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Judge denies delay for Uber and Lyft, which could result in California ride-hailing shutdown

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By Levi Sumagaysay

The countdown to a ride-hailing shutdown in California is on after a judge on Thursday denied appeals by Uber Technologies Inc. and Lyft Inc. to extend a stay of an injunction ordering the ride-hailing giants to classify their drivers as employees.

On Wednesday, Uber /zigman2/quotes/211348248/composite UBER -0.04% and Lyft /zigman2/quotes/208999293/composite LYFT -1.40% said they would shut down ride-hailing services in the state if they lost their appeals to extend the stay.

“I am unconvinced that any extension of the 10-day stay is required,” Judge Ethan Schulman said Thursday in denying the extension. He ruled Monday in a lawsuit brought by the state attorney general and three cities that the companies must classify their drivers as employees, not independent contractors, to comply with Assembly Bill 5, a California law that was passed last year and became effective Jan. 1.

“This was just another delay tactic by Uber and Lyft,” said John Cote, spokesman for City Attorney Dennis Herrera of San Francisco, one of the cities that sued to force the companies to comply with AB 5 while Uber challenges the law. “The court saw right through it.” 

The city attorney of Los Angeles also brought the lawsuit.

“Rideshare drivers are entitled to the full protections afforded to employees, and it’s long past time that Uber and Lyft stop shifting their responsibilities to California taxpayers,” said Los Angeles City Attorney Mike Feuer in a statement.

See: Uber and Lyft must make drivers employees because California law has ‘overwhelming’ edge, judge says

A Lyft spokeswoman said Thursday the company will file to extend the stay with a state appeals court, and that if it is unsuccessful, the company will suspend operations in California. Uber will also file an appeal, and it will shut down ride-hailing in the state if that appeal is denied, a spokesman confirmed.

Some San Francisco residents said a shutdown would be inconvenient, especially during this pandemic.

Kevin Murphy, who works in retail, said he has been taking Lyft to and from work lately because it is faster and feels safer than taking public transportation. Besides, there aren’t as many bus routes available right now.

How does he feel about the legal fight between his city, the state and Lyft and Uber?

Drivers “seem underpaid. A lot of them seem to work really long hours,” Murphy said. “And a lot of them come from far away — from Sacramento, Monterey, all over the East Bay.” On the other hand, he said, Uber and Lyft seem to “make enough money as it is.”

Anne Ahola Ward, a small-business owner in San Francisco who uses Lyft to get to appointments and other destinations that are too far for her to walk to, said: “I manage to pay my workers a salary and give them benefits. You should take care of the people that are core to your business.”

She added that Uber and Lyft would “have no business without their drivers.”

The ride-hailing companies once shut down for six months in Austin, Texas, over a fight to require them to do background checks on drivers. They have also threatened to go dark in other cities — but not a whole state —over various regulatory battles, union groups point out.

“Time and again in other states we’ve seen these threats evaporate as soon as the companies get what they want,” Art Pulaski, Executive Secretary Treasurer of the California Labor Federation, said in a statement Thursday.

Lyft’s California ride-hailing business makes up 16% of its overall rides business, while for Uber that number is 9%.

Uber and Lyft, along with other gig-economy companies, are also asking California voters to decide in November whether they should be exempt from AB 5. Uber CEO Dara Khosrowshahi said Wednesday that the company’s ride-hailing operations could shut down in the state at least until then.

Delivery couriers for Uber Eats — which has seen a surge in demand because of the pandemic — are not covered by the injunction, according to Cote. Many Uber drivers who have seen ride demand dry up are either supplementing providing rides with doing deliveries, or have switched to Uber Eats.

Lyft shares fell more than 5% Thursday after reporting earnings Wednesday afternoon , while Uber shares fell 1.2% to $30.46.

$ 54.29
-0.02 -0.04%
Volume: 40.89M
Jan. 25, 2021 4:00p
P/E Ratio
Dividend Yield
Market Cap
$100.55 billion
Rev. per Employee
US : U.S.: Nasdaq
$ 47.14
-0.67 -1.40%
Volume: 7.31M
Jan. 25, 2021 4:00p
P/E Ratio
Dividend Yield
Market Cap
$15.18 billion
Rev. per Employee

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