowing against city pension funds to run operating deficits for the city’s buses and subways.

Yet while Beame was described by allies and adversaries alike as kind and honorable, he also seemed paralyzed by the intensifying challenges of his office. Ed Koch, who was serving in Congress at the time and would go on to succeed Beame as mayor, later said “Abe Beame is an accountant, you know, but it’s hard to understand that he has that title.”

A few months before, in mid-April, the city had run out of money for the first time. Governor Hugh Carey was willing to advance state funds to allow the city to pay its bills under the condition that the city turn over its financial management to the state. This led to the creation of the Municipal Assistance Corporation, which was authorized to sell bonds to meet the city’s borrowing needs. (Its detractors referred to it as “Big mac,” because of its authority to overrule city spending decisions.)

The mac, which was chaired by the financier Felix Rohatyn, insisted on significant reforms, including a wage freeze, a subway fare hike, the closing of several public hospitals, charging tuition at the previously free City University, and tens of thousands of layoffs.

But the financial picture continued to deteriorate. Koch remembers hearing testimony before Congress about the city’s fiscal situation and thinking that “it was like somebody escaping from the Warsaw ghetto and saying they’re killing people there. Nobody believed it.”

At the Al Smith dinner, diners were working their way through what was being called a “bicentennial menu,” featuring Maryland terrapin soup and baskets of Colonial sweets. Speeches that had been loaded with humor in past years sounded notes of gloom.

Mayor Beame used his turn on the five-tier dais to excoriate Washington for refusing to bail out New York: “The problems were simpler and less complex in Smith’s day, and there even seemed to be a greater sense of responsibility on Washington’s part.” He then left the dinner to return to the debt negotiations.

Robert Moses, who had previously referred to the city’s leaders as “third-rate men,” simply paid tribute to Governor Smith. Only Governor Grasso tried to infuse some humor, joking that she must have been chosen to speak to the dinner because she was Italian, and that the cardinal and all the bishops “have been working for my people for many, many years.”

By ten o’clock, Rohatyn and others had learned that the Teachers’ Retirement System wouldn’t invest in more mac bonds. The Teachers’ trustee, Reuben Mitchell, said, “We must watch that investments are properly diversified, that all our eggs aren’t put in one basket.” Governor Carey left the dinner and phoned state and federal leaders with a simple message. Default was imminent.

The governor placed another call that night, summoning to his office a developer named Richard Ravitch, who had been serving as a minister without portfolio for the governor. When Ravitch arrived at the governor’s office, Carey was still in white tie. He told Ravitch to find Al Shanker, the powerful head of the teachers’ union, and convince him to buy the bonds that would save the city. A car and driver were waiting outside.

In his memoir, Ravitch would later write that when he got to Shanker’s apartment, Shanker “was genuinely distressed by his decision not to buy mac bonds. He knew the risks to the city, but he believed his primary obligation was his fiduciary responsibility to his teachers. As city employees, they had already been put at risk by the city’s fiscal crisis. It was no small thing to make their pension money subject to the same risk.” They talked until five o’clock that morning, but reached no consensus.

At the same time, Mayor Beame, convinced that there would be no stay of financial execution, had assembled a small team in the basement of Gracie Mansion. Ira Millstein, then a young lawyer at Weil, Gotshal, & Manges, prepared the legal filing.

Sid Frigand, the mayor’s press secretary, recalled the point at which the conversation turned not from if the city would go under but how. “We needed to figure out which services were essential, and which weren’t,” he said. “It was an interesting exercise because when you think of what is essential and what is not essential that there are functions of public service that we don’t know about that are very essential. Bridge tenders who raise and lower bridges were essential. Teachers weren’t life-or-death. Hospital services and keeping the highways open were essential.”

As the mayor’s team was making the list, Sid remembers looking over and seeing Howard Rubenstein writing on a pad of paper. Rubenstein was a sort of unpaid booster for New York City who was making his living doing public-relations work for many of the city’s real estate developers and unions. This magazine would later describe him as “ubiquitous, trusted, a kind of gentle fixer for those who run New York.”

Rubenstein and Beame were friends. At one point in the late sixties and early seventies, Rubenstein had lived across the street from Beame, in Belle Harbor, Queens. One of Rubenstein’s more vivid memories is seeing Beame on the beach, tucking a series of folded papers into his bathing suit. Rubenstein asked what they were, and Beame showed him that each was covered with tiny handwriting: he was writing a platform for his mayoral run. Here’s my program,” Beame said. Rubenstein’s response: “What happens if you go in the water?”

In 1974, on the power of that platform, Beame became mayor. And now, less than two years later, Beame was about to announce the bankruptcy of America’s richest and largest city.

