New York’s plan for a new fleet of cabs from Nissan Motor Co. (7201) was blocked by a judge, who ruled the city’s Taxi and Limousine Commission overstepped its authority by requiring medallion owners to buy a specific vehicle.
Nissan won a contract in May 2011 valued at $1 billion over 10 years to supply the minivans, which feature sliding doors, more luggage space and airbags in the back. The commission in September 2012 designated the Nissan NV200 as the official “Taxi of Tomorrow” and required owners of the medallions that confer the right to operate yellow cabs in New York to buy the $29,700 vehicle starting this month.
Taxi fleet operators sued the city in December seeking to block the requirement, and a judge in May halted the program, saying it violated the administrative code because there was no option for medallion owners to buy a hybrid vehicle. In June, the city revised the rules to let medallion owners buy hybrids until Nissan develops a hybrid version of the NV200.
The fleet operators sued again in July, and State Supreme Court Justice Shlomo S. Hagler in Manhattan blocked the plan in a ruling dated today, saying the commission exceeded its authority under the city charter by requiring the purchase of a specific vehicle.
“If the TLC was vested with the authority to contract for the medallion owners with third party vendors, the TLC may, for instance, also have the authority to mandate the purchase of special insurance from a particular insurance company or even to purchase a more efficient fuel from a designated vendor at pre-determined prices,” Hagler said.
The decision is “fundamentally wrong,” because it was within the commission’s authority to authorize the Taxi of Tomorrow, Michael A. Cardozo, New York corporation counsel, said in a statement. The city intends to appeal immediately, he said.
“Aside from its being by far the safest taxicab ever designed, the NV200 has superior legroom, a panoramic roof and a host of other comforts and amenities,” Taxi and Limousine Commissioner David Yassky said in a statement. “We remain committed to bringing it to the riding public.”
The Taxi of Tomorrow program is a plan by Mayor Michael Bloomberg’s administration to standardize and expand the city’s fleet of 13,237 yellow cabs with 15,237 yellow vans built by Nissan, of which more than 2,000 would be accessible for wheelchairs. The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP.
$1 Billion Revenue
The Nissans, already being made, were to hit the streets Oct. 28. The program was slated to bring in more than $1 billion in revenue to the city.
“We are disappointed in the court’s decision, but it will not prevent our plan to start upgrading the NYC taxi fleet with the Nissan Taxi of Tomorrow at the end of the month,” Travis Parman, a U.S. spokesman for Yokohama, Japan-based Nissan, said in an e-mail. “We are evaluating options for next steps regarding the exclusivity contract.”
The other part of the program is a fleet of green cabs that riders could hail in underserved areas of the city, including northern Manhattan and the boroughs of Brooklyn, Queens, Staten Island and the Bronx. Those cars have been on the streets since August. The fleet, now at 300, will increase to 18,000 over the next three years, 20 percent of which will be accessible to the disabled, according to Allan Fromberg, a spokesman for the Taxi and Limousine Commission
Medallion owners and taxi drivers had different reactions to Hagler’s decision.
“The Taxi and Limousine Commission had overreached in its authority when it maneuvered to approve this outside of the legal city authorization routes,” Ethan Gerber, executive director of the Greater New York Taxi Association, the medallion-owners group that brought the case, said in a statement. The NV200 “was inappropriate for people in need of accessible vehicles and those who are concerned with the environment,” he said.
Bhairavi Desai, executive director of the New York Taxi Workers Alliance, a union for cabbies, said the Taxi of Tomorrow plan lets drivers use their collective purchasing power to cut sales costs and get an “unprecedented” 150,000-mile (240,000-kilometer) warranty.
“Deep pocketed companies bitter that the TLC has finally started enforcing against their lease overcharges against drivers and who profit generously by charging high-interest car loans to drivers filed this suit,” Desai said. “Drivers and passengers lost today.”
The case is Greater New York Taxi Association v. New York City Taxi and Limousine Commission, 101083/2013, New York State Supreme Court, New York County (Manhattan).
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