On-demand ridesharing companies like Uber and Lyft often operate in legal grey areas, residing somewhere between illegal and kind-of legal – depending on the specific laws of the cities in which they launch. Most of the conflicts that arise between local governments and Uber have to do with current on-the-books laws regulating taxi services and the acquisition of permits. This sort of struggle is definitely not unprecedented.

Last week, Uber launched in Portland, Oregon. This was notable because technically, Uber is illegal in Portland, Oregon. In the city, it is illegal for drivers to pick up passengers for a fee inside the city limits without proper permits – which Uber does not possess.

Uber operates in nearby localities, which makes it an even trickier situation. Portland allows Uber drivers to operate inside the city limits, as long as they are just dropping off passengers they picked up in another city. Anyway, the city of Portland condemned Uber’s decision to begin operations and threatened fines.

“There’s nothing sharing about this so-called ‘sharing economy’ company: They want to profit in Portland without playing by the same rules as existing cab companies,” said City Commissioner Steve Novick. “People who pick up passengers for Uber in Portland should know that they are operating illegally and could be subject to penalties. Public safety, fairness among competitors and customer service are our top priorities. Unlike permitted drivers, Uber drivers do not carry commercial insurance, putting Portland customers at great risk.”

Fast forward a few days and the city of Portland is taking even stronger measures to stop Uber – by filing a lawsuit.

“The lawsuit seeks declaratory relief that Uber is subject to and in violation of the City of Portland’s Private for Hire Transportation Regulations and Administrative Rules. The City’s lawsuit is asking for a declaration by the court that Uber is subject to the City’s regulations. The lawsuit also asks the Court to order Uber to stop operating in Portland until it is in compliance with the City’s safety, health and consumer protection rules,” according to a release from the city government.

Mayor Charlie Hales says this is about both safety and fairness.

“Our main concern is public health and safety, because the state invested in the cities the responsibility to do that,” Mayor Charlie Hales said. “Beyond that, though, is the issue of fairness. Taxi cab companies follow rules on public health and safety. So do hotels and restaurants and construction companies and scores of other service providers. Because everyone agrees: good regulations make for a safer community. Uber disagrees, so we’re seeking a court injunction.”

Despite common legal objections and some incredibly bad PR, Uber just found itself at the end of a $1.2 billion round of funding. Uber is now valued at over $40 billion.

Image via Uber, Facebook