Association Boosts Legal Fight Over NYC Taxi Medallions

New York City taxi medallions have severely declined in value as a result of the rise in app-based ride-hailing alternatives. An association that represents medallion owners is appealing to the courts, claiming unfair competition.

The taxi medallion, once one of the most valuable investments a New York City resident could make, is in the middle of a long decline brought on by the rise of Uber and Lyft.

But one local association isn’t ready to give up on them without a fight.

The 1,500-member Taxi Medallion Owner Driver Association (TMODA) has gone to court to protect the value of the city’s 13,587 medallions, which are designed to limit the number of cabs on the streets of the nation’s largest city.

At their peak, medallions cost as much as $1.3 million each but now have a value of as little as $150,000, according to The New York Times. Meanwhile, taxi revenue is down significantly as a result of app-based services, making it hard for some taxi operators to cover payments on loans they took out to purchase medallions. Many are facing foreclosure proceedings.

Earlier this year, TMODA filed suit against the city and its taxi commission, claiming that its regulatory framework denies taxi drivers due process and equal protection because Uber and Lyft drivers are not required to comply with the same regulations as cab operators.  A judge dismissed that suit in March, saying differences in how the services operate justify the differences in the rules.

In May, the association filed a new lawsuit, with two drivers as plaintiffs. “They have created totally unfair competition,” Nino Hervias, one of the plaintiffs, told the New York Daily News. “We are competing with somebody else to do what we do, with no [medallion].”

Hervias says the $3,000-per-month cost of covering the medallion bill has forced him to stay on the road much longer than he would have otherwise.

TMODA has also asked the state for a moratorium on medallion foreclosures. “Here, in an environment where the legitimate interests of taxi medallion owners has been undermined by the callous disregard of elected officials, your intervention is needed in order to restore fairness,” TMODA President Sohan Gill wrote in a letter to Gov. Andrew Cuomo, according to Crain’s New York Business.

In comments to the Times, Hervias said the legal battle is about protection of owners’ rights, not technology. “We are not against competition, we are not against technology, but we want to compete fair and square,” he said.

New York City isn’t the only city to face a medallion crisis. In July, cab drivers in Chicago publicly protested increasing medallion foreclosures. Medallion prices in the city have fallen by nearly 90 percent in recent years, from $360,000 to $44,000.

(littleny/iStock Editorial/Getty Images Plus)

Ernie Smith

By Ernie Smith

Ernie Smith is a former senior editor for Associations Now. MORE

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