SAN FRANCISCO (CBS SF) – San Francisco cabbies have accused a startup that allows customers to hail limos and cabs with a smartphone app of violating both city and state taxi regulations.

The class action lawsuit filed on Friday claims the pickup service Uber, which recently expanded to include participating taxis, takes away fares from legally sanctioned cab companies and their drivers.

KCBS’ Chris Filippi Reports:

“They are unfairly competing with the only people in San Francisco who are legally able to provide this service,” said Gary Oswald, attorney for the cabbies.

Uber calls the lawsuit baseless, insisting it complies with all laws applicable to its business.

State regulators claim Uber and companies that book rides through smartphone apps fit the definition of a charter-party carrier of passengers, and so fall under the jurisdiction of the California Public Utilities Commission.

The California Public Utilities Commission has cited Uber and two other ride sharing companies, Lyft and SideCar, for operating as passenger carriers without evidence of public liability and property damage insurance coverage, and failing to enroll drivers in controlled substance and alcohol testing programs.

“This is a matter of public safety,” Brigadier General Jack Hagan, director of CPUC’s consumer protection and safety division, said Wednesday in a statement.

“If something happens to a passenger while in transport with Lyft, SideCar or Uber, it is the responsibility of the CPUC to have done everything in its power to ensure that the company was operating safely according to state law,” Hagan said.

Sunil Paul, CEO of SideCar, disputed the CPUC’s claim that it was a charter-party carrier.

“We established SideCar to allow drivers and passengers to connect with one another under the safe harbor of the ridesharing provisions of the law,” Paul wrote in a statement on the company’s website.

“We neither own nor operate cars. We neither employ nor use contract drivers.”

He wrote that his company will “continue our conversations with the CPUC and other authorities in order to educate them on the value of SideCar and the sharing economy as a whole.”

The CPUC sent cease-and-desist letters before levying the fines on Wednesday. The companies have 20 days to appeal or pay up.

(Copyright 2011 by CBS San Francisco and Bay City News Service. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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