NEW YORK—After threatening to sue New York City last month for allowing “illegal hails” at the popular ride-sharing service Uber, Melrose Credit Union has taken legal action, and has been joined in the suit by three other CUs that make taxi medallion loans.
CUToday.info was first to report the Melrose CU lawsuit here.
Melrose, the $174-million Montauk Credit Union, $718-million Progressive Credit Union and $278-million LOMTO FCU Wednesday filed a suit against members of the city government, alleging they allowed Uber to illegally pick up street-hail passengers.
For the credit unions and their members, the emergence of new ride-sharing companies is a significant issue that threatens the value of the taxi medallions, which can cost upwards of hundreds of thousands of dollars each. Those loans also make up significant portions of some CUs’ portfolios.
“The city has left us no choice but to pursue legal action in the courts, and that is what we have done," Todd Higgins, an attorney for the $2.1-billion Melrose Credit Union, told Crain's New York Business.
The credit unions are seeking a preliminary injunction to force the city to enforce a law that prevents anyone but medallion yellow-cabs from picking up street-hails. The lawsuit takes a broad approach, naming the city itself, Mayor Bill de Blasio, state Attorney General Eric Schneiderman, and the Taxi and Limousine Commission as well as Chairwoman Mira Joshi as respondents.
Melrose claims Uber’s electronic hails are illegal and had sent letters to the Taxi & Limousine Commission and New York Mayor Bill de Blasio threatening a suit if the city did not act. Uber and other ride sharing services such as Lyft, have had dramatic effects on taxi cab revenue in some markets.
Melrose CU argues city law gives only yellow medallion taxis and “street hail liveries” (also known as green cabs) the right to accept hails from passengers — an exclusive privilege in exchange for hundreds of millions of dollars in revenue from medallion sales.
In January, the Taxi & Limousine Commission (TLC) defined in new rules that a hail is a request for a taxi through calling out, raising a hand — or using an electronic method like an app, according to the MCU letter. David Pollack, director of the Melrose taxi action center, told CUToday.info in a previous interview that the TLC has not been enforcing the new rule and Uber drivers are taking advantage.
Pollack in April described the situation facing cab drivers in this city, saying that recently, in two days via just a very small survey, there were more than 400 incidents of Uber vehicles “illegally” responding to street hails.
The TLC today is scheduled to hold a public hearing on proposed rules that could make it easier to regulate app-hail companies like Uber and Lyft.