This time its the Passengers Suing Uber

Uber is used to being sued by regulators and taxi companies, but now passengers are getting into the act. Two riders in San Francisco are suing the company over its $1 "Safe Rides Fee." According to Gizmodo, the theory of the case is that "it's a bullshit fee."

Here is Gizmodo's summary of the complaint:

The lawsuit challenges Uber's claim that it conducts background checks that are supposedly more stringent than that of taxi companies. The only problem? They're really not more stringent. The background checks conducted by taxi companies typically include fingerprints and other methods of verifying a driver's identity. One of the big criticisms of Uber's background checks for UberX drivers is that it's easy to just use someone else's identity.

The complaint filed in federal court claims a right to relief under California professional licensing law and California consumer protection law.

The article claims that district attorneys in Los Angeles and San Francisco filed their own suits earlier this month over the Safe Rides Fee. 

In the Fighting City, Cab Companies call Uber a Racketeer

Dozens of Philadelphia taxi companies are suing Uber under the RICO statute, labeling the venture capital backed service a racketeering enterprise. 

The complaint says that Uber circumventions state and city regulations and that it has caused the traditional taxi business and medallion prices to plummet. The plaintiffs also want an injunction that would bar Uber from operating in the region.

A Life in Ruins

One of the thousands of drivers whose cars have been seized by the TLC-- always without a warrant and without a hearing-- for acting a taxi without a license has sued the agency for "ruining his life." Michael Davis of Allentown, Pennsylvania, claims $1 million in damages because the TLC seized his car at Kennedy Airport, which led to his being stranded, fired from his job as a limo driver, facing eviction, his wife miscarrying and unable to buy Christmas presents for his kids.

Davis says that a TLC inspector approached him and offered to pay him to driver her from JFK to LaGuardia Airport. Davis said he could not take the fare, but when the woman persisted, he offered to drive her for free.  The TLC then seized his car and later falsified evidence against him, reports Rebecca Harshbarger in the New York Post.

Check This!

The New York Times has a Christmas Day editorial saying that app-based taxi services like Uber and Lyft need to do a better job of background-checking their drivers. It cites a single incident-- albeit one that has grabbed headlines-- in which an Uber Driver in New Delhi was accused of raping a passenger.  

Uber, for one, says its checks are superior to those conducted by taxi regulators. Uber naturally does an Internet-based check, not a fingerprint based search used by at least some regulators.

What this editorial and many like it miss is that an aversion to regulation, background checks included, is the whole point of app-based services. They say that driver reviews regulate the system and weed out bad drivers. 

Taxi of Tomorrow -- or maybe the day after. Or never.

An interesting autoblog post details the history of legal and business problems behind the Taxi of Tomorrow.  It's set to be litigated again in the New York Court of Appeals, the state's highest court,  which granted the taxi industry group leading the opposition to the Nissan vehicle the right to appeal.  
Opposition to the T of T is summed up nicely by Ethan Gerber of the Greater New York Taxi Association, who says, "Look, Nissan is a good company. And the NV200 is not a bad car. If it turns out that people like it, then great – they should be able to sell them here.  But why can't we have competition? Why did the city think there had to be exclusivity? It stifles competition and stops innovation."

Spain to Uber: No Mas

A Spanish judge has ordered to stop operating in Spain, a ruling that followed  series of protests by taxi associations, according to the BBC.

In his ruling on the temporary ban, the judge said Uber drivers didn't have official authorization and accused the service of "unfair competition". This ruling seems similar to the one being sought by municipal officials in Portland, Oregon.

The move follows a complaint by the Madrid Taxi Association.

An Uber, meanwhile, says it is still operating for the time being and there is some uncertainty as to whether the judge's oder has taken effect.

The same BBC report says that judges in The Netherlands banned the UberPop ride-sharing service, which was launched as a pilot project in Amsterdam between July and September and subsequently extended to The Hague and Rotterdam.

"Drivers who transport people for payment without a licence are breaking the law," said the decision from the Hague-based Trade and Industry Appeals Tribunal.

