New York defeats taxi owners, lenders in lawsuit over rules, Uber

The logo of car-sharing service app Uber on a smartphone over a reserved lane for taxis in a street is seen in this photo illustration taken in Madrid.
Sergio Perez | Reuters

A federal judge on Thursday dismissed a lawsuit by taxi owners and lenders accusing New York City and its Taxi and Limousine Commission of jeopardizing their survival by imposing burdensome regulations and letting the Uber ride-sharing service take passengers away.

U.S. District Judge Alison Nathan in Manhattan said credit unions, medallion owners and trade groups failed to show they were denied due process or equal protection by having to obey rules on fares, who they can pick up, vehicle equipment, and access for disabled people that Uber drivers need not follow.

While the city's ground transportation industry "may well, as plaintiffs allege, be rapidly evolving," the differences in how yellow cabs and ride-sharing services serve passengers, including whether rides are hailed on the street or by smartphone, "easily justify" such distinctions, Nathan wrote.

The growth of services such as Uber and Lyft in New York has caused the value of a medallion, essentially the right to operate a yellow cab, to fall by more than half from its $1.3 million peak in 2014, according to recent sale listings.

That has left lenders facing greater delinquencies from drivers who owe more than their medallions are worth, even as they risk losing additional market share.

"Make no mistake about it - we fully expect the fight on behalf of the New York City taxicab industry to continue in state and federal court for as long as it takes," Todd Higgins, a lawyer for the plaintiffs, said in an email after Nathan issued her 33-page decision.

Nick Paolucci, a spokesman for the city's law department, in an email said the decision "recognized TLC's broad jurisdiction and the complex dynamic of the regulator's role in industries experiencing rapid change."

Among the plaintiffs were the Melrose, Progressive and Lomto Federal credit unions, which said they had made more than 4,600 medallion loans worth over $2.4 billion.

Two of the other plaintiffs were the League of Mutual Taxi Owners and the Taxi Medallion Owner Driver Association, which together represent about 4,000 medallion owners.

Nathan said the city had a rational basis to treat yellow cabs differently, citing needs to promote safety, convenience and fare uniformity given that only those cabs could pick up passengers off the street.

She said it was premature to call the alleged deprivation of cabs' "right to hail exclusivity" an unconstitutional "taking" without just compensation, saying the plaintiffs could seek some redress through a state administrative proceeding.