Leonard A.

Daneman
Call-A-Cab, LLC
200 Broadway Blvd SE
Albuquerque, NM 87102
Phone 505-252-6175

October 4, 2016
Re:

A New Mexico Class E Chauffeurs License will Solve Uber Safety Issues
The Transportation Network Services Act is Preempted by the Supremacy Clause
Predatory Pricing and Vertically Integrated Monopoly
Uber Contractors Operating Without Insurance

Synopsis:
The 2016 NM Transportation Network Services Act [TNSA] is only six-months old, but is fatally
flawed.
It is in direct conflict with Federal Motor Carrier Safety Administration [FMCSA] regulations and
definitions and its insurance scheme has gaps of non-coverage.
Especially as the Uber facilitates interstate transportation, it is subject to federal laws the TNSA
purports Uber exempt. Therefore, New Mexicos TNSA is preempted by the Supremacy Clause.
New Mexicos transportation regulation was pressured into accommodating Uber, however, the Uber
phenomenon is not a new technology requiring special treatment. Uber did not invent GPS or first
associate Smartphone GPS with a tracking app. Uber did, however, use Disruptive Marketing to take
over local taxi business, forcing its way in hiding in the ether of the Internet in order to ignore state
enforcement of regulations, business taxes; and violating antitrust law.
In comparison, nine months prior to Uber, Call-A-Cab launched a GPS taxi logistics peer-to-peer
website perfect for Smartphones, but also accessible by PC, tablet, and landlines. And Call-A-Cab
did it legally.
The following analysis of the 2016 NM TNSA is not intended to put Uber out of business. Uber is a
very popular Smartphone app. However, the State of New Mexico must modernize its Motor Carrier
and MVD statutes in order to promote its legitimate interest in public safety, and end Ubers
monopolistic practices of predatory pricing and blocking competition.
The current Uber business model, as described in the TNSA, unfairly exploits its contractors and
their vehicles, perpetuates monopolistic practices, and at times leaves drivers and passengers
completely uninsured.
On the other hand, if the measures suggested in this analysis are adopted, Uber can continue doing
business, its contract drivers will have more opportunities earn a fair income, and taxi companies
and their drivers can participate as well.
In 2011, the first 4G LTE Broadband Smartphones were introduced (3G was not fast enough to
handle streaming GPS data) and in 2013 Daneman launched the Call-A-Cab GPS Taxi Logistics
website. He also designed a GPS tracking website called GPS ON TIME.

Uber and Lyft entered the Albuquerque market illegally in 2014 and in 2015 their Predatory Pricing
practices decimated local taxi fleets. Call-A-Cab was in striking distance of competing head-tohead with Uber, but Uber dropped their prices from $2.25 to 85 cents per mile. Call-A-Cab went
from thirty subscribed drivers (our target for optimal logistics was fifty) to only four.
While Call-A-Cabs website redirects about $10,000 in taxi customers to three cab companies, no
cab company will adopt Call-A-Cabs GPS logistics to its dispatch office. Yellow Cab liked Call-ACab and eventually computerized its dispatch office, but at that time did not appreciate the value of
Call-A-Cabs peer-to-peer website; which is unfortunate because it would have put Yellow Cab a
year ahead of Uber and Lyft.

Why A Class E License

UBER can be subjected to state and federal Motor Carrier safety regulations simply by adopting the
Class E Chauffeurs License into New Mexico law.
IN ADDITION, once Uber is brought into compliance, existing taxi companies and drivers can
participate and profit while providing superior services to the public, not just smartphone users.
UBER HAS FATAL FLAWS. Its insurance scheme at times leaves Uber drivers uninsured. In
addition, Call-A-Cabs GPS website does what Uber cant: it can distribute calls both through taxi
dispatch and directly to drivers from business landlines, accept cash fares, and its interactive GPS
Logistics Map can specify types of vehicles and passenger capacity.

The Class E Chauffeurs License

A good model to follow is the law used by the state of Missouri. They force Uber into the federal
definition of for hire, require taxi license plates, and also control proof of commercial insurance.
Some states require periodic vehicle inspections. Commercial vehicle inspections can be monitored
by taxi companies who are already organized to facilitate Motor Carrier Act compliance.

Taxi Companies Will Not Just Survive, But Profit

Taxi companies not only lease taxicabs, but micromanage Motor Carrier Act compliance. The state
Class E license application would take over the initial driver tests, checks, and inspections; the taxi
companies would then take over compliance oversight charging a monthly fee to both Uber and taxi
drivers using personal cars for commercial passenger transport.
Uber created the Transportation Network Services Act [TNSA] to avoid taxes and obstruct
regulation under federal and state Motor Carrier laws, however, that in itself may be its undoing:
Question:

Is New Mexicos 2016 Transportation Network Services Act [TNSA] preempted by

the Federal Motor Carrier Safety Administration [FMCSA]?

