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Lyft loses petition to block New York City's minimum wage rule for drivers

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Lyft loses petition to block New York City's minimum wage rule for drivers

A state Supreme Court judge has denied Lyft Inc.'s petition to block the New York City Taxi and Limousine Commission's implementation of a minimum pay standard for ride-hailing drivers as it heard the ride-hailing service's lawsuit against the regulator's implementation of the rule, TechCrunch reported March 18.

The lawsuit is still ongoing and the judge is likely to issue a ruling on the lawsuit in the next 30 days, a Lyft spokeswoman told S&P Global Market Intelligence in a phone interview.

"The only question she decided was whether to block the rules from being enforced while she reviews the case and makes her decision in writing. She chose to not block them," the spokeswoman said.

Lyft, through its subsidiaries, Tri-City LLC, Endor Car and Driver LLC, and another ride-hail company, Juno USA LP, sued the regulator in January, arguing that its new minimum wages rules give Uber Technologies Inc. an advantage over smaller ride-share companies.

Lyft said while it is in support of the weekly pay standard, the approach by the New York City Taxi and Limousine Commission, or TLC, does not take into account things like drivers who use multiple apps and fluctuating demand.

The judge is expected to hand down a written decision in 30 days.

Meanwhile, Juno, through its subsidiaries Omaha LLC and Vulcan Cars LLC, withdrew their petition March 14. New York City-focused news site Gothamist reported that Juno sent a message to its drivers following the withdrawal, saying it will instead work with the TLC "to address concerns with the new regulations."

In an affidavit filed March 12 with the Supreme Court of the State of New York, New York County, Juno said the number of its riders dropped by about 30% since the new rules took effect Feb. 1.

"We are pleased the judge denied Lyft's motion to block the wage protection rules for now, and we hope she will uphold the city's rules in her written decision," Independent Drivers Guild member and Lyft driver Tina Raveneau said in a statement.

The Lyft spokeswoman told Market Intelligence that the company's three main arguments during the court hearing were the new rules' impact on drivers' earnings, the possible advantage of Uber, as well as TLC's formula, which according to the spokeswoman, could exacerbate congestion in New York City.

Uber also took the city to court in February over its decision to limit the number of ride-hailing drivers operating on the streets. When asked whether Lyft would consider pursuing the same petition, the Lyft spokesperson said the company is not a party to Uber's suit. "We are not participating, but we believe that the cap will have a detrimental effect for drivers."

In a March 16 blog post, Lyft said it is "committed to increasing driver earnings and helping drivers achieve their goals," but that it was against "the flawed implementation of the law" by the TLC. Lyft noted that since the rules came into effect, passenger prices increased 24%, the number of rides dropped 26% and driver earnings dropped 15%.

The San Francisco-based ride-hailing company is set to go public in the coming weeks, a move that could possibly value the company between $21 billion and $23 billion.