Innovation on Trial: Jack Nicastro on Empower’s Fight to Exist

Why is D.C. trying to shut down a rideshare app that pays drivers more and charges riders less? Jack Nicastro of Reason Magazine joins to unpack Empower’s battle with regulators, what “innovation vs. permission” means in real life, and how markets—not mandates—keep people safe.
Want to explore more?
- Read Nicastro's work at Reason Magazine.
- Michael Munger on the Sharing Economy, and EconTalk podcast.
- Matt Ridley on How Innovation Works, an EconTalk podcast.
- Dwight Lee, The Sharing Economy is as Old as Markets, at Econlib.
- John List on Scale, Uber, and the Voltage Effect, an EconTalk podcast.
Read the transcript.
Juliette Sellgren
Science is the great antidote to the poison of enthusiasm and superstition. Hi, I'm Juliet Sellgren, and this is my podcast, the Great Antidote named for Adam Smith, brought to you by Liberty Fund. To learn more, visit www.AdamSmithWorks.org. Welcome back. Today on October 19th, 2025, I'm excited to be talking about an issue which is close to my heart as a recent college grad who's learning the value of money and the cost of paying her own bills, and also as a blossoming economist who loves markets and innovation and thinks that that's super important to everything good about life. Today we're going to be talking with guest Jack Nicastro about the ongoing battle of the innovation and existence of this company Empower, which is a new Rideshare app and their battle with the government. Well, the government's battle against them. I guess it might be more aptly put. Jack Nicastro is an assistant editor at Reason Magazine and he's been covering the Empower Legal Battle in depth for many months now. Welcome to the podcast.
Jack Nicastro
Thanks, Juliette. Happy to be here as a longtime listener and fan.
Juliette Sellgren (1:27)
Ah, thanks. So before we get started, I guess you've heard a lot of these answers, so maybe you'll give us something super different, but maybe not. What is the most important thing that young people should know that they don't? We don't. I don't.
Jack Nicastro (1:46)
Well, I'm going to steal from my dad here, Dr. Nicastro, and say that people, especially young people who have a lot of time ahead of them, should keep in mind that life is what happens while you're waiting for the next thing. So the gist of that is to not wait to live your life because there's always some goal on the horizon, something that you haven't yet done. But if you lead your entire life like that, then you will die having not lived your life. So Carpe Diem, memento mori, Tempus, fugit, and all that.
Juliette Sellgren
What do all of those things mean?
Jack Nicastro
Seize the day. Remember death, and time flies.
Juliette Sellgren
Ah, I like that.
Jack Nicastro
When you're having fun like we are about to have.
Juliette Sellgren
Well then let's get into it. What is Empower and how is it different from other ride sharing services?
Jack Nicastro (2:46)
Sure. Empower builds itself as a software, as a service company, and it's software that it offers as a service to drivers. Importantly, connects independent drivers private vehicle for hire operators. That's the legal term in the District of Columbia with riders. So as a rider, your experience of the app is very similar to when you use Uber or Lyft, traditional rideshare apps. You open it up, you put in where you are or where you want to be picked up from. You put in your destination, it gives you an estimate. Voila, somebody picks you up and you go there and that's it.
The way that it differs from Uber and Lyft, Uber and Lyft, the drivers are their drivers. They're independent contractors. They're not W2 employees, but they are their employees. The contractual relationship that Uber and Lyft have with their drivers is one of employment, whereas the contract that Empower has in and a little bit more on the contract and where it does and does not exist today, but we'll stay away from that for now because that'll get into the legal weeds too soon. But the contract that Empower is in with drivers, not its drivers, but independent drivers is one of service. So the drivers are its customers, not its employees. And what does this mean in practice? So Uber and Lyft, they take a considerable, although I can't put a percentage on it, I've heard as high as between 40 and 50% from the Uber and Lyft current and former drivers that I've spoken to at Empower protests more on that later.
Whereas Empower, if you are a driver who uses the Empower software, who pays for the Empower software, which facilitates payment between riders and independent drivers. In Empower's case, you don't pay any percentage of each fare. And by the way, drivers set their own fares. There's a rate card in the app on the driver's side, and they set how much they want to bill per mile, per minute in the car, et cetera, et cetera. Drivers set that and Empower has some baseline suggested rates that would turn out to, and now I'll quote from Empower's own website here. Its suggested rate card, which again, the independent drivers who pay to use this service can change every part of, but the stock one is set. So that, and I quote, drivers make 20% to 25% more on average than they would if they were driving on behalf of Uber slash Lyft and drivers and Rider, sorry.
