Uber Hit with Preliminary Injunction in Nevada

Uber is a ride-sharing company based in San Francisco that has been operating in major cities worldwide since its inception. Uber’s growing market presence has been met with much controversy. At the forefront of this resistance are livery companies along with the state and local regulatory bodies that govern them. While the opposition insists that Uber is a transportation company subject to all the same rules and regulations as a taxi or limousine company, Uber maintains that it is a “technology company that facilitates communication between a contracted driver and a person seeking a ride through a smartphone app.”

The State of Nevada is the first to respond favorably to Uber’s naysayers. On November 25, 2014, a district court judge in Washoe County issued a preliminary injunction requested by the Nevada Transportation Authority against Uber. Uber suspended all operations within the state of Nevada, referring to the injunction as a “temporary legal setback,” estimating that this would cost nearly 1,000 jobs. 

In general, there are four elements that must be met for a court to grant a preliminary injunction:  1) a likelihood of irreparable harm with no adequate remedy at law; 2) the balance of harm favors the movant; 3) the likelihood of success on the merits of the case; and 4) the public interest favors the granting of the injunction.

Notably, the Nevada Transportation Authority emphasized the public interest element in its request for the preliminary injunction, arguing that passenger safety was at risk since Uber was an unregulated transportation service. Uber does require its drivers to undergo a background check and hold up to $1 million in insurance. However, recent incidents—including the death of a 6-year old girl who was struck and killed by an Uber driver in San Francisco—have made public safety a potent question for Uber.

Despite the emphasis on public interest and safety concerns, Uber is still backed by many supporters. Shortly after the preliminary injunction was issued, Uber started an online petition in support of its continued service in Nevada. The petition has since gained over 18,000 signatures.

The preliminary injunction (or temporary restraining order) is a powerful tool in business litigation. A resourceful business litigation attorney will know how to effectively utilize a preliminary injunction or temporary restraining order to serve his or her client’s needs.

The Nevada Transportation Authority filed suit and sought its preliminary injunction against Uber just one month after Uber began operating in the state. Strategically intentional or not, the timing is favorable for the NTA’s case against Uber. The NTA’s position would much likely be weaker if Uber were allowed to continue expanding into the Nevada market, gaining an even more notable foothold than it currently holds (as evidenced by its online petition), as this case continues. Uber’s more established presence in other markets may be a large part of the reason why the legal battles in other states have not yet resulted in favorable outcomes for the livery companies/regulatory bodies. Among other things, the preliminary injunction will prevent Uber from bolstering its position as a safe and necessary market participant in Nevada, which may ultimately lead to a favorable outcome for the NTA in its suit. 

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