CAUSE NO. SIDE.CR, LLC, Plaintiff, v. CITY OF AUSTIN, TEXAS, Defendant.

IN THE DISTRICT COURT OF

TRAVIS COUNTY, TEXAS

DISTRICT COURT

PLAINTIFFS ORIGINAL PETITION COMES NOW SIDE.CR, LLC, Plaintiff, complaining of City of Austin, Defendant, and would respectfully show as follows: 1. 190.1 I. Introduction and Summary. 2. Plaintiff Side.cr. LLC (SideCar) is a technology company that has developed a Discovery is intended to be conducted in this case under Level 2, Tex. R. Civ. P.

computer software platform for use by people who carpool or rideshare. SideCar is, in essence, a Match.com or dating service for carpoolers and ridesharers. People can download the SideCar mobile app to their smartphones, and use that app to locate other people who are driving or need rides. SideCar provides the software and the interactive computer system that facilitates the communication, but it does not own or operate vehicles or direct drivers as to routes or riders. 3. The City of Austin Transportation Department has threated to cite drivers who use The City is

SideCar and SideCars corporate representatives for violating the City Code.

incorrect. Neither SideCar nor its users are in violation of the City Code, for multiple reasons: SideCar maintains a communication platform for individuals to locate each other to share rides. SideCar does not provide or operate a ground transportation service as defined in the Code.

The City Code only regulates chauffeured vehicles, and neither SideCar nor people coordinating rideshares using SideCar are chauffeurs. The City Code only regulates chauffeured vehicles that pick up riders in the City for a fee. Any payments made using SideCar are strictly voluntary, discretionary donations, and not a fee. Finally, any application of the Code to SideCar would violate federal law, 47 U.S.C. 230, which provides protection to the operators of interactive computer services from state regulation based on their users communications. SideCar brings this lawsuit to obtain declaratory and injunctive relief to prevent

4.

the City from wrongly applying the City Code to it and its users. SideCar also brings this lawsuit to defend ridesharing and carpooling in Austin. If the Code is improperly stretched to cover SideCar, as the City of Austin is doing, the Code would apply to practically every carpooling and ridesharing arrangement in the City, making every soccer mom, ridesharing college student and carpooling worker potentially liable for citation and impoundment of their personal vehicle. II. Parties. 5. Plaintiff Side.cr, LLC, is a limited liability company with its primary place of

business in San Francisco, California. 6. Defendant City of Austin is a Texas home rule city, which may be served by

serving its City Manager, Mark Ott, at the Office of the City Manager, 301 W. 2nd Street, 3rd Floor, Austin, Texas 78701. III. Jurisdiction and Venue. 7. Jurisdiction is appropriate in a District Court of Travis County, because the

amount in controversy exceeds the minimum jurisdictional amount and because the Plaintiff seeks declaratory and injunctive relief. 8. Venue is proper in Travis County pursuant to Tex. Civ. Prac. & Rem. Code

15.002(a)(1) & (3).

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IV.

The Facts. A. 9. SideCar Has Developed and Operates a Mobile App that Facilitates Peer-toPeer Ridesharing. SideCar publishes a mobile application called SideCar and operates a website

located at www.side.cr. Persons who download the app can use it to coordinate ridesharing with other persons who have also downloaded the app. 10. A person looking to share a ride uses the SideCar app to input their desired pickup

and dropoff destination. That information is uploaded to the SideCar platform, which then enables the rideshare requester to route the request to either a geographically proximate or particular driver. The selected rideshare driver receives the request and must either accept or deny the rideshare request based on their trip specifics and preferences (e.g., pickup point, destination etc.). If the selected driver accepts the rideshare request, then a match is confirmed; if it is rejected then it is routed to other available drivers. Like a Match.com dating site, the platform merely suggests potential matches and the final match must be selected and approved by both rider and driver. This process is quick and easy, making arranging for a shared ride very convenient. However, because of this method, and in contrast to a dispatch service, a rideshare request may go unmatched; SideCar does not and cannot guarantee that a ride request will be matched. 11. For each ride, the SideCar app displays a suggested donation, based on a

computer-generated average or algorithm reflecting factors such as the amount of money that other riders have donated for rides of a similar distance and duration, the time of day and trip pickup and drop-off locations. Any donation is strictly voluntary; there is no minimum or required amount. If a donation is made, 20% of the donation goes to SideCar to cover the cost of providing the communications platform.

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12.