Answer:

Yes. A state statute must not conflict with, contradict, or obstruct enforcement of
federal law. Under public policy and legitimate state interest, commercial interstate
transportation of passengers is subject to federal and state safety regulations.

Conclusion: A New Mexico Class E license would facilitate for hire drivers meeting New
Mexico Motor Carrier Act, FMCSA safety, and commercial insurance regulations.
Discussion:
Generally speaking, a state statute is preempted by the Supremacy Clause if it violates, contradicts or
2

obstructs enforcement of federal law. Azar vs Prudential Insurance Company, 68 P.3d 909 (2003)
133 N.M. 669 2003-NMCA-0621
The New Mexico Motor Carrier Act regulates commercial transportation as public policy; the state
having legitimate interest in the safety and welfare of citizens using for hire, or commercial cars
and taxis. State Motor Carrier regulations follow FMCSA guidelines.
These regulations, from which Uber declares itself exempt, apply to Uber even more considering
Uber operates not only locally but as an Interstate Carrier. Just set your Uber apps destination from
Albuquerque to Denver or El Paso, and you will see for yourself.
The following section of Ubers 2016 Transportation Network Services Act [TNSA] is in conflict
with Federal law:
SECTION 3. NOT OTHER CARRIERS.--Transportation network
companies and transportation network company drivers shall
not be subject to the Motor Carrier Act or deemed2 to provide any
transportation service as defined in the Motor Carrier Act. A
transportation network company driver shall not be required to
register a personal vehicle as a commercial vehicle or vehicle for
hire.3

Federal Motor Carrier Safety Regulations; General

390.5: Definitions. Driver means any person who operates any commercial motor
vehicle. . . . For-hire motor carrier means a person engaged in the transportation of
goods or passengers for compensation;
As followed by the Missouri Class E License:
Individuals who may need to obtain a Class E license include:

Daycare employees.
Uber or Lyft drivers.
Limo drivers.
Taxi drivers.
Chauffeurs.
http://www.dmv.org/mo-missouri/special-licenses.php#Class-E-Drivers-Licenses

{30} Federal law may preempt state law under the Supremacy Clause, U.S. Const. art. VI, cl. 2, by "express
provision, by implication, or by a conflict between federal and state law." New York State Conference of Blue
Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 654, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995);
Hennessy v. Duryea, 1998-NMCA-036, 6, 124 N.M. 754, 955 P.2d 683. "The purpose of the preemption
doctrine is to allow Congress to promulgate a uniform federal policy without states frustrating it through either
legislation or judicial interpretation." Largo v. Atchison, Topeka & Santa Fe Ry. Co., 2002-NMCA-021, 6, 131
N.M. 621, 41 P.3d 347. Courts, however, apply a strong presumption against preemption, particularly in areas of
law that are traditionally left to state regulation. Hennessy, 1998-NMCA-036, 8, 124 N.M. 754, 955 P.2d 683;
Montoya v. Mentor Corp., 1996-NMCA-067, 7, 122 N.M. 2, 919 P.2d 410. {31} "Whether federal law
preempts state law is generally a question of congressional intent." Srader v. Verant, 1998-NMSC-025, 7, 125
N.M. 521, 964 P.2d 82. "`When Congress has considered the issue of preemption and has included in the
921*921 legislation a provision expressly addressing the issue,' we need only identify the domain expressly
preempted by the federal statute and may infer that matters beyond that domain are not preempted." Hennessy,
1998-NMCA-036, 6, 124 N.M. 754, 955 P.2d 683 (quoting Montoya, 1996-NMCA-067, 8, 122 N.M. 2, 919
P.2d 410).
2
Deem, vb. 1. To treat (something) as if (1) it were really something else, or (2) it has qualities that it doesnt have . . .
Blacks Law Dictionary, Seventh Ed. 1999
3
See also TNSA 2, B. (2) and 2, C.
3