Also save 15 to 20% on average as somebody who has used Uber and currently uses Empower. And having spoken to a lot of drivers, I would say that these claims being made by Empower here officially are very, very minimal. The drivers that I've spoken to, and I'm just going to go to one of my latest pieces where I spoke to one driver who told me that if, now I quote, “If you want to make a hundred dollars with Uber, you have to make like 16, 18 trips with Empower five, six trips, you can make a hundred dollars.” So there he's describing making over [$100] taking less than half as many rides to make the same amount of money put otherwise for the same number of drives on Empower versus Uber drivers can make as much as two times as much, at least according to this one driver whom I spoke to.
But I've spoken to many drivers and they've said very similar, remarkably similar things, which leads me to believe that they're telling the truth and that that's the case. And then as a writer who's ridden with Uber and Empower, now I don't even have the Uber app on my phone. I have Uber Eats; Empower doesn't have that functionality, but my rides with Empower in the DC-Arlington, Virginia area have been about 50% as expensive. So when Empower is making these claims about drivers, the independent drivers who pay for their software make 25 as much as 25% more with them, and Rider save as much as 25%. You should believe those numbers.
Juliette Sellgren
Those are very minimal, conservative estimates.
Jack Nicastro (7:25)
Thank you. They're very conservative estimates. And then the DC monthly Platinum plan is what a lot of the drivers whom I've spoken to use, and with this plan, at least at the time of writing on March 4th of this year of 2025, drivers would pay a flat monthly fee of about $350, $349 and 99 cents to be precise. And then drivers have unlimited access to Empower’s software from which they keep a hundred percent of the fares that they charge riders. Anyway, that was a long answer, but I wanted to be specific and thorough.
Juliette Sellgren (8:06)
Well, and I mean, just doing the quick math, that's like 16 to 17 rides, which when you're driving with Uber, that makes you a hundred bucks with Empower. If you do 16 to 17 rides, it makes you approximately $350 and pays for your subscription. So really you're paying the entire cost of being a driver other than the gas and all of that and the car itself in that amount of time, which is kind of crazy. So okay, it costs less to consumers, it costs less to the drivers. Seems like everyone should be happy. So what are the entities in the government that are taking issue with Empower and what are the actual concerns that they have that are being brought to court?
Jack Nicastro (9:00)
Sure. So let's get into it. So DC has the Department of Motor Vehicles, and this is the executive agency underneath the mayor, right? So right now, under Mayor Muriel Bowser that is responsible for regulating all publics. This would be taxi cab and limousine services, all public vehicles for hire and private vehicles for hire. Now, the interesting thing following, and again, I'm going to quote from my January piece for Reason on the matter here, DC was originally very accommodating of Uber and Lyft, these rideshare companies, whereas before, and so they passed this thing called the Vehicle for Hire Innovation Amendment Act of 2014, and this legalized ridesharing services. So now you could be a private vehicle for hire operator who is in contract with a private vehicle for hire company. This would be Uber or Lyft. And then these private vehicle for hire companies are responsible for all sorts of things.
So one of the things that they're responsible for is making sure that the private vehicle for hire operators, these are just drivers that drivers carry a certain level of insurance. And so in fact, this is so, okay, I do not have in front of me right now exactly what the law requires, but Uber and Lyft who have not run afoul of the Department of For Hire Vehicles as of late, they provide their drivers with over $1 million in third party auto liability coverage. And for drivers with qualifying personal auto insurance and all other caveats cover the cost of car repairs or its cash value. Did I already mention that the Department of For Hire Vehicles requires that drivers pay 6% of gross revenue to the department?
Juliette Sellgren
No.
