NEW YORK – A federal judge has halted a New York City law that requires rideshare companies like Uber and Lyft to show why they have deactivated drivers, finding the City Council did not consider the safety of citizens.
Judge Gregory Woods on Tuesday issued a preliminary injunction against Local Law 52, which was adopted in January and was set to start on July 28. The two companies challenged it in court, to which NYC argued it would have a “positive impact” on workers who had their income harmed by false reviews from riders.
Former mayor Eric Adams had opposed the measure, but successor Zohran Mamdani felt differently. LL52 requires Uber and Lyft to show the City that deactivation of a driver was for a “bona fide economic reason” but allows them to immediately act against drivers when there are egregious public safety concerns.
Judge Woods notes that Uber deactivates only 1% of its tens of thousands of drivers each year, and NYC failed to show how many of those actions were wrongful.
“And the record shows that the City Council did not consider the Law’s effects on the broader citizenry of New York City, such as passengers and pedestrians – groups whose safety depends in part on swift deactivation of drivers accused of assault, fraud or dangerous conduct,” Woods continued.
“Nor did the City consider whether the cost of compliance with the Law would result in increased costs for the millions of monthly users of Uber and Lyft’s services.”
The City tried to show studies and anecdotal accounts of drivers who lost their income because of discriminatory or false reviews from riders, to which Woods replied the law protects a narrow class of drivers while not advancing a broader social or economic interest. Woods noted the Uber and Lyft have shown a likelihood of success in the case.
A Brooklyn man has filed his own lawsuit against it, saying the City created a system in which he has no idea if his driver is in good standing with Uber or Lyft. If someone is an Uber driver, it used to mean the company vouched for them, he said.
Now, it could mean “a driver Uber tried to remove, but the City would not let it,” his lawyers wrote in his June 28 complaint. He says he has relied on truthful commercial information that is private speech now skewed by government interference.”
Ex-mayor Adams wrote the City Council shortly before leaving office in December to express his worries with the measure, calling it an “expensive new government program that would be called upon to second-guess business decisions.”
The Office of Management and Budget had estimated 170 workers, including 105 lawyers, would be needed in the Department of Consumer and Worker Protection to handle an estimated 2,000 deactivation claims each year. The unit was estimated to cost $23 million annually.
Uber said it was already doing more for the safety of New Yorkers than the City Taxi & Limousine Commission, under which it maintains a high-volume for-hire service license. While that commission only focused on in-state data, Uber said it looked at national information for background checks that disqualified hundreds of prospective drivers.
“Uber takes the decision to remove access to driver accounts seriously and considers deactivation to be a last resort,” the company said.
Judge Woods said the public has a substantial interest in preserving the reporting of dangerous conduct by drivers.
“The City has not considered in passing this statute whether its changes to protect some drivers will harm the millions of other users,” he wrote.
