March 30, 2017 / 9:57 PM / a year ago

New York defeats taxi owners, lenders in lawsuit over rules, Uber

March 30 (Reuters) - A federal judge on Thursday dismissed a lawsuit by taxi owners and lenders accusing New York City and its Taxi and Limousine Commission of jeopardizing their survival by imposing burdensome regulations and letting the Uber ride-sharing service take passengers away.

U.S. District Judge Alison Nathan in Manhattan said credit unions, medallion owners and trade groups failed to show they were denied due process or equal protection by having to obey rules on fares, who they can pick up, vehicle equipment, and access for disabled people that Uber drivers need not follow.

While the city's ground transportation industry "may well, as plaintiffs allege, be rapidly evolving," the differences in how yellow cabs and ride-sharing services attract and serve passengers, including whether rides are hailed on the street or by smartphone, "easily justify" such distinctions, Nathan wrote.

The growth of services such as Uber and Lyft in New York City has caused the value of a medallion, essentially the right to operate a yellow cab, to fall by more than half from its $1.3 million peak in 2014, according to recent sale listings.

That has left some lenders facing increases in delinquencies from drivers who owe more than their medallions are worth, at the same time they risk losing additional market share.

"Make no mistake about it - we fully expect the fight on behalf of the New York City taxicab industry to continue in state and federal court for as long as it takes," Todd Higgins, a lawyer for the plaintiffs, said in an email after Nathan issued her 33-page decision.

A spokesman for the city's law department, which represented the defendants, had no immediate comment.

Among the plaintiffs were the Melrose, Progressive and Lomto Federal credit unions, which said they had made more than 4,600 medallion loans worth over $2.4 billion.

Two of the other plaintiffs were the League of Mutual Taxi Owners and the Taxi Medallion Owner Driver Association, which together represent about 4,000 medallion owners.

Nathan said the city had a rational basis to treat yellow cabs differently, citing needs to promote safety, convenience and fare uniformity given that only those cabs could pick up passengers off the street.

She also called it premature to call the alleged deprivation of yellow cabs' "right to hail exclusivity" an unconstitutional "taking" without just compensation, saying the plaintiffs could seek some redress through a state administrative proceeding.

The case is Melrose Credit Union et al v City of New York et al, U.S. District Court, Southern District of New York, No. 15-09042. (Reporting by Jonathan Stempel in New York; Editing by Tom Brown)

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