One year after Uber and Lyft terminated operations in Austin, Texas, the ride-sharing platforms may be ready to return. The issue stems from a City of Austin ordinance that requires all “transportation network companies” (TNCs) to conduct fingerprint-based criminal background checks on individual drivers. The ordinance passed in December 2015, and went into effect in May 2016. Immediately after the ordinance went into effect, Uber and Lyft announced they were terminating service in the Austin market, primarily because of concerns over the length of time required to complete the background checks (a difficult impediment for a business model reliant upon quick onboarding of new drivers). Lyft, at the time, commented that it “doesn’t operate our peer-to-peer service in any market where mandatory fingerprinting requirements exist.”
Apparently, even a “no decision” decision by the U.S. Supreme Court can still establish precedent.
Relying on a Spring 2016 SCOTUS decision, a federal magistrate judge in California dismissed a proposed class action lawsuit by a driver against the ride-sharing company, Lyft, Inc., which had alleged privacy violations of the Fair Credit Reporting Act. Magistrate Judge Joseph C. Spero ruled on Wednesday, October 5, 2016 that the driver, Michael Nokchan, lacked “standing” – the right to sue – guaranteed under Article III of the U.S. Constitution, because he could not demonstrate he suffered “concrete harm” as a result of Lyft’s manner of conducting background checks on job applicants.
On August 5, 2016, Massachusetts Governor Charlie Baker signed into law a bill governing gig economy rideshare companies such as Uber and Lyft – dubbed “transportation network companies” – which implements a novel new background check system, among other things. With this law, Massachusetts will join 34 other states that have passed comprehensive oversight for this new industry. The details of this compromise bill were hammered out between the House and the Senate at the eleventh hour, moments before Massachusetts’s legislative session came to a close on July 31.