As October 16th became October 17th, the mayor’s team was in constant contact with the mayor’s Contingency Planning Committee as they sought to determine how, exactly, a bankruptcy would play out. Police, fire, sanitation—those were essential. Hospital and emergency care were, too. But what would the mayor say? Rubenstein was working on the mayor’s statement. Even in the moment of crisis, there was some score settling. Beame had no love for the comptroller and wanted him implicated in the bankruptcy. The first words of the statement read, “I have been advised by the Comptroller that the City of New York has insufficient cash on hand to meet debt obligations due today.…”

Rubenstein handed Beame the statement after many hours of work. The mayor looked at it, said nothing, and nodded. Rubenstein had it typed up. At 12:25 a.m., Beame attempted to call President Ford to advise him that default was imminent. Ford was asleep.

On the morning of October 17th, New Yorkers woke to a series of grim headlines. (“Balk by UFT pushing city to default,” in the Staten Island Advance; “Teachers Reject 150-Million Loan City Needs Today,” in the New York Times.)

The city ordered the sanitation department to stop issuing payroll checks, and one bank said it would not cash city payroll checks unless they were drawn on an account held by the bank itself.

New York City’s bonds, issued by the mac, plunged to between twenty dollars and forty dollars per thousand-dollar face value, and city note-holders began to line up at the Municipal Building in an attempt to redeem whatever they could. That morning, Rohatyn told the press that everything hinged on the teachers’ union: “The future of the city is in their hands.”

It was more than just the future of one city. New York’s bonds were held by banks throughout the United States and around the world. By some estimates, New York’s default would bring down at least a hundred banks, and expose others to liability for selling suspect or fraudulent products.

Economists warned that New York’s default would hurt the dollar abroad. The Dow dropped ten points at the opening bell, the price of gold began to rise, and, as reported by the United Press International wire service, “trading of bonds of other cities and states slowed to a near standstill, and even the prices of most credit-worthy bonds fell.” One newspaper in North Carolina ran a cartoon of a bum lying on trash, under the Brooklyn Bridge, with the caption, “We’re going down, America, and we’re taking you with us.”

President Ford began hearing from leaders around the world about the dangers of a New York default. His press secretary, Ron Nessen, said that Ford would continue to monitor the situation throughout the day, but wouldn’t change his mind about granting assistance to the city. In Nessen’s words, “This is not a natural disaster or an act of God. It is a self-inflicted act by the people who have been running New York City.”

Al Shanker, just a few hours removed from his meeting with Dick Ravitch, now went to Gracie Mansion to meet with Mayor Beame and former Mayor Robert Wagner. That meeting, too, yielded no consensus.

In the late morning, with the city’s 4 p.m. deadline looming, Shanker asked Governor Carey for another meeting. But since Carey’s office was swarmed with reporters, Shanker asked if they could meet somewhere private. Ravitch’s apartment, at Park Avenue and Eighty-fifth Street, was between Gracie Mansion and the governor’s office.

Ravitch still remembers how unprepared he was to host such a high-level meeting. There was so little food at his apartment that Harry Van Arsdale, the head of the New York Central Labor Council, began eating matzo he had found in the cabinet.

The teachers’ union was in a bind. Shanker later called it blackmail. If the city went bankrupt, a judge could order thousands of teacher dismissals, undo the raises the teachers had recently negotiated, and override any pension laws, stripping retirees of their pension checks.

Three hours into the meeting, Shanker left to meet with the Teachers’ Retirement System. Ravitch remembers that the only evidence of the momentous decision that had just taken place in his apartment was a trail of matzo crumbs.

At 2:07 p.m., the teachers’ union announced that it would reverse course and would make up the city’s hundred-and-fifty-million-dollar shortfall with their pension funds. “No one else was coming forward to save the city,” Shanker said.

The mayor’s statement, prepared by Rubenstein, was never read. Published for the first time here, it speaks in a workmanlike way to how grim a bankruptcy could have been. Only at the end is there a rhetorical flourish, referring to New York’s “great and continuing promise.”

The entire original article written by Jeff Nussbaum can be found here https://www.newyorker.com/news/news-desk/the-night-new-york-saved-itself-from-bankruptcy

When will the Elected Leaders of the State and City of New York Learn from Its Past Mistakes?

During the 1920s and 1930s, easy entry into the taxi cab industry led to an oversupply of taxis, resulting in traffic congestion, fare-cutting wars, low driver wages and other unsafe and sometimes illegal activities. The Great Depression created an influx of unemployed workers which worsened these problems, with the number of cabs spiraling to 21,000 in 1931.

To address problems of oversupply, in 1937 the City of New York enacted the “Haas Act” (sponsored by City Alderman Lew Haas) in order to freeze the number of taxi medallions. In 1996, 2004 and 2006, the City auctioned off a total of 1450 medallions. Thus, by 2012 the total cap was set at 13,237. While being a passenger in a taxi was not always the most pleasant of experiences, it was just another option for the millions of New York City residents and the multi millions of City visitors to obtain transportation for-hire on demand. Of course, demand always exceeded the supply of available taxis. That is why the value of the yellow medallion soared from $10 in 1937 to approximately $1,000,000 (one million dollars) in 2012. The purchase of the yellow medallion was one the best, if not the best investment in the world. It also provided many immigrants with the ability to realize the “American Dream”.

