SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - BLACK CAR ASSISTANCE CORPORATION, THE LIVERY ROUND TABLE, INC., DIAL 7 CAR & LIMOUSINE SERVICE, INC., DIAL CAR, INC., ELITE LIMOUSINE PLUS, INC., FAST OPERATING CORP. DBA CARMEL CAR AND LIMOUSINE SERVICE, INTA-BORO ACRES, INC., LOVE CORPORATE CAR INC., ROYAL DISPATCH SERVICES, INC., VITAL TRANSPORTATION, INC., ARTHUR HARRIS, and ALEXANDER REYF. Petitioners,

- against -

THE CITY OF NEW YORK; MICHAEL R. BLOOMBERG, in his official capacity as Mayor of New York City; the NEW YORK CITY TAXI & LIMOUSINE COMMISSION, a charter-mandated agency; and DAVID YASSKY, in his official capacity as Chairman and Commissioner of the New York City Taxi & Limousine Commission, Respondents. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

x :::::::::::::::: :::::::x

Index No.

IAS Part

Justice VERIFIED PETITION

Petitioners Black Car Assistance Corporation, The Livery Roundtable, Dial 7 Car &

Limousine Service Inc., Dial Car, Inc., Elite Limousine Plus, Inc., Fast Operating Corp. dba

Carmel Car and Limousine Service, Inta-Boro Acres, Inc., Love Corporate Car Inc., Royal

Dispatch Services, Inc., Vital Transportation, Inc., Arthur Harris, and Alexander Reyf, by and

through their attorneys, Gibson, Dunn & Crutcher LLP, as and for their Verified Petition, allege

as follows:

2

NATURE OF THE PROCEEDING

1. This case concerns the New York City Taxi & Limousine Commission (“TLC”)

once again overstepping the bounds of its limited regulatory authority in an effort to remake New

York City’s private for-hire vehicle industry, even when its policy whims cannot be squared with

the City Charter, the Administrative Code, proper procedure, and other governing law. In the

latest example of its “legislation-by-fiat” hubris, the TLC, having first failed to garner enough

Commissioners’ votes to enact a permanent rule change, then arbitrarily and capriciously

rammed through—without any public notice or opportunity for public comment—an even more

problematic program, but just as sweeping, in substance and scope, in the guise of a so-called “e-

hail” pilot program (the “E-Hail Program” or the “Program”) that permits medallion taxicabs

(“taxis” or “cabs”) for the first time ever to accept or reject requests for rides from potential

passengers through in-car “smartphone” applications (or “e-hails”). In authorizing medallion

taxi drivers “not” to “accept” ride requests (either “through active or passive action”), among

other shortcomings, the Program sharply conflicts with, and wholly undermines, the careful

regulatory structure imposed by the City Council to protect prospective passengers from

discriminatory ride refusals on the basis of race and destination. See N.Y.C. Admin. Code § 19-

507(a)(2) (prohibiting taxi drivers from refusing, “without justifiable grounds, to take any

passenger or prospective passenger to any destination within the city”).

2. The E-Hail Program also runs roughshod over the express, codified will of the City

Council in that it authorizes the use of smartphone applications to electronically connect taxi

drivers and passengers—who are separated by as many as 1.5 miles—without requiring

compliance with statutory licensure requirements that the City Council has imposed for

communications systems used for dispatching. And it fundamentally overhauls the City’s long-

3

standing transportation policy that has drawn a clear, bright-line between medallion taxis

exclusively authorized to pick up “street hails,” on the one hand, and for-hire black cars and

liveries authorized to make pick-ups by appointment or dispatch, on the other hand. The TLC

simply does not have the authority, unilaterally and without prior public notice, to effect such

fundamental changes in the City’s for-hire vehicle system without the approval of the City

Council. N.Y.C. Admin. Code § 19-503(b).

3. Indeed, less than two years ago, when considering the very issues that Petitioners

now raise in this lawsuit, the TLC itself concluded—consistent with the Administrative Code—

that taxi drivers are “NOT permitted to use smartphone apps for dispatch.” In addition, the E-

Hail Program purports to “exempt” drivers who use an authorized e-hail application from a

critical TLC safety rule, which—under the heading “Passenger and Driver Safety”—forbids a

taxi driver from using “any function of an Electronic Communication Device in any way” while

“operating a Vehicle.” Now, however, anxious to push through this far-reaching program while

still in office, under the guise of a sweeskirtping, year-long “pilot” program that is anything but a

“pilot,” TLC Chair David Yassky has flouted applicable legal and statutory standards,

exacerbated discrimination concerns, jeopardized public safety, and violated the rights of

Petitioners in several immediate and irreparable respects.

4. This Court should strike down the E-Hail Program and enjoin it from going

forward for each and every one of the following reasons:

5. Administrative code violations: In violating one fundamental provision of the

Administrative Code and flying in the face of another, the E-Hail Program effectively reinstitutes

a system that the City Council chose to eliminate two decades ago because it facilitated racial

and destination discrimination and created a shortage of taxis available for street hail. Prior to

4

the City Council’s intervention at that time, taxi drivers were permitted to accept calls from

potential passengers through in-car radios in a scheme strikingly similar to today’s

cellphone/smartphone “e-hails.” Although drivers were required to pick up anyone on the street

who hailed a taxi, the radio unofficially allowed drivers to pick and choose their passengers,

leaving the public and City government with no ability to monitor their choices. It was, in fact,

widely recognized that taxi drivers racially profiled potential riders, illegally and discriminatorily

passing over members of minority groups—and particularly African-Americans—who were

trying to hail taxis on the streets of New York. Affirmation of Randy M. Mastro, dated Feb. 14,

2013 (“Mastro Aff.”), Ex. A (Chris Timmerman, Racism Behind the Wheel: Cab Drivers in NYC

Refuse to Pick Up Minorities (Jan, 1, 2012)).

6. To alleviate these problems, the TLC passed rules requiring that all such radios be

removed from taxis, thus forbidding them from picking up passengers by pre-arrangement or

dispatch. Mastro Aff., Ex. B (TLC Resolution, Feb. 13, 1985). Later, the City Council amended

the Administrative Code to make these TLC rules permanent by eliminating the wide discretion

previously granted to the TLC to permit taxis to use radios and other “communications systems”

for dispatch. Mastro Aff., Ex. C (N.Y.C. Local Law No. 51 (1996)). The City Council also

passed laws that brought for-hire vehicles under the purview of the TLC, forbade for-hire

vehicles from picking up passengers by street hail, and established detailed requirements for base

stations that are charged with routing all dispatches. Mastro Aff., Ex. D (N.Y.C. Local Law No.

76 (1986)); Ex. C (N.Y.C. Local Law No. 51 (1996)). Thus, under this statutory regulatory

scheme that continues to exist today, taxis may only pick up “street hails,” while for-hire black

cars and liveries may only pick up passengers on a pre-arranged basis. See N.Y.C. Admin. Code

§ 19-502(g), (k)(1) (defining “taxi” as a motor vehicle “permitted to accept hails from passengers

5

in the street” and “for-hire vehicle” as a “motor vehicle carrying passengers for hire in the city . .

. other than a taxicab”).

7. With this E-Hail Program, the TLC seeks unilaterally to upend the City Council’s

carefully considered statutory scheme, in a manner that is completely inconsistent with both the

letter and the spirit of the Administrative Code. In particular, the E-Hail Program eviscerates the

statutorily mandated requirements for licensing of “communications systems used for

dispatching or conveying information to drivers of licensed vehicles” N.Y.C. Admin. Code § 19-

511(a)) by allowing taxis to use “e-hail” applications without licensure. Moreover, in permitting

taxi drivers “not” to “accept” ride requests (either “through active or passive action”), a

discretion that was explicitly forbidden by the City Council in order to combat widespread and

well-documented race and destination discrimination by taxi drivers, the E-Hail Program

conflicts with § 19-507(a)(2) of the Administrative Code, which charges the TLC with enforcing

the prohibition against refusing, “without justifiable grounds, to take any passenger or

prospective passenger to any destination within the city.” Importantly, “[a]n agency… may

adopt only rules and regulations which are in harmony with the statutory responsibilities it has

been given to administer,” Campagna v. Shaffer, 73 N.Y.2d 237, 242-43 (1989), and “[t]he rules

implemented by the TLC itself cannot provide authority for a deviation from a specific provision

of the Administrative Code,” which “have the force of statutes in New York City.” Lys v. N.Y.C.

Taxi & Limousine Comm’n, 2002 WL 338187, at * 3 (N.Y. Civ. Ct. Jan. 14, 2002). Any such

“rule or regulation” promulgated by the TLC that is “inconsistent with or supersede[s]” any

provision of the Administrative Code “shall be of no further force and effect.” N.Y.C. Admin.

Code § 19.503(b). Hence, for this reason alone, this E-Hail Program cannot stand.

6

8. Faux pilot program: The E-Hail Program far exceeds the narrow authority

granted to the TLC to waive otherwise binding rules for “limited purposes” and “limited amounts

of time” in order to “experiment[]” in relation to “type and design of equipment, modes of

service and manner of operation . . . .” See N.Y.C. Charter § 2303(b)(9). Unable to muster the

votes to adopt formal rulemaking authorizing “e-hailing,” TLC Chairman David Yassky slapped

a farcical “pilot program” label on his failed e-hail rulemaking proposal, improperly suspending

important safety restrictions forbidding the use of electronic devices by taxi drivers.1 But this is

no “pilot” program: it applies to every one of the City’s more than 13,000 medallion taxis, and

every one of the City’s more than 47,000 taxi drivers, and it has no geographic limitation of any

significance to the riding public, covering within its broad sweep areas of the City where more

than 95 percent of taxi fares originate. See Mastro Aff., Ex. E (E-Hail Program Resolution) at 2-

3.

9. Indeed, this is merely the latest example of what has become a commonly-

recognized Bloomberg Administration “do it first, ask questions later” artifice to bypass legal

and statutory requirements for implementing sweeping policy and land use changes—designating

an initiative contemplated to be permanent as a “pilot program” in order to skirt important

procedural safeguards and escape critical oversight and public review. See Mastro Aff., Ex. F

(David Chen and Michael Grynbaum, ‘Pilot’ Label Lets Mayor’s Projects Skip City Review,

N.Y. Times, June 26, 2011). Here, there can be no doubt that the TLC contemplated this

initiative to be permanent because it tried and failed to make it permanent by formal rulemaking

vote, and only after it was clear that the vote would not pass did the TLC resort to this “pilot”

1 In particular, the E-Hail Program purports to “exempt” taxi drivers who use an authorized e-hail application

from compliance with Chapter 54-14(e) of the TLC’s rules, which forbids a taxi driver from using “any function of an Electronic Communication Device in any way” while “operating a Vehicle.” Mastro Aff., Ex. E (E-Hail Program Resolution) at 6; 35 R.C.N.Y. §§ 51 & 54-14(e).

7

program ruse. As a matter of law, the TLC cannot do in the guise of a “pilot” that which it failed

to do—and could not legally do—by rulemaking. Thus, the E-Hail Program falls far outside the

scope of the TLC’s enumerated powers under Section 2303(b)(9) of the Charter and must be

invalidated for that independent reason as well.

