Three taxi and limousine trade associations have lost in their bid to revive a case against the city of Newark over what they claim to be comparatively lighter regulations placed upon Uber and other ride-sharing companies than what cab and limo companies operate under.
The U.S. Court of Appeals for the Third Circuit on Monday upheld a New Jersey federal judge’s decision to throw out the case, reasoning that the associations had no constitutionally legal ground to support their claims that Uber was given an unfair advantage.
By having different rules for traditional transportation companies and transportation network companies, or “TNCs” as the court labeled them, the associations argued that the city violated their rights under the takings clause of the Fifth Amendment and the due process and equal protection clauses of the 14th Amendment.
Uber drivers are exempt from the standards that cab and limo drivers have to meet, which include certain job qualifications, passing a background check conducted by the Newark Police Department, paying application fees, and obtaining special commercial licenses, according to Third Circuit Judge Michael Chagares’ opinion.
Additionally, taxis and limousines have to be inspected every six months by the Division of Taxicabs, fares must be measured by meters in accordance with city-mandated rates, and all taxi and limousine operators must carry primary commercial liability insurance, Chagares said. Operators have to purchase taxi medallions—capped at 600 citywide—and drivers are prohibited from working at Newark airport until one year after the issuance of their taxi driver’s license.
Uber, on the other hand, agreed in 2016 to pay Newark $1 million per year for a decade and provide $1.5 million in liability insurance for each of its drivers in exchange for permission to operate in the city, Chagares said. Uber also agreed to have a third-party conduct background checks on all of its drivers.
“The city’s decision to permit TNCs to operate subject to limited regulations places the plaintiffs in an undoubtedly difficult position. However, the potentially unfair situation created by this decision cannot be remedied through the plaintiffs’ constitutional and state law claims,” Chagares said.
The associations had argued that their medallions, by way of the financial investment in them, gave them the right to be the sole form of paid, non-public transportation in Newark.
“The plaintiffs have provided no authority in support of their position that their taxi medallions include a right to be the exclusive providers of transportation services in Newark, or that this right constitutes a separate cognizable property interest that can be the subject of a takings clause claim,” Chagares said.
As for the plaintiffs’ due process claims, Chagares said the associations failed to identify a type of protected property of which they were being deprived.
“We hold that the plaintiffs’ alleged protected property interests—the loss of value of their medallions and the right to be the exclusive provider of ride-for-hire services in Newark—do not meet the standard of fundamental property interests under the Constitution,” Chagares said.
Gary S. Lipshutz, assistant corporation counsel for the city of Newark, declined to comment on the case and referred a request for comment to city of Newark Business Administrator Eric S. Pennington, who was not immediately available.
The associations’ lawyer, Richard W. Wedinger, also did not immediately respond to a request for comment.