In order to use SideCar, a person must agree to SideCars Terms of Service,

which define and limit the purposes for which the SideCar app may be used. Participants agree that they will not use SideCar for any commercial purposes. SideCar is available for personal ridesharing purposes only, and use of SideCar for any commercial purpose may result in immediate termination of the users SideCar account. SideCar pre-screens persons who wish to provide rides using SideCar by doing background checks for criminal, DWI or reckless driving convictions, confirms liability insurance as required by Texas law, and confirms vehicle registration. 13. SideCar does not employ, contract, direct, manage or control drivers. It does not

dictate hours, schedules or shifts for drivers. It does not dispatch drivers to pick up riders. Drivers turn on and use the app when they want. Rather, the SideCar communication platform allows people to get and give rides in a more convenient and efficient way than casual carpools, paper or electronic bulletin boards, Craigslist, or traditional ride-matching services. Like

Match.com for dating, eBay for products, and HomeAway for rentals, SideCar has developed a technology allowing drivers and riders a better way to find each other and share rides. B. 14. The Citys Transportation Department Contends that SideCars Application Violates the City Code; SideCar disagrees. The Austin Transportation Department has interpreted the City of Austin Code as

prohibiting SideCar from operating in Austin without a permit. On February 22, 2013, SideCar received a letter from Robert Spillar, Director of the Austin Transportation Department, addressed to SideCars co-founder and CEO, Sunil Paul. Exhibit 1, attached. The letter claimed that your intended operations which connect passengers with drivers using a mobile application requires permitting and authorization through our Ground Transportation Office. Id.

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15.

Although Mr. Spillars letter did not identify any specific Code provision that

SideCar is allegedly violating, the Transportation Department nonetheless demanded that SideCar immediately cease and desist your current and future operations that are intended to dispatch vehicles-for-hire within the City of Austins right-of-way without securing the proper authority. Id. Again without citing any law, the letter claimed that [o]perating an unpermitted vehicle for hire without prior authorization is a criminal offence, and threatened that [v]ehicles and drivers observed providing for-hire services without the proper permits will be cited along with SideCar corporate representatives for each violation. Id. (This letter has been falsely characterized as a cease and desist order by City employees and others. It is not. The City Transportation Department has no legal authority to issue orders; under the Code, if the Department believes a violation has been committed, it is authorized to issue citations alleging a violation, which are then adjudicated in a court of law.) 16. SideCar carefully reviewed the Austin City Code with counsel, and on February

27, 2013, Mr. Paul responded in detail to Mr. Spillars letter, explaining why SideCars operations and its drivers were not in violation of the City Code, and did not require the Departments permitting and authorization. Exhibit 2, attached. Mr. Pauls letter included a detailed, seven-page legal memo analyzing the Code and its lack of application to SideCar, as well as explaining that if the Code did apply to SideCar, it would be preempted by a federal statute, 47 U.S.C. 230(c). Exhibit 3, attached. 17. SideCars counsel met with a representative of the Transportation Department at a

city councilmembers office on March 1, 2013, seeking to understand the Departments position. Following the meeting, SideCars counsel sent a letter requesting that the Department confirm that it does not intend to take enforcement action against SideCar or its users who are using the

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app in compliance with SideCars Terms of Service, while the City addresses the Transportation Code and its application to carpooling, ridesharing and electronic platforms that facilitate that activity such as SideCar. Exhibit 4, attached. 18. SideCar has received no written response to its February 27 or March 1

communications and has received no commitment that the City will not take enforcement action against it. SideCar has a reasonable belief that if it operates in the City of Austin and any driver accepts even a nominal donation for sharing a ride, the City will take enforcement action against both the driver and SideCars employees. V. Declaratory Judgment. 19. The City Transportation Departments February 15, 2013, letter presents a live

controversy over whether the City Code applies to SideCar and its registered users. The City has threatened to issue citations against SideCars users and its corporate representatives if it continues to operate in Austin. This presents a live case or controversy for this Court to resolve and SideCar seeks a declaration of its rights pursuant to Chapter 37 of the Civil Practice & Remedies Code. A. SideCars mobile app and the persons who use it do not violate the City Code because SideCar is not providing or operating a ground transportation service and therefore is not regulated by Chapter 13-2. Chapter 13-2 of the Austin City Code regulates ground transportation passenger

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services. The operative provision of Chapter 13-2 is 13-2-3(A), which provides that a person may not provide or operate a ground transportation service that picks up passengers within the city or represent the persons business to the public as a ground transportation service, without obtaining an operating authority or taxicab franchise. City Code 13-2-3(A) (emphasis added).

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21. 22.

The terms ground transportation service and passenger are defined terms. Ground transportation service means the service of providing chauffeured

vehicles for compensation for the transportation of passengers within the city. City Code 13-2-1(12) (emphasis added). 23. Passenger means an individual being transported for a fee in a ground

transportation service vehicle. City Code 13-2-1(17) (emphasis added). 24. Compensation is defined broadly as any money, thing of value, payment,

consideration, reward, tip, donation, gratuity, or profit paid to, accepted, or received by the driver or owner of any vehicle providing transportation for a person or persons; whether paid upon solicitation, demand or contract, or voluntarily, or intended as a gratuity or donation. City Code 13-2-1(3). 25. Importantly, several key terms are not defined: provide or operate,

chauffeured vehicle, and for a fee, and so those words must be given their common, ordinary meaning. 26. Under the plain language of the Code, Chapter 13-2 only regulates persons who

provide or operate a ground transportation service. For three reasons, Chapter 13-2 does not apply to SideCar. 1. 27. Rideshare cars are not chauffeured vehicles.