10. Human rights law violation: The E-Hail Program will have a disparate adverse

impact on the elderly—a protected class under New York City Human Rights Law—who rely on

taxis for basic transportation and who own smartphones in far fewer numbers than those who are

younger. Only 11% of individuals over 65 own smartphones, compared to 66% for those ages

18-29, 59% for those ages 30-49, and 34% for those ages 50-64. Affidavit of Jonathan R. Peters,

dated February 12, 2013 (“Peters Aff.”) ¶ 18; see also Mastro Aff., Ex. G (Lee Ranie, Two

Thirds of Young Adults and Those with Higher Income are Smartphone Owners, Pew Internet &

American Life Project (Sept. 11, 2012)). If this program goes into effect in the coming winter

weeks, the elderly will literally be left out in the cold as they attempt to run down a dwindling

number of taxis available for “old fashioned” street hailing. Affidavit of Arthur L. Harris, dated

January 31, 2013 (“Harris Aff.”), ¶¶ 5-6; see also N.Y.C. Human Rights Law § 8-107(4) & (17).

11. Procedural violations: In addition to these substantive infirmities with the E-Hail

Program, the TLC, in its rush to judgment, also ran roughshod over numerous procedural

requirements that exist to ensure rational, accountable agency decision-making that affords the

public adequate notice and an opportunity to be heard before administrative action. First, in

violation of N.Y.C. Charter § 1043, the New York City Administrative Procedure Act

(“CAPA”), the TLC failed to provide any notice to the public, failed to make the E-Hail Program

resolution (the “Resolution”) available to the public before the meeting at which it was voted on,

and neglected to provide any opportunity for public comment at that meeting. Second, the TLC

8

approved the Program without following its own “rules and regulations” for review and

authorization of “pilot” programs, 35 R.C.N.Y. § 52-27, which makes this a textbook case of

acting “arbitrarily and capriciously.” Era Steel Constr. Corp. v. Egan, 145 A.D.2d 795, 799 (3d

Dep’t 1988). Third, the TLC conducted no environmental review whatsoever of the evident

significant impacts of the E-Hail Program on the City's transportation scheme, despite the fact

that the Resolution clearly fits within the broad definition of State Environmental Quality

Review Act (“SEQRA”)-triggering “actions,” and despite the fact that it will have potentially

“far-reaching” environmental impacts on, for example, traffic safety, traffic congestion, and

environmental justice. Peters Aff. ¶ 10; see also 6 N.Y.C.R.R. § 617.3(a) (“No agency involved

in an action may undertake, fund or approve the action until it has complied with the provisions

of SEQR.”).

12. For all of these reasons, the E-Hail Program violates the City Charter,

Administrative Code, City Human Rights Law, CAPA, SEQRA and CEQR, and the TLC acted

arbitrarily and capriciously in passing it. Hence, this Court should now declare the E-Hail

Program void and unenforceable.

13. Despite these many legal infirmities, the TLC is steamrolling ahead, intending to

“go live” with the E-Hail Program as early as this Friday, February 15, 2013, or sometime

shortly thereafter.2 Petitioners therefore now seek emergency injunctive relief to prevent the

TLC’s imminent implementation of the E-Hail Program, which will cause Petitioners and others

immediate, irreparable harm. The E-Hail Program immediately threatens Petitioners’ safety and

the safety of New York City’s citizenry by allowing taxi drivers to use multiple in-car

2 Petitioners have been told by TLC representatives that, despite the start date language in the relevant resolution,

the E-Hail Program will not, in fact, be ready to be rolled out on February 15, but because those same TLC representatives declined to make any further commitment about the start date, Petitioners are compelled to seek immediate relief from this Court.

9

smartphones simultaneously, and to interact with their smartphones to accept or decline ride

requests while driving, despite the well-established risks of driving while interacting with an

electronic device (see Petitioners’ Memorandum of Law at 48-49), the TLC’s own long-standing

rules forbidding such conduct out of concern for “Passenger and Driver Safety” (35 R.C.N.Y.

§54-14), and the TLC’s own acknowledgement that distracted taxi drivers who engage with in-

car electronic devices are “dangerous.” Mastro Aff., Ex. H (Taxi and Limousine Commission,

Distracted Driving: Updating Rules on Cell Phone Use While Driving (2009)) at 3.

14. Distracted driving—including, in particular, interacting with electronic devices—is

a well-established, serious risk factor for car accidents, and New York City taxis are already

involved in an average of more than 3,300 crashes per year, or almost ten crashes a day. Mastro

Aff., Ex. I (National Highway Traffic Safety Administration, The Impact of Driver Inattention

on Near-Crash/Crash Risk: An Analysis Using the 100-Car Naturalistic Driving Study Data

(April 2006)); Ex. J (Institute of Advanced Motorists, Smartphone Use While Driving—A

Simulator Study, Published Project Report PPR592); & Ex. K (Schaller Consulting, Taxi and

Livery Crashes in New York City 2004 (Apr. 27, 2006)). Shockingly, under the proposed

permanent rules, taxis were required to pull over before using their “e-hail” smartphones

because, as TLC Chairman Yassky explained, allowing drivers to use their phones for e-hailing

while driving would lead to “distracted driving” by taxi drivers “driv[ing] around looking at the

phone.” Mastro Aff., Ex. L (TLC Transcript, Nov. 29, 2012) at 37, 217. Yet the E-Hail Program

permits just this very thing, allowing taxi drivers to engage in exactly the same risky behavior

the TLC has for many years banned.

15. The Program also will inflict other irreparable injuries on Petitioners and the

public by:

10

• dismantling the established regulatory structure and allowing for taxi pre-arranged pick-up by “e-hail,” which will upend the marketplace and change customer practices in a system-wide fashion that will be impossible to undo later;

• wreaking unquantifiable economic havoc on black car and livery bases and their

drivers as customers switch to taxis for pre-arranged pick-ups, causing drivers to lose their livelihoods and owners to lose investment value they have worked decades to build;

• facilitating the potential for pervasive discrimination by taxi drivers who will be able

to use “e-hail” calls as a pretext to bypass or refuse riders on the basis of race or perceived destination;

• depriving the elderly of a basic transportation resource that is critical for their quality

of life; and • causing immediate and significant adverse environmental impacts that the City has

not even attempted to address.

16. In short, absent emergency relief, Petitioners and others similarly situated will

immediately suffer irreparable injury to their persons, industry, livelihoods, fundamental rights,

and environmental interests—all of which will prove impossible to remedy or to quantify after

this case is resolved in their favor. Each of these harms, standing alone, would justify the

emergency injunctive relief requested here. Taken together, they compel it. Petitioners therefore

now seek, by proposed order to show cause, emergency injunctive relief precluding Respondents

from implementing the E-Hail Program during the pendency of this action, and then, a judgment

granting this petition and voiding the E-Hail Program as illegal.3

3 Like the “street hail” litigation in which this Court found last summer that Respondents violated the State

Constitution’s Municipal Home Rule Law by bypassing the New York City Council, Respondents here acted far outside their legal authority in seeking to bypass the City Council again by imposing their policy whims on the City’s private transportation services, breaking down the decades-old wall between taxis, on the one hand, and for-hire vehicles, on the other. In the earlier case, Respondents sought to favor the for-hire sector by allowing it to engage in “street hails;” in this case, Respondents seek to do the opposite in favoring the taxi sector by allowing it to engage in pre-arranged pick-ups. Because the underlying, complex historical facts, regulatory structure, and course of illegal conduct is so similar in both cases, Petitioners have cited the relation of this case to that one. In addition, to ensure that this Court can afford complete relief, Petitioners have named as Respondents the City of New York, Mayor Michael R. Bloomberg in his official capacity, the TLC, and TLC Chairman David Yassky, in his official capacity.

11

PARTIES

17. Petitioner Black Car Assistance Corporation (“BCAC”), a New York corporation,

is a business association that represents the interests of the black car and limousine sectors of the

for-hire vehicle industry. The members of the BCAC are black car and limousine bases. The

BCAC is located at 26 Broadway, New York, New York 10004.

18. Petitioner The Livery Roundtable, a New York not-for-profit corporation, is a

business association that represents over 14,000 New York City livery drivers, 240 base owners,

and 6,000 phone operators and dispatchers. The Livery Roundtable is located at 4323 35th

Street, Long Island City, New York 11101.

19. Petitioner Dial 7 Car and Limousine Service, a New York corporation, is a livery

car service that provides transportation services in the New York City metropolitan area. Dial 7

Car and Limousine Service is located at 4323 35th Street, Long Island City, New York 11101.

20. Petitioner Dial Car, Inc., a New York corporation, is a co-operative of black car

drivers that provides transportation services in the New York metropolitan area. It is located at

2104 Avenue X, Brooklyn, New York 11235. Dial Car, Inc. is a member of the BCAC.

21. Petitioner Elite Limousine Plus, Inc., a New York corporation, is a black car base

that provides transportations services in the New York area. It is located at 32-72 Gale Avenue,

Long Island City, New York 11101. Elite Limousine Plus, Inc. is a member of the BCAC.

22. Petitioner Fast Operating Corp. dba Carmel Car and Limousine Service, a New

York domestic business corporation, is a livery car service company that provides transportation

services both in the New York City metropolitan area and in cities around the world. It is

located at 2642 Broadway, New York, New York 10025.

12

23. Petitioner Inta-Boro Acres, Inc., a New York corporation, is a black car base that

provides car services in the New York area. It is located at 88-19 101 Avenue, Ozone Park, New

York 11416. Inta-Boro Acres, Inc. is a member of the BCAC.

24. Petitioner Love Corporate Car Inc., a New York corporation, is a black car base

that provides car services in the New York area. It is located at 1440 39th Street, Brooklyn, New

York 11218. Love Corporate Car Inc. is a member of the BCAC.

25. Petitioner Royal Dispatch Services, Inc., a New York corporation, is a black car

base that provides car services in the New York area. It is located at 43-22 Van Dam Street,

Long Island City, New York 11101. Royal Dispatch Services, Inc. is a member of the BCAC.

26. Petitioner Vital Transportation, Inc., a New York corporation, is a black car co-

operative that provides car services in the New York area. It is located at 41-24 38th Street, Long

Island City, New York 11101. Vital Transportation, Inc. is a member of the BCAC.

27. Petitioner Arthur Harris is a New York City resident. Mr. Harris resides at 25

Fifth Avenue, Apartment 2F, New York, New York 10003.

28. Petitioner Alexander Reyf, a New York City resident, is a shareholder of Dial Car,

Inc. and a black car driver.

29. Respondent City of New York is a domestic municipal corporation located within

the State of New York.

30. Respondent Michael R. Bloomberg is the Mayor of the City of New York. Mayor

Bloomberg is the chief executive officer of New York City, responsible for executing the City’s

laws and controlling and directing the City’s executive and administrative agencies in a manner

consistent with law. Petitioners bring this action against Mayor Bloomberg in his official

capacity.

13

31. Respondent New York City Taxi & Limousine Commission is a New York City

charter-mandated agency, responsible for licensing and regulating New York City’s taxicabs and

liveries and implementing transportation initiatives in a manner consistent with law.

32. Respondent David Yassky is the Chairman and a Commissioner of the TLC,

responsible for administering the TLC and implementing its statutory initiatives in a manner

consistent with law. Petitioners bring this action against Mr. Yassky in his official capacity.]

FACTUAL BACKGROUND

The New York City Car Services Industry Develops to Include Strict Delineation Between Street Hail Yellow Cabs and For-Hire Black Cars and Liveries In Order To Protect Passengers From Illegal and Discriminatory Street Hail Refusals

33. In 1937, Mayor Fiorello LaGuardia signed the Haas Act, which capped at 13,595

the number of medallion taxicab licenses that were available in New York City. See Mastro

Aff., Ex.K (Schaller Consulting, The New York City Taxicab Fact Book (Mar. 2006) (“Schaller

Consulting”)) at 22. With the number of medallions fixed, a need existed for additional for-hire

car services. Neighborhood car services, called liveries, began to fill the gap. Although they

were not regulated by the City, liveries were legal provided that they only operated on a pre-

arrangement basis (i.e., the customer arranges beforehand for a ride) and did not pick up street

hails. Id. at 24.

