July 15 (Bloomberg) -- Lyft Inc., the car-sharing business vying with Uber Technologies Inc. for customers hailing rides with smartphones, agreed to further postpone its start in New York City and avoided a court-ordered shutdown sought by the city and state.
A Manhattan judge yesterday didn’t issue the restraining order requested by New York Attorney General Eric Schneiderman after Lyft’s lawyers said the service won’t start until the ‘i’s are dotted and ‘t’s are crossed.’’
“I’m extending what is essentially a status quo,” Justice Kathryn Freed said at the conclusion of yesterday’s state court hearing.
Lyft hasn’t complied with state and local regulations, including insurance laws, state officials argued in a complaint filed July 11, the same day the car-booking service was planning to start ferrying passengers in the city. Lyft filed its own suit against the officials, seeking to block a subpoena for operational documents.
State regulators claimed Lyft doesn’t require drivers to hold commercial licenses, conduct vehicle safety inspections or take defensive-driving courses. The company also doesn’t conduct drug tests on drivers, they said. Lyft has a “shoot first, ask questions later, attitude,” Jane Azia, chief of the attorney general’s Bureau of Consumer Frauds and Protection, said at yesterday’s hearing.
The attorney general is engaging in a “smear campaign to shut down this business before it even starts operating” in New York City, Martin Jackson, a lawyer for Lyft, told the judge.
“Based on today’s progress, we expect to be operating shortly in New York City and will continue working” with all the relevant regulators, Edie Campbell Urban, a spokeswoman for San Francisco-based Lyft, said yesterday in a statement. At the same time, the company will be “vigorously pushing for a peer-to-peer model” that exists already in more than 65 cities, she said.
Lyft has agreed to use only commercially licensed drivers and vehicles, the way the taxi licensing commission and the city should want, said Alan Sclar, another of Lyft’s lawyers.
Lyft said on July 9 that it would start offering services in New York with 500 drivers, bringing more competition to Uber, which was valued at $17 billion in its latest financing round. Lyft started operating in two other New York cities, Buffalo and Rochester, on April 24, without approval or authorization, according to the state’s complaint.
The complaint was also filed by the office of Benjamin Lawsky, superintendent of the New York Department of Financial Services whose office regulates insurers in the state.
The case is The People of the State of New York v. Lyft Inc., Supreme Court of the State of New York (Manhattan).
To contact the reporter on this story: Erik Larson in New York at email@example.com