Portland Punts Uber

The city of Portland, Oregon, has filed a lawsuit to block Uber from operating in its city. According to the Guardian, Uber started offering its low-cost Uber-X service, which, it seems, aims to used unlicensed cars and drivers not licensed as tax drivers to operate the service. Passengers would hail the non-taxis with the famed Uber app.

Until now, Portland had been the largest U.S. city without Uber, the Gurdian says. 

“Our main concern is public health and safety,” mayor Charlie Hales is quoted as saying in a statement announcing the lawsuit. “Beyond that, though, is the issue of fairness. Taxi cab companies follow rules on public health and safety. So do hotels and restaurants and construction companies and scores of other service providers. Because everyone agrees: good regulations make for a safer community. Uber disagrees, so we’re seeking a court injunction.”

In some cities, such as New York, Uber and other services such as Lyft, has agreed to operate only with licensed car service drivers and licensed cars.   Elsewhere, the app-based services have come into town unregulated. 

The Portland lawsuit asks the court to confirm Uber is subject to the city’s regulations and to halt its operations until it is in compliance. 

Uber crashes Portland

Uber started operation in Portland this week even though it lacked the permits and inspections that the city says are required for any taxi service, according to Geekwire.

The city has already conducted enforcement actions against Uber drivers and is certainly not happy with Uber doing business on its streets, the report says.

“We have told Uber and Lyft that they are welcome to offer ideas for regulatory changes,” City Commissioner Steve Novick said in a statement. “Uber has chosen instead to break the law.”

A blog post in the New York Times says:

In October, Uber began its service in Las Vegas, where it was deemed illegal; multiple drivers were cited within hours of the company’s debut there. Similar scenarios played out in Austin, Tex., Philadelphia and other cities around the country.
 But Uber’s move in Portland comes just days after it vowed in a blog post to become a ‘smarter and more humble company.’ Uber, which is now valued at more than $40 billion, is reeling from a string of recent embarrassments that have critics questioning its ethics. The company’s executives have been accused of taking a lax approach to customer privacy, among other criticisms.

Uber’s manager in Portland told the website, “I think launching is not an act of aggression on our part; it’s actually a hope to serve [driver and passenger] needs.”

The Geekwire post includes a Q&A with Brooke Steger, Uber's honcho in the city.

Committee wants to Bar Uber for Playing God

The Committee for Taxi Safety s calling on the TLC to suspend Uber's TLC licenses because the New York City Uber chiefs have been using the company’s “God’s View” technology to track the movements of one a Buzzfeed reporter.

Uber’s God’s View tool allows Uber to track an individual's use of the service, marking when and where they traveled by an Uber-dispatched car. Reportedly Ubers NYC general manager Josh Mohrer told Buzzfeed reporter Johana Bhuiyan he had been tracking her Uber vehicle as she made her way to his office for an interview. Mohrer also emailed Bhuiyan logs of her Uber rides to answer questions she brought up in the interview. Mohrer did not ask for Bhuiyan’s permission before doing so. This is according to a report in the Guardian.

Now, the Committee for Taxi Safety, a group which represents taxi medallion leasing agents, is calling on the TLC to investigate Uber. In a letter by Tweeps Phillips, its executive director, the committee asked that Uber's license "be suspended until the riding public can be assured that their privacy and data are safe.”

Of course, the TLC has used its own GPS tracking power to track and gather evidence against cabbies for use in civil and criminal prosecutions.

NY AG wants Livery Drivers to be Free

According to BuzzFeed, New York Attorney General Eric Schneiderman is weighing in against a newly-proposed rule that would require livery cab drivers to affiliate with one base and one base only. Schneiderman has written a letter to the TLC saying hat the proposed rules, as written, would unfairly limit competition. “From a competitive standpoint, these advances may lower the costs of entry for new for-hire vehicle services and encourage existing services to compete more effectively for both drivers and passengers.”

The proposed rule would, some fear, give Uber an insurmountable competitive advantage because a driver limited to one base would naturally ally with Uber, the market leader, because it has the most potential passengers using its app.  The TLC would allow multiple affiliations if there was a formal agreement between bases allowing drivers affiliated with one to also affiliate with the the other. 