Jack Nicastro (11:01)
It was just a little thing. So the DFHV, they make money from drivers and they ostensibly regulate the drivers in important ways or in ways that non libertarians might find important. They make sure that certain background checks are completed, that the people who are driving actually have driver's licenses, that they have a certain degree of commercial insurance. Whereas libertarians would argue you don't need a Department of For Hire Vehicles and you don't need to register with such a department to ensure that drivers, whether they be your employees in Uber and Lyft's case or your customers and Empower's case, are not violent criminals in power, in fact uses the same background checking service checker that Uber and Lyft use because it's not profitable to have a platform that facilitates, let's say, child predators picking up children in cars. So there is this, not a perverse incentive, but there's this virtuous built-in incentive without the Department of For Hire Vehicles for companies, for drivers to do right by customers, les, they be sued in other, in tort cases for damaging riders, et cetera. So that was a rather circuitous answer. Maybe you can ask me the question again and I can make sure I hit, I hit it.
Juliette Sellgren (12:46)
Yeah, well, I mean, just building off of that, a lot of people think that, I mean, you would hear, oh, Uber and Lyft in accordance with the law provide insurance to all of their drivers for driving, and that sounds good. That sounds good for consumers, that sounds good for drivers. It sounds good for Uber and Lyft so that they probably will not get sued into oblivion for not having that. So is it good? Is it okay that Empower doesn't, I mean obviously it seems illegal, but how would that actually affect consumers, riders and drivers?
Jack Nicastro (13:32)
Good question, Juliette. So the question here is an empirical one, do drivers need to have a million dollars worth of liability insurance if you're not carrying this very expensive insurance? Doesn't mean that there are thousands, tens of thousands of riders that after being T-boned in a driver's car, now they lose all their life savings. Well, if something like that had happened even once, I imagine that the Department of For Hire Vehicles would cite that as evidence of Empower's lack of registration as something which Empower at the time. And this is from 2020 to 2024, at least at some point because things have evolved. So at some point argued it wasn't the thing that it's arguing, it not being is a private vehicle for higher company, but if private vehicle for higher companies don't force their drivers to carry this kind of insurance, maybe there really is some horrible stuff happening.
And so I'll walk you through the legal timeline here and you and listeners will get a sense of whether this argument is legit or not. Again, because kind of an empirical argument. So Empower's legal battles began shortly after its launch. It was founded in 2019. It entered the DC market in 2020, early in 2020 I believe. And in November of 2020, the DFHV, which is the acronym by the Department of For Hire Vehicles goes by, issued its first cease and desist order to empower to halt operations after the company failed to register as a private sedan business and digital dispatch service. And it doesn't really matter what those means, what those terms mean, just know that they're subspecies of private vehicle for higher companies. So in that law that was passed to allow Uber and Lyft and rideshares to come into the DC market in 2014, that law had private vehicle for hire company language. And then the more specific digital dispatch service and private sedan businesses business, those are again their subspecies of that legal category defined by the regulator. Anyway, that's enough of that. It's kind of akin.
And so in July of 2021, the Office of Administrative Hearings, this is a whole other problem, is an agency that is full of administrative law judges that is supposed to oversee the executive agencies. I'll leave it to my friends at the new Civil Liberties Alliance and the Pacific Legal Foundation to explain to listeners why AJs are so problematic. But the Office of Administrative Hearings concluded that Empower was in fact a private vehicle for hire company under the DFHV'S jurisdiction. And the OAH concluded that the risk of immediate and irreparable harm, this is a quote now outside of resulting from Empower's lack of registration was again, patently obvious. So this case started in November, 2020, then it reaches the OAH. The OAH says there really is immediate and irreparable harm posed to the public by Empower's lack of registration. But in February of 2024, the DC Court of Appeals, so this is the ultimate appellate body that this case reached, did not find this risk to be so obvious.
So the court reversed the cease and desist order finding that there wasn't reason to believe that empowers lack of registration posed an obvious and immediate and irreparable harm to the public by way of not verifying that its drivers have this degree of commercial insurance. But they did affirm OAH and DFHV's determination that Empower was indeed a private vehicle for hire company. So now there's a second cease and desist order, right? So the DFHV tries again, and in April, 2024, the Court of Appeals ruling wasn't just in February, it was February 29th. So April, 2024, it is just a little over a month later the DFHV slaps Empower with another cease and desist, this time for failing to register with the department and alleging that empowers non-compliance, endangered public safety. So how are they making this allegation this time? Well, I will read from another appellate order here.