SideCar is not a regulated ground transportation service, because the persons

participating in ridesharing coordinated by using the SideCar platform are not driving or riding in chauffeured vehicles. Chapter 13-2 applies only if persons participating in ridesharing using SideCar are driving a chauffeured vehicle. The terms chauffeured vehicle and chauffeur are not defined in the Code, so their ordinary meaning applies. Merriam-Webster defines

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chauffeur as a person employed to drive a motor vehicle. Miriam-Webster defines employ as to provide with a job that pays a salary. From Driving Miss Daisy to Downton Abbey, this has always been the common understanding of the word chauffeur: a professional whose job is driving another person around. 28. Individuals who participate in ridesharing coordinated by SideCar are not driving

a chauffeured vehicle because they are not employed to drive their vehicle, and they do not work a job that pays a salary. SideCar does not employ drivers or pay participating drivers a salary. Drivers voluntarily participate in ridesharing coordinated through the SideCar mobile app. SideCar specifically prohibits commercial drivers from participating in its rideshare

coordination service. 29. The SideCar app facilitates the making of a voluntary donation to help cover

vehicle operating expenses, but there is no guaranteed, minimum or required donation. Further, ridesharing is just that the SideCar model involves drivers sharing a ride as they travel from one part of town to the other as they move to their own destination. 2. 30. Rideshare riders are not passengers as defined in the Code.

Riders participating in ridesharing are not passengers, as that term is

specifically defined in the Code. The only regulated ground transportation service is one that picks up passengers in the City of Austin. 13-2-3(A). Passengers are only persons who are transported for a fee. 13-2-1(17). Although the Code includes a broad definition of compensation, the Code uses a different, undefined but clearly narrower term, fee in its definition of passenger. The ordinary meaning of the term fee does not include a gratuity or a reimbursement for expenses. It means a fixed charge for a service. Miriam-Webster defines fee as a fixed charge or a sum paid or charged for a service. Therefore, because there is no

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fee charged by a driver participating in a rideshare coordinated using SideCar, riders are not passengers as defined in the Code, and Chapter 13-2 does not apply. 3. 31. SideCar is not providing or operating a ground transportation service.

Moreover, Chapter 13-2 applies to SideCar only if it is providing or operating a

ground transportation service. Even if rideshare vehicles were chauffeured vehicles (they are not) and even if SideCar riders were passengers as defined in the Code (they are not) Chapter 13-2 would not apply to SideCar because it is not providing or operating a ground transportation service. 32. SideCar publishes a mobile application and operates a website. It provides

communication tools for individuals to use to contact each other and coordinate ridesharing. SideCar does not own, rent, lease, loan or control any vehicles. SideCar does not employ, contract, manage, direct or control drivers. 1 It does not dispatch drivers to pick up riders. Like an online dating service, SideCar uses a technology platform to permit individuals with shared interests (getting from point A to point B) to locate each other. Like an online dating service, passenger and driver have complete choice on the match. SideCar provides safety, identity verification, location and tracking mechanisms to promote trust and accountability. SideCar does not guarantee that any person seeking a rideshare will find another person to share a ride with (many rideshare requests are unmet). The SideCar app and interactive computer service simply facilitate voluntary information-sharing by third parties that allows a carpool or rideshare match, just as other intermediaries have done for decades from university and company bulletin

As other companies have done for promotional purposes during the March festivals, for a limited time during SXSW 2013, a SideCar corporate affiliate plans to pay drivers to be available to give SideCar rides. The rides will be provided at no charge, and these drivers have been instructed not to accept even voluntary donations from riders and therefore will not be receiving either compensation or a fee, and therefore will not be governed by Chapter 13-2.

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boards and modern and constantly evolving electronic exchanges and media. SideCar is therefore not providing or operating a ground transportation service. 4. 33. If a driver using SideCar is providing an illegal ground transportation service, so is every carpooler in Austin.

Chapter 13-2 applies to SideCar and persons using the SideCar app only if they

are providing or operating a ground transportation service. Even if rideshare vehicles were chauffeured vehicles (they are not) and even if SideCar riders were passengers as defined in the Code (they are not), Chapter 13-2 would not apply to because SideCar is not providing or operating a ground transportation service. 34. Take, for example, a parent who participates in a 3-family, 3-child carpool. The

parents have agreed that every third week, one of the parents will drive all 3 children to school. In exchange for driving all 3 children once every 3 weeks, each parent receives free transportation for their child during the other 2 weeks. This exchange of benefits would clearly qualify as compensation within the definition of that term in the Code. (Some carpooling parents contribute gas money instead of driving, when their schedules do not allow driving or they do not have a vehicle, which would also be compensation.) 35. Likewise, Capital Metro provides a carpooling matching service, which it

advertises as a great way to save on the high cost of commuting. Cap Metro encourages drivers to alternate driving or [a]nother choice might be to have one person drive all of the time and the others share the cost of gas. Cap Metro even says it is happy to help you organize a carpool. It uses a special matching program to coordinate ridesharing. We give you the list, and you decide what works best for you. See http://www.capmetro.org/rideshare.aspx?id=55. 36. For the same reason Chapter 13-2 does not apply to SideCar participants, these

carpoolers are not subject to Chapter 13-2. They are neither providing a chauffeured vehicle