But Schneiderman says this requirement would still unduly restrict the drivers. “Requiring agreements between competitors raises serious antitrust issues. Ultimately the proposed rule is likely to lead to market consolidation around a small number of the best-capitalized and most well-known services, whether large existing firms or well-financed newcomers. This market concentration will hurt consumers, who can expect fares to increase and service to decline. If this anticompetitive outcome followed from collusion in the industry, it would be illegal. It is no less disturbing as a product of regulatory action,” the letter reads.  

Even Uber has opposed the rule, though it would supposedly benefit from it.  The real losers, if the rule passes, are more likely to be livery drivers who may want to ally themselves with a neighborhood base and also sign on with Uber, Lyft or some other app-bases service to gain business when a business is slow at a local base.

The TLC likes the proposal because it would make the industry easier to regulate.

Uber has also said it does not like the rule because it comes with a requirement that for-hire vehicle bases would be submit trip data to the TLC,

A mid-level New York appeals Court has given taxi owners permission to bring their challenge to the Taxi of Tomorrow program to the Court of Appeals, the state's highest court.

The ToT would require most cab owners to purchase a taxi made by Nissan Motor Co. Traditionally, a taxi owner could use any car that met TLC specifications.

The plan has been challenged by the Greater New York Taxi Association and others, which claimed that the commission could not force taxi operators to buy specific vehicles. Last October, a state supreme court justice said the TLC overstepped its authority in requiring purchases of the NV200, but an appeals court reversed the ruling. The order today allows the  state's highest court to decide, probably early in 2015.

Uber Sued in S.F. over Driver Tips

A federal judge denied Uber's motion to dismiss a lawsuit accusing Uber of pocketing most of the 20% gratuities that the company says it is collecting for drivers. 

U.S. District Judge Edward Chen in San Francisco said Uber must face multiple civil counts, including an allegation the company violated California's unfair competition laws.

The case is Caren Ehret vs. Uber Technologies Inc in U.S. District Court, Northern District of California, No. 14-0113.

Taxi Legal Mashup in Milwaukee

A lawsuit in Milwaukee combines a host of taxi-related issues, with taxi companies suing the City of Milwaukee over a new ordinance that clears the way for app-based services like Uber and the Institute for Justice taking the City's side, saying that the existing taxi system, predicated on licenses and medallions is a restraint of trade. 

The Milwaukee Business Journal reports: "Five taxi groups are suing the city of Milwaukee, hoping to block an ordinance recently signed into law that lifts a cap on taxi permits and provides a path to legalization for mobile ride-booking apps."

The taxi owners say that a 1991 that caps the number of permits creates a property right that the new law lifting the cap denies them due process and equal protection. They say the new law will destroy the value of existing permits, currently priced at $150,000. The suit is seeking a temporary or permanent injunction of the city's law, as well as potential monetary damages.

But the the Arlington, Va.-based Institute for Justice, which has already sued the city to require it to lift the cap on new medallions, calls the cab companies' suit "desperate [and] baseless and belies their true motivation of protecting their monopoly at all costs."

Lyft Drops Its Threat to Enter the New York Market

There has certainly been a lot of talk about taxi apps on smartphones, and with that talk there is much confusion.  An app is just a way of hailing a vehicle. The real question is what vehicle is being hailed and who is driving it. Some apps hails cars licensed as taxi driven by licensed taxi drivers. Others hail anyone but.

Lyft, a major player in the taxi app space (to borrow a word from the heyday of the tech bubble) calls itself a "ride sharing" company. Its drivers are not licensed as cabdrivers; they drive their own cars, which are also unlicensed, at least not licensed as taxis. Because they are not taxis, the don't need taxi licenses. It says its drivers take "donations," not fares.  That's the theory at least.

But when Lyft announced plans to launch in Gotham, the TLC had a cow.