This was from this September 25th, and the order stated that Empower’s lack of compliance and non reregistration compromised the ability of DFHV to ensure that Empower and its drivers meet safety and legal standards, thus endangering public safety. The agency highlighted as an illustration of this harm, Sean Yeager, an Empower driver who was fined and whose car was impounded by DFHV because Empower is unregistered, causing Mr. Yeager to miss an important medical appointment and delay his cancer treatment. And that's awful. Notice there that the harm, the medical harm being done by Empower's lack of registration isn't from somebody getting into some grizzly car accident and the driver, the independent driver, lacking commercial insurance to pay for the rider's hospital bills. No, no, it's the DFHV.
(19:21)
I don't want to make a legal allegation here that gets me in trouble. So let me rephrase that sentence. It's not about a rider, it's about an independent driver. Sean Yeager, an Empower customer who missed a medical appointment because the DFHV discretionarily impounded his car. So anyway, that's a long answer, but that's just to say thinking through a public choice mindset here, if the DFHV really wanted to win these cases in the Office of Administrative Hearings and the DC Superior Court and the Court of Appeals and all the relevant and juridical bodies, but also in the court of public opinion, they probably would've, if there were even one case of somebody being reduced to penury as a writer because their driver using Empower didn't have a certain degree of insurance. If a scenario like that happened the DFHV in its second and now there's been a third cease desist order, which maybe we can get into some other time, they would cite that because that's an example that would vindicate the theory of the case.
The theory for having the Department of Four Hire vehicles in the first place and for having this really high degree of commercial insurance, which what it effectively does because clearly, again, I don't know that there are zero cases of the kind of harm that I just described. I don't know that not a single instance of that hasn't happened. I won't say that I'm not omniscient, but it stands to reason that if such an incident happened, the DFHV is strongly incentivized to know that it happened and to get that testimony from whoever was harmed in their hypothetical case by empower, refusing to register. So meanwhile, so that's dubious, that's not happening at any significant scale. Not at a scale that should be directing public policy and lawmaking and rulemaking. Meanwhile, it costs, I was actually outside the hearing room at the latest update in the Empower saga and there was another journalist, a fellow journalist, this one at the Washington Post whose name I'm forgetting, but if you look up Washington Post Empower, her name will come up. {Editor’s note: Rachel Weiner; see link.] She's the one who writes about it there. She was asking somebody about commercial insurance and how much it would cost to have the kind of insurance that's required in DC and the driver said something like 200, $300 a month, which is a lot of money to people who aren't making six figures. The bureaucrats and the city council members and whatever richer people might think that, well of course, $200 a month of $300 a month, that's totally worth having this insanely high degree of insurance.
Juliette Sellgren
But that's 15 rides, right?
Jack Nicastro
Exactly. That's a lot of rides. These are working class people.
Juliette Sellgren (22:26)
And then you have to do 30 rides to cover the cost of actually using the service. And on top of that, all the insurance…
Jack Nicastro (22:35)
You're an economist. Either you would have to do more rides at the same fares or you'd have to increase your fares or some combination of the two. And so drivers not acquiring this, and I'm sure there are many of Empower drivers that do. I don't know that in fact, at the next Empower Rally, this is a question that I should ask them, but for those drivers, those drivers who use Empower that don't get this $1 million commercial liability insurance that allows them to provide a lower cost option, an option that people like me want to use, I have a certain degree of risk tolerance. I'm a healthy young fit man. I don't think I'm going to be severely injured even in the event of an accident which I've never gotten into in DC either as a driver myself and my private vehicle or as a rider and having to pay a dollar, several dollars extra every ride for something that as an adult, it's up to me to decide whether I want to incur that risk or not.
I'm happy to incur that risk and I don't want to pay more for a ride. And that's the decision that a lot of people want to make throughout the city and not just young physically fit people. There are people on completely the opposite side of the age spectrum, if you will, that are happy that independent drivers who use Empower are able to charge such low prices. Bonnie, an 82-year-old resident of DuPont Circle near the Reason Office. I don't think that's private. I think you can. That's fine. I don't think I doxed, my employer told Reason, told me at an Empower Rally that old folks shouldn't be driving. They and I quote, “need something to get around.” But Uber and Lyft are pretty expensive for someone to think of using it regularly and Empower is reasonable and the drivers are always wonderful. And Bonnie said that Empower was a lifeline for her sister who lives in Brooklyn and uses Empower to pick up her groceries.