34. Over the ensuing decades, the livery industry boomed, growing from 2,500 cars in

1964 to 9,300 in 1971, while the number of medallions never exceeded its original total. Id.

During this period, instead of relying exclusively on traditional street hails, some taxi owners

began forming radio associations that serviced customers by telephone pre-arrangement. Id. at

26. The radios primarily serviced two groups: passengers who pre-arranged a pickup by

telephoning a request and paying the meter fare in cash, and employees of businesses that held

14

accounts with the radio group. Id. The radios were very popular with taxi drivers because the

businesses that held accounts provided a regular flow of passengers, and because pre-

arrangement was seen as safer for the driver than street hailing. Id.

35. In 1971, partially due to the growth of the livery industry and of radio associations,

the City Council created the Taxi & Limousine Commission to regulate transportation service in

New York City. Id. at 24. Included among the TLC’s initial functions, as set forth in then-

Section 2310 of the Administrative Code (now Section 19-511), was the “Licensing of

communications systems.” The Administrative Code provided as follows: “‘The commission

may require licenses for the operation of two-way radio or other communications systems used

for dispatching or conveying information to drivers of licensed vehicles . . . .’” Super Operating

Corp. v. N.Y.C. Taxi & Limousine Comm’n, 71 Misc. 2d 65, 65 (N.Y. Sup. Ct. 1972).

36. By using the word “may,” the “council intended to allow the commission

discretion to determine whether to allow taxis to install radios by permission of the commission

on the one hand, or by means of a licensing system on the other.” Id. at 67. The TLC was given

this discretion because the City Council was cognizant that the Hack Bureau (the predecessor to

the TLC) had “permitted the installation of radios as a matter of course [i.e., without licenses],

and that there were in fact over 1,400 radio taxis operating on the streets without benefit of

license but merely by permission of the Hack Bureau.” Id. Thereafter, the number of taxis using

radios grew steadily, from 1,700 cabs in 1973 to 3,200 cabs in 1982. Mastro Aff., Ex. K

(Schaller Consulting) at 26. By 1979, radio cab drivers were devoting 25% of their time to

serving business accounts and 12% to cash-paid radio calls. Id.

37. The rise of radio cabs led to considerable tension in the car services industry, and

also created significant problems for passengers trying to hail cabs on the street. The increased

15

use of radios reallocated a fixed supply of taxis away from the general public and towards

businesses that had accounts with the radio associations. As a result, passengers on the street

found it increasingly difficult to hail a cab, especially in the evenings when many taxis were on

radio calls. Id.

38. The advent of radio cabs left the system vulnerable to discrimination. Although

drivers were required to pick up any person on the street hailing a taxi, the radios unofficially

gave drivers the ability to pick and choose their passengers. If a taxi driver illegally skipped over

or refused a ride to an individual for race, age, or destination reasons and was reported, the driver

could claim that he was passing over the potential rider because he had just received a radio call.

And in fact, it was widely recognized and acknowledged that taxi drivers racially profiled

potential riders, illegally and discriminatorily passing over minorities who were trying to hail

cabs on the streets of New York City. Mastro Aff., Ex. A (Racism Behind the Wheel: Cab

Drivers in NYC Refuse to Pick Up Minorities).

39. Recognizing that the supply of taxis available for street hails had become a major

problem, Mayor Ed Koch appointed the Mayor’s Committee on Taxi Regulatory Issues, known

as the Smith Committee, in 1981. In its Preliminary Issues Paper, the Smith Committee noted

that the “radio voucher business may be re-allocating a fixed supply of taxis away from tourists

and the rest of the taxi riding public,” and that this problem had “become especially noticeable to

a person seeking to hail a cab who is frustrated by the presence of empty cabs with lit ‘on-radio-

call’ signs either parked in line or passing on the street.” Mastro Aff., Ex. N (Committee on Taxi

Regulatory Issues, Preliminary Issues Paper (Oct. 22, 1981)) at 70.

40. To address these problems, the TLC gave the 3,200 taxi owners belonging to radio

associations permission to transfer their radios to non-medallion vehicles, effectively creating the

16

black car industry. Mastro Aff., Ex. K (Schaller Consulting) at 26. The chairman of the TLC,

Jay Turoff, stated that the introduction of black cars would free up taxis for street hails, which he

called their “primary mandate.” Mastro Aff., Ex. O (Ari Goldman, Limousine Company to Offer

Challenge to Medallion Taxis, N.Y. Times, Feb. 3, 1982) at A22. By November 1982, the TLC

announced that 500 radio taxis had removed their radios, and another 500 to 700 were expected

to do so in the “immediate future.” Mastro Aff., Ex. P (500 Radio Cabs are Converted to Street

Hail Duty, N.Y. Times, Nov. 7, 1982).

41. In March 1982, shortly after the TLC allowed medallion owners to transfer their

radios, the Smith Committee released a long list of recommendations to improve the car service

industry. Mastro Aff., Ex. Q (Mayor’s Committee on Taxi Regulatory Issues New York City,

Recommendations (Mar. 29, 1982)). Included was the recommendation that medallion radio

cabs should not be permitted to be on radio calls during the evening rush hour, and that only non-

medallion vehicles could operate radios during that time. Id. at 6. The Committee also

recommended that radio associations should continue to be required to have a base license from

the TLC, and that bases should be subject to periodic inspection. Id. at 7. These base licensure

and inspection requirements were considered essential to protecting the riding public by ensuring

that the pre-arrangement system functioned safely and in accordance with all applicable laws.

See Mastro Aff., Ex. R (Suzanne Daley, New York Making Changes to Improve its Taxi Service,

N.Y. Times, May 26, 1984).

42. The TLC was optimistic that allowing taxis to transfer their radios voluntarily

would make more taxis available for street hails. By the end of the year, however, the New York

Times noted in two editorials that the “transfer of radios from licensed taxis to other cars has

slowed to a trickle” and that “the promised disappearance of the flashing ‘on radio call’ signs by

17

which so many yellow cabs snub riders, especially in rush hours” is distant. Mastro Aff., Ex. S

(November Editorial Desk, N.Y. Times, Nov. 25, 1984); Ex. T (December Editorial Desk, N.Y.

Times, Dec. 7, 1984).

43. Through the use of incentives and attrition, the TLC reduced to 2,000 the number

of radio taxis by the beginning of 1985. Mastro Aff., Ex. U (Metropolitan Desk, The City: Plan

Seeks to Curb 2-Way Cab Radios, N.Y. Times, Jan. 15, 1985). However, as New York City

continued to be plagued by street hail shortages and the dreaded “on radio call” lights, in

February 1985 the TLC passed a new resolution mandating that, by March 1987, “the owner of

any taxicab which is a member of a radio group shall remove his radio from the vehicle,” and

that after that date a taxicab owner “shall not be a member of any radio group or have two-way

radio equipment installed in his taxicab”—in other words, that all radios had to be removed from

taxis. Mastro Aff., Ex. B (TLC Resolution, Feb. 13, 1985). In its resolution, the TLC noted that

“the problem of taxicab unavailability has been severely exacerbated by the growth of medallion

taxicab radio groups in recent years whose members service radio customers thereby making

their taxicab unavailable for street hails.” Id.

44. The City Council also sought to regulate the black car and livery industries, and in

December 1986 passed Local Law 76 to conclusively bring what it termed the “for-hire vehicle

industry” under the purview of the TLC. Mastro Aff., Ex. D (N.Y.C. Local Law 76 (1986)).

Even though the TLC has been regulating limousines since its inception, many liveries and non-

medallion car services did not consider themselves to be in this category, and the City Council

felt the need to “correct[] any ambiguity in the law.” Id. The City Council also sought to ensure

that the new class of non-medallion radio cars was clearly within the jurisdiction of the TLC, and

18

so the new regulations went into effect in March 1987, the same time that all radios had to be

removed from taxis. Id. § 14.

45. Nearly ten years later, the City Council acted once again, making two important

and related amendments to the licensing requirements under Section 19-511 of the

Administrative Code. See Mastro Aff., Ex. C (N.Y.C. Local Law 51, § 4 (1996)). First, by

mandating that the TLC “shall require” licenses for “two-way radios and other communications

systems used for dispatch or to communicate with drivers” (where the Code had previously

stated that the TLC “may require” such licenses), the City Council explicitly removed from the

TLC the discretion to reintroduce communication systems for dispatch in taxis by “permission of

the commission,” and instead mandated that the TLC require formal licenses for such systems.

See id. Second, the TLC enacted detailed “base station” requirements for certain for-hire

vehicles, which, like communications systems, require formal licensure. Id.

46. Thus, under the current regulatory structure, taxis may only pick up street hails,

while for-hire black cars and liveries may only pick up passengers on a pre-arranged basis.4 This

careful distinction has allowed each type of car to serve its primary function, alleviating the

numerous problems that arose when taxis were permitted to operate on a pre-arranged basis. At

the same time, black car and livery companies have increased to fill New York City’s

transportation needs. In the early 1990s, about 8,000 cars were licensed to 45 black car

companies, rising to 10,400 cars and 72 companies by 2005. Mastro Aff., Ex K (Schaller

4 Compare Mastro Aff., Ex. D (New York City, N.Y., Local Law No. 76 (1986)), § 4 (“No motor vehicle other

than a duly licensed taxicab shall be permitted to accept hails from passengers in the street.”), and id. § 8 (“For-hire vehicles may accept passengers only on the basis of telephone contract or prearrangement.”), with Mastro Aff., Ex B (TLC Resolution, Feb. 13, 1985) (“[a taxicab owner] shall not be a member of any radio group or have two-way radio equipment installed in his taxicab”); see also N.Y.C. Admin. Code § 19-502(g), (k)(1) (defining “taxi” as a motor vehicle “permitted to accept hails from passengers in the street” and “for-hire vehicle” as a “motor vehicle carrying passengers for hire in the city . . . other than a taxicab”).

19

Consulting) at 26. Local livery car services have also grown, from 9,300 cars in 1971 to 22,900

cars in 2006. Id. at 30.

47. At the same time, the problem of taxi drivers illegally passing over riders and

discriminatorily refusing hails—particularly for reasons of race and geographic discrimination—

continues to plague the taxi industry. The TLC received 2,341 complaints of refusals in the

second half of 2010, a 38% increase from the year before, and 4,656 complaints in 2012. See

Mastro Aff., Ex V (Michael Grynbaum, Taxi Panel Focuses on Destination Discrimination, N.Y.

Times, Feb. 24, 2011); www.nyc.gov/html/tlc/downlads/pdf/annual_report_2012.pdf. In one all-

too-common episode, an African-American City Councilman described being passed over by 20

taxis in SoHo when he tried to hail one, with those that did stop refusing to take his daughter to

her destination. Mastro Aff., Ex W (Councilman James Sanders Outraged After Cabbies Refuse

to Take Daughter to Yonkers, CBS New York (June 16, 2011)).