Earlier this month, Lyft said it would move forward with its New York City launch despite threats from taxi regulators, not just the TLC, but state regulators. That assertion prompted the TLC to declare Lyft an “unauthorized service” in New York City.

“Lyft has not complied with T.L.C.’s safety requirements and other licensing criteria to verify the integrity and qualifications of the drivers or vehicles used in their service, and Lyft does not hold a license to dispatch cars to pick up passengers,” the TLC said in a statement.

“Unsuspecting drivers who sign up with Lyft are at risk of losing their vehicles to T.L.C. enforcement action, as well as being subject to fines of up to $2,000 upon conviction for unlicensed activity,” it added.

In short, the TLC said it would seize Lyft cars, which is not an idle threat because the TLC seizes close to 30 cars a day.

Later, Lyft backed down in the face of cease and desist letter from New York’s Department of Financial Services, joined by the NY attorney general.

Meanwhile, Uber, probably the richest of the taxi app companies, has already gained a foothold in new York by taking advantage of a pilot program that allows app-hailing of some yellow cabs. Uber and similar services can also be used to summon livery cabs, which, under New York rules, cannot accept street hails, but can be hired by "pre-arrangement" whether by a traditional phone call or a smartphone app.

Oops! -- TLC seizes hundreds of cars in error

The Taxi and Limousine Commission seizes more than 9000 cars per year-- all without a hearing and without a warrant. The TLC will give the car back to those who quickly plead guilty and pay $600. If you want to plead not guilty, you can get your car back if you pay $2000.

Now it has been revealed by reports in DNAInfo by James Fanelli and others and in the New York Post by Rebecca Harshbarger and Kathleen Cullito that the TLC lost almost 1,500 court hearings in 18 months in which TLC inspectors seized cars and falsely claimed they were illegal cabs. The TLC's own tribunal dismissed 20 percent of the 7,187 cases involving illegal-cab violations, according to a TLC tribunal spokeswoman. The 20 percent figure almost certainly overstates the true error rate because many drivers plead guilty because they are told that doing so is the quickest and easiest way to get their car back.

The increase in rogue seizures, the Post says, came about because chiefs and captains bullied officers to seize as many cabs as possible. Many examples of inspectors making bonehead plays under pressure have been in the news, as have reports of inspectors being hounded to seize cars often on flimsy evidence.

As DNAInfo notes, TLC inspectors often seize cars where the driver or the passenger doesn't speak English and the inspectors don't have a translator to help understand the situation. Often inspectors don't know or can't be bothered with the rules, such as those that allow New Jersey of Long Island cabs to make pick ups outside New York City for trips into the City. Another common mistake is to seize cabs driven by chauffeurs or cars serving a particular business, neither or which need TLC licenses.

Two takes on Uber

Two recent articles about Uber suggest that the car service and others like it might destroy the taxi driving profession, with one stating plainly that that would be a good thing.

In "Will Uber Destroy the Driving Profession?" New Yorker writer Eric Goldwyn suggests that Uber's employment of "semi-professional drivers" may ultimately force traditional taxis out of business. If this happens, Goldwyn quotes New York Taxi Worker's Alliance chief Bhairavi Desai as saying that  the emergence of Uber is part of a long term undermining of labor:

 “Forty years ago, drivers went from laborers to independent contractors,” Desai explained. In the seventies, corporations lowered costs by hiring contract labor and leasing medallioned cabs to drivers. As contractors, drivers lost basic labor protections, like health insurance and paid vacations. 

Ed Rogoff, a professor at Baruch College’s Zicklin School of Business (and a former New York City cab driver), tells Goldwyn, “The independent-contractor taxi model is like sharecropping. Previously, cabbies and garage owners split proceeds fifty-fifty, with drivers keeping tips. The new system totally changed the structure of the industry by shifting all of the risk to the drivers.”  

This discussion, like many concerning Uber, omits that taxi apps are used to summon both traditional taxi and, in other cases, non-taxis, with unlicensed drivers (that is, unlicensed to drive a taxi) driving their own cars rather than vehicles dedicated as cabs.

