New York City taxicab medallion holders are being unfairly forced to comply with regulations not imposed upon ride-sharing companies like Uber and Lyft and that those constraints are causing them to lose business, a lawyer representing New York credit unions argued Tuesday before an appeals court.
The group of plaintiffs, which also include taxicab medallion holders, are challenging a district judge’s March ruling that the medallion holders are not subject to disparate treatment because hailing a cab in the street is different from summoning a car through a computer application.
In the ruling, U.S. District Judge Alison Nathan of the Southern District of New York said that taxis effectively, have a “collective, government-sanctioned monopoly over one particular form of hailing” and that courts around the country have found that monopoly justifies subjecting the industry to a different set of regulations than ride-sharing services.
The city’s Taxi & Limousine Commission gives cabs the exclusive right to accept passengers by street hails while ride-sharing companies are considered for-hire vehicles that take passengers only by prearrangement.
Cabs are also required to comply with a raft of regulations promulgated by the commission that ride-sharing companies are not, such as setting fare rates and maintaining specific vehicle attributes.
In 2016, Manhattan Supreme Court Justice Manuel Mendez denied the medallion owners’ requests for declaratory and injunctive relief and ruled to dismiss their suit, and a panel of the Appellate Division, First Department, affirmed the decision by Mendez.
Among the regulations with which medallion owners have taken issue is a new rule requiring half of all New York City cabs to be wheelchair accessible by 2020.
The credit unions that are parties to the federal case—Melrose Credit Union, Progressive Credit Union and LOMTO Federal Credit Union, which are all located in New York—say that the regulations have driven up costs while ride-sharing services have been free to construct a “parallel taxi network” that is siphoning off passengers and drivers from the city’s cabs.
The credit unions said that the growth in competition has caused them to lose profits.
Arguing before a panel of the U.S. Court of Appeals for the Second Circuit, Todd Higgins, managing partner at Crosby & Higgins, said that a would-be passenger using their smartphone to hail an Uber is effectively the same as hailing a yellow cab.
“The questions of the disparate treatment have been catastrophic,’” Higgins said.
Higgins told the panel that the value of a medallion has plummeted from more than $1 million just a few years ago to about $130,000 today.
But Judges Dennis Jacobs, Barrington Parker and Robert Sack of the U.S. Court of Appeals for the Second Circuit pushed Higgins to define what counts as a hail or a prearrangement, including if one were to call a taxi dispatcher and request a pick up by taxi.
Higgins said that, while it is not defined in statute, the difference between prearranging a ride and hailing a car has traditionally been the “concept of time.”
But Assistant Corporation Counsel MacKenzie Fillow of the city’s Law Department said the distinction between street hails and prearrangement is not based on time, but whether or not consumers are able to choose their ride service.
“The speed with which the car comes cannot be the determining factor of whether something is a street hail or a prearrangement,” Fillow said. “The idea is whether the customer has a choice.”
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