The TLC Recognizes that the Use of Smartphone Applications to Request a Car Constitutes Pre-Arrangement, and Therefore Permits their Use in Black Cars, but Correctly Refuses to Allow Taxis to Accept Such Pre-Arranged Rides

48. In recent years, smartphone applications have begun to provide a new way of pre-

arranging for-hire vehicle pickup in New York City. The service first became available in New

York City in May 2011 “as a dispatch service, working with local owners of licensed private car

companies.” Mastro Aff., Ex. X (Jenna Wortham, With a Start-Up Company, a Ride is Just a

Tap of an App Away, N.Y. Times, May 3, 2011). When a user requested a car via smartphone

application, an affiliated for-hire vehicle company was notified, and the car and user were

matched through a black car or livery base. In this way, smartphone applications worked in

harmony with the careful regulatory structure in place in New York.

20

49. The TLC was aware of the use of smartphone applications by for-hire vehicles in

New York City, and in July 2011 it published an industry notice recognizing that smartphone

application dispatch constituted a pre-arranged trip and warning taxi drivers that they “are NOT

permitted to use smartphone apps for dispatch.” Mastro Aff., Ex. Y (TLC Industry Notice #11-

15, July 1, 2011). The TLC further stated that, “[a]s a yellow medallion taxi driver, you may

only pick up passengers that hail you,” and that “for-hire vehicle owners and drivers may NOT

contract directly with a smartphone app developer, without the approval and involvement of their

bases. If you are accepting dispatches via a smartphone app that is not authorized by the base

you are affiliated with, you are doing so in violation of TLC regulations.” Id.

50. Later the same month, the TLC published another industry notice after questions

arose about whether the smartphone applications were required to hold a base license under

Administrative Code § 19-506 and Section 59B-11 of the TLC Rules. Mastro Aff., Ex. Z (TLC

Industry Notice #11-16, July 18, 2011). The industry notice reiterated that taxis are “NOT

permitted to use Smartphone App[lication]s for dispatch,” and clarified that any smartphone

application that “provides for-hire transportations services directly and not through agreement

with one or more licensed FHV bases,” including a smartphone application that provides for-hire

transportation services “through direct agreement with TLC-licensed drivers,” is “required to

hold a Base License.” Mastro Aff., Ex. Y (TLC Industry Notice #11-15, July 18, 2011).

51. However, smartphone application providers had their sights set on taxi service, and

in September 2012, one such provider began operating in 105 taxis, with the hopes of recruiting

100 new drivers each week. Mastro Aff., Ex. AA (Matt Flegenheimer and Brian Chen, As a

Taxi-Haling App Comes to New York, Its Legality is Questioned, N.Y. Times, Sept. 4, 2012).

The application raised immediate concerns about its legality: The day after the application

21

launched in New York, the TLC put out an industry notice “remind[ing] medallion taxicab

drivers and owners that it has NOT authorized any electronic hailing or payment applications

(‘apps’) for use in New York City taxicabs.” Mastro Aff., Ex. BB (TLC Industry Notice #12-31,

Sept. 6, 2012).

52. Shortly after releasing its notice that taxis are not permitted to employ smartphone

applications to connect with riders, Ashwini Chhabra, the Deputy Commissioner for Policy &

Planning of the TLC, testified before the City Council Committees on Transportation and

Technology. Mastro Aff., Ex. CC (Testimony of Ashwini Chhabra, Sept. 19, 2012). Among

other issues, Mr. Chhabra noted that “there are numerous black car and livery bases that provide

a similar [smartphone arrangement] service, and there are already smartphone apps to help

passengers request one of those cars.” Mr. Chhabra acknowledged numerous potential problems

with smartphone application pre-arrangement of taxis, including that they could impact the

supply of taxis available for traditional street hails, privilege those who have smartphones, result

in distracted driving, hurt the black car business, and increase the perception that drivers are

refusing passengers. Id. at 6-7. Nevertheless, Mr. Chhabra stated that the TLC would pursue

rulemaking to allow such applications. Id. at 7.

[AFTER YOU FINISH MAKING MY CHANGES, IF THIS HEADER IS STILL AT THE BOTTOM OF A PAGE, KICK IT OVER] The TLC Reverses Course, And Over The Objections of Numerous City Council Members, Pushes through a So-Called E-Hail “Pilot Program” That Directly Conflicts With Numerous Provisions of the Administrative Code

53. On October 29, 2012, the TLC released its proposed rules. Mastro Aff., Ex. DD

(TLC Proposed Rules (Oct. 29, 2012)). A month later, on November 29, 2012, the TLC held a

public hearing on the proposed rules. At the meeting, Mr. Chhabra explained the proposed rules,

as well as potential issues with the rules. According to Mr. Chhabra, a “big concern” was “the

increased risk or the perception of [ride] refusals.” Mastro Aff., Ex. L (Transcript of the NYC

22

Taxi & Limousine Commission, Nov. 29, 2012) [hereinafter, “TLC Transcript (Nov. 29,

2012)”], at 31. In particular, Mr. Chhabra noted that a passenger may “see a car go by, may see

that car stop a block later, pick someone else up and feel that they have been refused.” Id. at 31-

32.

54. At the hearing, Mr. Chhabra also stated that there “is a potential reduction in

supply” of taxis as a result of smartphone application pre-arrangement (or, in the TLC’s

parlance, “e-hailing”), which could “endanger the street hail system[.]” Id. at 32-33. Mr.

Chhabra dismissed this concern, however, stating that drivers would not collect more for “e-hail”

trips and therefore would not prefer smartphone pre-arrangement over street hails. Id. He also

compared the technology to the advent of radio cabs, stating that:

During the course of this a lot of conversations surfaced stories about the way that taxis used to operate when there were radios in the cabs 30 years ago. And you hear these horror stories where the drivers were cherry picking because you had the radios in the cabs, and there was a potential for more lucrative fares for radio calls than there were from street hail trips. And we seek to avoid that. And we think with the technology today, which is very different from radios and dispatchers, we can mitigate that. But this is a concern that we have. Id.

55. Finally, Mr. Chhabra addressed the concern that e-hailing would unfairly hurt

livery and black car businesses, who have been operating in the clearly delineated regulatory

scheme for years. Dismissing completely this carefully constructed separation, Mr. Chhabra

stated: “we don’t believe that the regulatory policy should be driven by a desire to shift business

from one sector or preserve the current market share as it exists between sectors.” Id. at 35.

Addressing another “key” concern—“distracted driving” by taxi drivers “driv[ing] around

looking at the phone”—TLC Chairman Yassky emphasized that, under the proposed rules, “the

app [will] not accept the driver input if the vehicle is in motion,” and he acknowledged that, “you

do not want to have six iPhones mounted on the dashboard, that’s just too distracting.” Id. at 37,

217.

23

56. The TLC heard from numerous members of the public, including a number of

Petitioners, who spoke about the damage that the proposed rule would inflict upon the carefully

constructed delineation between taxis and for-hire vehicles. For example, Ira Goldstein, the

Chief Operating Officer of the Black Car Assistance Corporation, told the TLC that the

“proposed rules will destroy the regulatory separation that history proved was necessary.”

Mastro Aff., Ex. L (TLC Transcript (Nov. 29, 2012)) at 166. He further noted that the proposed

rules violate New York’s communication systems licensing requirement, among other legal

infirmities, since “the smartphone technology at issue here is a communication system and . . .

the e-hail application provider dispatches information to drivers just as any for-hire company

dispatches information to drivers.” Id. at 171. Indeed, one of the TLC Commissioners noted that

“[t]he app is kind of stepping in the shoes of a dispatch[] . . . .” Id. at 177.

57. The proposed rules were never voted on at the meeting. As the New York Times

reported, “it became clear that some commissioners, and perhaps a majority, were prepared to

vote down any permanent rule change.” Mastro Aff., Ex. EE (Matt Flegenheimer, City May Test

Smartphone Apps in Hailing Yellow Taxis, N.Y. Times, Dec. 12, 2012). In the weeks that

followed, the TLC received numerous letters from City Council Members urging it to reject so

called “e-hailing” because of concerns that it would lead to distracted driving and discriminatory

ride refusals, and would have a disparate impact on those who do not own smartphones. Mastro

Aff., Ex. FF (Letters from Council Members to TLC dated Nov. 28, 2012-Dec. 12, 2012). The

Council Members were also concerned that the rules would “destabilize the for-hire industry and

place Livery and Black Cars at a competitive disadvantage to Taxis,” which would lead to

decreased transportation options for the public. See id. (Letter from Council Member James

Sanders, Jr.) at 11. The TLC was urged by Members of the City Council to “reject this proposal

24

and work with the City Council” on a new plan, rather than unilaterally passing e-hail rules that

upend the careful structure of the industry implemented by the City Council and that conflict

with numerous provisions of the Administrative Code. Id. (Letter from Council Member Ydanis

Rodriguez) at 12.

58. Tuning out these pleas, TLC Chairman Yassky presented a so-called “e-hail pilot

program” to the TLC Commissioners at a meeting held on December 13, 2012, without public

notice, without publishing the proposed regulation before the meeting, without distributing the

proposed regulation to the TLC Commissioners with sufficient time for their review, and without

opportunity for public comment. Like the widely criticized permanent rules for smartphone pre-

arrangement, the Program institutes e-hailing in every taxi in the City but on a supposed one-

year “trial” basis, and with a number of other significant changes.

59. In introducing the Program, Chairman Yassky said: “We had proposed a rule back

in October that would have had us license these apps. After considerable discussion among the

Commissioners, I am not putting that rule forward for consideration today but rather putting

forward a pilot program.” Mastro Aff., Ex. GG (Transcript of the NYC Taxi & Limousine

Commission, Dec. 13, 2012) [hereinafter, “TLC Transcript (Dec. 13, 2012)”], at 24. As

Chairman Yassky explained at the meeting, there were “three major changes, substantive

changes” in the so-called “pilot program”: taxi drivers could accept arrangements for a taxi via

smartphone application so long as they were within 1.5 miles of the potential passenger (0.5

miles in Manhattan’s Central Business District”), drivers could accept hails by interacting with

their smartphones while driving via one-touch operation, and payments had to be processed

through the existing payment system. Id. at 25.

25

60. With no public comment period, seven TLC commissioners voted for the E-Hail

Program and two commissioners abstained. Commissioner Arout, who abstained, stated: “I got

most of this material just about this morning. And I feel, in good conscience, I cannot vote on

something I haven’t received within two or three days so I can look at it and read it.” Id. at 35.

Commissioner Marino, who also abstained, stated that although she was generally in favor of

new technology, “we have a unique transportation structure that is not like other cities . . . [and] I

think part of being a leader is to find what works for us and works with our structure and all of

the different facets of our taxi and livery structure in New York.” Id. at 36. She also commented

that, while in theory, the Commission “can just change our minds if [the Program] doesn’t work,

but like a marriage, a lot of things are a lot easier to get into than out of.” Id. at 36-37. The E-

Hail Program is scheduled to commence upon Chairman Yassky’s approval of the first

application provider, no earlier than February 15, 2013.

The E-Hail Program Is The Latest In A Long Line Of Large-Scale Bloomberg Administration Projects That Have Been Labeled “Pilot Programs” In Order to Skirt Important Procedural Safeguards, Because The Administration Knows The Programs Would Not Be Approved Through Proper Legislative Channels

61. In New York City, agency actions must undergo careful and deliberate review, to

ensure that all affected groups have the opportunity to be heard on important governmental

decisions. But when a so-called “pilot program” is established, there is often no review by the

City Council and no public hearings, even when the program is later expanded. The Bloomberg

Administration has time and again used the “pilot program” label to engage in “do it first, answer

questions later” policymaking. Mastro Aff., Ex. F (David Chen and Michael Grynbaum, ‘Pilot’

Label Lets Mayor’s Projects Skip City Review, N.Y. Times, June 26, 2011). In a recent

investigation, the New York Times found that dozens of major, transformative city projects

26

started as pilot programs, “ostensible experiments that are often exempt from the usual forms of

city review.” Id.

