SideCar Lawsuit

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Lawsuit filed by San Francisco ride sharing company SideCar against the city of Austin for prohibiting them from operating in the city.

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<p>CAUSE NO. SIDE.CR, LLC, Plaintiff, v. CITY OF AUSTIN, TEXAS, Defendant. IN THE DISTRICT COURT OF</p> <p>TRAVIS COUNTY, TEXAS</p> <p>DISTRICT COURT</p> <p>PLAINTIFFS ORIGINAL PETITION COMES NOW SIDE.CR, LLC, Plaintiff, complaining of City of Austin, Defendant, and would respectfully show as follows: 1. 190.1 I. Introduction and Summary. 2. Plaintiff Side.cr. LLC (SideCar) is a technology company that has developed a Discovery is intended to be conducted in this case under Level 2, Tex. R. Civ. P.</p> <p>computer software platform for use by people who carpool or rideshare. SideCar is, in essence, a Match.com or dating service for carpoolers and ridesharers. People can download the SideCar mobile app to their smartphones, and use that app to locate other people who are driving or need rides. SideCar provides the software and the interactive computer system that facilitates the communication, but it does not own or operate vehicles or direct drivers as to routes or riders. 3. The City of Austin Transportation Department has threated to cite drivers who use The City is</p> <p>SideCar and SideCars corporate representatives for violating the City Code.</p> <p>incorrect. Neither SideCar nor its users are in violation of the City Code, for multiple reasons: SideCar maintains a communication platform for individuals to locate each other to share rides. SideCar does not provide or operate a ground transportation service as defined in the Code.</p> <p>The City Code only regulates chauffeured vehicles, and neither SideCar nor people coordinating rideshares using SideCar are chauffeurs. The City Code only regulates chauffeured vehicles that pick up riders in the City for a fee. Any payments made using SideCar are strictly voluntary, discretionary donations, and not a fee. Finally, any application of the Code to SideCar would violate federal law, 47 U.S.C. 230, which provides protection to the operators of interactive computer services from state regulation based on their users communications. SideCar brings this lawsuit to obtain declaratory and injunctive relief to prevent</p> <p>4.</p> <p>the City from wrongly applying the City Code to it and its users. SideCar also brings this lawsuit to defend ridesharing and carpooling in Austin. If the Code is improperly stretched to cover SideCar, as the City of Austin is doing, the Code would apply to practically every carpooling and ridesharing arrangement in the City, making every soccer mom, ridesharing college student and carpooling worker potentially liable for citation and impoundment of their personal vehicle. II. Parties. 5. Plaintiff Side.cr, LLC, is a limited liability company with its primary place of</p> <p>business in San Francisco, California. 6. Defendant City of Austin is a Texas home rule city, which may be served by</p> <p>serving its City Manager, Mark Ott, at the Office of the City Manager, 301 W. 2nd Street, 3rd Floor, Austin, Texas 78701. III. Jurisdiction and Venue. 7. Jurisdiction is appropriate in a District Court of Travis County, because the</p> <p>amount in controversy exceeds the minimum jurisdictional amount and because the Plaintiff seeks declaratory and injunctive relief. 8. Venue is proper in Travis County pursuant to Tex. Civ. Prac. &amp; Rem. Code </p> <p>15.002(a)(1) &amp; (3).</p> <p>Plaintiffs Original Petition Page 2</p> <p>IV.</p> <p>The Facts. A. 9. SideCar Has Developed and Operates a Mobile App that Facilitates Peer-toPeer Ridesharing. SideCar publishes a mobile application called SideCar and operates a website</p> <p>located at www.side.cr. Persons who download the app can use it to coordinate ridesharing with other persons who have also downloaded the app. 10. A person looking to share a ride uses the SideCar app to input their desired pickup</p> <p>and dropoff destination. That information is uploaded to the SideCar platform, which then enables the rideshare requester to route the request to either a geographically proximate or particular driver. The selected rideshare driver receives the request and must either accept or deny the rideshare request based on their trip specifics and preferences (e.g., pickup point, destination etc.). If the selected driver accepts the rideshare request, then a match is confirmed; if it is rejected then it is routed to other available drivers. Like a Match.com dating site, the platform merely suggests potential matches and the final match must be selected and approved by both rider and driver. This process is quick and easy, making arranging for a shared ride very convenient. However, because of this method, and in contrast to a dispatch service, a rideshare request may go unmatched; SideCar does not and cannot guarantee that a ride request will be matched. 