Judge says Uber, Lyft should be treated like taxis

A FEDERAL JUDGE on Thursday ordered Boston officials to explain what regulations they plan to implement on ride-hailing companies such as Uber and Lyft to treat them like cabs until the state comes up with some action and why the court should not issue an injunction barring the companies from operating.

In a lengthy ruling that dismisses some motions but allows others to proceed against the city in a suit brought by taxi owners, US District Court Judge Nathaniel Gorton said medallion owners are reeling while the city and state have failed to take action.

“As [transportation network companies] become more prevalent and their existing operational structure becomes an engrained segment of the transportation-for-hire market, amending the existing regulatory structure to address TNCs becomes mandatory,” Gorton wrote in his 43-page opinion. “Further, as the value of plaintiffs’ medallions wanes, the medallion financing market has begun to collapse, threatening irreparable harm to the ability of the holders of individual medallions to continue operating in the industry.”

The suit, which was originally filed in January of last year, named Boston Police Commissioner William Evans and Transportation Secretary Stephanie Pollack as defendants, as well as several other state officials. The suit had requested an injunction as well as unnamed financial costs because Boston officials failed to enforce the existing hackney regulations, known as Rule 403, on the emerging transportation network industry even though the two operated in similar manners.

Gorton denied an injunction last year, noting the city said it was waiting for state regulations and state officials saying several bills would be working their way through the Legislature. In early March, the House passed a bill that would regulate transportation network companies as technology companies and require beefed-up background checks. The Senate is still crafting its version. The city also created a Taxi Advisory Committee but the panel has made no recommendations or changes in its 14-month existence.

Both the city and state requested the suit be dismissed and argued taxis and the app-driven companies were distinctly different in manner and form of operation. Gorton allowed motions to dismiss several complaints against Department of Public Utilities commissioners as well as Pollock and Evans regarding claims of contractual promises and taking of property. The taxi owners had argued by allowing Uber, Lyft, Sidecar, and others to operate without buying the expensive medallions, they were operating on their turf. Gorton, though, said the city regulations clearly state the rules can be changed by the city without notice and the medallions did not constitute property that was taken.

But Gorton did uphold the taxi owners claim that failing to regulate the ride-hailing drivers the same as them constituted a violation of the Equal Protection Clause of the 14^th Amendment of the US Constitution. The judge was persuaded by the argument and allowed the claim to move forward, saying the plaintiffs had a good chance of prevailing should the suit go to trial.

“When TNCs began to enter the transportation-for-hire market, it may not have been discernible that they were situated similarly to taxicab operators,” he wrote. “Over time, however, differences between taxis and TNCs have receded….Taking the situation as it has evolved and based on the allegations in the complaint, a reasonable official would understand that refusing to apply Rule 403 to TNCs while continuing to enforce it against taxicab operators violates the Equal Protection Clause.”

Gorton ordered the city to answer to him by Sept. 30 “what changes to Rule 403 it intends to adopt regardless of the status of the state law at that time and 2) to show cause why this Court should not enter a preliminary injunction ordering the City to apply Rule 403 to TNCs.”

A spokeswoman Boston Mayor Marty Walsh said officials are reviewing the decision, while a spokesman for Gov. Charlie Baker said the administration was pleased the complaints against the state were dismissed and is pushing to get regulations through the Legislature.

Officials at Uber and Lyft did not have immediate reactions. A spokesman for Ride Safe MA, a coalition of taxi and livery owners and drivers, hailed the decision.

“In failing to regulate Uber and Lyft, Boston has created a two-tiered system that hurts those of us who are playing by the rules and ultimately, compromises the safety of passengers,” Scott Solombrino said in a statement. “It is time that Boston take this public safety issue seriously and regulate Uber and Lyft.”