Uber, Lyft video ads maker, City Hall face off in court over Chicago's ridesharing ad ban

By Dan Churney | Oct 9, 2018

The city of Chicago and a company which wants to provide interactive video advertising for Uber and Lyft vehicles operating in the city have squared off in federal court over Chicago’s ban on such ads, with the company maintaining the ban runs roughshod over the U.S. and Illinois constitutions, and the city asserting the ban is a legitimate restriction of commercial speech. 

Technology company Vugo Inc. and the city of Chicago both filed court papers Oct. 5, regarding the lawsuit the company brought in February 2017 against the city in U.S. District Court for the Northern District of Illinois. Vugo is based in Minneapolis.  

Vugo defeated the city’s attempt to dismiss the lawsuit in August 2017. Now, Vugo and the city have lodged motions for summary judgment, which would declare one or the other the victor. 

In 2014, Chicago enacted a ridehailing ordinance that prohibited ride-hailing services like Uber and Lyft from displaying commercial advertising on or inside their vehicles. The city calls such vehicles “transportation network provider” vehicles.  

Under Vugo’s service, drivers download an app onto tablet computers, which then generates interactive advertising, which can be tailored to customers based on data, such as “trip signals” and “city, state, route, pick-up point for the trip, business category, specific keywords, and the passenger’s destination.” 

Passengers can then choose to interact with the ads on the tablet’s touch screen. Vugo said it is paid by advertisers, and then pays a percentage of revenue, which could be about $100 per month, to drivers using its service. 

Vugo said it wants to offer this service in Chicago, but Chicago’s ordinance allegedly stifles the company’s right to free speech and, because the ordinance doesn’t similarly effect traditional taxis, also runs counter to the constitutional guarantee of equal protection before the law. In effect, the city is “picking winners and losers in the economy,” Vugo alleged. 

The city is contending commercial speech enjoys less protection than other speech and the ban 

promotes safety, aesthetics and passenger comfort by reducing “visual and audio clutter,” which can distract drivers and pedestrians, as well as intrude on “captive” passengers. 

Further, the ban prevents private ride-hailing vehicles from having exterior adornment that could cause them to look like taxis, which prevents people from confusing a Uber or a Lyft for a taxi, in the city’s view. The city added it wishes to maintain the distinction between the two types of transportation service.   

In addition, the city argued it is permissible to prohibit ads on ride-hailing vehicles, but not on taxis, because by banning ads on one type of service, the city is at least reducing the problems associated with ads. To support this position, the city cited statistics that showed in Chicago there were 117,557 ride-hailing vehicles, but only 6,907 taxis as of December 2017, with ride-hailing vehicles used at least three times more often than taxis. 

Besides, taxis are already required to have “extensive” visual content, such as logos and identification numbers, so eliminating ads on taxis would not make a big difference, according to the city. In addition, the city claimed it’s proper to permit taxis to take advantage of ads as a revenue stream to recoup some of the cost of complying with regulations, which do not apply to ride-hailing vehicles. 

The next hearing is Jan. 14. 

Vugo is represented by the Liberty Justice Center of Chicago. 

The city is defended by corporate counsel. Intervenor Murray Meents is represented by LegalRideShare of Chicago.

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Organizations in this Story

City of Chicago LegalRideshare, LLC Liberty Justice Center U.S. District Court for the Northern District of Illinois

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