A Manhattan judge has dismissed Uber Technologies Inc’s lawsuit challenging a New York City law limiting the number of licenses for ride-hailing services, the first such cap by a major American city. New York State Supreme Court Justice Lyle Frank rejected Uber’s argument that the city wrongly gave its Taxi and Limousine Commission power to enforce the cap.
Frank was also unconvinced that the cap, part of Local Law 147, would impede state efforts to reduce traffic congestion through “congestion pricing” on vehicles entering high-traffic areas of Manhattan. The August 2018 law was meant to give New York City greater oversight of ride-hailing companies such as Uber and Lyft Inc. It includes a one-year freeze on new licenses to for-hire vehicles, which was later extended through August 2020.
The law, which the City Council passed, required the Taxi and Limousine Commission (TLC) to conduct a one-year study on the possibility of regulating the number of for-hire vehicle licenses and to stop issuing new for-hire vehicle licenses for that year. The study, which was released in June, found that reductions on FHV-related traffic could “meaningfully impact overall traffic conditions.” The one-year cap was then extended this past summer.
Uber’s lawsuit argued, among other things, that the city exceeded its authority in enacting the law because the state allows the city to cap taxis but not app-based or other for-hire vehicles. But Judge Lyle E. Frank said in his decision to toss the lawsuit that the City Council acted within its rights when it allowed TLC to adjust the number of for-hire vehicle licenses.
Bill Heinzen, acting TLC commissioner, said in a statement “We are grateful the court has again recognized the TLC’s power to address the problems that companies like Uber have created by flooding the streets of NYC. Drivers are bringing home an additional $750 a month on average because we fought back against their tactics, and the Mayor and TLC will continue to fight for less congestion and better pay for drivers.”
The legislation also allows New York City to set a minimum wage for drivers with Uber, Lyft and other ride-hailing services. The case is separate from Uber’s Sept. 20 challenge to a New York City “cruising cap” rule limiting how much time its drivers could spend without passengers in Manhattan south of 96th Street.
Uber has drawn criticism from many cities that its vehicles increase congestion, and commandeer business from taxis. The value of medallions, which are permits needed to operate yellow taxis in New York City and are distinct from ride-hailing licenses, has plunged as Uber and Lyft gained popularity. Taxi workers have long supported measures like the cap on for-hire vehicles to reduce the amount of vehicles driving around the city, as they face crippling amounts of debt due to a dramatic decrease in the value of medallions.