62. One of the most prominent pilot programs was the creation of pedestrian plazas in

Times Square and Herald Square in 2009. Despite being “one of New York’s most radical

experiments in a generation,” the administration did not seek public review or comment on the

pedestrian plazas, and instead closely guarded data relating to the project. Mastro Aff., Ex. HH

(Michael Grynbaum, New York Traffic Experiment Gets Permanent Run, N.Y. Times, Feb. 11,

2010). Once the “pilot program” was running, significant changes were made to the plazas—

including closing several blocks to vehicular traffic—“with minimal involvement by the Design

Commission.” Id. And even though the pedestrian plazas failed at their chief objective of

improving traffic flow, the Bloomberg Administration unilaterally decided to make this “pilot”

program permanent. Id.

63. The E-Hail Program is of a piece with the other large-scale programs pushed

through by the Bloomberg Administration as “pilot programs.” It applies to every single one of

the over 13,000 taxis and 47,000 licensed taxi drivers throughout the City, it affects tens of

thousands of cars and drivers and millions of riders, and it has no geographic limitation of any

significance to the riding public, covering within its broad sweep areas of the City where more

than 95 percent of taxi fares originate. And as TLC Commissioner Marino noted in abstaining

from voting on the program, it will be “a lot easier to get into than out of.” Mastro Aff., Ex. GG

(TLC Transcript (Dec. 13, 2012)) at 37.

27

FIRST CAUSE OF ACTION (Conflict with Communications Systems Licensure Requirement)

VIOLATIONS OF CPLR ARTICLE 78 AND SECTION 19-503(b) OF THE NEW YORK CITY ADMINISTRATIVE CODE:

RESPONDENTS’ RULEMAKING IS INCONSISTENT WITH ITS OBLIGATIONS UNDER SECTION 19-511(a) OF THE NEW YORK CITY ADMINISTRATIVE

CODE REGARDING COMMUNICATIONS SYSTEMS LICENSING

64. Petitioners repeat and reallege, as if set forth fully herein, the allegations contained

in Paragraphs 1-63 hereof.

65. The New York City Administrative Code mandates that the TLC “shall” require

“licenses for the operation of two-way radio or other communications systems used for

dispatching or conveying information to drivers of licensed vehicles…,” as well as for “base

stations.” N.Y. C. Admin. Code § 19-511(a). The Program directly contravenes these

requirements by purporting to “authorize” e-hail applications without requiring taxi drivers or e-

hail application providers to obtain communications systems or base station licenses.

66. When the TLC was created by the City Council in 1971, its initial responsibilities

included “Licensing of communications systems,” as set forth in then-Section 2310 of the

Administrative Code (now Section 19-511). Super Operating Corp., 71 Misc. 2d at 65. The

Administrative Code provided as follows: “The commission may require licenses for the

operation of two-way radio or other communications systems used for dispatching or conveying

information to drivers of licensed vehicles . . . .” By using the word “may,” the “council

intended to allow the commission discretion to determine whether to allow taxis to install radios

by permission of the commission on the one hand, or by means of a licensing system on the

other.” Id. at 67. The TLC was given this discretion because the City Council was cognizant

that the Hack Bureau (the predecessor to the TLC) had “permitted the installation of radios as a

matter of course [i.e., without licenses],” and that there were in fact “over 1,400 radio taxis

28

operating on the streets without benefit of license but merely by permission of the Hack Bureau.”

Id.

67. In the mid-1980s, radios were removed from taxis by TLC resolution, and the for-

hire vehicle industry was formally created to fill the City’s pre-arrangement needs. Thus, since

1987, only for-hire vehicles have been permitted to employ radios or other communication

systems for dispatch—with the TLC itself taking the clear position that under current law a

“medallion taxi driver . . . may only pick up passengers that hail [him or her].” Mastro Aff., Ex.

Y (TLC Industry Notice 11-15, July 1, 2011).

68. In 1996, the City Council overhauled the Administrative Code’s licensing

requirements, and made two important and related amendments to Section 19-511 of the Code.

See Mastro Aff., Ex. C (Local Law 51 § 4 (1996)). First, it changed “may require” to “shall

require” in the communications systems licensing provision. By doing so, the City Council gave

the TLC an affirmative mandate to require formal licenses for the use of two-way radios or other

communication systems in TLC-licensed vehicles. The City Council thus explicitly removed

from the TLC the discretion to allow taxis to install communication systems for dispatch—such

as e-hail-enabled smartphones—by “permission of the commission,” and instead required the

TLC to require formal licenses for such systems. Relatedly, the TLC enacted detailed “base

station” requirements for certain for-hire vehicles, which, like communications systems, require

formal licensure. See id.

69. The clear intent of the City Council was to take away the discretion of the TLC to

simply grant “permission” to taxi drivers to use communication systems for pre-arrangement or

dispatch, and instead require formal licensure, thus ensuring that should the TLC desire in the

future to allow such dispatch-enabling systems—such as e-hailing—back into taxis, it could only

29

do so by through formal rulemaking, as no TLC rules then existed or now exist regarding taxi

dispatch systems licensing.

70. Yet the E-Hail Program purports to do exactly what the City Council forbade

through the 1996 amendment to the Administrative Code: It simply “authorizes” E-Hail

Application Providers to enter into “subscription plan[s]” with “Drivers and Passengers,” and to

then employ their E-Hail Applications in Taxis. Mastro Aff., Ex. II (TLC Memorandum of

Understanding §20 (6) (“MOU”)); see also id. §1(g) (discussing the “authorization issued to an

E-Hail App Provider pursuant to this Agreement”). In fact, the E-Hail Program distinguishes

between an e-hail “Authorization” and formal licensure, and makes clear that an e-hail

“Authorization” is not a formal “license.” Id. §1(i) (“Licensee. When the term ‘Licensee’ is used

by itself, it refers to the holder of a License issued by the Commission that is NOT an

Authorization issued under this Agreement.”).

71. Such an E-Hail Application “allows a Passenger to identify the location(s) of

available Taxicabs in a given area and allows a Driver to identify the location of a Passenger

who is currently ready to travel,” “allows a Passenger to hail a Taxicab via the electronic

device,” and “provides for connecting a Passenger to a Driver” through the “Software program”

maintained by the E-Hail Application Provider. Id. § 1(e). As such, E-Hail applications fit

squarely within the broad language of the Administrative Code requiring licenses for

“communication systems” that are used for “dispatching or conveying information to drivers of

licensed vehicles.” Yet the program put in place by Respondents does not require the Taxi driver

or taxi owner to obtain a communications or dispatch systems license.

72. “Laws are made by the law-making power and not by administrative officers

acting solely on their own ideas of sound public policy, however excellent such ideas may be.”

30

Super Operating Corp., 71 Misc. 2d at 68 (granting Article 78 annulling TLC action under the

predecessor to § 19-511). The TLC does not have the power to waive or alter requirements

imposed by the Administrative Code, which are binding law promulgated by the City Council as

the City’s legislative body. See Lys, 2002 WL 338187; Nunez, 641 N.Y.S.2d 983; Bay

Fireworks, 661 N.Y.S.2d at 734.

73. Tellingly, just over a year ago, the TLC took the position that smartphone

applications constituted “dispatch” rather than “hailing,” and that smartphone applications were

subject to licensing requirements under Section 19-511. On July 1, 2011, Respondents published

a notice which stated that taxi drivers “are NOT permitted to use smartphone apps for dispatch,”

Mastro Aff., Ex. Y (TLC Industry Notice 11-15, July 1, 2011), and two-and-a-half weeks later

doubled down on this belief, writing in another industry notice that a “Smartphone App that

provides for-hire transportation services directly and not through agreement with one or more

licensed FHV bases … including a Smartphone App that provides for-hire transportation services

through a direct agreement with TLC-licensed drivers, is required to hold a base license.” Mastro

Aff., Ex. Z (TLC Industry Notice 11-16, July 18, 2011). By its plain meaning and in accordance

with its legislative history, the Administrative Code forbids the TLC from allowing the use of

communications systems such as e-hail applications by simple authorization or permission, and

instead that the TLC “shall require” formal licensure for any such systems used for

communication with drivers. The E-Hail Program is irreconcilable with these requirements of

the Administrative Code.

31

SECOND CAUSE OF ACTION (Inconsistent with Obligation to Enforce Administrative Code § 19-507(a)(2))

VIOLATION OF CPLR SECTION 78 AND SECTION 19-503(b)

OF THE NEW YORK CITY ADMINISTRATIVE CODE: RESPONDENTS’ RULEMAKING IS INCONSISTENT WITH THE TLC’S

OBLIGATION TO ENFORCE SECTION 19-507(a)(2) OF THE NEW YORK CITY ADMINISTRATIVE CODE REGARDING RIDE REFUSALS

74. Petitioners repeat and reallege, as if set forth fully herein, the allegations contained

in Paragraphs 1-73 hereof.

75. Not only does the Program directly violate §19-511, but it also conflicts with § 19-

507(a)(2) of the Administrative Code, which charges the TLC with enforcing the prohibition

against refusing, “without justifiable grounds, to take any passenger or prospective passenger to

any destination within the city.” In a traditional hail, once a potential passenger raises his hand,

an available driver is obligated to accept that hail, and may not reject or pass over the rider. The

City Council took the ride refusal ban seriously, and issued direct, unambiguous instructions to

the TLC to ensure that it did everything in its power to combat illegal ride refusals. For example,

under the heading “Mandatory penalties,” the Administrative Code mandates that the TLC

“shall” fine, or suspend or revoke the license of, any driver who violates the ride refusal rule.

N.Y.C. Admin. Code § 19-507(a)(2); see also § 19-507.1 (mandatory penalties for persistent

violators of rules relating to drivers of taxis). And the Administrative Code further mandates that

“[e]ach owner shall make a reasonable good faith effort . . . to deter the commission of [such]

violations.” Id. § 19-507(d)(1).

76. Yet under the E-Hail Program, when the rider raises his 1.5-mile-long arm to “e-

hail,” the driver is given the absolute discretion to “not accept” the hail, either through “active or

passive action,” i.e., actively rejecting the “hail” or simply ignoring. See Mastro Aff., Ex. HH

(MOU) § 20(2)(iii); see also id. § 20(1)(ii)) (requiring reporting of “yes/no indicator for whether

32

the trip request was ever accepted by a Driver”); id. § 20(2)(ii) (“For each Passenger trip request

accepted by a Driver, the E-Hail App Provider shall provide [the] number of Drivers that did not

accept the request before it was accepted.”).5 Indeed, even after accepting an e-hail, a taxi driver

is given the complete discretion to cancel the e-hail and pick up a traditional hailer he prefers

instead—for example, a wealthy-looking hailer standing on the street. See Affidavit of Michael

Kordonsky, dated February 13, 2013 (“Kordonsky Aff.”) ¶ 5.6 Or if the taxi driver sees another

e-hail request come in over the system, he can cancel the first e-hail and accept the second one

instead. This is the equivalent of stopping to pick up a traditional hail and then barring the door

when a more attractive-looking fare raps on the window looking for a ride.

77. In a similar case, where the TLC “imposed a penalty greater than that authorized

under the Administrative Code” (suspension of a claimant’s license), it was found to have

“exceeded” its “statutorily delegated authority.” Lys, 2002 WL 338187, at *3. Here, where the

TLC has neglected to enforce restrictions mandated by the Administrative Code, it has similarly

acted beyond its delegated authority.

