Lyft, owner of the Bay Wheels bikeshare program, stands to receive more than $300,000 in a legal settlement with The City. (Kevin N. Hume/S.F. Examiner)

Lyft, owner of the Bay Wheels bikeshare program, stands to receive more than $300,000 in a legal settlement with The City. (Kevin N. Hume/S.F. Examiner)

Supervisors to weigh $330,000 settlement with Lyft over bikeshare dispute

If approved, deal would resolve an 18-month long legal battle over San Francisco’s e-bike market

The City has tentatively agreed to pay $330,000 to settle a lawsuit with Lyft’s bikeshare subsidiary and the operator of Bay Wheels, the e-bikes seen on street corners and docking stations citywide.

John Cote, spokesperson for the City Attorney’s Office, said the proposed settlement will actually help San Francisco’s mobility network moving forward, providing it with more flexibility and influence over building out a bikeshare system.

“We believe this proposed settlement is in the public interest and puts the SFMTA in the best possible position to secure a robust bikeshare system,” Cote said in an email.

Bay Area Motivate, owned by Lyft, filed suit against the San Francisco Municipal Transportation Authority in June 2019, claiming the transit agency had breached its contract by soliciting applications for dockless e-bike permits.

This settlement, if approved by the supervisors, would end an 18-month long legal battle over whether one company — in this case, Lyft — should have a monopoly over San Francisco’s electric bike market.

The SFMTA argued that its contract with Bay Area Motivate guaranteed the company exclusivity only on the operation of an e-bike station program, and it didn’t prohibit the agency from seeking business for other e-bike options such as dockless.

Judge Ethan P. Schulman disagreed, though, and sided with Lyft, hitting The City with a court injunction last July to stop soliciting new dockless e-bike permits until the suit was resolved. It did allow the then-ongoing JUMP pilot to continue, and later be extended, through May 25 of this year.

The settlement would resolve Lyft’s claims and waive $50,000 in fees for Lyft. Funds would come from a line item in the SFMTA’s operating budget designated for judgments and claims that could arise during a given fiscal year.

According to Cote, the proposed settlement, which must be approved by the Board of Supervisors, also includes “several additional terms to strengthen San Francisco’s bikeshare network and authorizes the SFMTA to solicit a second operator if Lyft fails to meet contractual performance requirements” as well as terms for the potential for future service on Treasure Island.

The lawsuit was born in the wake of the SFMTA’s decision to solicit applications for stationless e-bike permits in May 2019, building off the pilot program it had awarded to Uber’s JUMP the year prior.

Lyft took issue with this call for applications on the grounds that it ignored the company’s understanding of its “right of first offer” for any kind of e-bike program expansion written into the 10-year contract it signed with The City in 2015.

As such, claimed Lyft, SFMTA had breached its contract and violated the promise of market exclusivity that had warranted the company’s roughly $35 million investment into the e-bike program.

The app-based mobility company promptly filed a lawsuit, and just days later rebranded the e-bikes it had acquired from Motivate in 2018 and changed the fleet’s name to BayWheels. Sleek, black two-wheeled rides with pink trim were deployed citywide and stored at docking stations.

Those unfamiliar with micro-mobility could understandably get lost in the minutia.

The basic difference is whether an e-bike has to be picked up from a docking station or if it can go dockless, and be left securely in locations where no such station exists. Stationless bikes enable companies to put more e-bikes out on the street without the cost of more docks and reach more pockets of The City.

Lyft started with docking stations, but it said it had plans to expand to stationless. JUMP already had gone dockless when it was granted the pilot permit.

“We’re pleased that we’ve reached an agreement with SFMTA and look forward to continuing our partnership with The City,” Julie Wood, Lyft spokesperson, said.

Since the COVID-19 pandemic hit San Francisco, micro-mobility options such as Bay Wheels have helped fill the gaps left behind by widespread cuts to Muni service.

In April, Lyft expanded its service area into the Richmond and Sunset Districts as well as The City’s southern neighborhoods. It’s also been working with the SFMTA to extend its reach into relatively e-bike-barren neighborhoods, eyeing at least 54 new stations as of May.

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