A few days earlier, the Boston Globe ran an opinion piece by John Sununu, "Uber isn’t the problem; taxi regulations are," arguing that "In most big American and European cities today, taxi services look more like a bureaucratic conspiracy than the product of a competitive marketplace. In London, regulators consider use of a taxi meter to be a privilege and have erected exorbitant barriers to protect that status."

Sununu, a former U.S. senator from New Hampshire, continues that Uber "operates more like an information broker than a transportation company. They own no vehicles or medallions, but vet local operators, manage the application connecting drivers with users, and provide a rating system for both."

This view is close to how Uber sees itself, as technology or information company, not  a taxi company subject to taxi regulations.  Many in the industry, including regulators, have disagreed at least in part. So does Sununu, who says: 

Uber’s success and popularity should inspire legislators to take a hard look at the wasteful mass of ancient taxi regulations already on the books. Ostensibly, they were intended to protect consumers. But now they block access to faster, more reliable service.

TLC Inspectors Cry Foul about TLC Car Seizures

The TLC seizes more than 9000 private cars annually, but apparently that's not enough. According to an article in the New York Post. "TLC chiefs are threatening inspectors with summons quotas and other stiff punishments if they don’t take enough illegal cabs off the road." The Post also says it has roll-call recordings to back up the inspector's claims.

The chiefs of the TLC inspection unit pressure their officers by issuing a target number of summonses a day.

“You are going to be doing 15 summonses a day . . . I’ll ride you for a week. If you see that you’re not getting the seizures, you see you’re not getting enforcement . . . then start with the street hails,” one chief says to an office on one of the tapes. The chiefs also threaten other subtle punishments, such as assigning an officer a day-shift just after a night shift.

TLC officers have already charged that "many seizures [are] bogus" in that the officers don’t have reasonable cause, and grab the cars done to fend off pressure from higher-ups.

Just this month, there have been allegations that the TLC seized the car of a black man who was driving his white wife, the car of a Turkish-American who was taking his neighbors to the airport, and that of a driver who gives free rides to cancer patients.

TLC inspectors are being backed by their union, the Teamsters. Randy Klein, of Teamsters Local 237, told the Post: “The ideal situation is they treat them like human beings, they are trained well, and have the tools to protect themselves and the public.”

That would be ideal, too, for the drivers whose cars are nabbed by the TLC.

Uber $3 billion, but how much uber?

Early this month, taxi hailing app Uber completed its latest round of funding and was said to have a valuation of $17 billion. Following that news, New York Times business columnist Andrew Sorkin suggested that the $17 billion figure might be too low, that Uber could be worth more. Sorkin's take can be summarized:

Think about the basic math. There are a lot of numbers floating around about the global revenue for taxis, but here are the basics: In the United States, the taxi business generates $11 billion annually, according to IBISWorld.

In big cities like New York and London, The Financial Times reports that the average person spends $238 a year on taxis. If you extrapolate that Uber could one day control a quarter of the current global taxi market, the investment would turn out to be a home run.

The business is currently in 128 cities in 37 countries and says it is doubling its revenue every six months. (TechCrunch reported Uber’s revenue last year was $213 million on more than $1 billion of bookings; Uber takes a 20 percent cut of all driver’s receipts.)
If Uber were to take just half of the taxi market in the United States — and nowhere else — it would generate more than $1 billion in revenue a year.

The problem with this math that that Uber only gets something like 20% of the fares of the rides that it arranges. So even if Uber arranged a quarter of all the taxi rides in the U.S. -- which is a huge 'if'-- it would get 20% of 25%, or 5%. If the taxi market in the U.S. if $11 billion, Uber's share of that gross would be $550 million. No one believes that Uber grosses this much now-- Techcrunch says the revenue is less than half that-- but it might in the not-too-distant future. Whether it makes a profit now, or is likely to see any profit soon, is anyone's guess. 

Still, a half a billion in gross revenue is quite a bit for a four-year-old company, and Uber is international. But there are also many other Uber-like companies, some big, like Hailo. I have heard that some of the the car services, like Carmel, have their own app. So the technology part seems ubiquitous and not proprietary. Thus a 25% share would seem hard to maintain in an industry with so many small companies, widely dispersed. 