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nor are they receiving a fee for driving the children to school, so the children are not passengers as defined in the Code. The informal exchange of compensation (even a

voluntary payment) alone is not enough to make a ground transportation service under the Code. There must also be a chauffeured vehicle and a passenger transported for a fee before the Code applies. 37. The Transportation Department has overlooked (or is ignoring) these specific

limitations on the scope of Chapter 13-2. The City cannot pick and choose, however, to whom the Code applies. If Chapter 13-2 applies to SideCar participants, it also applies to every informal carpool arrangement in Austin. Hopefully the City does not intend to start ticketing carpooling parents and impounding their cars. The City has not offered any basis for

distinguishing between SideCar users and other carpoolers and ridesharers. B. 38. In the alternative, even if the City Code applies to SideCar, the Code is preempted by federal law, 47 U.S.C. 230(c). SideCar operates an interactive computer service. SideCar publishes a mobile

application and operates interactive computer services that facilitate the exchange of information and communications between individuals. SideCar does not create or initiate the communications seeking rides, nor does it create or initiate the communications accepting ride requests. SideCar does not dispatch drivers or give riders and drivers directions or instructions regarding their specific rides. 39. In order to fit SideCar into Chapter 13-2 of the City Code and claim that SideCar

is providing or operating a ground transportation service, the City must hold SideCar responsible for the communications and actions of the riders and drivers who are coordinating their activities through exchanges of information using SideCars computer system. This would

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be treating SideCar as the publisher of its users electronic communications, since they are the ones requesting and offering rides. This would be illegal, under federal law. 40. Federal law preempts any state or local law that would treat the provider of an

interactive computer service as the publisher of its users communications, and therefore would preempt Chapter 13-2s application to SideCar. 47 U.S.C. 230(c). 41. Section 230 was enacted by Congress after it concluded that [t]he rapidly

developing array of Internet and other interactive computer services available to individual Americans represent an extraordinary advance in the availability of educational and informational resources to our citizens. 47 U.S.C. 230(a)(1). Congress recognized that [t]he Internet and other interactive computer services have flourished, to the benefit of all Americans, with a minimum of government regulation, and [i]ncreasingly Americans are relying on interactive media for a variety of political, educational, cultural, and entertainment services. 47 U.S.C. 230(a)(4) & (5). 42. In order to protect interactive computer services from state and local regulation

that would interfere with Congress goals of fostering technological innovation, Section 230(a) provides that [n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider. 47 U.S.C. 230(c)(1). State law that is consistent with this restriction is not preempted, but any state law that would treat an interactive service provider as the publisher of information generated by its users is preempted: No cause of action may be brought and no liability may be imposed under any State or local law that is inconsistent with this section. 47 U.S.C. 230(e)(3).

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43.

Application of Section 13-2 to SideCar because it would treat SideCar as

responsible for the content of its users communications would be preempted and prohibited by Section 230. Although SideCar informed the City of the application and immunity provided by Section 230 in its February 27, 2013 letter and during the March 1, 2013, meeting, SideCar has received no indication that the City intends to comply with that federal law. VI. Temporary and Permanent Injunctive Relief. 44. 45. SideCar is likely to prevail on the merits of its declaratory judgment claims. Based upon the Citys cease and desist letter of February 15, 2013, and its

erroneous interpretation of the City Code, SideCar, its employees and the users of its mobile app face imminent adverse enforcement action by the City should they offer, provide, or facilitate any exchange of value for sharing rides. 46. Likewise, based on the Citys erroneous interpretation of the City Code, every

person who participates in a rideshare or carpool in the City and gives or receives compensation such as gas money or a reciprocal promise to provide a ride, now faces potential enforcement and impoundment of their vehicles because according to the Citys interpretation of the Code they are providing a ground transportation service. 47. Such adverse enforcement action may consist of citation, arrest, and

impoundment of personal vehicles, which constitutes irreparable harm. SideCar does not have a legal remedy that is adequate in lieu of temporary and permanent injunctive relief. 48. SideCar therefore requests that the Court enter temporary and permanent

injunction enjoining the City of Austin and its employees from taking any enforcement action against Plaintiff Side.cr, LLC, its officers, directors, employees, agents and users of its mobile application, for violation of Section 13-2 of the Austin City Code.

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VII.