78. Not only does the Program purport to give taxi drivers discretion explicitly

forbidden by law, but it also facilitates and encourages discriminatory refusals to pick up riders

on the basis of race and destination, among other factors, by providing a modern version of the

now-banned taxi radio, which provided taxi drivers with a perfect defense to any claims of ride

refusal (“I just received a radio call.”). Combatting such discriminatory refusals was a

5 The TLC incorporated the terms of the MOU into the E-Hail Program resolution: “Pursuant to section 52-28(a)

of the Commission’s rules each participant in the Pilot Program (‘Participant’) must enter into a binding Memorandum of Understanding (‘MOU’) with the Chair on behalf of the Commission . . . obligating the Participant to adhere to all requirements of this Resolution and setting forth additional specifications for each requirement. This Resolution contains a summary of the major MOU terms and does not include each and every term.” All e-hail application providers are required to sign the MOU without modification.

6 See also Mastro Aff., Ex. L (TLC Transcript (Nov. 29, 2012)) at 125 (“MR. KABESSA: If I accept a street hail, a prearrangement of a yellow, while en route to the prearrangement, your standard is I'm allowed to accept a person in the street raising their hand, isn't it? COMM. MARINO: While en route -- MR. KABESSA: Yes. COMM. MARINO: -- to prearranged. MR. KABESSA: The answer is yes.”).

33

significant factor in the decision to take radios out of yellow cabs, and it was widely recognized

and acknowledged that taxi drivers racially profiled potential riders, illegally passing over

minorities who were trying to hail cabs on the streets of New York. See Petitioners’

Memorandum of Law at 11-14; Kordonsky Aff. ¶ 5. Even today, without recourse to the radio

call excuse, cab drivers routinely illegally refuse hails. See Petitioners’ Memorandum of Law at

15-16. TLC Commissioner Yassky recently conceded as much: “We know service refusals—

where drivers refuse to pick up a passenger for who they are, where they are going, or any other

host of reasons—are an increasing problem in the City’s yellow-cab industry, with more than

500 complaints just in March alone.” Mastro Aff., Ex. JJ (Testimony of David Yassky before

the City Council Transportation Committee (April 27, 2011)) at 1. The E-Hail Program makes

such conduct easier, as the ability “to choose between e-hailers and street hailers gives the taxi

driver the ability to bypass someone standing on the street because he does not like the

neighborhood he is driving through or the way that a passenger trying to hail his Taxi looks.”

Kordonsky Aff. ¶ 5; see also Mastro Aff., Ex. L (TLC Transcript (Nov. 29, 2012)) at 33-34

(TLC representative acknowledging the concern of drivers “cherry picking” passengers, as they

did 30 years ago); Peters Aff. ¶¶ 23-24 (environmental justice expert explaining why he

“anticipate[s] that discriminatory refusals will increase under the E-Hail Program”).

79. In fact, the City Council explicitly linked the ride refusal ban to such

discriminatory conduct on the part of taxi drivers by requiring that the TLC “shall develop and

commence a program” that all drivers must complete prior to obtaining a TLC license and

subsequent license renewals, which “shall inform such drivers that they may not refuse fares

solely based on the appearance of an individual” or other discriminatory characteristics. N.Y.C.

Admin. Code § 19-505(q) (emphasis added) (citing N.Y.C. Human Rights Law, § 8-1).

34

80. Given the important purpose served by the “no refusals” rule, and the deliberate

history of combatting illegal taxi driver conduct surrounding it, any attempt to alter or amend

that rule, particularly by introducing a modern version of the very thing which the scheme sought

to eliminate, cannot be done unilaterally by the TLC without legislative approval. The TLC does

not have the authority to override the City Council in giving taxi drivers the discretion to refuse a

ride request, whether that request is by “e-hail” or otherwise.

THIRD CAUSE OF ACTION (Acting Beyond Enumerated Powers)

VIOLATION OF CPLR SECTION 78 AND SECTION 2303

OF THE NEW YORK CITY CHARTER: RESPONDENTS ACTED OUTSIDE THE SCOPE OF

THEIR AUTHORITY IN IMPLEMENTING THE E-HAIL PROGRAM

81. Petitioners repeat and reallege, as if set forth fully herein, the allegations contained

in Paragraphs 1-80 hereof.

82. The TLC is an administrative agency of enumerated powers, created and confined

within the boundaries set forth in the City Charter. See N.Y.C. Charter § 2303 (setting forth the

“[j]urisdiction, powers and duties of the commission”). Pursuant to § 2303(b)(9), the TLC has

the authority, in certain narrow circumstances, to implement trial programs, and in that context

only, to “depart from the requirements otherwise established for licensed vehicles” under TLC

rules. In the past, the TLC has on occasion used this authority properly, to test equipment and

modes of service in a small number of vehicles or at a limited number of locations, in order to

evaluate technical specifications, gauge rider interest in innovative services, and the like.

83. The programs have fit within the narrow confines of the power granted the TLC by

the City Charter; specifically, that “for limited purposes and limited periods of time [the TLC]

may depart from the requirements otherwise established [by the TLC] for licensed vehicles” in

35

connection with “innovation and experimentation in relation to type and design of equipment,

modes of service and manner of operation[.]” N.Y.C. Charter § 2303(b)(9) (emphasis added).

“It is fundamental that a court, in interpreting a statute, should attempt to effectuate the intent of

the Legislature, and where the statutory language is clear and unambiguous, the court should

construe it so as to give effect to the plain meaning of the words used.” Doctors Council v.

N.Y.C. Empls.’ Ret. Sys., 71 N.Y.2d 669, 674 (1988). The language of Section 2303(b)(9) of the

City Charter is clear and unambiguous: Any departure from the rules must be for both limited

purposes and limited periods of time.

84. Thus, in the only published case applying Section 2303(b)(9), the Supreme Court

found that a TLC pilot program validly waived TLC regulations only because it was both limited

in time (“one year or less”) and severely limited in scope—specifically, “limited to five non-

operational bus routes.” Samuelson v. Yassky, 911 N.Y.S.2d 570, 577 (N.Y. Sup. Ct. 2010).

85. In contrast, the E-Hail Program is not limited in scope, and is only nominally

limited in time. Indeed, by its own terms, “[the] number of Participants in the Pilot Program is

not limited.” Mastro Aff., Ex. E (E-Hail Program Resolution) at 2-3. In fact, it is available to

every single one of the more than 13,000 taxis and 47,000 taxi drivers in New York City, as well

as millions of potential riders, and it has virtually no geographic restrictions. Moreover, the E-

Hail Program fundamentally restructures the for-hire vehicle market in New York City, undoes

the careful structure put in place by the City Council, and for the first time in 25 years, grants to

taxis the opportunity for electronic pre-arrangement of rides. And while the E-Hail Program is

nominally limited in time, it will be effectively impossible to roll back at the end of the one-year

“trial” period, after the prevailing regulatory structure has already been fundamentally altered, E-

Hail Providers have invested heavily in reliance on it, and drivers and riders have become

36

accustomed to it. See Affidavit of Ira Goldstein, dated Feb. 13, 2013 (“Goldstein Aff.”) ¶ 13. As

TLC Commissioner Marino noted in abstaining from voting to approve the Program, it, “like a

marriage,” will be “a lot easier to get into than out of.” Mastro Aff., Ex. GG (TLC Transcript

(Dec. 13, 2012)) at 36-37.

86. And TLC representatives have done little to hide their intention to extend or make

permanent the program at the conclusion of the one-year “trial period.” Id. at 26-27 (discussing

future of E-Hail Program, and comparing it to past TLC “pilot” program that became

permanent). This is a “pilot program” in name only, labeled as such as an end run around the

democratic process because TLC Chairman Yassky failed to garner the votes to pass the

permanent e-hail rules originally proposed and promulgated by the TLC. Accordingly, the TLC

exceeded its powers under Section 2303(b)(9) in authorizing the Program.

87. The E-Hail Program is also fundamentally at odds with the way the TLC has

historically interpreted this authority. Traditionally, and in accordance with the plain meaning of

Section 2303(b)(9), the TLC has used pilot programs in order to test new equipment or services

in a small number of taxis or locations. See Goldstein Aff. ¶¶ 10-13 (discussing “numerous pilot

programs” of limited scope and length undertaken during affiant’s tenure as TLC Chief of Staff

and noting that the programs “allowed [TLC] to determine whether a new technology or service

was beneficial to the public or not—and to evaluate what was working in the program and what

was not—before it was introduced on a fleet-wide basis through formal rulemaking”). Currently,

the TLC is running a pilot program to put six Nissan all-electric vehicles into service, as well as

installing electric charging stations. Mastro Aff., Ex. KK (TLC Industry Notice #11-26, Oct. 20,

2011). Earlier this year, the TLC approved a pilot program for ride payment by smartphone

application. Mastro Aff., Ex. LL (NYC Taxi & Limousine Commission, Resolution Approving

37

Alternative In-Taxi Technology System Pilot Program). The plan was limited to a maximum of

thirty medallion owners, in order to “gather information about the strengths, weaknesses and

issues surrounding the use of the Mobile Technology System to provide a better, more seamless

payment experience for taxicab riders.” Id. The program ultimately failed, with the application

provider pulling its technology from the taxis in October 2012, demonstrating that a properly

limited pilot program is a valuable tool for testing new technology. See Mastro Aff., Ex. MM

(Garret Sloane, Square Hits Breaks on Taxi Payment System as New Rules Loom, N.Y. Post,

Oct. 15, 2012).

88. Other recent pilot programs include livery stands in two locations per borough and

hearing loop technology in 15 taxis per vendor. See Mastro Aff., Exs. NN & OO. These small

scale projects are in line with the proper use of a pilot program to test out new technology or

services. In contrast, the E-Hail Program is of a piece with the other large-scale programs

pushed through by the Bloomberg Administration in order to skirt public review and important

regulatory checks. See Petitioners’ Memorandum of Law at 22-23.7

89. One consequence of denominating the Program a “pilot” is that it ostensibly

affords the TLC the authority to waive its own rules. For example, relying on the TLC’s “pilot

program” authority, the E-Hail Program explicitly purports to “exempt” drivers who use an

authorized E-Hail App from Section 54-14(e) of the TLC’s rules, which—under the heading

“Passenger and Driver Safety”—forbids a taxi driver from “Us[ing] an Electronic

Communication Device while operating a Vehicle,” along with “Driving While Impaired” and

7 The limited way in which the TLC has in the past understood and applied its own powers in this regard is

illustrative of the scope of those powers. See Matter of Charles A. Field Delivery Serv., 66 N.Y.2d 516, 520 (1985) (absent an explanation, “failure to conform to agency precedent will… require reversal on the law as arbitrary”); cf. Car Barn Flats Residents’ Assn. v. N.Y. State Div. of Hous. & Cmty. Renewal, 184 Misc. 2d 826, 833 (N.Y. Sup. Ct. 2000) (“It is a fundamental principle of administrative law that the administrative agency justifies any departure from its prior practice.”).

38

“Reckless Driving.” Mastro Aff., Ex. E (E-Hail Program Resolution) at 6; 35 R.C.N.Y. § 54-

14(e). An Electronic Communication Device is defined broadly as “any portable or hands-free

electronic device able to,” inter alia, “send or receive data, voice or images,” or “[t]ransfer . . .

text or messages,” and clearly includes smartphones. 35 R.C.N.Y. § 51-03. And the TLC rules

forbid the operation of “any function of an Electronic Communication Device in any way” while

driving. Id. Yet in pushing through its E-Hail Program, the TLC here waived these well-

considered driver and rider protections, without any study or review.