Writing today on Nate Silver's fivethirtyeight.com, Aswath Damodaran, a finance professor at New York University’s Stern School of Business, argues that Uber is actually worth something like $5.9 billion, which is still nearly double what valued at before its latest round of financing. Of course, the "correct" valuation varies wildly depending on what one assumes to be the future size of the taxi market and Uber's share of that market.

Damodaran is skeptical of Uber, or any taxi company's ability to obtain a large share of such a disintegrated market:

The bad news is that the market will be tough to dominate. Unlike technology companies in other businesses, like Google, Facebook and eBay, the network effect and winner-take-all benefits are limited. Having a global network of tens of thousands of cabs doesn’t make a difference to a customer looking for a cab in New York City. That, along with the regulatory restrictions protecting the status quo and the competition Uber faces from Lyft, Hailo and others, lead me to estimate a market share of 10 percent.

Increased competition has already forced Uber to cut its take of gross receipts in some cities. My instincts tell me that Uber’s slice will decrease over time, but I’m going to make the optimistic assumption that the company will find a way to differentiate itself and continue to claim 20 percent of gross receipts.

But even if Uber does get a 20% share of a global $100 billion market, Damodoran doesn't think the valuation makes sense.

The market would have to be three times my estimate — about $300 billion — or Uber’s market share would have to be more than double my base case estimate — more than 20 percent — to justify a $17 billion valuation. The former may hold if you see Uber’s market more expansively than I do, and the latter may come to fruition if you believe Uber will have an easier time overcoming the competition and the regulatory constraints on its growth.

Of course, the money backing Uber is said to be smart money-- Fidelity Investments, BlackRock, Kleiner Perkins Caufield & Byers, Google Ventures, Menlo Ventures and Wellington Management and Summit Partners. Everyone assumes that they must know something that makes their investment make sense. And maybe they do. But even the most successful venture capitalists lose more often than they win. The profit comes from winning big when they do win. Thus Damodoran says, "I wouldn’t be that quick to conclude that smart investors always make smart investment judgments."

A few have made small and even large fortunes in the taxi business, usually after a generation or two of accumulating licenses. But there is no taxi billionaire. It remains to be seen whether Uber's backers become the first.

---

In an addendum to the Uber valuation story, the Wall Street Journal today ran an article suggesting a way for investors to profit from Uber even if they are not venture capitalists who have access to Uber shares.  The Journal's idea: Sell Medallion Financial short:

Medallion is a specialty finance company that services loans used to purchase city-issued “medallions” that are required to operate yellow cabs. Shares of the company have slumped more than 18% this year and on Thursday fell to the lowest level since December 2012. The company sports a market capitalization of about $300 million, according to FactSet.

After peaking at $17.85 in November, Medallion shares lost about 1/3 of their value, a decline that has coincided with a rush of short sellers betting that the stock will keep falling.

The Journal figures that shares in the company that lends on medallions is indicative of the decline of the traditional taxi business as it loses out to Uber and its ilk. 

Canceling Tomorrow Could Cost Big Bucks

Mayor Bill de Blasio has he indicated he might cancel the Taxi of Tomorrow program even if the city continues to prevail in court. But doing so could cost the city as much as $100 million, according to a capitalnewyork.com report
Following a lengthy competition, in 2011 Mayor Michael Bloomberg agreed to give Nissan near-exclusive rights to supply yellow taxis for New York City Streets. Its winning design was the big and ugly, but feature-rich NV200, which sports amenities like back-seat airbags, moon roofs, phone-charging ports and passenger reading lights.
Nissan apparently claims that developing the vehicle cost Nissan about $100 million, and that the city would be on the hook for that sum. 
De Blasio, as public advocate, opposed the Taxi of Tomorrow on the grounds that Nissan had investments in Iran and that the vehicle was not wheelchair-accessible-- which is now even more awkward nowadays in that the city has also promised to make half of the city's taxis wheelchair friendly. 
Taxi fleet owners, who gave hundreds of thousands of dollars to the mayor's campaign have battled the program in court, first successfully, but lately unsuccessfully.  That battle could continue if the mayor decides to proceed with the program. Presumably, if the NY Court of Appeals, which may have the last word, decides that the program was unlawful after all, the city would no longer own Nissan for canceling the deal.

