Judge ponders blocking Colo. rideshare transparency law | Courts
A federal judge on Friday weighed whether to temporarily block Colorado from enforcing a law set to take effect in one week requiring rideshare companies to disclose certain information to riders and drivers about the amount of money drivers earned prior to any tip.
Last year, the legislature enacted Senate Bill 75 to place new mandates on transportation networking companies. Although rideshare company Uber participated in the legislative process, it filed a lawsuit three weeks before certain provisions were to take effect on the grounds that they unconstitutionally infringed on its First Amendment rights.
In the company’s telling, SB 75 compels Uber to “speak” by electronically informing riders and drivers about drivers’ compensation immediately after a ride, using “design techniques intended to draw the eye.” The disclosure allegedly “shames” Uber for not giving drivers a large enough portion of the fare, and shames riders into tipping more.
“This is a politically controversial issue,” attorney Michael J. Gottlieb argued in court. “And what the state is trying to do is require us to convey a particular message, which is: You take too much money.”
U.S. District Court Judge Daniel D. Domenico noted the unusual nature of the disclosure law: Unlike cancer warnings on cigarette cartons that inform a purchasing decision, for example, SB 75 requires transparency at the end of the experience. Still, he questioned Uber about why Colorado’s justification for the law is likely unconstitutional.
“When you say the state hasn’t shown what interest would be served, I mean, it seems to me that at least the stated interest that I’ve heard is essentially drivers are not getting enough money,” Domenico said. “Potentially, tips might increase. Potentially, yes, this might encourage Uber to retain less of the ride. I don’t know. Why isn’t trying to help Uber drivers out a legitimate interest?”
Daniel Domenico.
Uber alleged SB 75 imposed more excessive requirements on the company than any other regulation. In addition to showing riders how much their driver earned prior to tipping, the law also requires similar information to go to the driver, along with details informing a driver about decisions to accept trips.
Advocates, including rideshare drivers, testified to the legislature last year that other occupations did not require someone to agree to a task before knowing any details about it.
“It’s about letting the driver decide if they’re going to take a ride … how much they’re going to get for the ride, letting the driver and the passenger know what they’re getting afterwards, how much money’s going to the company, how much money’s going to the driver,” said one of the bill’s sponsors, Sen. Robert Rodriguez, D-Denver.
Senate Majority Leader Robert Rodriguez, D-District 32, talks to Assistant Majority Leader Faith Winters, D-District 25, on the the Senate floor Wednesday, March 6, 2024, at the Colorado State Capitol in Denver. (The Gazette, Christian Murdock)
To Domenico, Uber argued it already provides earnings information to drivers. Moreover, the mandated displays on users’ phone screens would omit “important context,” like the portion of a fare dedicated to insurance Uber pays for on behalf of its drivers.
The state responded that SB 75 does not bar Uber from adding information it believes is necessary to the disclosures.
“It can provide all of this context,” said Senior Assistant Attorney General Peter G. Baumann. “But two pieces of information have to be emphasized, and the legislature determined it was those two pieces of information that mattered.”
Although the governor and the director of the Division of Labor Standards and Statistics are named as defendants, the state pointed out that SB 75 places enforcement authority on “a person aggrieved by” a rideshare company’s violation. Domenico acknowledged he could not block private enforcement, but he could still provide “relief of some sort.”
The state also maintained Uber’s last-minute request for a preliminary injunction should count against the company, given the law’s enactment in June 2024. Baumann called attention to another lawsuit Uber filed in Washington, challenging a 2023 Seattle ordinance two weeks before it was to take effect this January.
“I get what you’re saying. I don’t love it,” responded Domenico. “But I also don’t know that saying, ‘You waited too long, I’m not gonna grant an injunction if otherwise there seems to be a constitutional problem’ is appropriate.”
In this Jan. 31, 2018, file photo, a Lyft driver opens the Lyft app on his phone while waiting for a fare in Pittsburgh.
Gottlieb, the attorney for Uber, emphasized the legislature had singled out rideshare companies for the mandated disclosures. He rejected the idea that drivers’ compensation was necessary information for immediate, post-ride disclosure.
“What we object to is conscripting Uber to make these disclosures in a time, place and manner that is problematic,” he said.
“If that’s all that’s required is saying, ‘Here’s how much your driver is getting for this ride they just gave you,’ why doesn’t that serve the legitimate purpose of letting people know, ‘Oh, geez, maybe a 50-cent tip on this $20 ride is kind of cheap’?’ Why isn’t that something the state can do?” pressed Domenico. “You say this makes things worse. They say this is intended to make it better. Who do I go with in that circumstance?”
Domenico will issue a written order before SB 75’s Feb. 1 deadline. He disclosed at the outset that he had professional relationships with people on both sides of the case, and he was also a past Uber rider. He invited the parties to seek his recusal quickly if they had any issues.
The case is Uber Technologies, Inc. v. Moss et al.
