A number of San Francisco car service startups have been cited for "violations of the Public Utilities Code" by the California Public Utilities Commission, the state agency that regulates taxis and limousines. The companies have until December 3, 2012 to respond, or they can pay $20,000 in fines.

In a Wednesday statement (PDF) the CPUC charged Lyft, SideCar, and Uber with "operating as passenger carriers without evidence of public liability and property damage insurance coverage in effect and on file with the CPUC," and "engaging employee-drivers without evidence of workers’ compensation insurance in effect and on file with the CPUC."

"That is unsurprising to me, based on the law," Jordanna Thigpen, the former deputy director of the San Francisco Taxi Commission and now attorney with Cotchett, Pitre, and McCarthy, told Ars. "Those are quite large fines. I’ve never heard of such fines."

SideCar and Lyft were served a cease-and-desist by the CPUC last month, which they have ignored. On its blog, SideCar dismissed the citation, which was filed and served on Tuesday. (Ars profiled SideCar and Lyft back in July.)

John Zimmer, Lyft's co-founder, told Ars that his company had no plans to stop operating, and it would oppose the citation through the CPUC's appeals process.

"We are not a charter-party carrier, we are a peer-to-peer carrier," he maintained. "I think it's clear to everyone that the current framework doesn't fit modern technology and possibilities."

These companies all continue to argue that they are not traditional transportation services companies because they neither own cars nor employ drivers—rather, they claim they are a sort of middleman that connects passengers with drivers.

In a blog post that also included the official citation, Sidecar's CEO Sunil Paul compared the CPUC's citation to "saying Airbnb is a hotel chain, that Travelocity is an airline, or that eBay is a store. We established SideCar to allow drivers and passengers to connect with one another under the safe harbor of the ridesharing provisions of the law."

Thigpen noted that these cases will likely need a judicial ruling on what it means to be a transportation company or to provide transportation services.

"'Providing'—what does it mean?" she added. "[These startups have] obviously spent a lot of time reading and re-reading the transportation code and the PUC code. Obviously it’s going to turn on this issue—what is the definition of 'providing'?"

San Francisco taxi drivers file class-action lawsuit against Uber

In a related case, Uber, the San Francisco smartphone-driven car service startup, has been served with a class-action lawsuit filed on behalf of two local taxi drivers. Uber has faced a series of clashes with local regulators, but this new case marks the first time a class-action suit has been filed by cab drivers directly.

"The taxicab drivers in San Francisco are hurting—basically that’s the purpose of the action," Gary Oswald, the plaintiffs’ attorney, told Ars.

He added that since Uber’s launch in San Francisco two years ago, all cab drivers had lost money due to what he called "unfair" competition, but he declined to put a precise dollar figure on it.

Uber, distinct from SideCar and Lyft's business models, works with already CPUC-licensed drivers rather than people who are essentially moonlighting as a not-quite taxi driver.

"The question from the CPUC with regards to Uber is only whether Uber should be licensed as well, double-regulating us on top of our already-regulated transportation partners," Travis Kalanick, the company's CEO and founder, told Ars. "Our contention is that if you read the regulations, such a notion doesn't make sense. Are we supposed to give drivers a second drug and alcohol test? Are we supposed to have cars inspected by the DMV a second time after they've already inspected our partners' vehicles already?"

In the lawsuit, which was filed on November 9 but announced publicly on Wednesday, the plaintiffs argue that black cars and limousines are regulated by the California Public Utilities Commission (CPUC) at the state level and the San Francisco Municipal Transportation Authority (SFMTA) locally. Specifically, the suit cites California’s Business and Professions Code Section 17200, which forbids "any unlawful, unfair, or fraudulent business act." The suit also argues that Uber "significantly interferes with the business of the legally authorized taxicab drivers," who make up the class.

The SFMTA did not immediately respond to Ars’ request for comment with respect to the case. Uber, for its part, maintains that it is law-abiding—its terms of service state in all-caps (we’ll spare you):

The company does not provide transportation services, and the company is not a transportation carrier. It is up to the third party transportation provider, driver or vehicle operator to offer transportation services which may be scheduled through use of the application or service. The company offers information and a method to obtain such third party transportation services, but does not and does not intend to provide transportation services or act in any way as a transportation carrier, and has no responsibility or liability for any transportations services provided to you by such third parties.

Will the transportation services companies please stand up?

This is a line of reasoning used by other similar San Francisco startups like Sidecar and Lyft.

"Uber complies with all laws and regulations applicable to its business. Any claim to the contrary is baseless and motivated by those who seek to deprive the public of this safe and convenient transportation option,” John B. Quinn, the company’s counsel, told Ars in a statement. “Uber would rather compete for business on the streets of San Francisco than in the courtroom, but Uber will defend these claims in court and is confident of the outcome."

A judge has yet to rule on this fundamental question that seems to persist nationwide: whether Uber, Sidecar, Lyft and other similar companies are actually transportation companies.

“Essentially Uber doesn’t think that the rules apply to it,” Oswald added. “It doesn’t have a license and what it’s doing requires a license. There’s only one group of people here who do have such licenses, and they’re the cab drivers in San Francisco, and they’re impacted. If you don’t like the rules, change the rules—don’t ignore them.”