While the yellow taxis have traditionally served those persons who live and seek transportation in Manhattan, the non-medallioned “livery” industry has always served the residents of the 4 outer boroughs of New York City. The residents of Brooklyn, Queens, the Bronx and Staten Island always had a reliable car service to call to obtain transportation by pre-arrangement. By 2012, the livery industry has some 38,000 licensed drivers in 23,000 vehicles that were affiliated with approximately 450 bases.

As far back as January 2011, Mayor Bloomberg first proposed allowing non-medallioned livery vehicles to accept street hails (i.e., a person standing on the street waving to vacant taxicabs to be picked up, as opposed to a trip pre-arranged by telephone or other means) outside of Manhattan. With the help of the Mayor Bloomberg and then TLC Commissioner Yassky, the State legislature created a law, later known as the “Street Hail Law” that allowed the Mayor to issue up to 2,000 new taxicab medallions and allowed the TLC to issue 18,000 “HAIL licenses,” valid for street hails outside the Manhattan Central Business District. Thus, the creation of the green taxicab. These granny apple green cabs were supposed to provide the residents of the 4 outer boroughs of New York City with more transportation options.

Those who had been heavily involved in the for-hire transportation industry and knew much more than the elected leaders in Albany about what was good and what was bad for the transportation industry in New York City were essentially ignored. The leaders of the taxi and livery industry knew that the Mayor’s proposal and the state’s new law was a bad idea and vigorously fought it all the way to the New York Court of Appeals, New York State’s highest court. The Court of Appeals upheld the law as it is required to give great deference to enactments of the State Legislature when it comes to matters of health, safety and welfare of its citizens. Of course, transportation always involves the health, safety and welfare of the citizens of New York State and New York City.

On the implicit promise from the City of New York that these green cabs would be money makers, similar to the yellow medallions, and because the City was offering incentives for green cabs retrofitted to accommodate passengers in wheelchairs, many small time investors bought into this bad bill of goods. A new generation of immigrants who were looking for the same “American Dream” that their predecessors did via the yellow medallion, bought into the green cabs. All the while, there was this little know company named Uber that was lurking in the background.

The leaders of the taxi and livery industry knew at the time that Uber was operating illegally. They surely complained to the City Council, the TLC, the New York State Attorney General and even the Federal Trade Commission. All elected leaders and those in power ignored the pleas of the leaders of the taxi and livery industry to stop Uber from operating illegally. It was not a matter of Uber taking away business from the yellow taxis and the livery bases, but a matter of fairness. Two entities that provide the same service were being treated differently. The taxi and livery industry have always been heavily regulated, but Uber was not being regulated. This created an unfair playing field that is the antithesis of our American way of life that has thrived on fair play and substantial justice. This was the seed of the downfall of the industry. The City’s failure to regulate Uber created a vacuum that allowed it to expand in ways that Uber surely planned, but the City’s leaders refused to acknowledge.

The elected leaders of the City and the TLC took no action to regulate Uber. They all bought into Uber’s claim that they were not a transportation company, but a technology company. While I believe that Uber’s technology was surely excellent, I also believe in the old saying of don’t pee in my ear and tell me it is raining. By the time the City and the TLC got around to regulating Uber, it had become a behemoth with money, political power and influence. In no time at all, Uber’s fleet of vehicles eclipsed the number of yellow taxis….and then some.

I and many of my friends and colleagues in the for-hire vehicle industry pled to the City Council Transportation Committee and the Mayor to place a temporary cap on the growth of Uber until all interested parties could get a handle on what the effects of Uber were likely to be. The City’s leaders took no action and the City’s transportation regulators even took affirmative action to let Uber thrive. Before Uber’s explosive and unchecked growth, the yellow taxi industry was still doing well and the livery industry too. Then the TLC allowed a driver of a for-hire vehicle to accept dispatches form more than one base. This old requirement that a livery or black car vehicle be affiliated with only one base and its driver only be allowed to accept dispatches from that base was created for the safety of the public. All of a sudden, without any real reason or justifiable explanation, the TLC allowed drivers to accept dispatches from bases in which there was no affiliation. This was the equivalent of the ability to mint 18 carat gold bars for Uber because it allowed them to send dispatches to virtually anyone it wanted and thus expand its fleet in ways that few, except Uber, ever imagined.