If you're an old person on a fixed income, the Department of For Hire Vehicles successfully enforcing their commercial liability insurance requirement and the 6% basically effectively a tax on the gross revenue of drivers. Both of those things and the rest of its regulations function to increase the cost of doing business on independent drivers and therefore the prices that are born by riders to one extent or another. I don't know what the own price elasticity is here, right? That's an empirical question. But theoretically we know that the DFHV imposing these requirements that's actually an immediate irreparable harm to the public because they're not going to pay Bonnie's 80 plus year old sister for now being unable to get to the grocery store, right? That's an unseen cost to the DFH v's regulation. Meanwhile, the best they can show in this tenuous way of Empower's lack of registration, causing harm to somebody is harm to a driver after that driver's car was impounded, not by Empower, but by the Department of Four higher vehicles. So that was a long answer, but I do think it's really important to drive home the cost of compliance with regulation, how that regulation, were it successfully enforced on independent drivers, how much that would cost the public and both dollar and other terms. And that the instance of harm that they use to show why it's so utterly important that Empower comply with the law and register and jump through all these hoops and make their customers the independent drivers jump through all these hoops is a harm that they wrought on one Sean Yeager not Empower.
Juliette Sellgren (27:07)
Well, and also I guess I don't know the specifics of how insurance works, but even if drivers are insured privately to drive, obviously it might not cover the same amount, but you would think that would still be relevant. And almost all drivers I think are privately insured also, if you have private car insurance as a rider, pretty sure that can help. I don't know. I'm not pretending and I'm not asking you necessarily to know, but I don't think that means that you're without insurance. And even if consumers hear about that and that costs someone effectively their entire life savings or something awful, some catastrophic amount or it kills them or something, you as a rider would not use that company or you would think twice. It's not like information doesn't carry power in that sense. So it seems kind of silly, but that's just me maybe.
Juliette Sellgren (28:07)
Yeah, I agree. It's an iterated game. We have the internet, there aren't meaningful asymmetries of information. If drivers that used Empower we're doing all sorts of bad things, we'd know the court, the DFHV would know the DC Court of Appeals would have ruled in favor of OAH and DFHV regarding its their first cease and desist order if there were such an obvious and immediate and irreparable harm to the public from lack of million dollar commercial insurance. And it didn't rule that way. So I mean, if my attitude isn't coming through on the podcast, which I'm sure it is, I'll just state it plainly. I think that this is the pretense that the DFHV is meaningfully protecting the public from drivers that use Empower does not comport well with the reality that the public loves Empower as indicated by just the number of rides that the company facilitates on a weekly basis. And I have a relatively recent number for you on that somewhere. Oh yeah, here it is. So this was on October 9th. That's the article I'm quoting from. So this was either the day before around then in early October, Joshua Sear, the CEO of Empower told me that drivers using Empower are providing 150,000 rides per week in the DC metro area.
Juliette Sellgren
Juliette Sellgren
Wow.
Jack Nicastro
I think the DFHV is trying to protect the public from cheap rides.
Juliette Sellgren (29:57)
Non-existence threat. Yeah, yeah, cheap rides. I mean especially for people who can't really afford it, that seems to be the main target audience for this sort of service. So we've talked a little bit about the legal progression of this, but there have been multiple cease and desist orders. Some of them have been let go, some of them haven't. There have been some updates and advances in the arguments being made both by Empower and by the DFHV. And so can you walk us through past, I think April is about where we got, when we were talking about it earlier, what has happened since. So there have been all these cease and desists, but you can still call and empower in the district. You can still call an Empower in Virginia, you can still do it in New York, wherever. So I mean, I know this is primarily DC related, but what has happened since the kind of initial proceedings and where is the case now?
