Lyft and Uber said they will continue operating their ridesharing service in Los Angeles despite receiving cease-and-desist letters from the city's Transportation Department.
The city sent the two companies, as well as Sidecar, the letters Monday, saying they do not have the permits or licenses to operate and are in violation of the city's municipal code.
The three services enable users to request rides using smartphone apps. The apps locate users by GPS, and they are then picked up by others who are using their own cars to give the rides. At the end of the ride, the users pay for the ride through the smartphone apps.
"Your company and all drivers and vehicles dispatched via your mobile app sysem (sic) are hereby directed to cease and desist from picking up passengers within the City of Los Angeles," the letter to Uber reads.
But Lyft and Uber said they have agreements in place with the California Public Utilities Commission that permit them to operate statewide. Both companies said they plan to continue operating in Los Angeles.
"We already signed an agreement with the California Public Utilities Commission explicitly stating that Uber services, including the eco-friendly UberX, are authorized to operate statewide," an Uber spokesman said.
The letters from the city said drivers of the services may be subject to arrest and could have their cars impounded for as long as 30 days. The letters were followed Tuesday by taxicab driver protests at City Hall against the ridesharing services.
"These companies have no permits, and that's a real concern to us," said Thomas Drischler, the city's taxicab administrator. "That raises safety issues."
Without those permits, Drischler cannot verify that the services conduct inspections, background checks or are insured. He also said that because these companies are making money off their rides, they are commercial vehicle for-hire services and fall under the jurisdiction of the city, not the state. Drischler said the city plans to make arrests.
But Lyft co-founder John Zimmer said he isn't worried and that drivers or riders shouldn't be either. He said Lyft has experienced the same kind of opposition in its home city of San Francisco, where drivers were not arrested and continued operating.
"The state has demonstrated that it's a state issue and not a city issue," he said.
Zimmer also stressed that his service does indeed do criminal background checks, Department of Motor Vehicle checks and has excessive liability insurance that covers drivers for as much as $1 million.
Uber said it uses drivers' Social Security number for background checks and checks drivers' criminal history for the last seven years and their driving history for the last 10 years. Its insurance covers drivers for $2 million.
The Public Utilities Commission and Sidecar could not immediately be reached for comment.
[Update 4:20 p.m. June 25: Sidecar said it too will continue to operate in Los Angeles.]