Today, Uber and other companies such as Lyft, have an army of nearly 50,000 licensed vehicles that transport hundreds of thousands of people across the city every day. Uber and Lyft are rapidly transforming transportation in New York. They not only threaten the existence of the taxi industry, but they siphon passengers away from subways and buses, all while raising concerns over worsening street congestion. According to city data, the proliferation of Uber and Lyft appear to be contributing to increasingly gridlocked streets. Average travel speeds in the heart of Manhattan dropped to about 8.1 miles per hour last year, down about 12 percent from 2010. Uber and Lyft are also succeeding at the expense of others. The Metropolitan Transportation Authority has taken a hit to its budget because it receives financing from a 50-cent surcharge on taxi trips. Officials at the MTA say the shift from taxis to Uber has cost the MTA about $28 million since 2014.

So back to the taxis industry. Many of those who invested in yellow or green cabs have seen their investments wiped out. For-hire vehicle drivers are flocking to Uber with their false promise of making large sums of money all while being your own boss. Since 2013, approximately 5,000 taxi drivers have thrown in the towel. Those who own yellow medallions are either barely paying their loans back or are in foreclosure. Last month Queens-based Melrose Credit Union, one of the largest lenders of money to those who purchased taxi medallions, was seized by state after delinquent taxicab loans soared tenfold in just 18 months. The stock price of another one of the City's taxi lenders, Medallion financial Corp., has fallen so far that one share of its stock now costs less than a ride on a NYC subway. And lets not forget that the City itself has a financial interest in the sale of medallions as it takes a 5% transfer tax on each sale/transfer. This is much less money to go to the City coffers.

Moreover, the drivers that have flocked to Uber and Lyft are not looking at the big picture. Uber has made its plans to develop a self-driving vehicle very clear. In other words, the day will come very soon, when Uber will no longer need drivers. Then the for-hire vehicle drivers will have no work. The taxi industry will be on life support or dead and the out of work drivers will then cause the unemployment lines to swell.  Worst of all, the public just does not see the ills inherent in Uber and Lyft. Their explosive growth was made possible by luring riders away from taxis and the traditional modes of for-hire vehicle transportation (livery/community car services) with artificially low prices because they are being subsidized by a massive influx of cash by large pocketed investors. Uber has engaged in anti-competitive conduct since its inception. Competition has always been good for the consumer as it keeps prices low and the incentive to innovate high. This is why the law prohibits monopolies. So all while Uber and Lyft take all measures necessary to kill off the competition, they continue lure the public to their apps.

The public and the elected leaders of the City and State need to wake up and realize that at some point in the near future, the combination of significantly reduced competition with the eventual need for Uber to turn a profit, will lead Uber to drastically increase prices. When Uber has little or no competition, what options will the public have? Taxis may very well be gone, community car services will slowly be wiped out and the MTA is always in disarray, financial and otherwise. Uber will then be in the position to raise prices to whatever it wants and will be able to fleece the pockets of anyone with a smartphone. If we stay on this path, the public will have two options. One is to walk to their destination or be financially raped by Uber. Neither sounds like a very good option to me. And what will the elected leaders do then? Will they seek to regulate the prices of Uber trips? Will they create further regulations to stagnate the vitality of for-hire transportation in the City? Will they do nothing and just let the public deal with the problems? At this point in time, all I know is that the City and State have not learned the lessons from their past errors and mistakes. Someone needs to force the elected leaders of the City and State to open their eyes…or perhaps the public should just vote those with blinders on out of office.  

So at this point in time, what can the public do, short of voicing their opinion through the power of the ballots? The public can support their tried and true local car service. Don’t turn your backs on the liveries that provided transportation to the City during a past time in recent history, such as the late 80‘s and early 90s, when it was unsafe and unpopular to so, especially in the outer boroughs. Car services such as Carmel Car and Limousine Service and Dial 7 Car and Limousine Service have been in business since the late 1970's/early 1980’s and have apps that are just as good as the one created by Uber and Lyft. Carmel and Dial 7 have been there for the public in its time of need and now the public should return its loyalty to Carmel and Dial 7, and other livery bases, by refusing to utilize Uber and Lyft. Support your local car service is akin to only buying American made goods. Sometimes it may be hard to do so, but in the end, who will be the loser by continuing to use Uber which will allowing Uber to kill off the competition. The public will suffer. I speak my peace not because I have the magic 8 ball that allows me to see into the future, but because I care. I take the time to think about the future of our City, the needs of the public and the path to destruction that the transportation industry is now on. I hope that some elected leaders take a good long look at history, think about what I am saying/preaching in this article and give my opinions its due consideration and not let campaign donations and the desire to stay in office cloud their judgment. I also hope that members of the public think about what I am saying and use your good sense to realize that Uber is not the solution, but is the problem. 

How risky is your Uber ride? Much More than you think

An Uber ride is different from hopping into a taxi or a traditional car or limousine service. When you download Uber's app and get into a car summoned with the mobile reservation system, you agree to a host of terms and conditions by default. Uber claims it puts potential drivers through a background check so that they can become an impromptu taxi driver using their own car and Uber's tech platform. The incidents, injuries, assaults and accidents involving Uber drivers and the riding public are too numerous to detail. But the real issue is that the public should understand Uber's responsibility to passengers (or lack thereof).