11. For each ride, the SideCar app displays a suggested donation, based on a</p> <p>computer-generated average or algorithm reflecting factors such as the amount of money that other riders have donated for rides of a similar distance and duration, the time of day and trip pickup and drop-off locations. Any donation is strictly voluntary; there is no minimum or required amount. If a donation is made, 20% of the donation goes to SideCar to cover the cost of providing the communications platform.</p> <p>Plaintiffs Original Petition Page 3</p> <p>12.</p> <p>In order to use SideCar, a person must agree to SideCars Terms of Service,</p> <p>which define and limit the purposes for which the SideCar app may be used. Participants agree that they will not use SideCar for any commercial purposes. SideCar is available for personal ridesharing purposes only, and use of SideCar for any commercial purpose may result in immediate termination of the users SideCar account. SideCar pre-screens persons who wish to provide rides using SideCar by doing background checks for criminal, DWI or reckless driving convictions, confirms liability insurance as required by Texas law, and confirms vehicle registration. 13. SideCar does not employ, contract, direct, manage or control drivers. It does not</p> <p>dictate hours, schedules or shifts for drivers. It does not dispatch drivers to pick up riders. Drivers turn on and use the app when they want. Rather, the SideCar communication platform allows people to get and give rides in a more convenient and efficient way than casual carpools, paper or electronic bulletin boards, Craigslist, or traditional ride-matching services. Like</p> <p>Match.com for dating, eBay for products, and HomeAway for rentals, SideCar has developed a technology allowing drivers and riders a better way to find each other and share rides. B. 14. The Citys Transportation Department Contends that SideCars Application Violates the City Code; SideCar disagrees. The Austin Transportation Department has interpreted the City of Austin Code as</p> <p>prohibiting SideCar from operating in Austin without a permit. On February 22, 2013, SideCar received a letter from Robert Spillar, Director of the Austin Transportation Department, addressed to SideCars co-founder and CEO, Sunil Paul. Exhibit 1, attached. The letter claimed that your intended operations which connect passengers with drivers using a mobile application requires permitting and authorization through our Ground Transportation Office. Id.</p> <p>Plaintiffs Original Petition Page 4</p> <p>15.</p> <p>Although Mr. Spillars letter did not identify any specific Code provision that</p> <p>SideCar is allegedly violating, the Transportation Department nonetheless demanded that SideCar immediately cease and desist your current and future operations that are intended to dispatch vehicles-for-hire within the City of Austins right-of-way without securing the proper authority. Id. Again without citing any law, the letter claimed that [o]perating an unpermitted vehicle for hire without prior authorization is a criminal offence, and threatened that [v]ehicles and drivers observed providing for-hire services without the proper permits will be cited along with SideCar corporate representatives for each violation. Id. (This letter has been falsely characterized as a cease and desist order by City employees and others. It is not. The City Transportation Department has no legal authority to issue orders; under the Code, if the Department believes a violation has been committed, it is authorized to issue citations alleging a violation, which are then adjudicated in a court of law.) 16. SideCar carefully reviewed the Austin City Code with counsel, and on February</p> <p>27, 2013, Mr. Paul responded in detail to Mr. Spillars letter, explaining why SideCars operations and its drivers were not in violation of the City Code, and did not require the Departments permitting and authorization. Exhibit 2, attached. Mr. Pauls letter included a detailed, seven-page legal memo analyzing the Code and its lack of application to SideCar, as well as explaining that if the Code did apply to SideCar, it would be preempted by a federal statute, 47 U.S.C. 230(c). Exhibit 3, attached. 17. SideCars counsel met with a representative of the Transportation Department at a</p> <p>city councilmembers office on March 1, 2013, seeking to understand the Departments position. Following the meeting, SideCars counsel sent a letter requesting that the Department confirm that it does not intend to take enforcement action against SideCar or its users who are using the</p> <p>Plaintiffs Original Petition Page 5</p> <p>app in compliance with SideCars Terms of Service, while the City addresses the Transportation Code and its application to carpooling, ridesharing and electronic platforms that facilitate that activity such as SideCar. Exhibit 4, attached. 18. SideCar has received no written response to its February 27 or March 1</p> <p>communications and has received no commitment that the City will not take enforcement action against it. SideCar has a reasonable belief that if it operates in the City of Austin and any driver accepts even a nominal donation for sharing a ride, the City will take enforcement action against both the driver and SideCars employees. V. Declaratory Judgment. 