Attorneys Fees. 49. It was necessary for Plaintiff Side.cr, LLC, to hire undersigned legal counsel to

file and pursue this lawsuit. Plaintiff seeks to recover its reasonable and necessary attorneys fees pursuant to Tex. Civ. Prac. & Rem. Code 37.009. VIII. Prayer. WHEREFORE, PREMISES CONSIDERED, Plaintiff Side.cr, LLC, prays for the Court to enter the following relief: 1. Enter a declaratory judgment finding that Plaintiff Side.cr, LLC, and its users who comply with its Terms of Service, are not providing a ground transportation service as defined in the Austin City Code; In the alternative, enter a declaratory judgment finding that the City Code is preempted by 47 U.S.C. 230(c); Enter a temporary and permanent injunction enjoining the City of Austin and its employees from taking any enforcement action against Plaintiff Side.cr, LLC, its officers, directors, employees, agents and users of its mobile application, for violation of Section 13-2 of the Austin City Code; Award Plaintiff Side.cr, LLC, its attorneys fees and costs; and Such other and further relief, at law or in equity, to which Plaintiff Side.cr, LLC, may show itself to be entitled. Respectfully submitted, By: /s/ Peter D. Kennedy Peter D. Kennedy State Bar No. 11296650 [email protected] Michael J. Whellan State Bar No. 21265550 [email protected]

2. 3.

4. 5.

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GRAVES, DOUGHERTY, HEARON & MOODY, P.C. 401 Congress Avenue, Ste. 2200 Austin, TX 78701 Telephone: 512-480-5674 Facsimile: 512-536-9908 ATTORNEYS FOR PLAINTIFF SIDE.CR, LLC

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EXHIBIT 1

EXHIBIT 2

EXHIBIT 3

401 Congress Ave., Suite 2200 Austin, TX 78701 512.480.5600 www.gdhm.com

A Professional Corporation

MAILING ADDRESS: P.O. Box 98 Austin, TX 78767-9998

MEMORANDU M TO: FROM: DATE: RE: Dave Phillips, General Counsel, SideCar Peter D. Kennedy February 27, 2013 Application of Chapter 13-2, City of Austin Code, to SideCar and SideCar Ridesharers.

I.

Summary.

SideCar and people who coordinate ridesharing using the SideCar mobile app are not subject to regulation under Chapter 13-2 of the City of Austin Code. Although the Citys Transportation Department has made statements indicating that it believes SideCar and another ridesharing mobile app, Heyride, are in violation of the City Code, the Departments reading of the Code is incorrect. A careful reading of the language of Chapter 13-2 shows that it does not, in fact, apply either to SideCar or to people who participate in ridesharing using the SideCar app, for three reasons: First, Chapter 13-2 regulates only chauffeured vehicles, and neither SideCar nor participants provide chauffeured vehicles. Second, Chapter 13-2 regulates only drivers who pick up passengers within the City for a fee. Neither SideCar nor participants charge a fee. Any payments made by riders are strictly voluntary. Third, SideCar does not provide or operate a ground transportation service. It does not own or operate any vehicles, and it does not employ, control or dispatch any drivers. SideCar provides a technology platform for like-minded persons to use to locate each other. SideCars technology coordinates something people have been doing since the car was invented sharing rides to save money, build community and reduce environmental impact. If Chapter 13-2 applies to people who use SideCar, it applies to every informal carsharing arrangement in Austin, including any work, school or recreational carpool.

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Finally, even if the language of the Code applied to SideCar, which it does not, any attempt by the City to regulate SideCar would be preempted by a highly significant and important federal law. 47 U.S.C. 230(c) prevents state and local governments from imposing liability or regulation on the operators of interactive computer services such as SideCar based on information shared by their users, which is exactly what the Department appears to be proposing doing to SideCar. II. SideCar.

Side.cr LLC (SideCar) publishes a mobile application called SideCar and operates a website located at www.side.cr. Persons who download the app can use it to coordinate ridesharing with other persons who have also downloaded the app. A person looking to share a ride uses the SideCar app to input their desired pickup and dropoff destination. The software provides that information to persons in the area with available drivers who have also downloaded the SideCar app, have created a SideCar account and have been pre-screened.1 The system displays the available drivers to the person looking to share a ride. The rider then chooses which available driver he or she wants to share a ride with, or simply selects closest driver. Once the rider has confirmed the ride, the software provides the driver with the riders information. For each ride, the SideCar app displays a suggested donation based on the average donation that other riders have made for rides of a similar distance and duration, taking place at similar times of day and locations. Any donation is strictly voluntary; there is no minimum or required amount. If a donation is made, 20% of the donation goes to SideCar to cover its costs of providing the communications platform. If no donation is made, SideCar receives no funds. In order to use SideCar, a person must agree to SideCars Terms of Service, which define and limit the purposes for which the SideCar app may be used. Participants agree that they will not use SideCar for any commercial purposes. SideCar is available for personal ridesharing purposes only, and use of SideCar for any commercial purpose may result in immediate termination of the users SideCar account. SideCar does not employ, contract, direct or control drivers. It does not dictate hours, schedules or shifts for drivers. It does not dispatch drivers to pick up riders. Rather, the SideCar communication platform allows people to get and give rides in a more convenient and efficient way than casual carpools, paper or electronic bulletin boards, Craigslist, or traditional ride-matching services. Like eBay for products, Travelocity for flights, and HomeAway for rentals, SideCar has developed a technology allowing drivers and riders a better way to find each other and share rides.

