NYC Judge: Taxis Must Compete With Uber, No Matter The Medallion Industry

from the bravo dept

If violence is the last refuge of the incompetent, as Issac Asimov’s delightful line in Foundation tells us, then perhaps desperate lawsuits are the last refuge of the disrupted industry. There is simply no better example of this than the many groups affiliated with many city’s taxi services and their many lawsuits against Uber. We’ve seen this dance play out in the past, with the disrupted industry flailing away in court, attempting to get the government and/or the law to protect its own business interests rather than competing with a disruptive newcomer. It almost never ends well for the old guard.

But it isn’t just taxi companies themselves who have attempted to get into this mix against Uber. Take a case brought in Queens, for instance, in which Melrose Credit Union joined others in an effort to force Mayor de Blasio and New York’s Taxi Commission to ground Uber on its behalf. Melrose Credit Union has most of its loan portfolio tied into medallion purchases, lending money to taxi companies in order that they could pay the once-expensive medallions. The problem, obviously, has been that taxis aren’t making as much money as they used to because Uber is displacing them. As a result, taxi companies and drivers can’t make enough to pay back the loans, the loans are defaulting, and Melrose Credit Union is freaking the hell out. They told as much to Queens Supreme Court Justice Alan Weiss. Weiss, as it turns out, was less than impressed.

“Any expectation that the medallion would function as a shield against the rapid technological advances of the modern world would not have been reasonable,” he wrote. “In this day and age, even with public utilities, investors must always be wary of new forms of competition arising from technological developments.”

In other words: compete or die. And those really are the options, no matter what other legal actions might be taken or verdicts rendered. The fact is that the progress of technology will indeed march on and will create more efficient ways of performing within any given industry. Attempting to stem that flow with trumped up legal actions and proclamations of the industry’s destruction would only work in the short-term, if at all. In this case, the court ruled that de Blasio and the Taxi Commission aren’t required to keep Uber drivers from picking up customers. And why should they be? If the public wants the service, Melrose Credit Union would deny them that service on the argument that it will lose money? Judge Weiss wasn’t having that.

Judge Weiss made clear that that’s not his concern. “It is not the court’s function to adjust the competing political and economic interests disturbed by the introduction of Uber-type apps,” he wrote.

Indeed it isn’t, nor is it the court’s function to countermand the Taxi Commission’s stance that Uber rides are pre-planned rides, instead of hailed fares off the street, and therefore don’t require a medallion. If medallions become less valuable, that’s a problem for the medallion money-men to endure, not the public.

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Companies: melrose credit union, uber

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Comments on “NYC Judge: Taxis Must Compete With Uber, No Matter The Medallion Industry”

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50 Comments
Anonymous Coward says:

I’m just amazed the Taxi Commission isn’t acting as the taxi industry’s government mouthpiece. So often the regulatory bodies end up serving the industry they are supposed to be watching against the public.

I wonder, where do limo drivers, shuttle buses, and cars-for-hire fall into all of this. They are exempt from medallions, right? So are they friends of Uber or do they also hate the competition?

Bamboo Harvester (profile) says:

Re: Re:

“where do limo drivers, shuttle buses, and cars-for-hire fall into all of this?”

Limo drivers in NY need a Class E license, same as a Taxi driver. Shuttle buses are fixed-route, cars for hire (limo or anything under 16 passengers) require Livery plates and the driver must have a Class E.

In NY, anyway.

TimothyAWiseman (profile) says:

Re: Re: Re: Re:

As weird as it may sound, that does happen, especially around airports.

If I may indulge in an anecdote, I was once travelling with a medium sized group on company business. We found it was cheaper to hire a limo that could hold us all than take two taxis. We found this because there were limos there waiting to be hailed and one of the limo drivers approached us to offer his services.

Anonymous Coward says:

You can prove or disprove anything by NYC, it's too tangled to be rational. However, a more rational city has BANNED Uber:

“The biggest city in Brazil and in Latin America has just banned Uber”
http://xrepublic.tv/node/71929

Just for the record, I agree the judge is right that’s not to be decided there; however, as same mode of people-carrier “Uber” employees / vehicles should be regulated otherwise just like taxis, except prevented from picking up when hailed.

Now, note that yet again, Techdirt is cheering JUST “Uber”, not a mention of other corporations with same service.

And why is Uber valued at tens of billions in the stock market? Its service should cost about a quarter! Do you know how cheap it is to put up a web-site? Ebay does more for similar fees.


Geigner appears to be flooding Techdirt to re-build… whatever truthiness he had before yesterday’s mega-flop.

Dark Helmet (profile) says:

Re: You can prove or disprove anything by NYC, it's too tangled to be rational. However, a more rational city has BANNED Uber:

“Geigner appears to be flooding Techdirt to re-build… whatever truthiness he had before yesterday’s mega-flop.”

Mega-Flop sounds like a wonderful nickname for a certain body part of mine, so thank you!

shill says:

Re: You can prove or disprove anything by NYC, it's too tangled to be rational. However, a more rational city has BANNED Uber:

“Now, note that yet again, Techdirt is cheering JUST “Uber”, not a mention of other corporations with same service.”

