Cabbies Challenge NYC’s $1 Billion Contract

MANHATTAN (CN) - The Committee for Taxi Safety sued New York City, challenging the $1 billion, 10-year contract it awarded to Nissan to build a "Taxi of Tomorrow," which the committee says has not even been produced yet, "uses outmoded engineering, design and technology" and is not "ruggedly built" or wheelchair accessible.

The committee, a trade association representing 3,500 cabbies, sued the city, Mayor Michael Bloomberg, the New York City Taxi and Limousine Commission and its Commissioner David Yassky, in New York County Court.

"This proceeding arises out of New York City's new requirement that, beginning in 2013, all taxi medallion owners replacing taxi vehicles - either because of a legally imposed retirement of the vehicle or the medallion owner's own choice - are obligated to purchase the so-called 'Taxi of Tomorrow,' a yet-to-be manufactured version of the Nissan NV200 van.

"Respondents selected the Nissan NV200 as the exclusive vehicle that those in the New York City taxi industry must use to replace their taxis, announcing a decade-long exclusive contract with Nissan that provides that all medallion taxis in

New York City must be Nissan NV200s.

"Awarding an exclusive contract to Nissan marks the first time in the history of New York City taxicab regulation that taxicab medallion and vehicle owners will be required to purchase and use a single brand and model automobile.

"The Nissan NV200 uses outmoded engineering, design, and technology. The vehicle's features and design led New York State Assembly member Micah Kellner to say, 'Who knew that the Taxi of Tomorrow was the delivery van of yesterday?' Moreover, the Nissan NV200 is not accessible to the people with mobility disabilities," according to the complaint.

The Nissan NV200 will be produced at the Nissan's plant in Cuernavaca, Mexico, and is expected to sell for about $29,000.

The complaint adds: "There are concerns that the NV200 will not be an adequate replacement for the cars that now make up the New York City taxi fleet. The NV200 does not appear to be ruggedly built and therefore may not be able to remain in good repair over many miles of rough driving on the poorly maintained streets of New York City. Restricting taxi medallion drivers to one and only one type of car deprives drivers and riders of options that might better suit their individual preferences. And because the Taxi of Tomorrow is sole-sourced from a Japanese manufacturer, if any problems arise with the vehicle - such as mechanical issues, recalls or manufacturing delays - New York City taxi drivers and riders could find themselves facing a shortage of operable taxis."

The committee claims that forcing an inferior vehicle on the city's taxi owners will increase their driving costs and devalue taxi medallions.

"The costs of driving a cab will increase not only because the NV200 is produced in foreign countries, but also because medallion owners will be able to only purchase replacement vehicles and parts from one source - Nissan - who will control the price of its product," according to the complaint.

Nissan was one of three finalists for the contract. The other two were Ford and Karsan, a Turkish company.

The complaint states: "While the contract has not yet been signed, on information and belief, its terms are set and the mayor and the TLC have moved forward as if the contract has already been signed. The contract will be a ten-year manufacturing and supply contract, with vehicles ready for purchase beginning in late 2013, The Taxi of Tomorrow will replace old models of taxis already out on the streets which, by TLC rules, must be replaced if they cannot pass inspection or if they are damaged in accidents, and must be replaced without regard to inspection after a three to seven year period of use. The manufacturer's suggested retail price will be approximately $29,000 and the contract in total is estimated to be worth over $1 billion to Nissan."

The committee wants the contract enjoined as arbitrary and capricious and an abuse of discretion. It is represented by Roberta Kaplan with Paul, Weiss, Rifkind, Wharton & Garrison.

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