90. Because the E-Hail Program does not fit within Section 2303(b)(9)’s narrow grant

of authority to engage in experimentation for a “limited purpose” and “limited time,” the TLC

exceeded its authority in authorizing the Program, and in particular in waiving the prohibition on

using electronic communication devices while operating a taxi.

FOURTH CAUSE OF ACTION (Violation of CAPA)

VIOLATION OF SECTION 1043 OF THE

NEW YORK CITY CHARTER: RESPONDENTS VIOLATED THE NEW YORK CITY ADMINISTRATIVE ACT BY FAILING TO COMPLY

WITH RULEMAKING PROCEDURES

91. Petitioners repeat and reallege, as if set forth fully herein, the allegations contained

in Paragraphs 1-90 hereof.

92. The E-Hail Program is a hastily executed end run around legislative procedures

and is therefore invalid. Pursuant to the New York City Administrative Procedure Act

(“CAPA”), “[n]o agency shall adopt a rule except pursuant to this section[’s]” requirements of

notice and opportunity for public comment. N.Y.C. Charter § 1043. CAPA defines “rule”

broadly as “the whole or part of any statement or communication of general applicability that (i)

implements or applies law or policy, or (ii) prescribes the procedural requirements of an agency

39

including an amendment, suspension, or repeal of any such statement or communication.” Id.

§ 1041(5). Thus, any policy or program that “materially affect[s] the rights of [a group of

individuals] equally and without exception” amounts to the adoption of a new rule. Singh v. Taxi

& Limousine Comm’n, 282 A.D.2d 368, 368 (1st Dep’t 2001); see also N.Y. State Rest. Assoc. v.

N.Y.C. Dep’t of Health & Mental Hygiene, 798 N.Y.S.2d 711, 711 (N.Y. Sup. Ct. 2004)

(describing “rules” as “fixed general principle[s] to be applied by an administrative agency

without regard to other facts and circumstances relevant to the regulatory scheme of the statute it

administers”) (internal citation and quotation marks omitted).

93. Because the Program “was intended to be applied generally to all cab drivers . . .,

without regard to individual circumstances or mitigating factors, and it is indisputable that it

materially affect[s]” all taxi drivers and passengers “equally and without exception,” the E-Hail

Program falls within the definition of a “rule” and must follow the notice and comment

requirements set forth in CAPA. Miah v. Taxi & Limousine Comm’n, 206 A.D.2d 203, 203 (1st

Dep’t 2003); see also Mastro Aff., Ex. E (E-Hail Program Resolution) at 2-3 (“[the] number of

Participants in the Pilot Program is not limited.”). Nevertheless, the Commission rushed the

“pilot program” through without providing any notice to the public. The regulation was not

made “available for public review” before the meeting at which it was voted on, and there was

no “opportunity for public comment in writing or at a hearing.” Goldstein Aff. ¶¶ 8-9.

94. One commissioner voting against the program expressed reservations about

approving the Program because even the TLC commissioners only “got most of the materials

th[at] morning” and he “[could ]not vote on something [that he had not] received within two or

three days so [he] c[ould] look at it and read it.” Mastro Aff., Ex. GG (TLC Transcript (Dec. 13,

2012)) at 35. The public’s only notice of the program will be, eventually, a “[n]otice of

40

opportunity to participate in the Pilot Program,” to be “published in the City Record and on the

Commission’s website,” after the Program is scheduled to commence on February 15, 2013.

Mastro Aff., Ex. E (E-Hail Program Resolution) at 2.

95. This procedure—or lack thereof—egregiously violates CAPA. At the conclusion

of the public hearing on November 29, 2012 on the proposed permanent rulemaking on which

the TLC never voted, the TLC Commissioner represented that the TLC would “be in a position

to finalize this in December and vote on it at [the] December meeting.” Mastro Aff., Ex. L (TLC

Transcript (Nov. 29, 2012)) at 218. But the TLC instead substituted that proposed rulemaking

with a different program without notice to the public or opportunity to comment on the so-called

“pilot program.” Indeed, Chairman Yassky acknowledged as much at the December meeting,

stating: “[w]e had proposed a rule back in October that would have had us license these apps,”

but “[a]fter considerable discussion among the Commissioners, I am not putting that rule

forward for consideration today but rather putting forward a pilot program” that contains

“major changes, substantive changes” from the earlier proposed permanent rules. Mastro Aff.,

Ex. GG (TLC Transcript (Dec. 13, 2012)), at 24-25. This was a bait and switch of epic

proportions by the supposed guardians of the public trust; it is just this kind of backdoor

maneuvering that CAPA is supposed to prevent. Without notice and comment, the E-Hail

Program is invalid.

41

FIFTH CAUSE OF ACTION (Failure to Comply with TLC Rules)

VIOLATION OF CPLR ARTICLE 78:

RESPONDENTS ACTED ARBITRARILY AND CAPRICIOUSLY IN FAILING TO COMPLY WITH TLC RULES FOR PILOT PROGRAMS

96. Petitioners repeat and reallege, as if set forth fully herein, the allegations contained

in Paragraphs 1-95 hereof.

97. The City should not be permitted to implement the E-Hail Program for the

additional reason that the Commission acted arbitrarily and capriciously in approving the

Program without following its own rules for review and authorization of pilot programs. “An

administrative agency acts arbitrarily and capriciously when it fails to conform to its own rules

and regulations.” Era Steel Constr. Corp., 145 A.D.2d at 799; see also Marshall v. Maguire, 102

Misc. 2d 697, 700 (N.Y. Sup. Ct. 1980) (“It is by now familiar law that an agency’s violation of

its own regulations may in and of itself constitute a violation of due process.”).

98. The TLC Rules pertaining to pilot programs are extensive. Among many other

things, they require that the Commission include in its final resolution approving any pilot

program: (1) a deadline for a final report; (2) a deadline for rulemaking action to implement

changes to the Commission’s rules; and (3) a statement of whether a safety evaluation will be

required before or during implementation, or a statement of how and by whom such an

evaluation must be conducted. See 35 R.C.N.Y. §§ 52-27(b)(2), 52-27(b)(6). In pushing

through the E-Hail Program, the Commission failed to include in its final resolution either of the

required aforementioned deadlines or any information regarding the safety evaluation—a

particularly glaring omission in light of the serious traffic safety concerns raised by the Program.

See Mastro Aff., Ex. E (E-Hail Program Resolution) at 2-7.

42

99. Moreover, additional Commission rules govern pilot program proposals, which are

in and of themselves prerequisites for the implementation of a pilot program. See 35 R.C.N.Y.

§ 52-24(b). Proposals must include, inter alia, (1) “[e]stimates of any cost and revenue impact

of the proposed innovation on affected Licensee groups . . ., on the Commission and the City,

and on the public”; (2) a “description of the different ways in which the proposed innovation

would depart from otherwise applicable requirements”; (3) the “number of pilot program

participants necessary to achieve the purpose of the proposed pilot program”; and (4) the

“criteria by which the value of the innovation can be measured after implementation of the pilot

program.” See 35 R.C.N.Y. §§ 52-24(b)(4)-(5), 52-24(b)(8)-(9). Here, the Commission violated

its own rules in approving the Program without first receiving a full proposal for review detailing

the above information. Because the Commission did not act “consistently with its own

applicable regulation[s]” in passing the E-Hail Program, it acted arbitrarily and capriciously.

Universal Waste, Inc. v. Dep’t of Envtl. Conservation, 4 Misc. 3d 500, 507-08 (N.Y. Sup. Ct.

2004).

100. These required elements of a pilot program proposal are not merely technical; they

are essential to the reasoned evaluation of the proposed program by the Commission in advance

of a decision about whether to approve it. That the TLC approved the Program despite failing to

obtain or review a proposal violates both the letter and the spirit of the Commission’s pilot

program rules and renders the Commissioners’ actions in approving the Program arbitrary and

capricious.8

8 See, e.g. De Marco v. Vill. of Elbridge, 251 A.D.2d 991, 991-92 (4th Dep’t 1998) (annulling Planning Board’s

denial of a site plan application because the Board’s determination was arbitrary and capricious where it was not supported by the record); Private Commcn’s Ass’n v. Gabel, 24 A.D.2d 427, 427-28 (finding an operational bulletin arbitrary and capricious because it was “not based on any record, showing or finding” that the action was necessary); Romero v. N.Y. State Div. of Hous. and Cmty, Renewal, 842 N.Y.S.2d 213, 217 (N.Y. Sup. Ct. 2007) (concluding that a determination was arbitrary and capricious because it had “no evidentiary basis in the record”).

43

101. Indeed, if the Commission had considered the information that is required to be

contained in a pilot program proposal, it could not have rationally approved the E-Hail Program,

as its impact on the black car and livery licensee groups and protected classes of riders will be

devastating, see Petitioners’ Memorandum of Law at 51-53; the Program departs from

requirements that the TLC does not have the power to waive, see Petitioners’ Memorandum of

Law at 37-39; the Program is not limited to a particular “number of pilot program participants”

who are necessary to achieve the purpose of the proposed Program, see Mastro Aff., Ex. E (E-

Hail Program Resolution) at 2-3 (“[the] number of Participants in the Pilot Program is not

limited”); and the TLC did not consider what criteria, if any, by which the value of the new

program can be measured.

102. Amazingly, on February 8, 2013—nearly two months after the resolution

approving the Program—the TLC issued a “directive” to members of the for-hire vehicle

industry asking them to provide the TLC with monthly dispatch data and other trip-related

information from January 1, 2012 through January 31, 2013, “[i]n order to assess the potential

impact of smartphone applications for hailing Medallion Taxicabs and booking For-Hire

Vehicles (FHVs) . . . .” Mastro Aff. PP (TLC Directive, dated Feb. 8. 2013). As the directive

itself acknowledges, collection and analysis of such information would be “extremely valuable”

to the TLC in “research[ing] the industry’s future and analyz[ing] the impact of smartphone

applications on the FHV and Medallion Taxicab Industries.” Id. The directive does not include

any explanation as to why the TLC failed to undertake this “extremely valuable” research at an

earlier point, before rushing to implement the E-Hail Program. Indeed, this is exactly the

“[e]stimates of any cost and revenue impact of the proposed innovation on affected Licensee

groups . . ., on the Commission and the City, and on the public” that the TLC was required under

44

its own rules to have obtained and reviewed before approving the Program under TLC rules. 35

R.C.N.Y. § 52-24(b)(4). Thus, the Program is invalid for this independent reason as well.

SIXTH CAUSE OF ACTION (Violation of SEQRA and CEQR)

VIOLATION OF SECTION 617.3 OF THE NEW YORK CODE AND

NEW YORK CITY EXECUTIVE ORDER 91: RESPONDENTS VIOLATED SEQRA AND ITS NYC COUNTERPART

BY FAILING TO CONDUCT AN ENVIRONMENTAL REVIEW PRIOR TO THE PROGRAM’S IMPLEMENTATION

103. Petitioners repeat and reallege, as if set forth fully herein, the allegations contained

in Paragraphs 1-102 hereof.

