Lime Accuses San Francisco of Scooter Discrimination

(Bloomberg) -- Lime, the electric scooter company backed by Uber Technologies Inc., isn’t done with its fight to get its scooters back on San Francisco’s streets -- even if that means keeping other companies out, too. On Thursday, the company delivered the San Francisco city attorney an application for a temporary restraining order on the city’s scooter pilot program, slated to start on Monday. The company plans to officially file the order on Friday.

Lime has said that it has been unfairly denied a permit to operate its scooters in San Francisco, a charge the city contests. "It is unfortunate Lime has chosen this course," John Coté, a spokesman for the city attorney’s office, said in a statement. "The SFMTA’s permitting process for the pilot program was thoughtful, fair and transparent. It includes an appeal process that Lime should be pursuing instead of wasting everyone’s resources by running to court."

Coté said the company knew for weeks about the city’s plans to grant permits to certain scooter companies not including Lime, but chose to pursue "a last-minute motion in an effort to shut down the entire scooter program." He added that the company’s actions were tantamount to saying "if they can’t run electric scooters in San Francisco, no one can."

The escalating conflict is a clear sign that a new generation of mobility startups are willing to publicly clash with city governments even as they project a friendly approach -- attending city meetings, stressing cooperation in public appearances and encouraging users to follow traffic laws. It also underscores how high the stakes are in the ongoing struggle over who has the right to use public streets and how.

Lime and rival Bird Rides Inc. have been valued at $1 billion and $2 billion, respectively, and have amassed hundreds of millions in investment, leading a newly crowded field of electric mobility companies. Together Lime and Bird have launched scooter-rental services in more than 100 cities. Both are based in California, and each expects San Francisco to be an extremely valuable market for scooters.

Lime, Bird and a third company, Spin, began renting scooters in the city early this year. That irritated some local regulators and politicians. San Francisco hadn’t given its blessing, but the startups still decided to deploy their electric scooters on city sidewalks. That strategy evoked Uber Technologies Inc.’s history of conflict with regulators.

This summer, following a cease-and-desist letter asking the companies to stop "unlawful conduct," the city passed a law requiring electric scooters to have permits, prompting Lime, Spin and Bird to pull their vehicles from city sidewalks. The companies then applied for one of the newly created scooter permits. In August, the city’s transportation agency revealed that Lime, Bird and Spin had all been rejected. Instead, the city awarded permits to two smaller startups.

Lime is fiercely contesting that decision. The company said it will argue that the city unfairly punished it for putting scooters on San Francisco streets without explicit approval.

The company’s legal action "is an option of last resort," said Lindsey Haswell, Lime’s general counsel, who previously worked at the ride-hailing company Uber. "We hope that it’s the first and the last of its kind for this company."

Lime said officials’ public comments have signaled that the city was not fairly weighing the applications of the city’s existing scooter operators. The company pointed to the transportation board’s May 1 meeting, when SFMTA director Art Torres said, "We ought not to be rewarding people who have stuck their fingers at us when dealing with cease-and-desist orders. Those of us on this panel, I know, believe in the rule of law."

Lime said it’s required to give the city 24 hours notice before applying for a temporary restraining order against it -- and that the company has completed the first step in its larger legal strategy. Lime says it plans to ask the Superior Court of California to temporarily halt scooter permits in a filing Friday. It will then be up to the court to weigh the merits of Lime’s case before potentially delaying the city’s planned scooter program.

"If Lime succeeds, it will be hurting the very people it purports to want to help –- those who are ready to use scooters on Monday," Coté said.

Lime has repeatedly said it is one of the largest and most experienced companies in the industry, and therefore equipped to provide the best service. "Fundamentally we think we’re the best operator, and we think we should be operating in this city," said Scott Kubly, chief programs officer for Lime. "I think there’s a level of urgency that we have as a company around the mission that we serve: We’re taking cars off the road."

©2018 Bloomberg L.P.