Uber investigation finds 'overreach' but no illegal or unethical behavior

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by MATT GOODMAN

WFAA

Posted on October 23, 2013 at 4:38 PM

Updated Wednesday, Oct 23 at 7:11 PM

DALLAS –– Mayor Mike Rawlings says city staffers did not act illegally or unethically in recent dealings with Uber, including asking the council to vote on changes to a transportation-for-hire ordinance modeled by lawyers for competitor Yellow Cab. 

On Wednesday, Rawlings unveiled a long-awaited investigation conducted by former Dallas County District Attorney Bill Hill. While no city employee broke the law, Rawlings said, “several wrong decisions and bad judgments were made throughout this process.” 

And no more so than those of Interim City Manager A.C. Gonzalez, who fast-tracked a vote on changes to the city's transportation ordinance and failed to communicate to the City Council he was doing so until it plunked onto an agenda. 

He's already apologized to the mayor for his actions in how he handled regulating Uber, the San Francisco-based startup that has long maintained that it is a technology company that allows customers to arrange and pay for rides through its smart phone app. Thereby, it is not beholden to the transportation ordinance at the center of this controversy. The city disputed that, which brought about this whole saga. 

In August, a line item quietly crept onto a council agenda that would’ve required members to vote on changing the code that governs transportation-for-hire companies. 

The ordinance changes were never discussed before a committee, which caused Councilman Scott Griggs to ask the mayor to pull it before it hit the floor. 

That line item looked to change Chapter 10A of the city code, requiring luxury vehicles to have sticker prices of more than $45,000, limousines to show up no sooner than 30 minutes following the request and, perhaps most damaging to Uber’s business model, smartphones could no longer calculate fares. 

From there, things spiraled. City code enforcement had Dallas vice officers conduct undercover stings on Uber drivers, resulting in 65 tickets, the report says. Gonzalez snuck the line item onto the agenda as if it were ready for a vote. The report blames a two-week illness in failing to communicate his decision to the council or the mayor. 

Feeling heat from a new, more technologically savvy competitor, Yellow Cab had its lawyers draft up changes to the ordinance, according to the report.

Then, the investigation says, Gonzalez based his draft of the ordinance on Yellow Cab’s. 

“Mr. Gonzalez should not have asked City Attorneys to draft ordinances using Yellow Cab’s lawyers draft as the primary guide,” says the report. “Even if he thought they were correctly written, it creates the after-the-fact perception that one private company was getting too much influence within City Hall.” 

All 65 tickets written to Uber’s drivers were dismissed on a council order reached in an executive session that lasted more than three hours, Griggs said. The Oak Cliff councilman and colleague Phillip Kingston were two of the 13 present council members Wednesday who voted against discussing the report in executive session before releasing its findings to the public. 

“I think our goal here is that all the actions of the Dallas City Council are so clear and intelligible that every citizen in the city of Dallas is able to make an informed decision and completely understand what we’re doing,” Griggs said during the council meeting. 

Councilwoman Carolyn Davis, who was among the 11 who voted to go discuss the report in executive session, said she “had some personnel questions that I don’t really want to put out here.” Councilman Dwaine Caraway shared her sentiment. 

“I think, first, I would love to hear it, so I can ask and say some things that might not be said out here,” he said. “I think our discussion is something of executive conversation but the report and the meat of the report is what the public is going to get.” 

The 134-page report was made public after the session. Rawlings took questions afterward but the council did not. 

It includes a timeline of Uber’s dealings with the city. Upon arriving in Dallas in 2012, Uber “immediately started making a marketplace impact.” The mayor soon ordered then-City Manager Mary Suhm to investigate. 

In Nov. 2012, the city attorney’s office found Uber did not operate legally within the city’s code and sent a cease and desist letter. Uber ignored it. In the first quarter of 2013, the city met with Uber.

The company’s lawyers made their case: Uber said it doesn't have to follow the transportation code because it's a technology company. The city was unmoved. Assistant City Managers Joey Zapata and Melissa Miles ordered vice officers to begin their undercover sting. 

Then, “Yellow Cab’s lawyer, John Barr, becomes very active at City Hall pushing City Management to enforce City ordinances,” Rawlings writes in the report. 

In July 2013, Gonzalez took over as interim city manager. He soon ordered city attorneys to draft new ordinances “similar to the ones Yellow Cab’s attorney had drafted.” The changes appeared on August 28’s council agenda. Griggs ordered it removed the day before.  

The report finds three key areas for improvement: when the city launches an investigation that lasts as long as the Uber one did, the corresponding council committee should be kept abreast of its developments.

The council needs a “better and clearer understanding” of the process to put an item on the agenda. And, finally, Rawlings also says he will ask for more briefings to the council and not assume committees will handle each topic. 

“I thought this issue would bubble up through the Transportation Committee so I didn’t push for a briefing in this case,” he writes. “That will not happen again.”

Now that the investigation is done, the attempt to regulate Uber will first have to be discussed in committee. 

News 8's Carla Wade contributed to this report

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