N.Y. Court Upholds Livery Car Law Allowing Borough Hails

New Yorkers and visitors to the biggest U.S. city will have more choices to flag down a ride outside of Manhattan after the state’s highest court paved the way for vehicles other than yellow cabs to pick up street hails.

New York City’s plan to allow car services to pick up passengers who hail them outside Manhattan was upheld by the Court of Appeals in Albany, which declared the plan constitutional in a ruling issued today.

The decision is a victory for Mayor Michael Bloomberg’s administration, which says it’s trying to improve access to transportation that can be hailed from the street throughout the five boroughs. The administration also won a ruling today allowing cabs to be hailed with smartphone applications.

“We can finally bring safe, reliable taxi service to the four-and-a-half boroughs that don’t currently have it,” Bloomberg said in a statement. “That’s a victory for everyone who lives in, works in or visits New York City. This will also advance our efforts to make taxi service available to people with disabilities, by adding 2,000 wheelchair-accessible yellow cabs to the streets.”

Only yellow cabs are permitted to pick up fares on the street, while car services are legally limited to prearranged dispatched calls. Governor Andrew Cuomo struck a deal with lawmakers in December 2011 for the city to permit car services to pick up passengers who hail them on the street outside Manhattan. The state Legislature passed the law in February 2012. Rules to implement the legislation were approved by the city’s Taxi and Limousine Commission and were to take effect June 4, 2012.

Taxi Groups

Taxi groups sued to block the plan, and state Supreme Court Justice Arthur Engoron ruled Aug. 17 that the plan violates the “home rule” clause of New York’s constitution. That provision grants the state Legislature the power to intervene in the affairs of a local government only when it is requested by that municipality’s legislative body.

The city appealed the ruling to the state’s highest court in Albany, which today reversed Engoron’s ruling, saying the plan isn’t a “purely local issue” and “addresses a matter of substantial state concern.” Millions of people from within and without the state visit the city every year, and some are disabled and would benefit from the increase in accessible vehicles, Judge Eugene Pigott wrote in a unanimous decision.

‘Significant Goals’

“This act is for the benefit of all New Yorkers, and not merely those residing within the city,” Pigott wrote. “Efficient transportation services in the state’s largest city and international center of commerce are important to the entire state. The act plainly furthers all of these significant goals.”

The plan allowed the city to authorize an 18,000-livery car fleet to pick up riders in Manhattan north of East 96th Street and West 110th Street, and in the boroughs of Brooklyn, the Bronx, Queens and Staten Island, where customers can rarely find ordinary yellow cabs.

The plan calls for adding 2,000 yellow taxis to a fleet of about 13,000. The city will auction new medallions, or operating licenses, which command prices of $700,000 to $1 million, that Bloomberg had relied upon to plug a $1 billion hole in his fiscal 2013 budget.

‘A Victory’

The Metropolitan Taxicab Board of Trade, a group of fleet owners, and the Taxicab Service Association, which finances medallion purchases, sued the state and the mayor in April 2012, seeking to have the new law deemed unconstitutional. The Greater New York Taxi Association, a group of medallion owners, also sued the following month.

Medallion owners cited concerns that the added permits would dilute their value. They said the outer-borough fleet would reduce the earning power of yellow cabs by giving the new fleet the market for those street-hailing customers.

The city, state and livery groups argued that the hail law doesn’t require a “home rule message” because it furthers a “substantial” state interest by ensuring access “to reliable and effective transportation to, from and within the city,” according to a case summary. They claimed there is a “lack of access to street-hail service in the outer boroughs and the lack of wheelchair-accessible vehicles available for street hails citywide,” according to the summary.

Today’s ruling is a “crushing blow to New Yorkers who loathe the brand of end-run politics that created this law,” and “kicks open the door for systematic abuses for future executives in cities throughout the state,” the Metropolitan Taxicab Board of Trade said in a statement.

‘An Affront’

“Even the city’s win here is a loss,” the group said. “City Hall and the Taxi and Limousine Commission railroaded and ostracized its regulated industries rather than working together to come up with workable solutions. And it is entirely unclear whether in fact, this plan, will ever actually work in practice.”

Randy M. Mastro, an attorney representing the Taxicab Service Association, said he is disappointed with the ruling. The plan will have “profoundly adverse ramifications” for New York City for decades, he said.

‘Isn’t Over’

“The state Legislature has permitted this program to proceed, if at all, only in stages over time,” Mastro said. “There are still many legal issues that will arise along the way, so this isn’t over. The Bloomberg administration has overreached here, to the detriment of the city’s taxi industry, the riding public and future administrations.”

The mayor is the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News.

Bloomberg’s administration also won a state court ruling today allowing a pilot program to move forward that lets riders hail a yellow cab using smartphone applications.

The measure adopted by the Taxi and Limousine Commission in December would run for 12 months and exempt areas such as airports that have provisions for taxi lines. While all licensed city cab drivers would be eligible, participation would be optional.

The Livery Roundtable, Black Car Assistance Corp. and several car-service firms sued the TLC in February, claiming the program violates city codes and may let drivers discriminate against racial minorities based on their names or locations, as well as the elderly, who are less likely to own smartphones.

Emergency Injunction

Supreme Court Justice Carol E. Huff in April dismissed the lawsuit and lifted an earlier order blocking the program. Associate Justice Helen E. Freedman of the Appellate Division in Manhattan issued an emergency injunction blocking the pilot from moving forward the next week. Freedman’s court vacated the emergency injunction in an order dated today, allowing the program to proceed while an appeal is pending.

South of Manhattan’s 59th Street, the smartphone program would be restricted to pickups within a half-mile (0.8 kilometer) range, according to Huff’s decision. Elsewhere in the city, the range would extend to 1 1/2 miles. Smartphone application providers would be subject to Taxi and Limousine Commission approval.

The cases are Metropolitan Taxicab Board of Trade v. Michael R. Bloomberg, 102472/2012; Taxicab Service Association v. the State of New York, 102553/2012; and Greater New York Taxi Association v. the State of New York, 102783/2012, New York state Supreme Court (Manhattan).

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