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PolitiFact: Ad blaming Catherine Cortez Masto for shutting down Uber misleads

Posted at 4:25 PM, Jul 13, 2016
and last updated 2016-07-13 23:05:19-04

Catherine Cortez Masto is once again taking fire from a Koch Brothers-backed group attacking her record as the state’s attorney general.

Freedom Partners Action Fund is spending $1.2 million on a new television ad campaign accusing the Nevada Democratic Senate candidate of "driving away jobs" by forcibly shutting down popular ride-hailing company Uber in Nevada.

"Many Nevadans relied on Uber for work, but after accepting $70,000 from taxi companies, Catherine Cortez Masto went after Uber — once, twice, three times — until she drove them out of town, along with all their jobs," the ad says.

Let’s be clear — Uber has been operating in Nevada for about a year. But is it true that Cortez Masto pushed out Uber and drove away jobs in 2014?

No free rides

Uber didn’t have the smoothest ride into Nevada.

Speculation around the company launching was running rampant in 2014 as Uber eyed Nevada and tourist-friendly Las Vegas as one of the most lucrative markets without ride-hailing companies operating (Uber considered Nevada in 2012 but backed out).

But Uber’s normal strategy of legally questionable, high-profile launches was a more difficult bar to clear in Nevada, where the closely-regulated taxi market is ruled by incredibly strict regulations. The rules include an explicit prohibition in state law on any company entering the market unless it can prove it wouldn’t "adversely affect other carriers operating in the territory."

Nevada also has a confusing regulatory structure for overseeing cab drivers. The Nevada Taxicab Authority oversees Las Vegas, while the Transportation Authority regulates the rest of the state. Both regulators fall under the Department of Business and Industry, which Director Bruce Breslow said attempted to negotiate Uber’s entry into the market before it suddenly launched statewide on Oct. 24, 2014.

"In the middle of trying to help them, they decided to operate without authority and illegally at the time in Nevada," Breslow said.

Despite being told by regulators that Uber would need to apply under existing rules for new taxi companies, the company argued its non-traditional business model didn’t fall under decades-old state regulations.

State officials disagreed, and quickly cracked down. Uber drivers caught by regulators were immediately cited and their cars impounded, and the Attorney General’s office quickly filed suit to shut Uber down.

In an interview, a spokesman for Freedom Partners said Cortez Masto’s "overaggressive legal fight" justified the ad.

"The reality is that Uber was operating in the absence of regulations, not in spite of them, and the state Legislature ultimately codified what Nevadans already knew: Uber is not a taxi company and should not be subject to their regulations," spokesman Bill Riggs said in an email.

So how much wiggle room did Cortez Masto have in going after Uber, and was her legal strategy as overzealous as the ad claims?

Jurisdictional fights

The ad claims Cortez Masto went after Uber "three times" until the company was driven out of the state — a reference to three attempted requests for temporary restraining orders filed on the same day Uber launched.

The requests, which were filed in Carson City, Reno and Las Vegas, created a legal mess with several justices attempting to claim the case, including one Las Vegas-based justice suggesting that the Attorney General’s office was "jumping around to different jurisdictions trying to get a ruling."

Nevada’s state Supreme Court eventually ruled on the jurisdictional fight, sending the case to a Reno district court, which promptly granted an injunction against Uber (the company soon after "temporarily suspended operations").

Freedom Partners claims this "overaggressive legal fight" drove Uber out of the state and cost jobs, but the truth is more complicated.

Former Chief Deputy Attorney General Gina Session oversaw the Uber case. She said the office filed in three courts because they were pressed for time and weren't totally sure if an injunction filed in one jurisdiction would apply statewide — especially because Nevada has two geographically-based regulatory bodies covering the taxi industry. (Uber launched unexpectedly on a Friday).

Former Deputy Attorney General Colleen Platt said the rush to file the suits that Friday meant they weren’t submitted with the usually required documentation, adding to the confusion.

A panel of state Supreme Court justices called the multiple lawsuits an "inept effort" ignoring procedural rules, but didn’t find any evidence proving the office was searching for a more favorable court (though one dissenting justice said it gave "an appearance of improper forum shopping").

Former Nevada Transportation Authority chairman Andrew MacKay said the massive size of Uber’s workforce dwarfed the enforcement capabilities of state regulators, meaning the only real maneuver available was a court-ordered restraining order.

MacKay, who disclosed that he’s supporting Republican Joe Heck in the state’s Senate race, detailed some of the issues with Uber in a three-page affidavit describing the more stringent requirements of Nevada’s cab companies.

Although Freedom Partners argues Uber’s business model didn’t fall under existing law, state regulators unanimously agreed that Uber met the definition of a "common motor carrier" and needed to follow the applicable laws.

Legal discretion, wiggle room

The ad raises the question of how much discretion Cortez Masto had in going after Uber, and how much of the "blame" she deserves.

Session said the Attorney General’s office generally serves as primary legal counsel for state agencies and departments, and that the actions taken against Uber fit Cortez Masto’s approach to her job.

"This was generally the way our office operated," Session said. "Unless our clients were asking us to do something that was clearly illegal, we followed the will of our clients."

MacKay, chairman of the state’s "client" in the case against Uber, said it’s theoretically possible that Cortez Masto could have ignored the will of the state and not filed suit, but it would have been highly unusual.

"I couldn’t foresee the AG or any AG not enforcing state law," MacKay said.

There are several high-profile examples of Cortez Masto’s discretion in which cases to take, twice determining not to follow through on requests from Republican governors on politically-charged issues. Freedom Partners also linked to a similar situation in Virginia that was resolved more peacefully.

Donations & job losses

As for the ad’s reference to $72,626 from taxi donations, Freedom Partners provided PolitiFact with a spreadsheet of taxi company donations to Cortez Masto between 2005 and 2010.

PolitiFact double-checked the numbers and found them to be accurate, though close to $26,000 were "in-kind" donations which went to reserving billboard ads.

Session did say she declined requests from taxi companies who wanted to latch on to the state’s lawsuit in order to avoid the appearance that they were doing the taxi industry’s bidding.

As for the job losses, Uber at the time claimed that roughly 1,000 drivers lost their jobs "overnight" due to the state’s legal fight, though there’s no clear way to double check that figure.

Regardless, Uber hired an army of lobbyists in 2015 and pushed through legislation allowing so-called "Transportation Network Companies" to legally operate in the state, roughly a year after the initial legal skirmishes.

Our ruling

A Freedom Partners Action Fund ad claims that Cortez Masto "went after Uber ... until she drove them out of town" after receiving tens of thousands of dollars in donations from taxi companies.

Freedom Partners got a couple of the details right in the amount of taxi industry donations and Cortez Masto’s aggressive legal actions against Uber.

But there’s a convincing argument that Uber at the very least bent the rules, and it’s clear that Cortez Masto didn’t have some sort of individual vendetta against the ride-hailing company — her office was working with state regulators who specifically requested the attorney general take action.

The ad also neglects to mention how Uber only temporarily left town. The ridesharing service is very much up and running through Nevada a year after its initial skirmish with the state.

Because this ad takes things out of context, we rate it Mostly False.

Editor's note: This story was updated shortly after publication to clarify how the state Attorney General's office responded to Uber's launch on Friday, Oct. 24, 2014.