Ride-sharing service Uber has expanded quickly by rallying public support for its service before city regulators could catch up. It became so popular in places such as San Francisco that politicians would have paid a big political price had they tried to slow it down.
That tactic is hitting some potholes. On Monday, the city of Portland, Ore., sued the San Francisco company for operating illegally in the city.
The suit claims Uber failed to comply with the city's regulations on private, for-hire transportation and seeks a court order stopping it from operating in Portland unless it complies with the city's permit and insurance requirements.
The city's transportation director, Leah Treat, issued a cease-and-desist order Monday.
Portland Mayor Charlie Hales said that the city's main concern is public health and safety and that rules applying to the taxicab industry also should apply to Uber.
"Everyone agrees: Good regulations make for a safer community. Uber disagrees, so we're seeking a court injunction," Hales said.
City Commissioner Steve Novick said the city is prepared to issue civil and criminal penalties against Uber drivers who continue to operate without the required permits.
"If Uber thinks there should be no maximum price on what they charge Portlanders, they should make their case to the Portland City Council," Novick said.
"If Uber thinks taxi companies shouldn't have to serve people with disabilities, they should make their case. If Uber thinks taxis should not have to have proper insurance in case of a crash, they should tell us why we should allow that," he said.
In response, Uber spokesperson Eva Behrend issued a statement saying that the service had received a warm welcome from riders and drivers in Portland and that the company remains "hopeful that the city will listen to Portlanders who want safe, reliable, hassle-free ride options now."
The court order is Uber's second setback in the United States in less than a month. In late November, the company suspended its operations in Nevada after a Washoe County District Court issued a preliminary injunction preventing the company from operating in the state.
As in Portland, state officials in Nevada cited regulatory concerns.
Licensed taxi drivers can only operate in cities after meeting stringent guidelines pertaining to background checks, insurance, vehicle safety and permits. Uber bypasses most of these regulations by having drivers use their own cars and allowing people to hail rides through a mobile app.
In Portland's order Monday, the city commissioner stated that Uber failed to comply with the permit "and other important public health and safety requirements of PCC Chapter 16.40," including failure to obtain permits to operate in the city and failure to show that its drivers complied with and maintained the "minimum levels of insurance to protect the public."