Lyft files lawsuit, says driver fee is ‘illegal tax’

By Jackie Valley

Thursday, Feb. 25, 2016 | 1:15 p.m.

Ride-hailing company Lyft filed a lawsuit against the city of Las Vegas today, alleging a new business license fee is too vague and defies state law.

The lawsuit stems from a fee the Las Vegas City Council approved last month that charges ride-hailing companies based on their number of “active drivers.” Companies like Uber and Lyft must pay a semiannual fee of $50 for each active driver — defined as anyone who provided transportation to a customer within a given 30-day period.

The city will determine how much money is owed based on the number of active drivers reported each month by the companies. The average for each six-month period will be calculated and then multiplied by $50.

The lawsuit, filed this morning in Clark County District Court, alleges the fee is an “illegal tax” that goes beyond limits placed on local jurisdictions by the Nevada Legislature.

Assembly Bills 175 and 176 as well as Senate Bill 376, which were enacted last year by the Legislature, created a framework for regulating and taxing so-called transportation network companies.

“The Legislature adopted an express preemption clause, making it clear that local jurisdictions cannot impose additional taxes or fees on TNCs and drivers who use TNC platforms, other than a very specific and narrow exception for imposing a business license fee that is ‘generally applicable to any other business,’” the lawsuit states.

The complaint also asserts the fee is “unconstitutionally vague” because it is based on active drivers without any geographic limitations.

“The city of Las Vegas is trying to levy an outrageously high tax on ride-sharing that it doesn’t have the legal authority to collect,” Lyft spokeswoman Chelsea Wilson said in a statement. “When state leaders passed A.B. 176 last year, they prohibited singling out ride-sharing with fees that restrict competition and limit consumer choice. As the city has refused to reconsider its illegal tax, we are forced to take action to preserve Lyft’s safe, affordable rides for people in Las Vegas.”

City officials declined to comment on the lawsuit, citing a policy of not discussing pending litigation. Uber, which also opposed the fee, has not taken legal action.

“We remain concerned about the city of Las Vegas ordinance, which we believe directly conflicts with state law,” Uber spokesperson Taylor Patterson said in a statement. “We are closely reviewing Lyft’s complaint, and we are considering all of our options.”

Ride-hailing companies have been operating under temporary business licenses in Las Vegas, and Lyft's is set to expire March 23.

After the fee was approved Jan. 20 by the City Council, Lyft filed an objection with the city clerk, city spokesman Jace Radke said. The objection will be heard by the City Council during its March 16 meeting.