Race-Based Seizure?

In another seizure gone awry, TLC inspectors ticketed a black man as an illegal cabbie after spotting him drop off a white passenger. That passenger turned out to be his wife, leading to a lawsuit in a Queens county court, according reports in the Daily News. and in DNAinfo.

The Queens couple, Dan Keys Jr., 66, and Symone Palermo, 53, filed a racial bias action (claiming a whopping $3 million in damages) against the city and the Taxi and Limousine Commission, claiming they were unlawfully targeted on May 2013 by agents who assumed that a black man dropping off a white woman must be a cabdriver, or, in this case an unlicensed cabdriver  providing an illegal ride.

This is the third black eye in a week for the TLC aggressive car seizure program, the first being an claim by one of the TLC's own inspectors that his agency acts recklessly in issuing summons, the second being a summons and car seizure of a driver who gives free rides to cancer patients. 

in the latest case, the husband and wife both received summonses — the wife was ticketed as  the registered owner of the car — and the agents allegedly continued the charade to cover up their mistake, according to court papers.

While the TLC-issued summonses were dismissed, the couple lost use of the car for a week. 

TLC mouthpiece Alan Fromberg, who is rarely at a loss when denouncing drivers, refused comment.

In the past the TLC has boasted that it seizes 8000 cars annually, and that it is looking to increase that number.

Additional links:

Lawsuit: TLC Mistakes Black Man, Bi-Racial Wife For Illegal Livery Cab Driver, Passenger

NYС officials accuse black man of being illegal cabbie for driving wife to work

This Racial Profiling Case Will Have You Shaking Your Head

If your car has been seized, click here.

Taxi of Tomorrow Held Legal

The so-called Taxi of Tomorrow got a legal green light from an intermediate state appeals court today, reversing an earlier trial court decision.  

Read the appeals court decision here.  

According to BloombergBusinessweek report, the Appellate Division ruled that the Taxi of Tomorrow program is a “legally appropriate response to the agency’s statutory obligation to produce a 21st-century taxicab consistent with the broad interests and perspectives that the agency is charged with protecting.” Judge David B. Saxe wrote the majority opinion. That there was a dissent by Judge Acosta makes an appeal to the New York Court of Appeals more likely.

Nissan won a contract with the city in May 2011 that allowed it to be the sole maker of NYC taxis, a deal valued at $1 billion over 10 years. 

Taxi fleet operators sued the city in December 2012 on the ground that the TLC had the authority to issue standards, but not to designate a particular vehicle. A judge halted the program five months later.  The city subsequently revised its rules to allow for more hybrid vehicles, something the TLC had previously advocated. The Nissan vehicle is not a hybrid, yet the TLC made it mandatory.

But in today's ruling, the court wrote: "Where an agency has been endowed with broad power to regulate in the public interest, we have not hesitated to uphold reasonable acts on its part designed to further the regulatory scheme. Here ... far-reaching control has been delegated to a commission charged with implementing a pervasive regulatory program. This far-reaching control granted to the TLC by the New York City Charter gave the agency full authority for its actions. 

Judge Acosta said in dissent that the commission exceeded its authority, “regardless of whether the Taxi of Tomorrow project is rational and consistent” with its objectives, because it mandated the exclusive use of a specific make, model and manufacturer.

The T o T was a darling of the Bloomberg administration. The new mayor, Bill De Blasio, has decidedly different views about the taxi industry so it remains to be seen whether the city and the TLC will seek to revive the program.

  

TLC Car Seizures Run Amok

Former TLC Chairman David Yassky often bragged about the ever-increasing number of cars his agency was seizing as unlicensed taxis, sometimes more than 1000 per month. Indeed, the limiting factor was said not to be the number of unlicensed cabs on the streets, but the space to store seized vehicles. 