Ahh, so now techdirt went from being a Google shill to being an Uber shill, right? You dropped your shilling contract with Google, which is why you have been so critical of them lately, and you started a new shilling contract with Uber because they are offering more. Always going to the highest bidder.

/Shill

“Its service should cost about a quarter!”

Why should laws be based on ensuring a minimum cost to a service? I think this shows your hatred for Uber. You don’t care about safety or employee welfare (and do you have anything citing the employee benefits and labor laws taxi-cab drivers get and benefit from or extra vehicle regulations their vehicles must adhere to that regular and Uber vehicles don’t adhere to), you only care about making Uber less competitive compared to the status quo.

I’m all for ensuring that Uber drivers face similar regulations as tax-cab drivers provided that the medallion system is abolished completely. The problem isn’t about employee and safety standards that I’m concerned about. The issue is that a very limited, expensive, medallion is given to a very small select group of people that gives them special privileges over anyone else that have absolutely nothing to do with safety or employee welfare. Yes, let anyone be required to pass a safety test to become a taxi or Uber or whatever driver. Let them be required to pass a vehicle inspection test. Let them be able to have a special license including a business and safety license. Pass labor laws for those that are employees. But let anyone, including independents, have the same opportunity to enter the market without any limited licenses such as medallions. No more limited licenses. That garbage needs to end.

and I really don’t see anything wrong with an app that provides the service of connecting independent, non-employee, drivers with people who need a ride. Now whether or not Uber falls in that category is debatable but I would argue that it shouldn’t. You’re not required to work a fixed schedule or to work when they call you or to work a minimum number of hours in a given period of time. You just go at your convenience at a location that’s convenient enough for you for the pay at the time. You go as often or seldom as you like. No one is pressuring you to work a specific shift, it’s at your complete discretion.

Anonymous Coward says:

Re: Re: You can prove or disprove anything by NYC, it's too tangled to be rational. However, a more rational city has BANNED Uber:

and I think this is a very important key question to determining if Uber drivers are independent or are employees. Are you required or encouraged to work a minimum number of hours to maintain your job. What about taxi-cab companies. Are their drivers treated like employees with all the benefits that go along with it? Are they encouraged to work a minimum number of hours or can they just, at will, take vacations whenever they want and come back whenever they want without having to call someone else to cover their shift and get a substitute or whatever. How does that work?

Anonymous Coward says:

Re: Re: Re: You can prove or disprove anything by NYC, it's too tangled to be rational. However, a more rational city has BANNED Uber:

(and every time someone says that Uber drivers should be treated like employees, Uber should be regulated like a normal taxi-service or faced with the same burdens, and I ask well does anyone have citations showing how taxi employees are treated and what additional safety regulations a regular taxi-cab must endure no one seems to ever have an answer. Not saying there is no answer but such is relevant to this discussion).

Anonymous Coward says:

Re: Re: Re:2 You can prove or disprove anything by NYC, it's too tangled to be rational. However, a more rational city has BANNED Uber:

…someone says that Uber drivers should be treated like employees, Uber should be regulated like a normal taxi-service…does anyone have citations showing how taxi employees are treated…

There is NO uniform treatment in the US. Some states and localities do require taxi drivers be treated as employees while others do not. The tests to determine employee vs contractor are the same that Labor & IRS use. Uber is already running afoul of such tests in at least two jurisdictions that have ruled Uber drivers were employees.

RD says:

Re: You can prove or disprove anything by NYC, it's too tangled to be rational. However, a more rational city has BANNED Uber:

“And why is Uber valued at tens of billions in the stock market? Its service should cost about a quarter! Do you know how cheap it is to put up a web-site? Ebay does more for similar fees.”

So let me get this straight. A service that helps someone get somewhere, one that requires real-world physical materials to perform (car, gas, drivers time) should cost pennies because it’s “cheap to put up a website”, but movies and music, which are entertainment and not “useful” in any other sense, MUST, by dint of LAW, cost many tens of dollars for every single instance it is experienced or else someone is “stealing” from someone. Do I have that about right?

Do you realize – at all – how patently ridiculous your priorities seem to everyone else in the world?

Mike Masnick (profile) says:

Re: Re:

These credit unions are worried because they hold $2.5 billion in loans for these medallions. Leave it to techdirt to not do its research and leave out the motivating factors as to why the credit unions are fighting Uber.

You do realize that the second paragraph address this point exactly. Leave it to the angry commenter not to read beyond the first paragraph, huh?