What exactly do passengers agree to when they use Uber? That depends on whom you ask. Most people don't know what they're getting into when they get into one of these Uber cars and they surely don't know what they're getting into when they download the app. The public is essentially giving Uber a free pass -- up to and including possible death.

Uber's terms and conditions are a way for the company to absolve itself of any liability in cases of injury or accident and to avoid responsibility for a driver's actions. It is a way for Uber to attempt to cover their ass and claim they are not responsible for anything that happens to you. Uber's public statements on safety contradict its terms and conditions. It is akin to an outright deception on people. They surely do not in any way seek to warrant that their product/service is safe.

The fine print of Uber's  terms and conditions clearly says that passengers accept a risk by using the service. "You understand, therefore, that by using the application and the service, you may be exposed to transportation that is potentially dangerous, offensive, harmful to minors, unsafe or otherwise objectionable," Uber's terms and conditions read, "and that you use the application and the service at your own risk." Lyft essentially operates the same way as Uber.

In essence, Uber and Lyft are basically trying to show through their terms of use that they are ride-matching services, rather than transportation companies. No one is really buying that they are merely tech platforms, but people continue to use these services without knowing the true potential dangers

While there are some Uber and Lyft drivers that are safe, courteous and competent, several incidents have occurred during the past few years that have called into question the safety of the services. The most severe incident was the death of 6-year-old Sophia Liu, who was  struck and killed by an Uber driver on New Year's Eve in San Francisco. There have also been more than a dozen allegations of sexual assault and gropingkidnapping; and physical assault, according to several media stories.

Uber claims its drivers are independent contractors rather than employees, which if true, it protect Uber from liability. But the company's terms and conditions can be trumped in court if it's shown that Uber exercises a certain amount of direction and control over its drivers and they more are akin to employees. Such factors of control include the ability to hire and fire drivers, decide where their services are performed, or provide them with specialized equipment, along with other considerations -- many of which, some would argue, including myself, Uber has.

Soon enough, the time will come when the issue of whether Uber's drivers are independent contractors or employees will hit the appellate courts and if it goes bad for Uber, then their entire business model may be placed in grave danger...the same type of grave danger that Uber often places its customers.....the danger of death.

Vision Zero- the Mayor has no Vision

New York City’s Mayor Bill de Blasio said in an interview Monday that he would categorize drunk driving “that doesn’t lead to any other negative outcome” a minor offense. This is absolutely absurd. Is Mayor de Blasio serious about this. Drunk driving a minor offense so long as no one gets hurt!!!! I guess all that really matters to Mayor Bill de Blasio is that traffic accident statistics go down. The means to achieve such are irrelevant to him. In other words, driver fatigue rules look good on paper, but in reality all they will do is add window dressing for Vision Zero. To say that drunk driving a minor offense so long as no one gets hurt is kin to dying that armed robbery is a minor offense so long as no one gets hurt. Driving drunk or walking into a bank with a gun, both have potential to cause massive harm and are akin to a scourge on society, but according to this Mayor, no big deal.

How about the big deal of limiting the ability of for-hire vehicle drivers to make a living. Limiting the number of hours they can work without any proof, statistics, studies or data (data and/or studies that apply to New York City) is an absolute outrage. For-hire vehicle drivers are doing the best they can to make a living in this day in age. considering the state of the market right now, that i a hard feat to do. the market is flooded with part-time Uber drivers, thus limiting the amount of jobs a regular full time professional driver can perform. Less money for drivers means they are going to seek a job elsewhere. NYC will be left with nothing but part time in experienced drivers. Would you rather be driven by an experienced driver who knows how to manage their time and fatigue or a part time inexperienced driver who knows how to manage neither.

How many NYC taxi medallions need to be foreclosed upon until the Mayor understands that limiting the number of hours a for-hire vehicle driver can operate is not going to be good for local small businesses in the outer boroughs of NYC, is not going to be good for persons who drive people for a living, is not going to be good for the ability of drivers to continue to service those persons most in need of transportation, is not going to enable the driver to make his/her car payments, etc, etc. In other words, limiting the ability of drivers' ability to operate is not going to be good for the consumer or the the economy.

If the Mayor or the NYC Taxi and Limousine Commission had some empirical data or studies to support their arbitrary time limit, then there may be nothing to complain about, as we are all in agreement that limiting accidents in NYC is a laudable goal. But limiting drivers ability to work and make a living based upon no proof of a problem and no proof that the means sought to be imposed by the NYC Taxi and Limousine Commission are the best means to prevent accidents wholly unreasonable.

