“Hailing a cab” once meant stretching an arm out toward a city’s open streets and attracting the attention of a ubiquitous yellow car. But the phrase and accompanying gesture have since been retired in favor of its digital substitute: fumbling for a phone in a pocket to “get an Uber.”

The clearest sign of the ride-hailing app’s growing dominance came this week, as the San Francisco Examiner reported that the largest taxi company in the city where Uber is headquartered is on the verge of filing for bankruptcy.

Yellow Cab Co-Op, which serves San Francisco, is preparing to file for Chapter 11 bankruptcy, according to a letter to shareholders obtained by the Examiner.

“We are in a midst of serious financial setbacks,” wrote Yellow Cab President Pamela Martinez. “Some are due to business challenges beyond our control and others are of our own making. Today we are faced with fiscal obligations that far exceed expected income.”

The letter is dated Dec. 10, 2015, just two days after Martinez replaced former Yellow Cab president James Gillespie, who remains the company’s general manager. It stated that documents were being prepared for the bankruptcy filing to move forward “within a month” – in other words, any time now.

Yellow Cab is a cooperative co-owned by 300 shareholders who haven’t received dividends since October, Gillespie told the Examiner. It transports over 5 million passengers every year.


While Martinez iterated in the letter that “Yellow is still the best taxi brand in San Francisco,” she conceded, “We used to have more [passengers] and our goal is to get them and even more back. . . . We must get the public to smile when they think of Yellow Cab and the way to that goal is to be more welcoming and responsive by making an extra effort, no matter the obstacles, to ensure that this happens.”

Neither Uber nor Lyft is mentioned by name in the statement, but the two ride-hailing services loom large over Yellow Cab’s troubles.

For instance, Martinez noted the “need to have not just more drivers but drivers who are happy to be behind the wheel” – possibly a subtle nod to the high pay, frequent bonuses and flexibility that Uber drivers are supposed to enjoy, all while offering riders more affordable prices. A year ago, Uber released internal data showing that its drivers in San Francisco make an average of $23 an hour, compared to slightly less than $14 for traditional taxi drivers and chauffeurs.

This report has been criticized for neglecting to factor in the costs of gas, car insurance and vehicle maintenance associated with driving one’s own car. That hasn’t stopped its driver base from growing exponentially, though most of its workforce (two-thirds, as of last year) have at least one other part-time job in addition to driving an Uber car.

Is Yellow Cab Uber’s “first casualty,” as Forbes has proposed? While other taxi businesses, such as the original Yellow Cab Company in Chicago and 22 companies in New York, have also filed for Chapter 11 bankruptcy, none carry as much symbolic weight as the biggest company in Uber and Lyft’s hometown.

Competition aside, the Yellow Cab has also been stymied by a June 2015 court ruling that found the company liable for injuries incurred by a passenger who was riding one of its vehicles.


In a statement to the San Francisco Chronicle, Gillepsie attributed Yellow Cab’s current financial situation to the “unusual number of accident claims” that the company has recently had to confront.

Speaking with the Examiner, Gillespie pointed to the case of Ida Fua, a 28-year-old attorney who was riding a Yellow Cab home from the airport when her driver failed to notice traffic in front of them and struck a stopped vehicle at 60 to 65 mph. The crash left Fua paralyzed on one side of her body, suffering from brain trauma and unable to work, and her lawyer argued that Yellow Cab was responsible for the driver’s actions.

While the taxi company countered that it merely provides vehicles and a dispatch service and does not directly employ drivers, a California Superior Court judge ruled that because the driver was an “ostensible employee,” Yellow Cab should pay $8 million in damages.

“If the filing is necessary, we expect to be in a stronger position than before the filing,” Gillespie told the Chronicle.

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