Ubers Predatory Pricing and Monopolistic Insurance Scheme

Ubers proprietary app and insurance are non-compete conditions in their driver contract creating a
Vertically Integrated Monopoly. There is no reasonable non-fleet commercial insurance
available for other business models and Uber drivers arent insured if they stray from the Uber
app.
The insurance scheme approved for the Transportation Network Services Act is not standard
commercial insurance, but an electronically controlled scheme tied directly to the Uber app.
Unless they have their own commercial insurance, Uber drivers have limited or no insurance
under some circumstances while in Part A and B.
In addition, if an Uber driver takes a personal call, they are operating with ZERO liability
insurance. These are serious gaps in Uber insurance and underwriters in some states are
scrambling to create gap insurance. But, that is not good enough.
Also in violation of Antitrust law is Ubers past year of dropping their rates from $2.25 to 85 cents
per mile. Not only is this incredibly exploitive of Uber drivers and cars, it is Predatory Pricing
according to both state and federal Antitrust law.
Predatory Pricing is a foreign corporation using below cost prices with the intent4 to take over a local
market (predation), knowing that increasing prices without competition will recover their losses
(recoupment).5
A pricing scheme secondary to Ubers predation is their refusal to collect gross receipts taxes from
fares collected through the app, or pay gross receipts on commissions paid out to drivers.6 Uber
evaded taxes from their inception, but legalized their tax fraud scheme in the vague language of
the 2016 TNSA, Section 18:
SECTION 18. CONTROLLING AUTHORITY.-A. No municipality or other local entity may impose a tax on or require
a license for a transportation network company, a transportation
network company driver or a vehicle used by a transportation network
company driver where a tax or license relates to providing prearranged
rides or subjects a transportation network company to the
municipality's or other local entity's rate, tax, license, entry,
operational or other requirements, except for generally applicable
business licenses or taxes.

This is unfortunate and unfair to legal taxi companies, and Call-A-Cab. The only way to correct this
inequity is to preempt and or repeal the TNSA through the Supremacy Clause.
4

Uber CEO Kalanick made it publicly known he was out to destroy big taxi. http://recode.net/2014/05/28/traviskalanick-uber-is-raising-more-money-to-fight-lyft-and-the-asshole-taxi-industry/
5
Below-cost pricing intended to eliminate specific competitors and reduce overall competition is known as predatory
pricing. Section 2 disallows this conduct. In Brooke Group Ltd. v. Brown & Williamson Tobacco, 509 U.S. 209 (1993),
the U.S. Supreme Court devised a two-part test to determine if predatory pricing had occurred. First, the plaintiff must
establish that the defendant's production costs surpass the market price charged for the item. Second, the plaintiff must
establish that a "dangerous probability" exists that the defendant will recover the investment in above-cost inputs. In
Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber Co., Inc. (05-381) (2007), the Supreme Court said that this test
also applies when determining if a predatory bidding scheme exists.
6
New Mexico Taxation and Revenue could find no gross receipts tax filings for Hinter-NM, LLC, Ubers registered
business name in New Mexico. See Connie L. Dayton, CPS, CFE, CFF, Forensic Tax Auditor, 505-841-6687
connie.dayton@state.nm.us

Summary of a Statutory Solution:

1. Class E License -- Uber drivers fall under the federal definition of for hire and must apply
for a Class E Chauffeurs License. That would resolve the federal and state safety issues now
ignored by Uber. Federal preemption under the Supremacy Clause would void Ubers TNSA
exemptions.
2. With a Class E License and reasonable non-fleet (half the operational hours) for hire
commercial insurance, GPS peer-to-peer logistics will be available to all citizens including
hospitals, hotels, bars, restaurants, and anyone using just a landline.
3. It is known nationwide that Ubers commercial insurance has holes in coverage. Many states
are scrambling to create gap insurance.7 Once the Class E license is law, the insurance
companies must provide an appropriate commercial insurance policy (not a gap patch) for
personal cars used for-hire. At about half the rate of fleet taxis leased 24/7, this insurance
will be affordable as a fixed business cost for all but the most part-time drivers.
4. These solutions will permit both Uber and Taxi drivers to accept calls through Call-A-Cabs
GPS Logistics, or any other competing dispatch services for independent contract carriers.
I would appreciate your interest in my years of research and building Call-A-Cab. The next step,
with your support and approval, is scheduling a presentation before the NMPRC.
Sincerely,
Leonard A. Daneman
Owner/Designer of Call-A-Cab

cc:
Yellow Cab Company of Albuquerque
Albuquerque Cab Company
Giant Cab Company
Capital City Cab Company
Avellino Gutierrez, Director of Transportation
Valerie Espinoza, Chairperson, NMPRC
U.S. Sen. Tom Udall
Sen. Cisco McSorley
Sen. Gerald Ortiz y Pino
Sen. Michael Padilla
Sen. Michael S. Sanchez
Sen. William P. Soules
Rep. Jim Dines
Rep. Brian Egolf
Rep. Eliseo Lee Alcon
Rep. James Roger Madalena
Rep. Matthew McQueen
Rep. G. Andrs Romero
76

http://uberpeople.net/threads/uber-and-lyft-car-insurance.60340/
5

Rep. Miguel P. Garcia

Rep. Harry Garcia
Rep. Sheryl Williams Stapleton
Rep. Dianne Miller Hamilton
Hector Balderas