Last week, though, a TLC inspector said that he and his colleagues often stopped and seized cars because of pressure from enforcement-unit brass. These inspectors have grabbed cars without adequate evidence or reasonable suspicion that the drivers were working as illegally as unauthorized cabbies. 

Inspector practices appear to often include aggressively questioning passengers who are dropped off at airports about whether they paid for the ride. If the flummoxed passengers-- who naturally wonder wonder why they are being questions-- don't give a sufficiently clear statement that they did not pay, the inspectors stop the driver, issue a summons to the drive and sometimes to the car owner as well. Each can call for a fine of $1500.  

In one egregious example, last week inspectors seized a car belonging to a charity that gives rides to cancer patients.

In addition to the possible fine, the car owner has to to both the TLC and to an impound lot at another location to retrieve the vehicle at an additional cost of several hundred dollars. It's not at all clear, however, whether the seizures are lawful where the car's driver is perfectly capable of driving it away and no crime is charged.    

If your car has been seized, click here.

London High Court to decide Uber dispute

The battle over taxi apps has gone international, with disputes flaring up in England and France as well as all over the U.S.  Even the regulators don't know what to do and in London, the transport authority has kicked the can to the British High Court.  According to an item in Gigom:

London’s transport authority will ask the British High Court to decide whether car services such as Uber that use smartphones to determine the customer’s fare should be regulated in the same way as traditional “black cabs” and private hire services. 

London cabbies are as highly regulated as any, with officials only licensing cabbies who prove they hat  “The Knowledge” — a comprehensive, testable understanding of the city’s intricate and ancient streets that obviates the need for GPS or paper maps.

These furious with the likes of Uber and Hailo, not just because they pose a massive threat by being more convenient, but because their drivers apparently don’t need to adhere to the same stringent standards. 

UK regulators have "admitted the law in this area was somewhat woolly, and said it wanted High Court judges to clear things up," Gigom says. 

The cabbies aren’t impressed and told the BBC they’d be launching a case of their own.  

Throwback Thursday: Statharos v. New York City Taxi & Limousine Comm’n

The 1999 case, Statharos v. New York CityTaxi & Limousine Comm’n, 198 F.3d 317 (2d Cir. 1999), is perhaps the high water mark for TLC regulations of the taxi industry and the the court's deference to that regulation.  

The Statharos case came in the wake of the Giuliani-era New York City Taxi and Limousine Commission's enactment of a new raft of litigation. Perhaps most important were the so-called "Critical Driver" and "Persistent Violator" rule, both of which allowed the TLC to suspend or revoke cabdriver licenses when the driver accumulated just six or ten DMV or TLC "points" on their licenses. But the regulations also required far more record-keeping and reporting requirements by taxicab and medallion owners. 

The lawsuit was by several small, closely-held corporations, each of which owned two taxi medallions who sought a preliminary injunction barring enforcement of financial disclosure requirements set forth in the regulation. Judge John Martin denied the application, and shareholders appealed. The Court of Appeals Circuit Judge, held that: (1) Commission did not impermissibly arrogate powers properly belonging to legislature in promulgating regulation, and (2) regulation did not violate shareholders' constitutional right to privacy.

The plaintiffs argued that the TLC acted in excess of its legal authority in promulgating financial disclosure rule and that in that it impermissibly arrogated powers properly belonging to the legislature. The Court of Appeals rejected that arguments, relying   on recent decisions by state courts that the City Charter delegated to the TLC a “broad grant of authority ... to promulgate and implement a pervasive regulatory program for the taxicab industry, including ... requirements for the maintenance of financial security.” 

The extent of the TLC's authority to regulate the industry and the actions of taxi drivers and taxi owners would be a persistent theme in the years to come, including recently in litigation about the Taxi of Tomorrow, the healthcare fund for taxi drivers and the TLC policy of suspending or revoking taxi drivers for off duty arrests or crimes. In these later cases, courts tended to take a more critical view of the authority allowed to an unelected board of unpaid advisors.