SideCar pre-screens persons who wish to provide rides using SideCar by doing background checks for criminal, DWI or reckless driving convictions, confirms liability insurance as required by Texas law, and confirms vehicle registration.

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III.

The Relevant City of Austin Code Provisions.

The operative provision of Chapter 13-2 is 13-2-3(A), which provides that [A] person may not provide or operate a ground transportation service that picks up passengers within the city or represent the persons business to the public as a ground transportation service, without obtaining an operating authority or taxicab franchise. The terms ground transportation service and passenger are defined terms. Ground transportation service means the service of providing chauffeured vehicles for compensation for the transportation of passengers within the city. 13-2-1(12). Passenger means an individual being transported for a fee in a ground transportation service vehicle. 13-2-1(17) (emphasis added). Compensation means any money, thing of value, payment, consideration, reward, tip, donation, gratuity, or profit paid to, accepted, or received by the driver or owner of any vehicle providing transportation for a person or persons; whether paid upon solicitation, demand or contract, or voluntarily, or intended as a gratuity or donation. 13-2-1(3). Several key terms are not defined: provide or operate, chauffeured vehicle, and a fee. IV. SideCar is not providing or operating a ground transportation service and therefore is not regulated by Chapter 13-2.

Under the plain language of the Code, Chapter 13-2 only regulates persons who provide or operate a ground transportation service. For three reasons, Chapter 13-2 does not apply to SideCar. First, SideCar is not a ground transportation service because the persons participating in ridesharing coordinated by SideCar are not driving or riding in chauffeured vehicles. Chapter 13-2 applies only if persons participating in ridesharing using SideCar are driving a chauffeured vehicle. The terms chauffeured vehicle and chauffeur are not defined in the Code, so their ordinary meaning applies. Merriam-Webster defines chauffeur as a person employed to drive a motor vehicle. http://www.merriamwebster.com/dictionary/chauffeur. Miriam-Webster defines employ as to provide with a job that pays a salary. http://www.merriam-webster.com/dictionary/employ. This has always been the common understanding of the word chauffeur: a professional whose job is driving another person around.

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Individuals who participate in ridesharing coordinated by SideCar are not driving a chauffeured vehicle because they are not employed to drive their vehicle, and they do not work a job that pays a salary. SideCar does not employ drivers or pay participating drivers a salary. Drivers voluntarily participate in ridesharing coordinated through the SideCar mobile app. SideCar specifically prohibits commercial drivers from participating in its rideshare coordination service. The SideCar app facilitates the making of a voluntary donation to help cover vehicle operating expenses, but there is no guaranteed, minimum or required donation. Further, ridesharing is just that the SideCar model involves drivers sharing a ride as they travel from one part of town to the other as they move to their own destination. Second, riders participating in ridesharing are not passengers, as that terms is specifically defined in the Code. The only regulated ground transportation service is one that picks up passengers in the City of Austin. 13-2-3(A). Passengers are only persons who are transported for a fee. 13-2-1(17). Although the Code includes a broad definition of compensation, the Code uses a different, undefined but clearly narrower term, fee in its definition of passenger. The ordinary meaning of the term fee does not include a gratuity or a reimbursement for expenses. It means a fixed charge for a service. Hence, Miriam-Webster defines fee as a fixed charge or a sum paid or charged for a service. http://www.merriam-webster.com/dictionary/fee. Therefore, because there is no fee charged by a driver participating in a rideshare coordinated using SideCar, riders are not passengers as defined in the Code, and Chapter 13-2 does not apply. Third, Chapter 13-2 applies to SideCar only if it is providing or operating a ground transportation service. Even if rideshare vehicles were chauffeured vehicles (they are not) and even if SideCar riders were passengers as defined in the Code (they are not) Chapter 13-2 would not apply to SideCar because it is not providing or operating a ground transportation service. SideCar publishes a mobile application and operates a website. It provides communication tools for individuals to use to contact each other and coordinate ridesharing. SideCar does not own, rent, lease, loan or control any vehicles. SideCar does not employ, contract, direct or control drivers. It does not dispatch drivers to pick up riders. Like an online dating service, SideCar uses a technology platform to permit individuals with shared interests (getting from point A to point B) to locate each other. SideCar does not guarantee that any person seeking a rideshare will find another person to share a ride with; it simply facilitates voluntary information-sharing by third parties. It is therefore not providing or operating a ground transportation service.2

As other companies have done for promotional purposes during the March festivals, for a limited time during SXSW 2013, SideCar plans to pay drivers to be available to give SideCar riders rides, if requested. These drivers will not accept donations from riders and therefore will not be receiving either compensation or a fee, and therefore will not be governed by Chapter 13-2.

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V.

Persons participating in a rideshare coordinated using SideCar are not providing a ground transportation service and therefore are not regulated by Chapter 13-2.