104. The Commission lacks authority to move forward with the implementation of the

E-Hail Program without a review of its likely environmental impacts. Under both New York

State and New York City law, “[n]o agency involved in an action may undertake, fund or

approve the action until it has complied with the provisions of SEQR.” 6 N.Y.C.R.R. § 617.3(a);

see also Mastro Aff., Ex. Q (N.Y.C. Executive Order No. 91) § 6-01 (mirroring in relevant parts

the provisions of SEQRA). “Actions” include, among other things, “adoption of agency rules,

regulations and procedures, including . . . resolutions that may affect the environment.” 6

N.Y.C.R.R. § 617.2(b)(3). SEQRA’s “broad definition of ‘actions’ . . . should be liberally

construed.” City Council of the City of Watervliet v. Town Bd. of Colonie, 3 N.Y.3d 508, 518

(2004) (requiring SEQRA review for adoption of a resolution to approve the annex of real

property, before existence of a specific development plan); see also O’Keefe v. Bonelli, 654

N.Y.S.2d 1009, 1014-15 (N.Y. Sup. Ct. 1996) (discussing the “low threshold for SEQRA

consideration” and the broad definition of the term “environment”).

105. An agency action is invalid where the agency neglects to perform this first level of

environmental review and fails to “issue a negative declaration, or make the requisite findings

45

after considering an environmental impact statement.” Tauber v. Vill. of Spring Valley, 56

A.D.3d 660, 661 (2d Dep’t 2008).

106. Here, the Program resolution clearly falls within the broad definition of SEQRA-

triggering “actions,” which explicitly include agency “resolutions.” 6 N.Y.C.R.R. § 617.2(b)(3).

And the Program certainly “may affect the environment.” Indeed, it likely will have “far-

reaching” and “significant” environmental impacts. Peters Aff. ¶ 10. These include increased

traffic safety risks, as the Program will encourage taxi drivers to shift their attention “inward as

drivers start paying more attention to potential rider locations and ride request messages on their

smartphones, and as they start taking their hands off the wheel to accept such rides via their

smartphones,” which inevitably will result in more crashes. Id. ¶¶ 11-12.

107. Traffic patterns will also shift, causing increased congestion as taxi drivers

“deviate from their established driving patterns” and “converge in the direction of available e-

hails, particularly in midtown Manhattan’s already congested streets,” and as “dramatic[]”

changes in “ride-origination behaviors”—namely, the ability to summon taxis to side streets—

generates “greater congestion on the streets that can least handle an increase in traffic.” Id. ¶ 13-

14. In addition, the Program raises environmental justice concerns, as disparities in smartphone

ownership by age and income, among other factors, will “impact the opportunity for each of

these classes to avail themselves of Taxi service in New York City once smartphone ride

arrangement is available.” Id. ¶¶ 17-20.

108. Yet the TLC conducted no environmental review whatsoever, and did not issue so

much as a negative declaration. Before implementation, the TLC must at a minimum classify the

action as exempt or non-exempt, prepare an environmental assessment form, and determine

whether the proposed action may have one or more significant environmental impacts,

46

necessitating the preparation of an environmental impact statement (a “positive declaration”) or

not (a “negative declaration”). Affidavit of Michael B. Gerrard, dated February 4, 2013

(“Gerrard Aff.”) ¶¶ 10-11. And following a positive declaration, a full SEQRA review would be

a multistage process involving a series of interim findings, conclusions, and public reports. Id. ¶

11; see also 6 N.Y.C.R.R. §§ 617.3(c), 617.6(a), 617.7-9, 617.11-12.

109. Importantly, an agency does not escape SEQRA obligations merely because it

considers the action to be exempt from SEQRA (a so-called “Type II” action). If the agency

intends to bypass an environmental review for an allegedly exempt action, the agency is still

required to take a “‘hard look’ at whether the project would go beyond the ambit of any Type II

criteria” and to make a “‘reasoned elaboration’ of the basis for its conclusion that its proposed

action was a Type II action under SEQRA.” Zutt v. State, 99 A.D.3d 85, 100-01 (2d Dep’t

2012); see also Tupper v. City of Syracuse, 71 A.D.3d 1460, 1462 (4th Dep’t 2010) (requiring

that an agency provide a “reasoned elaboration for its determination of environmental . . . non-

significance”). Here, the TLC did not engage in the requisite “hard look” or make the required

“reasoned elaboration” that the E-Hail Program was exempt from environmental review—but

even if it had, that conclusion would be erroneous as a matter of law, as the E-Hail Program

“does not qualify as an exempt action.” See Gerrard Aff. ¶¶ 9, 13-18. The TLC cannot move

forward with implementing the Program.

47

SEVENTH CAUSE OF ACTION (Violation of N.Y.C. Human Rights Law)

VIOLATION OF SECTION 8-107(4) OF THE NEW YORK CITY HUMAN RIGHTS LAW:

THE E-HAIL PROGRAM WILL HAVE A DISPARATE IMPACT ON THE ELDERLY

110. Petitioners repeat and reallege, as if set forth fully herein, the allegations contained

in Paragraphs 1-109 hereof.

111. New York City Human Rights Law § 8-107(4) prohibits discrimination on the

basis of “race, creed, color, national origin, [and] age” and other protected statuses by “any

person” providing “public accommodation[.]” The term “person” includes governmental bodies

or agencies. N.Y.C. Human Rights Law § 8-102(1). The term “public accommodation” includes

“services, facilities, accommodations . . . or privileges of any kind.” N.Y.C. Admin. Code § 8-

102(9). Section 8-107(17) permits claims of discrimination to be based upon disparate impact,

and Section 8-502 provides a private right of action to enforce these provisions.

112. An “unlawful discriminatory practice” based upon disparate impact is established

when “it is demonstrated that a policy or practice of a covered entity . . . results in a disparate

impact to the detriment of any protected group.” 18 N.Y. Jur. 2d Civil Rights § 47 (citing

N.Y.C. Admin. Code § 8-107(17)); see also Broadway Triangle Cmty. Coal. v. Bloomberg, 35

Misc. 3d 167 (N.Y. Sup. Ct. 2011) (granting preliminary injunction under the Fair Housing Act

where plaintiffs alleged that a plan to construct low-rise buildings containing numerous large

apartments disproportionately impacted minority groups.).

113. Once this initial burden is met, the covered entity has the opportunity to “plead and

prove as an affirmative defense that each such policy or practice bears a significant relationship

48

to a significant business subjective of the covered entity or does not contribute to the disparate

impact.” Id. If it fails to do so, the claim succeeds. Id.

114. Here, the E-Hail Program “results in a disparate impact to the detriment of” the

elderly: The anticipated saturation of smartphone applications in taxis, and the resulting shift of

taxis towards e-hailing customers, will make it far more difficult for individuals without

smartphones to find taxis, “as physical hails are ‘crowded out’ by virtual hails in competition for

a fixed supply of available Taxis.” Peters Aff. ¶ 19.

115. This will “constrict the supply of Taxis for those who do not own smartphones,

leading to longer wait time and less access to Taxi service, which is an important means of basic

transportation for many residents of (and visitors to) New York City.” Id. Individuals 65 years

and older will be “disparately impacted” in a significant way, id., as the number of smartphone

owners in that demographic is very small. As of the most current available statistics, “45% of

American adults own a smartphone,” but only 11% of Americans over 65 owned smartphones,

compared to 66% of 18 to 29 year olds, 59% of 30-49 year olds, and 34% of 50 to 64 year olds.”

Id. ¶ 18; see also Mastro Aff., Ex. G (Lee Ranie, Two Thirds of Young Adults and Those with

Higher Income are Smartphone Owners, Pew Internet & American Life Project (Sept. 11,

2012)). Indeed, most “senior citizens do not own smartphones and do not know how to use them

or smartphone applications” and, therefore, senior citizens “will not have access to the

smartphone applications that can be used to ‘e-hail’ Taxis” under the E-Hail Program. Harris

Aff. ¶ 5; see also Peters Aff. ¶ 18.

116. As a result, the elderly will quite literally be left out in the cold, as they attempt to

find a dwindling number of taxis available for “old fashioned” street hailing. Id. (“This will

force other senior citizens and me to wait longer for a Taxi or to walk greater distances to find

49

one than we do now, even when the weather is inclement.”); see also Mastro Ex. II (Testimony

of David Yassky before the City Council Transportation Committee (dated April 27, 2011)) at 1

(“New Yorkers depend on cabs to pick up groceries, make it to an afternoon meeting, or enjoy a

night out on the town.”). The TLC explicitly acknowledged this problem—noting that “you need

a smartphone in order to avail yourself of this technology” and that “there’s some risk that that

results in an unfair outcome”—but failed to address it in its rush to push this E-Hail Program

through. Mastro Aff., Ex. L (TLC Transcript (Nov. 29, 2012)) at 34. Thus, one of the most

vulnerable of demographics will now be at a severe disadvantage when it comes to utilizing one

of the most fundamental and vital public accommodations in New York City—taxis.

NO PRIOR APPLICATION

117. No prior application for this or any similar relief has been made in this Court.

PRAYER FOR RELIEF

WHEREFORE, Petitioners pray for judgment against Respondents, pursuant to CPLR

6001, 6301-13, and 7801-06:

(1) declaring that the E-Hail Program was passed in violation of lawful procedure,

was affected by errors of law, was arbitrary and capricious, and/or was an abuse

of discretion because it is inconsistent with Respondents’ obligations under

Section 19-511(a) of the N.Y.C. Administrative Code (communications systems

licensing);

(2) declaring that the E-Hail Program was passed in violation of lawful procedure,

was affected by errors of law, was arbitrary and capricious, and/or was an abuse

of discretion because it is inconsistent with Respondents’ obligations under

50

Section 19-507(a)(2) of the N.Y.C. Administrative Code (enforcement of ride

refusals law);

(3) declaring that the E-Hail Program was passed in violation of lawful procedure,

was affected by errors of law, was arbitrary and capricious, and/or was an abuse

of discretion because Respondents acted outside the scope of their authority under

Section 2303 of the N.Y.C. Charter in authorizing the Program;

(4) declaring that Respondents violated Section 1043 of the N.Y.C. Charter, the New

York City Administrative Procedures Act, by failing to comply with rulemaking

procedures in passing the Program;

(5) declaring that Respondents acted in violation of lawful procedure, arbitrarily and

capriciously, and/or in an abuse of discretion by failing to comply with TLC rules

regarding pilot programs in authorizing the E-Hail Program;

(6) declaring that Respondents violated Section 617.3 of the New York Code,

SEQRA, and its New York City counterpoint, Executive Order 91, by failing to

conduct an environmental review prior to authorizing the E-Hail Program;

(7) declaring that Respondents violated Section 8-107(4) of the New York City

Human Rights Law in passing the E-Hail Program because the E-Hail Program

will have a disparate impact on the elderly;

(8) declaring that as a result of each and every one of the legal infirmities set forth

above, the E-Hail Program is null and void;

(9) annulling and vacating the E-Hail Program;

(10) granting and issuing a temporary restraining order and preliminary injunction

ordering Respondents to refrain from any action to implement the E-Hail

Program, including, but not limited to, authorizing e-hail smartphone applications

under the Program or signing any Memorandum of Understanding with any

smartphone application provider under the Program;

(11) awarding Petitioners-their costs and attorney fees under Section 8-5020 of the

New York City Human Rights Law;

(12) awarding Petitioners their costs, fees, and disbursements incurred in connection

with these proceedings; and

(13) granting such other and further relief as the Court deems just and proper.

Dated: New York, New YorkFebruary 14, 2013 Respectfully submitted,

GIBSON, DLJNN & CRUTCHER LLP

BY~Randy M. M stroJennifer H. ReardenAkiva Shapiro

200 Park AvenueNew York, New York 10166-0193Telephone: (212) 351-4000Facsimile: (212) 351-4035

Attorneys for Petitioners

51