19. The City Transportation Departments February 15, 2013, letter presents a live</p> <p>controversy over whether the City Code applies to SideCar and its registered users. The City has threatened to issue citations against SideCars users and its corporate representatives if it continues to operate in Austin. This presents a live case or controversy for this Court to resolve and SideCar seeks a declaration of its rights pursuant to Chapter 37 of the Civil Practice &amp; Remedies Code. A. SideCars mobile app and the persons who use it do not violate the City Code because SideCar is not providing or operating a ground transportation service and therefore is not regulated by Chapter 13-2. Chapter 13-2 of the Austin City Code regulates ground transportation passenger</p> <p>20.</p> <p>services. The operative provision of Chapter 13-2 is 13-2-3(A), which provides that a person may not provide or operate a ground transportation service that picks up passengers within the city or represent the persons business to the public as a ground transportation service, without obtaining an operating authority or taxicab franchise. City Code 13-2-3(A) (emphasis added).</p> <p>Plaintiffs Original Petition Page 6</p> <p>21. 22.</p> <p>The terms ground transportation service and passenger are defined terms. Ground transportation service means the service of providing chauffeured</p> <p>vehicles for compensation for the transportation of passengers within the city. City Code 13-2-1(12) (emphasis added). 23. Passenger means an individual being transported for a fee in a ground</p> <p>transportation service vehicle. City Code 13-2-1(17) (emphasis added). 24. Compensation is defined broadly as any money, thing of value, payment,</p> <p>consideration, reward, tip, donation, gratuity, or profit paid to, accepted, or received by the driver or owner of any vehicle providing transportation for a person or persons; whether paid upon solicitation, demand or contract, or voluntarily, or intended as a gratuity or donation. City Code 13-2-1(3). 25. Importantly, several key terms are not defined: provide or operate,</p> <p>chauffeured vehicle, and for a fee, and so those words must be given their common, ordinary meaning. 26. Under the plain language of the Code, Chapter 13-2 only regulates persons who</p> <p>provide or operate a ground transportation service. For three reasons, Chapter 13-2 does not apply to SideCar. 1. 27. Rideshare cars are not chauffeured vehicles.</p> <p>SideCar is not a regulated ground transportation service, because the persons</p> <p>participating in ridesharing coordinated by using the SideCar platform are not driving or riding in chauffeured vehicles. Chapter 13-2 applies only if persons participating in ridesharing using SideCar are driving a chauffeured vehicle. The terms chauffeured vehicle and chauffeur are not defined in the Code, so their ordinary meaning applies. Merriam-Webster defines</p> <p>Plaintiffs Original Petition Page 7</p> <p>chauffeur as a person employed to drive a motor vehicle. Miriam-Webster defines employ as to provide with a job that pays a salary. From Driving Miss Daisy to Downton Abbey, this has always been the common understanding of the word chauffeur: a professional whose job is driving another person around. 28. Individuals who participate in ridesharing coordinated by SideCar are not driving</p> <p>a chauffeured vehicle because they are not employed to drive their vehicle, and they do not work a job that pays a salary. SideCar does not employ drivers or pay participating drivers a salary. Drivers voluntarily participate in ridesharing coordinated through the SideCar mobile app. SideCar specifically prohibits commercial drivers from participating in its rideshare</p> <p>coordination service. 29. The SideCar app facilitates the making of a voluntary donation to help cover</p> <p>vehicle operating expenses, but there is no guaranteed, minimum or required donation. Further, ridesharing is just that the SideCar model involves drivers sharing a ride as they travel from one part of town to the other as they move to their own destination. 2. 30. Rideshare riders are not passengers as defined in the Code.</p> <p>Riders participating in ridesharing are not passengers, as that term is</p> <p>specifically defined in the Code. The only regulated ground transportation service is one that picks up passengers in the City of Austin. 13-2-3(A). Passengers are only persons who are transported for a fee. 13-2-1(17). Although the Code includes a broad definition of compensation, the Code uses a different, undefined but clearly narrower term, fee in its definition of passenger. The ordinary meaning of the term fee does not include a gratuity or a reimbursement for expenses. It means a fixed charge for a service. Miriam-Webster defines fee as a fixed charge or a sum paid or charged for a service. Therefore, because there is no</p> <p>Plaintiffs Original Petition Page 8</p> <p>fee charged by a driver participating in a rideshare coordinated using SideCar, riders are not passengers as defined in the Cod...</p>