For the same reasons explained above, a person who uses SideCar to coordinate a rideshare is not governed by Chapter 13-2. First, ride sharers are not a chauffeurs and are not providing chauffeured vehicles, because they are sharing rides. While it is theoretically possible that a person could misuse the SideCar app to simply provide rides in the expectation of payment, SideCar specifically prohibits professional drivers or persons seeking to profit from ridesharing and will terminate the accounts of drivers violating its Terms of Service. Second, because there is no fee paid for a rideshare, riders are not passengers as defined by the Code. Again, while it is theoretically possible that a driver using SideCar could demand a fixed sum or require a payment for a ride, this would be in direct violation of SideCars Terms of Service. While that individual may be in violation of Section 13-2-3(A), the exception proves the rule: in the absence of a fee (which SideCar prohibits) riders are not passengers as defined, and so participants in rideshares coordinated by SideCar are not subject to regulation under Chapter 13-2. VI. If SideCar is providing an illegal ground transportation service, so is every carpooling parent in Austin.

If the specific language of Chapter 13-2 is not carefully applied, as described above, every person in Austin who is part of an informal carpool or rideshare would be in violation of the City Code. The author of this memo, for instance, participates in a 3-family, 3-child carpool. The parents have agreed that every third week, one of the parents will drive all 3 children to school. In exchange for driving all 3 children once every 3 weeks, each parent receives free transportation for their child during the other 2 weeks. This exchange of benefits would clearly qualify as compensation within the definition of that term in the Code. (Some carpooling parents contribute gas money instead of driving, when their schedules do not allow driving or they do not have a vehicle, which would also be compensation.) For the same reason Chapter 13-2 does not apply to SideCar participants, however, carpooling parents are not subject to Chapter 13-2. They are neither providing a chauffeured vehicle nor are they receiving a fee for driving the children to school, so the children are not passengers as defined in the Code. The informal exchange of compensation (even a voluntary payment) alone is not enough to make a ground transportation service under the Code. There must also be a chauffeured vehicle and a passenger transported for a fee before the Code applies. Page | 5
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The Transportation Department has overlooked (or is ignoring) these specific limitations on the scope of Chapter 13-2. The Department cannot pick and choose, however, who the Code applies to. If Chapter 13-2 applies to SideCar participants, it also applies to every informal carpool arrangement in Austin. Surely the City does not intend to start ticketing carpooling parents and impounding their cars. VII. Even if Chapter 13-2 applied to SideCar, it would be preempted by federal law, 47 U.S.C. 230(c).

As explained above, SideCar operates an interactive computer service. SideCar publishes a mobile application and operates interactive computer services that facilitate the exchange of information and communications between individuals. RideShare does not create or initiate the communications seeking rides, nor does it create or initiate the communications accepting ride requests. SideCar does not dispatch drivers or give riders and drivers directions or instructions regarding their specific rides, other than to draft general rules of the road for SideCar participants. In order to fit SideCar into Chapter 13-2 of the City Code and claim that SideCar is providing or operating a ground transportation service, the City must hold SideCar responsible for the communications and actions of the riders and drivers who are coordinating their activities through exchanges of information using SideCars computer system. This would be treating SideCar as the publisher of its users electronic communications, since they are the ones requesting and offering rides. This would be illegal, under federal law. Federal law preempts any state or local law that would treat the provider of an interactive computer service as the publisher of its users communications, and therefore would preempt Chapter 13-2s application to SideCar. 47 U.S.C. 230(c). Section 230, although perhaps not familiar to the Citys Transportation Department, is a significant federal statute that was enacted by Congress after it concluded that [t]he rapidly developing array of Internet and other interactive computer services available to individual Americans represent an extraordinary advance in the availability of educational and informational resources to our citizens. 47 U.S.C. 230(a)(1). Congress recognized that [t]he Internet and other interactive computer services have flourished, to the benefit of all Americans, with a minimum of government regulation, and [i]ncreasingly Americans are relying on interactive media for a variety of political, educational, cultural, and entertainment services. 47 U.S.C. 230(a)(4) & (5). In order to protect interactive computer services from state and local regulation that would interfere with Congress goals of fostering technological innovation, Section 230(a) provides that [n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider. 47 U.S.C. 230(c)(1). State law that is consistent with this restrict is Page | 6
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not preempted, but any state law that would treat an interactive service provider as the publisher of information generated by its users is preempted: No cause of action may be brought and no liability may be imposed under any State or local law that is inconsistent with this section. 47 U.S.C. 230(e)(3). Application of Section 13-2 to SideCar because it would treat SideCar as responsible for the content of its users communications would be preempted and prohibited by Section 230, just as a multitude of state laws that would purport to regulate or impose liability on communications platforms have been held to be preempted. E.g., Chicago Lawyers Committee for Civil Rights Under Law v. Craigslist, Inc., 519 F.3d 666 (7th Cir. 2008) (under Section 203, fair housing law cannot be applied to Craigslist based on users advertisements); Jane Doe v. MySpace, Inc., 528 F.3d 413 (5th Cir. 2008) (under Section 230, MySpace cannot be held liable for users communications and later acts); Doe v. MySpace, Inc., 629 F. Supp.2d 663 (E.D. Tex. 2009 (same); Carafano v. Metrosplash.com, 339 F.3d 1119 (9th Cir. 2003) (website does not lose Section 230 immunity by providing tools to create content); Lars Gentry v. eBay, 99 Cal. App. 4th 816 (Cal. App. 2002) (under Section 230, eBay not responsible for communications and acts of eBay seller).