It is clear that the Mayor and the NYC Taxi and Limousine Commission are more concerned with what looks good to the public rather than what is good to the public. Accidents in NYC will never reach zero. It is a fact of life, just like crime in NYC. It will always be there. We can try to limit it, but both will be there. Police don't go after criminals and solve crimes without proof, evidence an/or data. They don't operate based upon a hunch. The NYC Taxi and Limousine Commission should not be allowed to make rules based upon a hunch either.

The Mayor's comments about drunk driving not being a big deal so long as no one gets hurt is proof that the Mayor is not really concerned with limiting accidents, but simply with the appearance that he is doing something to limit accidents. That is fine, but before you take away the ability of a for-hire vehicle driver to make a living, perhaps the Mayor should consider having some proof or evidence that the NYC Taxi and Limousine Commission proposed rules on driver fatigue be based upon some proof or evidence. Otherwise, the for-hire vehicle driver is being hurt and punished more than the drunk driver who does not cause any accidents or harm to others. Think about it. It is not just the end result that matters. The means used to achieve those results are often the difference between a well executed plan that leads to good results and a poorly executed decision that causes harm to many without any justifiable basis.

Time to Consider Deregulation of the FHV industry

Deregulation in the for-hire vehicle industry is something that should be seriously considered these days. It is obvious that the New York State government, in its various versions of the TNC (Transportation Network Company) bills it has recently created, proves that while there is virtually no difference in the service provided by a TNC like Uber, from that of the traditional car and limousine service, the various services are being treated differently, all without any real reason or rationale. Can someone really tell me with a straight face that providing transportation via a TNC is not transportation for hire? Is the State Legislature and the Governor going to serious claim that the provision of transportation via a TNC is not a commercial transaction. Ride Sharing is simply a misnomer. While the ride can technically be shared by more than one person, we are no talking about legalized hitchhiking. It is a commercial transaction for which a service is being provided to one person and that person is paying for the service. At least create rules that are the same for all services. Otherwise, the playing field is hardly level and will only lead to destruction of all for-hire transportation providers other than Uber and Lyft.

While new competition from all sides of the car service industry are forcing operators to improve their business, it is impossible to adapting through improved driver retention and customer service when Uber and Lyft are able to operate the same type of business as a traditional car service but can play by rules which are either non-existent or so lenient as to make it unfair competition. If there is going to be regulations, then there should be regulation for all that provide the same service. Otherwise, the government should de-regulate the entire industry.

Transportation deregulation in the airline, railroad and shipping industries have produced enormous benefits for consumers. Airfares are down sharply; trucking rates have fallen; the nation’s railroads are offering new services. A few years ago, passenger and freight transportation were among the most heavily regulated industries in the United States. Now much of the red tape regulation has been totally eliminated.

This wave of deregulation stems from a growing recognition that government controls of transportation have not fostered the public interest. Regulatory agencies tend to protect the interests of the industries they regulate. Studies by experts representing the whole spectrum of political persuasion have confirmed that regulatory agencies reduce competition at the expense of the public. Typically, industry-oriented individuals are appointed to commissions, often from industry itself. Once in office, regulators perceive their duty as protecting the financial health of the companies they regulate. The easiest way to accomplish this is to reduce competition, thereby increasing rates and creating monopolies. This seems to be the exact case in New York City and soon to be throughout New York State. 

Uber and the Demise of the Taxi industry and the Dawn of the Tyranny

New York state took over a small credit union in September of this year because of the “unsafe and unsound conditions” at the institution. The real reason for this is Uber. One third of Montauk Credit Union’s portfolio of $170 million in outstanding loans were to taxicab operators, all of which have been struggling to pay their loans to their lenders.

Since the dawn of the Hass Act, a taxi medallion was likely the best investment in the world. Enter Uber and the technological revolution they brought to the for-hire vehicle industry in New York City. Taxicab operators typically take out loans for medallions, the city-issued licenses that they need to operate. Yellow taxi medallions were always a hot commodity in New York City because the city always severely limited how many licenses it issues, thus driving up the demand for them and their value. Just two years ago or so, a single license could sell for as much as $1.3 million.

When Uber entered the marketplace, they exploited loopholes in the system by skirting existing rules and regulations or by simply ignoring them. By the time the TLC got around to bringing them under their regulatory umbrella, Uber was already entrenched in the market. The loopholes exploited by Uber let the company’s fleet of drivers grow over the past five years to about 60,000 drivers in New York City. Keep in mind that there are only 13,237 licensed yellow cabs in the city. 

As Uber’s estimated value has skyrocketed to an estimated $65 billion in the past few years, the value of the city's taxi medallions has shrunk from $1.3 million to less than $700,000. The plummeting value of taxi medallions doesn't just hurt taxi owners. Much like how the housing bust in 2008 shook the home loan industry, banks across the country that specialize in medallion loans are now taking a massive hit. With the crash in prices, many loans are now underwater, many borrowers are in default and lenders are reluctant to continue to refinance as the borrowers struggle to make payments.