Jack Nicastro (31:10)
Yeah, absolutely. Honestly, the legal timeline here is difficult for me too. So I'm just going to check my notes here and get situated before I continue with the story. So I talked about how in February of 2024, the Court of Appeals reversed the first cease desist order, which was meted out in November of 2020 by the DFHV, but it affirmed that Empower was a private vehicle for hire company. So then the DFHV issued, and I briefly got into this, it's second cease and desist in April of 2024 for failing to register with the department and for that whole Sean Jager case that shows that Empower's lack of registration is a danger to the public. So then in May of 2024, the Office of Administrative Hearings upheld the second cease and desist because I quote well before I quote because the company's non-compliance posed. And now I quote a substantial risk that DFHV will issue Empower drivers $500 citations and impound their vehicles and that may lead to immediate and irreparable harm. So Empower appealed this ruling to the DC Court of Appeals in June of 2024. And now, more recently in 2025, sorry, still in 2024, the DC Superior Court upheld the second cease and desist order and Empower still did not stop operating as a digital dispatch service or private sedan business in the district. And so in response to Empower's non-compliance, judge Shauna Frostini of the DC Superior Court found empower to be in conditional contempt on February 3rd, 2025, at which time the court began finding the company $25,000 per day. By the way, this is in addition to the $75,000 a day levied against Empower by the Department of For Hire Vehicles upon the issuance of their second cease and desist order in April of 2024. So now we're up to, in terms of fines and contempt of court penalties $100,000 against the company per day.
And I do not think that any of that is paid contemporaneously, but that is the amount of money that the company would need to pay to the district, to various governmental organizations in the district if it were to lose all of its appeals. So this isn't money that empowers paid out yet. And then on March 19th, the DC Superior Court Judge Matini ordered a daily fine of $5,000 against Joshua Sear Empower's CEO himself in a bid to bring his company into compliance, but Empower continued to operate. So trying to get us to the present day here. Okay, so while Empower's appeal of the second cease and desist order was pending before the Court of Appeals, the DFHV issued a third cease and desist order in July, specifically alleging that Empower was violating the law by failing to confirm the insurance status of its subscribers.
Sear tells reason that Empower updated its software as a service agreement in March, 2025 to more explicitly make clear that drivers are required to have whatever insurance is required of private vehicle for hire operators in the district. Regardless, the DC Attorney General Brian Schwab, he's repeatedly accused in power of not playing by the same rules as everyone else despite Empower attempting to do so and being frustrated every step of the way. So Empower resubmitted, its digital dispatch service on May 1st, but this was rejected after Empower was unable to secure a 2$50,000 surety bond because of the pending fines that had accumulated against the company. And Sear told Reason that surety bonds are not required for the services that Empower renders under DFHV's own regulations. And recently in October, the Office of Administrative Hearings agreed with Sear and said that the DFHV's denial of Empower's digital dispatch service application was illegal.
(36:19)
Empower has also tried to register with the DFHV as a private sedan business. And these are the two kinds of private vehicle for hire companies, which the Court of Appeals ruled that Empower is in February of 2024. Just as a reminder, because the story's getting a little long here. So Empower also tried to register as A PSB in May. This application was also denied on May 23rd on the basis that Empower did not adequately verify operator's insurance. And in the same ruling where the Office of Administrative Hearings said that the DFHV's denial of its DDS application was baloney was illegal, they ruled that its rejection of Empower's PSB application on these insurance grounds was kosher. So that's important to keep in mind to know about. Then the DC Court of Appeals, they ultimately upheld the second cease and desist order on September 25th just a couple of weeks ago and refused at that time to accept empowers supplemental documents related to its ongoing attempts to register with the DFHV because, and I'm quoting from the court here, the primary issue before the court is whether the Office of Administrative Hearings properly upheld the Department of For Hire Vehicles second cease and desist order.
And then the very next day on September 26th, Schwab, the DC Attorney General, stated that Empower’s active and unpaid fines totaling more than $50 million were not working to again compel the company. Well, I'll paraphrase to Compel, empower to obey the Supreme Court's November of 2024 order and the law. And he then requested that CRB incarcerated until such a time as Empower has ceased operating in the district without registration. And this brings us almost up to date here. So then after the district argued for Sear to be incarcerated until Empower stops operating in the district, judge Matini declined to do this on the condition that Sears shut down Empower’s DC operations, specifically that Empower stop functioning as a private vehicle for hire business by October 10th.
