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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  • icon
    Ninja (profile), 11 Sep 2015 @ 11:49am

    Epic win for the people and for innovation. Instead of fighting against Uber they should be working WITH the company to integrate current cabs to the system while offering better service. Hopefully this will resonate elsewhere and break old monopolies.

    reply to this | link to this | view in chronology ]

    • identicon
      Wendy Cockcroft, 15 Sep 2015 @ 5:30am

      Re:

      This actually happens in Britain, where many of the "minicabs" (book in advance only) have UBER stickers on their vehicles. I'm not sure what the hail-and-ride black cabs are doing since I rarely use them.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 11 Sep 2015 @ 11:53am

    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?

    reply to this | link to this | view in chronology ]

    • icon
      Bamboo Harvester (profile), 11 Sep 2015 @ 12:11pm

      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.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 11 Sep 2015 @ 12:27pm

        Re: Re:

        Aren't limo rides "pre-planned" too? I can't imagine many people hailing a limo ride off the street.

        reply to this | link to this | view in chronology ]

        • icon
          TimothyAWiseman (profile), 14 Sep 2015 @ 9:12am

          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.

          reply to this | link to this | view in chronology ]

  • identicon
    Baron von Robber, 11 Sep 2015 @ 11:54am

    Dear Judge Weiss,

    Let me tell you a story about some cable companies....

    reply to this | link to this | view in chronology ]

  • identicon
    JustShutUpAndObey, 11 Sep 2015 @ 12:01pm

    Compete or Die

    The expectation that the status quo will continue indefinitely is unreasonable.
    Any investor's failure to understand that the risk of innovative disruption EXISTS marks them as incompetent as an investor or financier.

    reply to this | link to this | view in chronology ]

  • icon
    DB (profile), 11 Sep 2015 @ 12:20pm

    Million dollar purchases of taxi medallions should have been seen as proof positive of a flawed regulatory system.

    Not as a reason to continue it.

    reply to this | link to this | view in chronology ]

  • This comment has been flagged by the community. Click here to show it
    identicon
    Anonymous Coward, 11 Sep 2015 @ 12:23pm

    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.

    reply to this | link to this | view in chronology ]

    • icon
      Dark Helmet (profile), 11 Sep 2015 @ 12:26pm

      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!

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 11 Sep 2015 @ 4:53pm

        he's talking bout his cock

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


        The one you can't get up?

        reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 11 Sep 2015 @ 1:23pm

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

      Thank you, expert businessman! Where is your billion dollar website that costs nothing?

      reply to this | link to this | view in chronology ]

    • identicon
      shill, 11 Sep 2015 @ 1:39pm

      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.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 11 Sep 2015 @ 1:43pm

        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?

        reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 11 Sep 2015 @ 1:46pm

          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).

          reply to this | link to this | view in chronology ]

          • identicon
            Anonymous Coward, 11 Sep 2015 @ 2:31pm

            Re: 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:

            ...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.

            reply to this | link to this | view in chronology ]

            • identicon
              Anonymous Coward, 11 Sep 2015 @ 2:40pm

              Re: Re: 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 I think that's another issue. The people that want to impose all this stuff onto Uber want to impose burdens that many normal taxicabs don't face.

              reply to this | link to this | view in chronology ]

    • identicon
      RD, 11 Sep 2015 @ 5:20pm

      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*?

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 14 Sep 2015 @ 5:31am

      Re:

      out_of_the_blue just hates it when due process is enforced.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 11 Sep 2015 @ 12:39pm

    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.

    reply to this | link to this | view in chronology ]

    • icon
      Dark Helmet (profile), 11 Sep 2015 @ 12:43pm

      Re:

      ....are you daft? That was the entire point of the post....

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 11 Sep 2015 @ 1:06pm

      Re:

      Judge Weiss made clear that that’s not his concern.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 11 Sep 2015 @ 1:14pm

      Re:

      Maybe this so called "Credit Union" should re-take Investments 101 and learn that one must have a Diversified Porfolio inorder to not end up in such situations.

      reply to this | link to this | view in chronology ]

    • icon
      Mike Masnick (profile), 11 Sep 2015 @ 1:18pm

      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?

