MANHATTAN (CN) – The Second Circuit rejected a lawsuit challenging how New York City regulates companies like Uber and Lyft in a way that medallion taxis found devastating to their business.
The ride-sharing economy in New York took hold after the city passed two sets of regulations that relaxed rules on hails sent via smartphone apps rather than thumbs and whistles.
Months after the “e-hail rules” passed in 2015, the taxi industry struck back with a lawsuit accusing the city, the Taxi & Limousine Commission and its longtime chair of violating their rights to equal protection and due process.
U.S. District Judge Alison Nation dismissed the lawsuit last year, and a three-judge appellate panel unanimously affirmed that ruling Tuesday.
“We readily acknowledge that the plaintiffs may have suffered a decrease in the value of their medallions as a consequence of regulations imposed by the TLC,” the 32-page ruling opinion states. “But this decrease is not something that violates the Due Process Clause.”
The panel found that the Taxi & Limousine Commission gave any critic of their regulatory regime the right to be heard.
“Indeed, the TLC’s rulemaking process leading to the promulgation of the accessible conversion rules involved the posting of notices, two public hearings, and the solicitation of public comments at those hearings, by mail, fax, email, and through the city’s rulemaking website,” the opinion states.
A spokesman for the Taxi & Limousine Commission applauded the ruling.
“We appreciate the Second Circuit’s affirmation of the district court’s findings, as it recognizes the broad scope of the TLC’s regulatory authority,” spokesman Allan Fromberg said in a statement.
Todd Higgins, an attorney for the challengers with the firm Crosby & Higgins, did not immediately respond to a telephone request for comment.
U.S. Circuit Judges Dennis Jacobs and Robert Sack joined the decision by U.S. Circuit Judge Barrington Parker, which says the taxi companies made a plausible case as to how e-hail rules caused their industry “catastrophic harm.”
“Because the city permits [for-hire vehicles] to use e-hail smartphone applications, plaintiffs alleged that no material differences now exist between a traditional street hail and an e-hail,” Parker wrote. “Consequently, plaintiffs alleged, a significant benefit medallion holders once enjoyed — the exclusive ability to pick up customers who hail a taxi on the street — has effectively disappeared.”
As reported by Business Insider, services like Uber and Lyft have been causing the value of taxi medallions to plummet across the United States, including in New York, Boston and Chicago.
San Francisco’s Yellow Cab filed for bankruptcy in 2016.