And so Joshua Sear, the Empower CEO, agreed to do this. And the way that he went about doing this was not what was desired by the district or I think expected by anybody. So in their update, Empower’s update to the Superior Court to Judge Matney. This was last, not this past Wednesday, but the Wednesday before a couple weeks, a week and a half before we recorded this, Empower submitted an update to the Superior Court explaining that it is changing to a no contract business model in the district. And what this means is that Empower’s software as a service agreement no longer applies to drivers when operating within the city. And I'm just going to run you through Empower's argument here. They contend that this change brought the company into compliance with the cease and desist order by placing it outside the Department of For Hire Vehicles’ authority entirely.
So remember that February of 2024 ruling by the DC Court of Appeals, they found that even though does not have an employment contract with drivers, that because of the contract between Empower and its subscribers, that it's still subject to DFHV's regulation. So Empower seized upon this contract between it and its subscribers’ language by ending the contract with drivers who are operating in the city and in fact an assistant attorney general for the district. The RA Naru said during oral argument in October, 2023 leading up to the February, 2024 ruling of the Court of Appeals, that the company would fall out of the definition of a private vehicle for hire company if it didn't have a contract with drivers. However, despite what I think is a pretty novel and true to the letter of the law and statements of the district itself, legal strategy Judge Matini held on Thursday that Empower remained in contempt.
And that's this past Thursday. So on Tuesday, the DC Superior Court convened to hear arguments from Empower and the district about whether the company had come into compliance by updating its SaaS agreement in the way that I just described. And another Assistant Attorney General, one Anthony Celo, characterized Empower’s no contract model as a distinction without a difference, and argued that an implied contract still exists between Empower and drivers because the company still subjects DC drivers to background checks, requires them to submit their licenses, facilitates payments via Stripe, et cetera. And cello said, if it looks like a duck and it quacks like a duck, it's probably a duck. And I mean that's kind of funny. And Matini sided with Celo, she agreed that Empower is a duck, so to speak. And she said she described Empower's amendment to its SaaS agreement as merely a different term of the same contract.
And accordingly, she ruled that Empower remains in contempt of court because a contract whether expressed or implied remains present between Empower and drivers operating in the nation's capital and in the language and the relevant DC code language that defines private vehicle for hire operators, sorry, a private vehicle for hire company. It's a type of business that has a certain kind of relationship with private vehicle for higher operators, private vehicle for higher operators who are defined as being in contract with private vehicle for hire companies. And so this is why so much attention has been paid to the existence or lack thereof of a contract between Empower and drivers. Empower argues that there is no implied contract, Sear makes the analogy that Empower’s continued discretion over whom to allow on its platform is akin to a bar excluding underage patrons from its premises. It's not in a contract with people who it lets into the bar, if you get rowdy at a bar, you can still be kicked out.
And that's not a violation of anything just because the bar is exerting discretion and exercising its private property rights and associational rights. So yeah. So now Matini's decision that Empower remains in contempt because there's an implied contract. Empower is still operating in the district again under this new SaaS model. And despite Matini siding with the district, because Matini agreed to stay her decision pending a decision from the Court of Appeals. So now the case is back to the Court of Appeals and the Court of Appeals will rule whether Empower remains in contract with drivers in this kind of vague implied sort of way or whether it does not. And the DC Superior Court and the district and Empower, they'll reconvene for a status update. I think it's called a status hearing on January 9th. So it's looking like, and I think, well, I was actually in the courtroom when this happened this past Thursday, and I recall the district saying that they would, I'm not familiar with the exact legal terms, but petition for expedited judgment.
I think that's the right phrase, but I don't know what's expedited in the legal sense. I'm anticipating as an Empower rider that independent drivers will continue to be able to use the software at least until January 9th when there's this status hearing. But I'm certainly not sure; there's a lot of moving parts here. It turns out that not only are the DFHV’s impoundments of independent driver's vehicles, I think flatly absurd and do not serve the public interest, but they may very well be illegal. And I'm going to quote from my second most recent article for Reason on this topic at length here.
So while the city has made it challenging for empower to operate, it has allegedly engaged in illegal enforcement mechanisms against the company and its subscribers. And a federal complaint filed in July, Olushola Oduneye,, an Empower subscriber, alleged that the DFHV violated his fourth amendment rights by stopping him, seizing his phone, and searching it without a warrant. Ali Shir, excuse me, also declared that he was a legally stopped by DFHV enforcement Officer Ceray Burns’ body cam footage shows burns randomly stopping shear, asking him whether he's working for Empower Uber or Lyft and demanding to see Shear's phone all while Shir maintains that he's not working as a private vehicle for hire operator. And then after Shir repeatedly refuses Burns’ requests and asks to see a warrant burns and pounds his vehicle. I watched this whole video, it's about two minutes long from start to finish. It's outrageous. And this is a whole other case.
