SUPREME COURT OF THE STATE OF NEW YORK NEW YORK …

FILED: NEW YORK COUNTY CLERK 07/14/2014

NYSCEF DOC. NO. 23

INDEX NO. 451476/2014 RECEIVED NYSCEF: 07/14/2014

SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY --------------------------------------------------------------------X THE PEOPLE OF THE STATE OF NEW YORK, by ERIC T. SCHNEIDERMAN, Attorney General of the State of New York; BENJAMIN M. LAWSKY, Superintendent of Financial Services of the State of New York,

Plaintiffs, - against -

Index No. 451476/2014

IAS Part 5 Justice Kathryn E. Freed

LYFT, INC.,

Defendant.

--------------------------------------------------------------------X

DEFENDANT'S MEMORANDUM OF LAW IN OPPOSITION TO PLAINTIFFS' MOTION FOR TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION

ACTIVE 202632959v.4

SIDLEY AUSTIN LLP 787 Seventh Avenue New York, New York 10019 Tel: (212) 839-5300 Fax: (212) 839-5599

SCLAR ADLER LLP 19 West 34th Street, 1018 New York, NY 10001 Tel: (646) 494-3240 Fax: (212) 537-0359

Attorneys for Defendant Lyft, Inc.

TABLE OF CONTENTS PRELIMINARY STATEMENT .....................................................................................................1 FACTUAL BACKGROUND..........................................................................................................5 ARGUMENT ...................................................................................................................................9 I. PLAINTIFFS HAVE NOT MET THEIR BURDEN OF SHOWING A LIKELIHOOD

OF SUCCESS ON THE MERITS.....................................................................................10 A. Plaintiffs Have Not Met Their Burden of Showing a Likelihood of Success with

Respect to Sections 2102, 2117, and 2122 of the Insurance Law or 11 N.Y.C.R.R. 153(8) .....................................................................................................................10 1. Lyft Is Not Violating Section 2102 of the Insurance Law.........................10 2. Lyft Is Not Violating Insurance Law Section 2117 ...................................13 3. Lyft Is Not Violating Insurance Law Section 2122 ...................................14 4. Lyft Is Not Violating 11 N.Y.C.R.R. ? 153.8............................................15 B. Plaintiffs Have Not Met Their Burden of Showning a Likelihood of Success on their Claims for Violations of Vehicle and Traffic Law ("VTL") ? 370.1 and 501.2(v), Chapter 437 of the City of Buffalo Code, Chapter 108 of the Rochester Municipal Code or Article 19 of the New York City Administrative Code..........15 C. Plaintiffs Have Not Met Their Burden of Showning a Likelihood of Success on the Merits of Their Claims Concerning Alleged Deceptive Business Practices under GBL ?? 349 and 350....................................................................................20 D. Plaintiffs' Business and Corporation Law ("BCL") ? 1301 Claim is Moot ..........20 II. PLAINTIFFS HAVE NOT MET THEIR BURDEN OF SHOWING IRREPARABLE HARM................................................................................................................................21 A. Plaintiffs' Perceived Harm Is Speculative and Contingent....................................23 B. Plaintiff Cannot Show Any Harm That Is Imminent Or Immediate......................24 III. A BALANCING OF THE EQUITIES FAVORS LYFT, NOT PLAINTIFFS .................25 CONCLUSION..............................................................................................................................27

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Defendant Lyft, Inc. ("Lyft") respectfully submits this memorandum of law in opposition

to Plaintiffs' motion for temporary restraining order and preliminary injunction.

PRELIMINARY STATEMENT

Plaintiffs, the Attorney General for the State of New York (the "AG") and the

Superintendent of Financial Services (the "Superintendent") have employed a strategy--

involving misrepresentations to the public and noncompliance with statutory requirements1--

designed to destroy Lyft's business without due process. In fact, rather than permitting the Court

to resolve the motions pending before it, Plaintiffs took to the press on Friday, July 11,

announcing that the Court had "granted the State a temporary restraining order" and accusing

Lyft of "flout[ing] dozens of different laws."2 Plaintiffs' allegations and misrepresentations are

unfounded. Additionally, as set forth fully below, Plaintiffs have failed to meet their burden of

showing any entitlement to the temporary restraining order and preliminary injunction they seek.