A group of Credit Unions have sued New York City and the Taxi and Limousine Commission for allowing Uber to operate, saying the company is destroying their businesses and threatening their livelihoods. The situation will get worse before it gets better for taxi owners and their lenders. Financial institutions with large exposures to the taxi medallion industry have had to take appropriate steps to measure and mitigate this increasing credit risk. As Uber and the other so called “ride-sharing companies” have overtaken the on demand transportation market in New York City, medallion prices will to continue to decline. The end result is still unknown. No one, except a few people, would have predicted the housing market crash in 2008 and look what long term ripple effects that caused. While the Taxi industry is not quite as large as the housing industry, the fact remains that the “Uber effect” has not only decimated the taxi industry in New York City, but is harming, and sometimes destroying, the credit unions that loaned taxi owners money to purchase the medallions in the first place.

I don’t blame Uber for this. I blame the City of New York. The allowed Uber to operate outside of the law, allowed them to proliferate over time and caused the value of the hottest commodity in town (the taxi medallion) to plummet…and that decline will only continue and the ripple effects will be harmful not to just the taxi owners and their lenders, but to the public. If things continue as they are, there will likely come a time when Uber is the only game in town….and when they are, they will do as all monopolies do, they will exert their power and influence in a manner that is detrimental to the interest of the riding public. The only difference between Uber and Standard Oil is that once the medallion industry is decimated and the car services are no longer in business, there is no going back to the “old days”. A theoretical break up of Uber, if it were to become an illegal monopoly, would not make the price of the yellow medallions rise, will not prompt people to go out and purchase medallion and will not prompt lender to loan money to those who may seek to purchase a medallion. Hence, any theoretical break of the Uber Monopoly that is set to occur in the future will not increase competition because there will be no competition.

And remember, Uber is not the Salvation Army. They are not here to save the world. They are here to gather your information and data for their own purposes. Uber is not just a ride sharing company. Look further into the future, remember George Orwell’s 1984 and consider what happens when an almighty entity controls all the data on the comings and goings of the citizens of New York City. The consolidation of power has been a danger since the dawn of time. Our country was founded upon the principle that the consolidation of power is bad and leads to tyranny. Where do you believe Uber is headed? Think about It and Draw your own conclusions. 

Federal Judge Rejects Uber's $100M Settlement Offer to Its Drivers

Now it is time for the real game of chicken. Since the Federal District Court Judge overseeing what is likely the biggest labor law case in history has rejected the $100,000,000.00 settlement Uber was going to pay to its drivers, both sides will have to move forward. The stakes are high for the drivers, even higher for the lawyers for Uber and the highest for Uber itself. The drivers have little to lose as most would only get peanuts. The lawyers for Uber agreed to reduce their legal fee from $25,000,000.00 to $10,000,000.00 to push the settlement through. But for Uber, it may be winner take all. Uber may move forward and win simply because the appeals court may not permit the class action to move forward at all, thus killing the case as all drivers would be then forced to arbitration on a case by case basis. On the other hand, if the case moves forward in class action status and Uber loses, the gig economy may be upended, Uber's $65 billion dollar valuation make implode and Uber as we know it may be over. I for one am happy that the case must move forward. The drivers are the client's and they should be zealously represented and not sold out by their lawyers who simply wanted to cash in before the oven got too hot and they were at a severe risk of losing any legal fee they could have earned. As I have written before, I have never seen a case so clear for employee-employer relationship as Uber and its drivers in my 20 years of practicing law. The Judge overseeing the case must agree that the case has great merit, otherwise, the $100M offered would have been a windfall and no judge would have declined to approve such a settlement for a meritless case. Time will tell what happens when the appeals court rules on the class action status (obligation of each driver to go to arbitration as opposed to court) and we will see who blinks first.......the 800 pound Gorilla (Uber) or the lawyers who are now forced to either move the case forward on its merits or to obtain a better and increased monetary settlement from Uber. Grab tour seats because this issue is far from over. 

Uber will pay $100 million to settle the biggest legal threat to its business, but are Drivers or Uber the real winner?????

It is crying shame to have settled this case. I am sure fighting Uber is a hard and arduous undertaking, but once you take case, a lawyer is supposed to do what is in the client's best interest and not their own....and certainly not where the opponent (Uber) makes out better than all of the parties. It is as if this settlement was a clear victory for Uber.

As we know, Uber has spent the last two and a half years embroiled in a major legal battle over its business model. The company considers its drivers to be independent contractors, but many of those drivers believe they were treated more like employees. Paying up to $100 million to settle class action lawsuits in California and Massachusetts removes the biggest threat to Uber's Business model. Drivers in those states will remain independent contractors rather than becoming employees. So who wins in all of this????? Certainly not the drivers. The small amount of money they will each receive will perhaps reimburse them for some of their past costs for gas and car maintenance, but Uber is not going to be paying any of these items to drivers in the future. The drivers get a bit more protection by having less stringent rules before Uber can deactivate a driver and drivers are allowed to ask for tips from passengers. BIG DEAL......This is a settlement that is fair to drivers? NO WAY. NOT IN MY BOOK. 

