Cabbies Can’t Sue NYC Over Uber, Lyft Impact On License Values

(Reuters) – New York’s top state court on Thursday threw out claims by yellow cab operators that New York City diminished the value of their taxi licenses by failing to rein in app-based competitors like Uber Technologies Inc and Lyft Inc.

The New York Court of Appeals in a unanimous ruling said the city’s Taxi and Limousine Commission (TLC) never promised yellow cab companies that it would take steps to protect the value of their licenses, which are known as medallions and can cost millions of dollars.

The companies claim the value of medallions they purchased in 2013 for an average of $1.3 million each fell by about 75% over the next few years as app-based services became more popular.

But the Court of Appeals, affirming a lower court, said the TLC was not bound to cap the number of app-based cars that could operate in the city when it sold medallions to cab companies.

A spokesman for the New York City Law Department, which represents the TLC, said his office was pleased with the ruling.

“The Court rightly recognized that plaintiffs had no basis to sue the City, which has otherwise provided substantial debt relief and other support to the small-scale taxi drivers who were affected by the entry of ride-hailing apps into the New York City market,” he said.

Lawyers for the taxi companies did not immediately respond to requests for comment.

The TLC currently caps the number of medallions for yellow cabs, which can pick up passengers on the street in Manhattan, at about 13,500. The agency also regulates “black cars,” including app-based services, which may only give rides that are prearranged.

In their 2017 lawsuit, the companies said the TLC had breached its contracts with medallion owners by failing to cap the number of black cars that could operate in the city.

But the Court of Appeals on Thursday said those contracts did not make any guarantees about the value of taxi medallions.

“Defendants warned plaintiffs … that they were not guaranteeing plaintiffs’ investment or making any promises about the future application of TLC’s rules,” Judge Anthony Cannataro wrote for the court.

The court also dismissed the companies’ claim under a New York law banning deceptive business practices. The law only applies to “consumer-oriented transactions,” which does not include the sale of taxi medallions, the court said.