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Taxi Companies Are Suing New York City for Letting Uber Kill Their Business

A coalition of taxi industry groups accuses Uber of purposefully targeting the city's yellow cab profession, and insists that New York City's regulators are to blame for allowing the ride-share service to threaten its survival.

by Reuters and VICE News
Nov 18 2015, 4:15pm

Photo by Ian Mattoo

A coalition of taxi industry groups sued New York City and its Taxi and Limousine Commission on Tuesday, arguing that the proliferation under its watch of the popular ride-sharing service Uber threatens to destroy the taxi business and the livelihoods of cabbies.

The lawsuit filed in Manhattan federal court on Tuesday accused the defendants of violating the exclusive right of licensed "medallion" yellow cab drivers to pick up passengers on the street by letting Uber drivers who face fewer regulatory burdens by picking up millions of passengers who hail them via smart phones. 

According to the complaint, 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.

Related: Video Shows Mob of Cabbies Attacking Uber Vehicles in Mexico City

The plaintiffs — which include taxi drivers, owners, and companies that help finance the purchasing of medallions and lease yellow cabs to drivers — say this has driven down the value of the required medallions by 40 percent from a peak exceeding $1 million.

Taxi companies "have been forced to repeatedly slash daily lease rates to compete," the complaint said. "Despite this, there are still not enough drivers willing to lease medallion taxicabs at any price, resulting in 'taxicab graveyards' scattered throughout New York City."

Uber's rise also contributed to the July 22 bankruptcy of 22 companies run by taxi magnate Evgeny Freidman, and the state's Sept. 18 seizure of Montauk Credit Union, which specialized in medallion loans, the suit argued.

The plaintiffs accuse Uber of purposefully targeting the taxi industry, and insist that New York City's regulators are to blame for allowing it to erode their business. 

"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 filing said.

Related: 'Uber Killed Me': Angry Drivers Take to Paris Streets to Protest Fare Cuts

The lawsuit seeks compensatory and punitive damages. It also seeks to ease cab drivers' regulatory burdens, including a requirement that half of their cabs be accessible to disabled people by 2020.

A central argument of the suit is that the difference in how taxis and Uber vehicles are regulated violates the equal protection clause of the 14th Amendment. It also says that Uber has been allowed to "usurp and trespass upon the exclusive property rights of Credit Union Plaintiffs and Medallion Owner Plaintiffs," which the suit claims is a violation of the Fifth Amendment, which prohibits the taking of private property for public use without compensation. 

The Taxi and Limousine Commission referred requests for comment to the city's law department. Nick Paolucci, a spokesman there, said the city would review the complaint.

The plaintiffs in the suit include a wide range of taxi industry stakeholders,  including lenders like Progressive and Lomto Federal credit unions, which said they have made more than 4,600 medallion loans worth over $2.4 billion. Other plaintiffs include individual medallion owners, as well as the Taxi Medallion Owner Driver Association Inc and League of Mutual Taxi Owners Inc, which said that together they represent about 4,000 medallion owners.

In September, a state judge in Queens County dismissed a lawsuit by the credit union seeking to stop the city from supporting Uber's expansion.

Photo via Flickr