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 11 Sep 2015 @ 2:31pm

        Re: Re:

        Such an optimist! A whole paragraph?

        reply to this | link to this | view in chronology ]

        • identicon
          cpt kangarooski, 11 Sep 2015 @ 3:05pm

          Re: Re: Re:

          Yeah, I figure he stops reading right about h

          reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 11 Sep 2015 @ 4:24pm

          Re: Re: Re:

          The shills have a very short attention span and seem to skip everything past the first sentence. We'll often be lucky if they even read the first sentence. Proof?

          Anonymous Coward, Sep 11th, 2015 @ 12:39pm

          He obviously didn't read the article.

          reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 11 Sep 2015 @ 4:39pm

        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.

        reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 12 Sep 2015 @ 9:07am

          Re: Re: Re:

          That is the shills hate Uber because it interferes with the private welfare of those that benefit from these exclusive medallions and his post is an admission to this. The hatred they have for Uber has absolutely nothing to do with the public benefit or the benefit of Uber employees.

          reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 11 Sep 2015 @ 2:39pm

      Re:

      Yeah so? It's not the government's job to protect your investment. Otherwise I want the government to protect me if I lose money in the stock market. Sorry, it doesn't work that way. You don't get a government that protects your business model.

      reply to this | link to this | view in chronology ]

      • icon
        Atkray (profile), 11 Sep 2015 @ 4:04pm

        Re: Re:

        "Yeah so? It's not the government's job to protect your investment. Otherwise I want the government to protect me if I lose money in the stock market. Sorry, it doesn't work that way. You don't get a government that protects your business model unless you are a member of the MAFIAA"

        ftfy

        reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 11 Sep 2015 @ 4:26pm

      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.

      reply to this | link to this | view in chronology ]

    • identicon
      RD, 11 Sep 2015 @ 5:13pm

      Re:

      Reported, because: seriously? Are you trolls even trying anymore? You *clearly* read the topic line then fired off this absurd screed because "get Mike! get Mike!" at all costs, even when the *entire body* of the article disproves what you are saying.

      Sheesh, don't even bother to hide your shilling or anything.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 12 Sep 2015 @ 8:41am

      Re:

      ?? I thought the entire article was pointing that out...

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 14 Sep 2015 @ 5:32am

      Re:

      Seriously, Whatever, if you're going to spam your usual troll bullshit why bother bitching about your account?

      reply to this | link to this | view in chronology ]

  • icon
    streetlight (profile), 11 Sep 2015 @ 12:42pm

    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?

    reply to this | link to this | view in chronology ]

    • icon
      Oblate (profile), 11 Sep 2015 @ 12:52pm

      Re: How's the typewriter business doing?

      "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?"


      Yes, and those who fail to comply get hit with a buggy whip.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Anonymous Coward, 11 Sep 2015 @ 1:20pm

    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.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 11 Sep 2015 @ 2:07pm

    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."

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 11 Sep 2015 @ 3:34pm

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

      Well that helps explain why Uber is doing so much better than Lyft. However, it doesn't have any effect on whether the courts should intervene to protect legacy industries that make bad investments from the march of technology.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 11 Sep 2015 @ 2:42pm

    Thank you, Justice! You are really great and one of the very few in this country to understand the capitalist system we are born with.

    Can you please tell your peers that they should also be mindful of the wave of technological changes surrounding other monopolies and be brave in saying what you said.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 12 Sep 2015 @ 11:57am

    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.

    reply to this | link to this | view in chronology ]

  • icon
    SteveMB (profile), 13 Sep 2015 @ 6:05am

    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.

    reply to this | link to this | view in chronology ]

  • identicon
    Dan Nietzsche, 13 Sep 2015 @ 6:42pm

    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 !

    reply to this | link to this | view in chronology ]

  • identicon
    Mike, 12 Nov 2015 @ 1:22pm

    Uber is breaking laws followed by thousands of taxi drivers worldwide.

    Uber is also evading taxes.

    To those who claim that "innovation" justifies everything, read history - TAXI APPS existed years before Uber.

    reply to this | link to this | view in chronology ]

  • identicon
    E H A, 9 Mar 2016 @ 7:25pm

    Taxi Service

    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!!

    reply to this | link to this | view in chronology ]

  • identicon
    Haris, 10 Jun 2016 @ 3:31am

    comment

    I think this is a very important key question to determining if Uber drivers are independent or are employees.

    reply to this | link to this | view in chronology ]


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