Monday, October 12, 2015

Judge reconsiders ruling that taxis must compete with Uber or die : PART TWO

The story continues...Update from Crain's New York Business News, 10 October 



Yellow cabs have another chance against Uber.

State Supreme Court Judge Allan Weiss decided to give yellow cabs another chance after a federal judge in Chicago ruled that taxis may be entitled to the same rules as other for-hire vehicles.

"The yellow cab lives to fight another day," said an elated participant in the New York case.

In allowing the equal-protection argument to proceed, the Illinois judge sent a strong message to taxi regulators in Chicago, said one expert who reviewed her decision.

“The city’s going to have a very difficult if not impossible time to overcome the judge’s statements,” said Matthew Daus, a former head of the Taxi and Limousine Commission in New York. “The judge could be sending a message, saying, ‘You should settle this thing or fix the law.’ ”

The Chicago ruling prompted plaintiffs in the New York case to make a motion for re-argument. The Queens judge might have feared that his dismissal last month of three lawsuits against the de Blasio administration would be overturned in light of the federal court’s decision. He has given city lawyers until Nov. 12 to explain why the Chicago ruling should not matter here. Previously, the equal-protection argument had made no impression on Judge Weiss.

But Mr. Daus, an attorney and taxi-industry consultant, views the constitutional rationale as one of two major threats to Uber’s rapid rise in the last three years. The other is that Uber drivers could be reclassified as employees of the Silicon Valley-based company, which currently regards them as independent contractors who merely use its app to find fares. A California lawsuit making that argument recently got a green light from a judge.

“Two big things that I’ve always thought could bring down the Titanic were the labor case and the equal-protection clause,” said Mr. Daus, referring to Uber, a privately-held company valued at $50 billion.

Uber is not a defendant in the New York City cases, which were brought by several taxi-medallion owners, a car-service company and four credit unions that bankrolled medallion purchases.

The plaintiffs are trying to force the Taxi and Limousine Commission to forbid Uber drivers from responding to smartphone hails. Their case hangs on whether such electronic hails infringe on yellow and green cabs’ exclusive right to pick up passengers who request rides when they are ready to travel. Other for-hire vehicles, such as liveries and black cars, are restricted to pre-arranged travel, which traditionally has meant rides booked by phone calls. City regulators say rides hailed with apps fall into that category.

One of credit unions that sued the city earlier this year has since been seized by state regulators because many of its medallion loans were delinquent or nearly so. The action by the Cuomo administration could bolster the argument by the lenders' attorney Todd Higgins that they need immediate relief in the form of an injunction banning e-hails by non-taxis. But such an injunction seems like a longshot, because it would essentially ban the business model used by Uber and its 23,000 drivers.

“We are confident that the decisions will stand,” a spokesman for the Law Department said Thursday afternoon, adding that the agency had yet to see the judge’s latest ruling.

Mr. Higgins said, "We are pleased that the court will be reviewing its prior ruling and look forward to being heard on the merits."

Even if the courts rule that livery and black cars must be subject to the same rules as taxis, it would not necessarily mean Uber, Via, Lyft, Gett and other rideshare startups would be stopped from responding to e-hails, given that taxis can answer e-hails as well. They already use Uber to find fares and recently adopted two other ehail apps.

But an equal-protection determination could subject rideshare companies to taxi requirements that don’t fit into their business models. Taxis' fares are determined by the Taxi and Limousine Commission and yellow cabs can only be certain model cars, for example.

Other lawsuits by medallion owners against the city remain pending. Those plaintiffs argue that they overpaid for medallions because the city failed to disclose previous medallion sales for lesser amounts and did not protect yellow cabs’ exclusive right to answer street hails.

Expect this to go on and on ...