NEW YORK—A state judge in Queens has for a second time dismissed a lawsuit from taxi owners and credit unions that alleges the city is permitting Uber to operate illegally.
The latest lawsuit, filed Tuesday in Manhattan federal court, accused city regulators of easing the pathway for ride-hailing services to operate with fewer burdens, alleging the proliferation of the popular ride-sharing business Uber was destroying their businesses and threatening their livelihoods.
In September, state Supreme Court Judge Allan Weiss ruled against three lawsuits that alleged Uber is operating illegally in New York City. Those lawsuits, filed by a group of taxi medallion CUs, medallion owners, and taxi companies against the city of New York, alleged that the city has allowed Uber to illegally pick up street-hail passengers. The plaintiffs in that lawsuit were the $2.1-billion Melrose CU, the $174-million Montauk Credit Union, $718-million Progressive Credit Union and $278-million LOMTO FCU.
In Thursday’s ruling, Weiss—in light of a federal judge's ruling in Chicago that favored taxis—reconsidered his rejection of the initial lawsuit against the city. But, again, he came to the same conclusion: Uber does not infringe on yellow cabs' exclusive right to respond to street hails, Crain’s New York Business reported.
"The Illinois Federal Court's decision does not constitute new evidence or, in anyway, change or undermine the law upon which this court's decision was based," Weiss wrote in his decision, which affirmed that the Taxi and Limousine Commission has the authority to allow Uber and other app-based car-service providers to respond to hails from smartphones.
"As to the District Court’s view that there is 'no material difference between raising your arm to hail a cab on a street corner and putting your location in an app,' this court respectfully disagrees," wrote Weiss. "Street hails serve to benefit passengers in locations where cabs are available. Electronic dispatches via app allow passengers, who have not prearranged for transportation, to secure immediate livery assistance at any location."
But the judge might have inadvertently provided an angle to taxi interests by noting that electronic hails are for passengers who have not prearranged their travel, Crain’s reported. In New York, prearrangement is the legal dividing line between medallion cabs and all other for-hire vehicles. State law says that Uber and other non-medallion vehicles can only accept prearranged travel. In the days before smartphones, that meant prearranged by phone, the news outlet stated.
The de Blasio administration has consistently defended Uber's right to respond to smartphone-based hails, because the Taxi and Limousine Commission considers that to be prearrangement. Yet Weiss called it not prearranged, while still ruling in the city's favor. Instead, he seemed to indicate that taxis' exclusive right is to pick up passengers whom the drivers can see. It was unclear Thursday night if taxi interests would attempt to use the judge's language to their advantage, Crain’s explained.
Melrose, Progressive and LOMTO were plaintiffs in the second lawsuit, and in the complaint they stated they collectively have made more than 4,600 medallion loans worth more than $2.4 billion. In September, the New York State Department of Financial Services placed Montauk into conservatorship citing “unsafe and unsound” conditions at the credit union.
Other plaintiffs in Tuesday’s lawsuit included individual medallion owners, as well as the Taxi Medallion Owner Driver Association Inc. and the League of Mutual Taxi Owners Inc., which said that together they represent about 4,000 medallion owners.
The complaint detailed that the number of Uber rides in the “core" of Manhattan increased by 3.82 million from April to June 2015 compared with a year earlier, while medallion cab pickups fell by 3.83 million. Plaintiffs alleged that has driven down the value of medallions, which Yellow Cab drivers need to operate, by 40% from a peak exceeding $1 million and caused more loan defaults.
"Defendants' deliberate evisceration of medallion taxicab hail exclusivity, and their ongoing arbitrary, disparate regulatory treatment of the medallion taxicab industry, has and continues to inflict catastrophic harm on this once iconic industry, and the tens of thousands of hardworking men and women that depend on it for their livelihood," the complaint said.