Anonymous Coward says:

Re: Re: Re:

This guy is so dense it’s like he doesn’t even realize the audacity of his statement. It’s essentially an admission that he doesn’t care at all about the public interest and only cares about the private interests of those that benefit from these medallions. But I thought these medallions are supposed to be about the public interest. Why is the government supposed to pass laws granting special medallion privileges based on the private interests of some credit unions with no regard for the public interest. No, the government’s decisions should be based only on the public interest. Whether or not these special medallion privileges benefit the medallion holders should be of absolutely no regard to the government because the government shouldn’t pass special medallion privileges based on whether or not the recipients of those privileges benefit. This is supposed to be a government for the people not for the credit unions.

and I think this is the true reason Uber is hated among the shills here. It has nothing to do with employee benefits or safety standards or equality with taxi-cab drivers. It’s that Uber competes with an undemocratically passed, publicly harmful, limit on competition that a small hand full of entities have managed to subvert the democratic process to obtain through politician buying. Uber creates equality, by letting more people equally enter a market, in a market where corruption has previously wrongfully bought inequality and the shills want their wrongfully bought inequality back.

Anonymous Coward says:

Re: Re:

“These credit unions are worried because they hold $2.5 billion in loans for these medallions. “

The government is supposed to be concerned with the public interest and not the private interests of some multi-billion dollar credit unions. That you care so much more about the multi-billion dollar credit unions over the public interest is proof of who you are really shilling for.

streetlight (profile) says:

How's the typewriter business doing?

In almost every area when new methods or technology is better than older ways of doing things the older methods suffer and sometimes disappear. There are too many situations like this to mention here but readers of these threads know of many examples. Evolve or go away.

Oh. Didn’t I read that the Russians have re-instituted the use of typewriters in areas needing high security to avoid capture of information through Internet hacking?

Anonymous Anonymous Coward says:

Market Disruption

Is it possible that such disruption is ignored in business planning because it doesn’t have a sexy enough name? I mean, I have been hearing about it for decades but all those MBA’s out there seem to ignore the possibility and steam full speed ahead into supporting industries or products that are vulnerable.

Now I understand that there may be some difficulty in foreseeing or possibly even recognizing potentially disruptive technology coming down the pike, but why do the MBA’s leave themselves vulnerable to the possibility? In this case, the ones that work for that credit union who over-positioned themselves with regard to funding medallion acquisitions.

I don’t have an idea at the moment, but with disruption happening at an ever increasing rate one would think that there would be strategies in place to hedge bets made in every business plan. Maybe a sexier name for disruption would make it more status quo. Maybe there is another solution, but disruption isn’t going away.

Anonymous Coward says:

Here's another "ride-sharing service" chiseling the public:

“The investigation into Lyft showed that while its terms of service state that a consumer may opt out of receiving autodialed and/or prerecorded telemarketing texts and calls by using ‘provided unsubscribe options,’ the company does not, in fact, provide unsubscribe options or any information or links that would allow consumers to easily opt out of receiving such calls and texts,” the FCC said. “If consumers, through navigating the company’s website, are able to locate the opt-out page and manage to opt out of such calls and texts, they are not able to use Lyft’s services unless they opt back into receiving such calls and texts.”

Anonymous Coward says:

I’m a New Yorker who has paid for overpriced taxis for years. The taxi industry is easily disrupted because they did not depend on a business model of wealth creation but rather one of “rent seeking” political influence to artificially limit supply creating a market inefficiency. The credit unions mentioned simply made profits by enabling ever increasing prices of medallions which were a result of the “rent seeking.”

We should always be encouraging business models that are based on wealth creation and market efficiencies and attempting to undermine any business models that are based on political influence.

Uber has simply provided a business model that helps to disrupt a market inefficiency. What can be wrong with disrupting market inefficiencies?

It is wrong that taxis are lying idle and the “fix” is for the NY Taxi Commission to lower the regulated rates of using a taxi to be comparable to rates in Chicago, Philly, Wash DC, LA, etc.

SteveMB (profile) says:

This is one of those situations that evokes an observation from Robert Heinlein’s first published story (“Life-Line”, in which the insurance industry freaks out about a device that predicts how long someone will live):

There has grown in the minds of certain groups in this country the idea that just because a man or corporation has made a profit out of the public for a number of years, the government and the courts are charged with guaranteeing such a profit in the future, even in the face of changing circumstances and contrary to public interest. This strange doctrine is supported by neither statute or common law. Neither corporations or individuals have the right to come into court and ask that the clock of history be stopped, or turned back.

Dan Nietzsche says:

Ponzi Scheme

“it the court’s function to countermand the Taxi Commission’s stance that Uber rides are pre-planned rides, instead of hailed fares off the street, and therefore don’t require a medallion. If medallions become less valuable, that’s a problem for the medallion money-men to endure, not the public”.

Of course it the court’s function to countermand the TLC stance that Uber rides are pre-planned rides, instead of hailed fares off the street.
TLC stance vis-a-vis UBER e-hails it is already known and on the record: “e-hails is just that; hails”
There is nothing for the court to countermand the TLC.
City sold to the public, 1,400 taxi medallions, between 2006 – 2014 generating to City’s koffers about $ 850 million in revenues. At about $ 900,000, each, these medallions were sold packaged with an exclusivity right to HAIL expressly guaranteed by NYS as well as NYC laws for eighty years. It is this exclusivity right to HAIL that anchors the values of every medallion. THIS IS A PONZI SCHEME run by the City and it should be investigate by FBI.
I smell a Madoff here !

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