It is well-settled that "[p]reliminary injunctive relief is a drastic remedy and will only be

granted if the movant establishes a clear right to it under the law and the undisputed facts found

in the moving papers." Koultukis v. Phillips, 285 A.D.3d 433, 435, 728 N.Y.S.2d 440, 442 (1st

Dep't 2001) (emphasis added). Here, Plaintiffs have failed to meet their burden of showing

undisputed facts and law supporting a likelihood of success on the merits of their claims,

1 Executive Law ? 63(12), the statute under which the AG brings the majority of its causes of action, requires five days' notice prior to seeking an order enjoining business activity or any illegal acts pursuant to the statute. The AG did not comply with this statutory requirement prior to commencing this action. 2 Plaintiffs issued a press release on Friday, July 11, 2014, which erroneously stated: "As a result of [the AG's and the Superintendent's motion for a temporary restraining order], the court has granted the State a temporary restraining order preventing Lyft from launching this evening in New York City." (Second Affidavit of David Estrada, dated July 14, 2014 ("2d Estrada Aff."), Ex. B.) Plaintiffs later made further misrepresentations that they had obtained an injunction and Plaintiffs' misrepresentations are false and without justification. See . As the Court is aware, the Court granted Lyft's application to adjourn the hearing on Plaintiffs motion for a temporary restraining order based upon Lyft's agreement to preserve the status quo. In their joint press release, Plaintiffs also accused Lyft of violating "dozens of different laws . . . putting the safety of New Yorkers at risk" and putting "law-abiding competitors at a substantial disadvantage." 2d Estrada Aff. Ex. A. Neither the Complaint nor the motion for a temporary restraining order alleged dozens of violations of New York law.

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irreparable injury absent an injunction, and a balancing of the equities in their favor. Indeed, there are disputed issues of fact and law that cannot be resolved on the partial record before the Court, which requires denial of Plaintiffs' motion.

First, Plaintiffs have not demonstrated undisputed facts showing that they have a likelihood of prevailing on the merits of their underlying claims. Plaintiffs have not shown that Lyft is violating regulations concerning "for hire" vehicle statutes or any provisions of New York Insurance Law. Lyft is neither a "for hire" car service company nor does it sell insurance in the State of New York. Rather, Lyft is a real-time, mobile-based, peer-to-peer ridesharing platform, which now operates in more than 60 cities throughout the United States, including Buffalo and Rochester and allows users seeking rides to contact rideshare drivers in the vicinity through use of Lyft's application platform on their mobile phone or tablet (commonly referred to as a "smartphone app"). Although the technology behind Lyft's peer-to-peer ride sharing platform is new, it is based on a ridesharing concept which is not new and has long been endorsed by the State of New York as a safe alternative transportation mechanism.

Residents of the State of New York are benefiting from Lyft's innovative platform and enhanced peer-to-peer ridesharing. Indeed, after nearly three months of operating in the State of New York, during which Lyft has repeatedly engaged with State and municipal authorities in an effort to answer their inquiries and address any legitimate concerns they may have, Plaintiffs have come forward with no evidence of any harm or injury to any individual or the public. Moreover, based upon Plaintiffs' own evidence, Lyft is clearly a donation-based rideshare program, not a "for hire" taxicab service. Indeed, as Plaintiffs' witness affidavits from interns at the Office of the Attorney General ("OAG") demonstrate, an individual can use Lyft's

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smartphone app to arrange a rideshare and pay nothing or make any donation he or she desires to contribute regardless of any suggested donation:

"The suggested donation for my ride was $46. . . . At the time of executing this affidavit, I have not paid the suggested donation or any portion thereof."3

* * * "The suggested `donation' for my ride was $63 . . . . I paid instead $50 . . . ."4 While Plaintiffs seek to impose on Lyft, and its users, laws, rules and regulations that the legislature enacted to govern "for hire" car services, Plaintiffs disregard the differences between the Lyft platform and a traditional livery service. Moreover, Plaintiffs also fail to demonstrate that Lyft is violating any "for hire" laws. For example, the Director of Technology Programs of the New York City Taxi and Limousine Commission ("TLC"), states only that "it appears that the service Lyft is providing is most like for hire vehicle service."5 Brian F. Curran, the Deputy Corporation Counsel of the City of Rochester, similarly concludes only that "[a] person who operated a taxi cab within the City by carrying passengers for hire without being licensed as a taxicab and meeting the requirements of the Code may be in violation of [certain] sections of the Code . . ."6 These are not even close to the required undisputed facts and clear violations of law that would support the issuance of a temporary restraining order. Plaintiffs have also failed to meet their burden of showing Lyft's conduct violates the Insurance Law. Contrary to Plaintiffs' allegations, Lyft does not act as an insurance producer, agent or broker because it does not sell, negotiate, or solicit insurance in New York. Nor has Lyft taken any action to aid any unauthorized insurer in effecting any insurance in New York.

3 Affirmation of Robert Vanwey, dated July 9, 2014, ? 9, which is attached to the Affirmation of Melvin L. Goldberg In Support of Application for a TRO, dated July 11, 2014 ("Goldberg Aff.") as Exhibit 11. 4 Affirmation of Evan Biddlecom, dated July 8, 2014, ? 13, attached to Goldberg Aff. as Exhibit 12. 5 See Affidavit of Joanne Rausen ? 13, attached to Goldberg Aff. as Exhibit 5. 6 See Affidavit of Brian Curran, ? 10, attached to Goldberg Aff. as Exhibit 9.

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