Lyft's NYC launch of ride-sharing service hits roadblock

NEW YORK Fri Jul 11, 2014 6:36pm EDT

John Zimmer, co-founder ride-sharing star up Lyft, speaks on stage during day one of TechCrunch Disrupt SF 2012 event at the San Francisco Design Center Concourse in San Francisco, California September 10, 2012. REUTERS/Stephen Lam

John Zimmer, co-founder ride-sharing star up Lyft, speaks on stage during day one of TechCrunch Disrupt SF 2012 event at the San Francisco Design Center Concourse in San Francisco, California September 10, 2012.

Credit: Reuters/Stephen Lam

NEW YORK (Reuters) - Ride-sharing service Lyft Inc faces a roadblock in launching its car service in New York City after authorities on Friday sought to prevent it from operating in the state.

Just hours before the company planned to start service in Brooklyn and Queens, two state officials asked the State Supreme Court in Manhattan to stop Lyft, saying it has ignored licensing and insurance laws.

The parties are scheduled to appear in court on Monday, according to the office of New York Attorney General Eric Schneiderman and a representative for Lyft.

"We are pro-innovation and pro-competition, but allowing Lyft to flout dozens of different laws would, in addition to putting the safety of New Yorkers at risk, put law-abiding competitors at a substantial disadvantage," Schneiderman and Superintendent of Financial Services Benjamin Lawsky said in a joint statement on Friday afternoon.

The statement said the court granted an injunction at a hearing on Friday preventing Lyft from launching in New York City on Friday evening, as it had planned. Lyft spokeswoman Katie Dally disagreed, saying in an email that the company agreed to hold its launch in New York City and that the judge adjourned the matter until Monday.

No one at the court could be reached after normal business hours.

Dally also said the company will not proceed in New York City unless it complies with city taxi and limousine regulations.

The San Francisco-based company is not licensed to do business in New York, uses drivers who are not commercially licensed and vehicles that are not commercially insured and operates in violation of state and local law, Schneiderman and Lawsky said in court papers filed Friday morning.

Competitors to Lyft include Sidecar, which also links passengers with drivers who use their personal vehicles; and Uber, Flywheel and Hailo, which connect passengers and taxis.

Lyft allows people to use a smartphone to request a ride within minutes from a "background-checked driver," whom they pay with a stored credit card when the ride ends, according to its website.

For payment, Lyft collects suggested donations in some cities and charges a set amount in others, the website says.

The company offers drivers an insurance plan intended to backstop their personal coverage that includes a $1 million limit covering liability for bodily injury or property damage sustained by passengers, according to the website. It operates in more than 30 states, including California, Michigan and Texas, the website says.

(Reporting by Bernard Vaughan; Editing by Barbara Goldberg, Eric Beech and Lisa Shumaker)