NYC Can’t Block Digital Ads in Ubers & Lyfts, Judge Says

MANHATTAN (CN) – New York City taxi authorities trampled the First Amendment by blocking video advertisements in Lyft and Uber cars, a federal judge ruled.

U.S. District Judge Ronnie Abrams issued her 19-page ruling Thursday, awarding an an injunction to the digital-media company Vugo, which wanted to expand its business into New York City.

Vugo filed suit when the Taxi and Limousine Commission denied advertising to ride-hail vehicles though it permits such media in the city’s traditional for-hire vehicles — the iconic medallion-bearing yellow taxis in Manhattan, and the green livery cars that can be hailed down in the outerboroughs.

Abrams said the commission failed to justify its ban “even under the relaxed judicial scrutiny applied to commercial speech first articulated in Central Hudson Gas & Electric Corp. v. Public Service Commission of New York.”

Applying the four-part test from this 1980 decision to determine when restrictions on commercial speech violate the First Amendment of the U.S. Constitution, Judge Abrams said New York City could not justify its regulations.

Abrams acknowledged that many passengers find existing video advertisements in taxis annoying, but she said the city failed to justify its current exceptions to the ban.

“There is no basis for concluding that advertisements in the exempted vehicles are somehow less annoying or that those passengers are any less vulnerable,” Abrams wrote.

A Minneapolis infotainment startup, Vugo tapped John Cinti of Reger Rizzo Darnall LLP in Mount Laurel, N.J., and Minneapolis-based attorney Chad Snyder of Rubric Legal LLC for its case.

At the time of the 2015 filing, Vugo had been in service for five months, working with ride-hail companies in Los Angeles, San Francisco, Atlanta, Washington, D.C., Houston, Boston and other cities.

Vugo celebrated its injunction Friday.

“It’s an important decision that the court made, and it’s the right one to protect citizen’s rights to access information while not picking winners and losers, thus protecting freedom of speech under the First Amendment,” the company said in a statement on its website.

“We believe taxi advertising is broken. We aren’t trying to replicate an experience that hasn’t changed in two decades and put it in your rideshare with you,” Vugo added. “That’s not what the future of in-vehicle media should be.”

Through monetizing data and branded sponsorships in rideshares that could ultimately be carried out with self-driving cars, Vugo seeks to eventually make most trips free.

The company boasted in its October 2015 lawsuit that its patent-pending TripIntent algorithms use data like pickup points, destinations and routes of the trip to select ads that are most likely to resonate. Passengers can click on the ads that interest them on the tablet screen, and drivers collect a percentage of the advertising revenue.

Nicholas Paolucci from the New York City Law Department said that the city is reviewing Thursday’s decision.

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