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EXHIBIT 4

Peter D. Kennedy Board Certified, Civil Appellate Law Texas Board of Legal Specialization 512.480.5764 512.536.9908 (fax) [email protected] 401 Congress Avenue, Suite 2200 Austin, TX 78701-3790

A Professional Corporation

March 1, 2013 Mr. Gordon Derr Assistant Transportation Director City of Austin Transportation Department 505 Barton Springs Road, Suite 800 Austin, Texas 78704 Re: SideCar, ridesharing and carpooling. via email: [email protected]

Dear Mr. Derr: Thank you for meeting with me and Michael Whellan today, along with Councilmember Chris Riley and his policy aide, Leah Bojo. Per our discussion, I am sending this letter to clarify some facts about SideCars Brand Ambassador program and its community ridesharing platform. Brand Ambassador program. As we discussed, SideCar is currently in the process of hiring individuals to act as temporary promotional Brand Ambassadors for SideCar to publicize and promote the company during the next few weeks, including during SXSW. The Brand Ambassadors are independent contractors. As part of their duties, these Brand Ambassadors will drive their own vehicles and accept rides requested through the SideCar mobile app. These are the drivers who SideCar is currently advertising to hire. In addition to confirming their drivers licenses and vehicle liability insurance, SideCar is obtaining additional insurance coverage for these Brand Ambassadors. The Brand Ambassadors will not accept voluntary donations through the SideCar app, and SideCar will not receive any revenue from rides given by Brand Ambassadors. Brand Ambassadors will be instructed not to accept any tips or other compensation whatsoever from riders. The rides they will be giving therefore will be free of any compensation or fee under the City Transportation Code. The purpose of the program is to promote SideCar and to increase the installed base of its mobile app. Because SideCar will receive no revenue, and will be paying these Brand Ambassadors, this is not the companys business model, but purely a promotional activity. This program is materially identical to the free rides that Chevrolet and Mfft, and probably others, gave around town last year during SXSW as promotions for their brands. The SideCar mobile app. As explained in greater detail in my memo of February 27, 2013, SideCar publishes a mobile application and operates a website; people who download the app can use it to coordinate ridesharing with other persons who have also downloaded the app.

401 Congress Ave.

Suite 2200

Austin, Texas 78701

512.480.5600

www.gdhm.com

March 1, 2013 Page 2 Before authorizing any person to use the app to offer and accept rides, SideCar performs a background check via the Lexis/Nexis risk management platform for criminal, DWI, or reckless driving convictions and bars any such persons from receiving approval to access and uses our rideshare platform. SideCar also performs a separate background check of the US National Sex Offender Registry through Family Watchdog. SideCar also requires prospective drivers to provide proof of a current and valid drivers license and proof of current and valid liability insurance as required by state law. SideCar is not trying to build a cadre of professional drivers. SideCar does not permit commercial use of its app. SideCar has developed and is deploying a peer-to-peer computer network that allows individuals interested in sharing rides to locate each other. SideCar does not consider itself to be displacing existing taxi dispatch services or pre-arranged limousine services. Rather, SideCars rideshare platform simply makes is easier and simpler to do what Austin residents are doing already carpooling and ridesharing to save money, build community and help the environment. As explained in my February 27 memo, SideCars platform is not subject to city regulation, due to the federal immunity granted by 47 U.S.C. 230(c), and neither SideCar nor its users are operating a ground transportation service as defined by the City of Austin Code. As we read the Code, it does not apply to SideCar, but if it does, then it applies to every informal carpool or ridesharing arrangement in Austin, which is surely not the Citys intention. Given the letter received by SideCar on February 26 from the Transportation Department, , however, SideCar and its community of users are living with considerable uncertainty as to the Departments enforcement intentions. We are asking, therefore, that the Department confirm that it does not intend to take enforcement action against SideCar or its users who are using the app in compliance with SideCars Terms of Service, while the City addresses the Transportation Code and its application to carpooling, ridesharing and electronic platforms that facilitate that activity such as SideCar. Thank you for your attention to this, and we look forward to working with the Department and the City to foster improved and diverse transportation options for all of Austins citizens. Sincerely, GRAVES, DOUGHERTY, HEARON & MOODY A Professional Corporation By: PDK /s/ Peter D. Kennedy Peter D. Kennedy

March 1, 2013 Page 3 cc: Mr. Michael Whellan (Firm) Councilmember Chris Riley Ms. Leah Bojo Ms. Karen Kennard Ms. Deborah Thomas