Juliette Sellgren (47:17)
How did he know to stop him? I mean, no warrant. What gives you grounds to stop someone?
Jack Nicastro (47:24)
So the DFHV has been, that's a good question. And the DFHV has been operating these checkpoints within DC right where it's jurisdiction lies and they actually have the power to just, they cannot discretionary, they do not have the legal authority. It would be unconstitutional for them to discretionarily stop drivers, which allegedly appears to be what's happening here. Checkpoints need to be conducted with extremely little discretion for them to be constitutional. So for example, stopping every third car or something like that, then you could conduct this checkpoint and stop people momentarily, detain people without probable cause and have it still be constitutional. At least that's what I've heard from lawyers whom I've spoken to on this topic. But that doesn't appear to be what the DFHV is doing appear. This is an ongoing legal matter. So that's probably about as much as I should opine on it.
But yeah, Officer Burns, that's the case. You can go to my Reason article titled DC will arrest the CEO if his rideshare alternative doesn't shut down by Friday. Obviously, I was not anticipating a stay of the cease and desist order of the contempt order. And that article was published on October 9th. And if you just scroll down or if you just scroll down to the bottom of the article, it's the 1, 2, 3, like the fourth, fifth to last paragraphs there, you can actually click on the links I've included and see the camera footage of the stop and read the complaint and look at the facts for yourself if you're so interested. But yeah, so I mean the relevance of that is that the second cease and desist was upheld. And again, the second cease and desist is predicated on this irreparable and immediate harm to the public from DFHV’s. Impoundments of vehicles, which it blames on in power, but which it turns out may not even be constitutional. And so because of this complicated constitutional question that the legality of the DFHV's. Impoundments Empower has requested a rehearing on the second cease desist in the court of appeals, and that's another avenue by which empower may be able to remain operational in the district.
Juliette Sellgren (30:24)
Thanks for bringing us up to date, and I guess I have to have you back on when we know what happens next to see what's up. I have one last question for you. Thanks so much for taking the time to explain, I mean the complex situation to us and everything and kind of the underlying economic and legal arguments for why or why not. This is good or bad. But what is one thing that you believed at one time in your life that you later changed your position on and why?
Jack Nicastro (51:01)
Yeah, I've changed my mind on a whole host of things. So let me think for a second here. There are so many ways to answer this question. Oh, just pick one. Okay. I'll just, I think my answer to your first question was profound, thanks to my dad. So I'll just give a rather straightforward, easy answer to this question. I used to believe in the death penalty on moral and political grounds, and I've done a complete 180 on that. I think that the state cannot be trusted with the power to execute people. Even people that have been shown beyond a shadow of a doubt have done the most egregious things you can imagine.
The state has a very poor record of executing people who turn out to be innocent, DNA evidence or whatever other evidence shows that they actually were innocent. So there's always, you can never be a hundred percent sure, and even if you had a hundred percent certainty that the people you're putting to death are murderers and other horrible things, that's just not a power that we should trust the state wielding. And so I'm anti-death penalty. And then morally, I still vacillate. I change my mind on this every day. Sometimes I'm a retributivists and I think if you murder somebody, you should be executed, maybe not by the state, but by somebody who saw you just murder an innocent person. Maybe that would be moral. And other days, I think that the only moral use of violence is in self-defense, and that once some rights violation has occurred, using violence on the aggressor as a form of punishment doesn't make sense. Because while it might feel good to inflict suffering on an evil doer, it doesn't right any wrong. It doesn't repair harm to the person who they hurt, whose rights they violated. So yeah, I am constantly vacillating on that. But regardless, we should not trust the state with the power to execute.
Juliette Sellgren
Once again, I'd like to thank my guests for their time and insight. I'd also like to thank you for listening to the Great Antidote Podcast. It means a lot. The Great Antidote is sound engineered by Rich Goyette. If you have any questions, any guests or topic recommendations, please feel free to reach out to me at great antidote@libertyfund.org. Thank you.