Uber get to keep its business prized model and gets to claim vindication by continuing business as usual. 100 Million to them is peanuts. So we know that Uber benefits the most, but who also benefits....the lawyers for the drivers. Class action cases of this nature are supposed to be about vindicating the rights of the drivers, but for the plaintiffs attorneys it has proven to be clearly about a big payday and mega buck. Yes, they worked extremely hard over the past 2.5 years, but in the end they will get about $25-$30 Million dollars in legal fees from this case. This is a huge incentive for them to settle and the impetus to convenience their clients (the drivers) that the settlement will give them more rights and will vindicate their interests.

I have the utmost respect for the plaintiffs’ attorneys as they took a case and financed it all the way, but I believe they had a great case and would have won. I have been litigating cases involving the issue of employer-employee relationship in almost every forum in New York for the past 20 years and this is one of the most clear cut cases of employer employee relationship I have ever seen. So why settle, especially before the plaintiffs’ attorney even had the chance to make a motion for summary judgment asking the court to declare Uber's drivers to be employees as a matter of law? The answer is that the plaintiffs’ attorneys worked hard, paid money from their own pockets to litigate the case and they wanted to get paid.....and now they will....BUT the real issue of whether Uber's drivers are employees or independent contractors will remain unsettled. 

In the interim, Uber, which doesn't really make money at all, will continue to save as much as 30% or so on labor costs, because independent contractors aren’t entitled to the same safety nets as traditional employees—i.e., benefits such as health insurance and minimum wage protection. They’re also responsible for paying their own business expenses. For Uber drivers, these include gas and car maintenance, which really add up.

What a shame for the drivers, because they really don't get anything here.....and what a shame for the legal profession because now it is just another case where the lawyers settle because money has that kind of effect on people. This degrades the legal profession....and kind of makes me ashamed to be a part of it. A lawyer is supposed to zealously represent the interests of their client (not their own interests). I apologize in advance too the attorneys for the drivers, but this case has turned into just another case to make money. It turns out that it was not about vindicating the rights of drivers. Each driver really did not have much to lose by continuing to litigate the case, but the plaintiffs attorneys had about $25-$30 Million dollars in legal fees to lose. This appears to be simply too much for them to risk. The drivers didn't  have much to risk by continuing. In the end, for the drivers who drove the most, around 10,000 drivers, they will receive around $8,000. For the rest, the more than 122,000 drivers who have driven less than 750 miles, they should expect an average of $24. This is a pathetic settlement that the drivers should reject as it is their case and they should demand more.


Sometimes you have to take a risk and sometimes that risk means taking a case all the way and get a decision. Yes, it would have been a big gamble for the plaintiffs attorneys and they did a great job thus far, but I felt so strongly about this case that if asked, I would have worked with them for free. After 20 years of practicing law, I still believe in justice...and in this case, justice was not served. Uber continues to operate with impunity, their business model survives and the drivers go on as usual, getting treated like cattle, when in fact they are as close to an employee of Uber as any case could possibly expose. Again, Uber wins, the lawyers win and the driver, who are the represented parties, get nothing in the long run. 

The settlement represents a huge win for Uber. If the lawsuit had gone to trial, and a jury decided that drivers indeed deserved to be full employees, then Uber could have suddenly found itself responsible for all sorts of extra costs, from Social Security payments to minimum wage requirements. Instead, drivers will stay "independent", and Uber keeps its costs low. Don't be surprised if you don't see any Uber drivers celebrating in the streets as a result of this settlement. Many were hoping for a much different outcome.

I believe it is obvious that the plaintiffs/drivers who wanted to be employees are going to be disappointed and they should be. Although the lawsuit was settled, for the drivers, Uber really won this case.

But drivers could end up eventually coming out on top, depending on whether the settlement is approved by US District Court Judge Edward Chen, and everything he has said up until this point seems to suggest that he was looking forward to a jury trial. The plaintiffs in Uber's case were seeking $3.4 billion, a fairly ridiculous sum but one they thought they were owed. Judge Chen could decide that $100 million isn't enough compensation, or that the reforms Uber is promising more transparency, an ability for drivers to solicit tips and challenge deactivations through arbitration, recognition from Uber of quasi-union "driver associations" don't even scratch the surface.

Another potential poise result from this settlement is that without any jurisprudence on the most critical issue of employer-employee relationship, there is nothing preventing others from championing the cause in the future. The case would be settled and not decided. Until a court decides whether Uber drivers are employees or independent contractors, the debate will not end. I guess a new set of plaintiffs in other states will have to hope for a lawyer that is willing to take the risk of taking this type of case to trial and consider more than their own self interests in being compensated for their efforts rather than the cause they were supposed to be seeking, which is justice.