Bos. Taxi Owners Ass'n, Inc. v. City of Bos.

180 F.Supp.3d 108

Boston Taxi Owners Association, Inc., Raphael Ophir and Joseph Pierre Plaintiffs,

v.City of Boston, Boston Police Commissioner William Evans, Chairman Angela M. O'Connor, Commissioner Jolette A. Westbrook, Commissioner Robert Hayden, Department of Public Utilities, and Massachusetts Department of Transportation Secretary Stephanie Pollock, Defendants.

Civil Action No. 15-10100-NMG

United States District Court, D. Massachusetts.

Signed March 31, 2016

Jenifer M. Pinkham, Tiffany L. Stichel, Schlossberg, LLC, Braintree, MA, Sharon Ophir, Sharon Ophir, Esq., Attorney at Law, Jamaica Plain, MA, for Plaintiffs.

John J. Boscia, City of Boston Law Department, Peter M. Geraghty, Boston Police Department, Jo Ann Shotwell Kaplan, Tori T. Kim, Sookyoung Shin, Massachusetts Attorney General's Office, Annapurna Balakrishna, U.S. Attorney's Office, Boston, MA, for Defendants.

Commonwealth of Massachusetts, pro se.

MEMORANDUM & ORDER

GORTON, J.

In this action, the Boston Taxi Owners Association, Inc., along with two individual Boston taxicab license owners, Raphael Ophir and Joseph Pierre (collectively, “plaintiffs”), challenge city and state regulations with respect to the registration and operation of vehicles providing transportation-for-hire services. Plaintiffs bring claims on federal constitutional, state contract and equitable grounds. The suit is brought against the City of Boston and Boston Police Commissioner William Evans (collectively, “the city defendants”) and against Angela M. O'Connor, the Chairman of the Massachusetts Department of Public Utilities (“DPU”) and Jolette A. Westbrook and Robert Hayden, DPU Commissioners (collectively, “the DPU defendants”), and Stephanie Pollack, the Secretary of the Massachusetts Department of Transportation (“MassDOT”) (collectively, “the state defendants”).

Recent amendments to the state regulations establish standards for the registration of motor vehicles providing services for so-called Transportation Network Companies (“TNCs”), such as Uber, Lyft and Sidecar. See 540 CMR § 2.05. Plaintiffs contend that those amendments create an arbitrary, two-tiered system between TNCs and taxicabs that violates plaintiffs' constitutional and contract rights. Moreover, they argue that the continuing failure of the City of Boston and Commissioner Evans to enforce existing local regulations governing the Hackney Carriage industry against TNCs also violates plaintiffs' constitutional and contract rights.

Pending before the Court are three motions to dismiss filed by the City of Boston, William Evans, and the state defendants. Also pending before the Court is plaintiffs' second motion for a preliminary injunction against the City of Boston.

I. Background

A. City Regulation of the Taxi Industry

The main source of regulation for the City of Boston (“the City” or “Boston”) taxicab industry is its Police Commissioner (“the Commissioner”), who is authorized by state statute to regulate the taxi business in Boston. In exercising that authority, the Commissioner requires anyone who drives or is “in charge of” a “hackney carriage” (i.e. taxicab) to possess a license known as a “taxicab medallion.” There are currently 1,825 city-issued medallions.

In 2008, the Commissioner issued a comprehensive set of taxicab regulations under Boston Police Department Rule 403 (“Rule 403”). Rule 403 defines a taxicab as “[a] vehicle used or designed to be used for the conveyance of persons for hire from place to place within the City of Boston.” Since its inception, Rule 403 has not been applied to livery vehicles, despite the fact that the rule's broad definition of a taxicab would seem to encompass them.

The rule requires all taxicab operators, inter alia, to possess a medallion, maintain a properly equipped and functioning taxicab, display a hackney carriage license at all times, refrain from cell phone use while operating a taxicab and belong to an approved dispatch service or “radio association.” Rule 403 also sets out the approved manner in which a taxicab in the City can engage customers.

Beginning in 2012, companies such as Uber, Lyft and Sidecar began operations in Boston and surrounding communities. The cellular phone app-based, for-hire transportation services have quickly gained popularity and serve as an alternative to traditional taxicab or livery services. The new companies rely, to varying degrees, on drivers who provide pre-arranged transportation services in their own private vehicles.

The City of Boston has yet to issue regulations specifically targeted at such companies, nor does it enforce Rule 403 against them. In October, 2014, however, the City convened a “Taxi Advisory Committee” which is authorized to examine the City's regulatory framework of for-hire transportation services and to develop new policies to account for these relatively new entrants into the market.

B. State Regulation of Motor Vehicle Registration

Overlaying the specific city regulations for taxicabs, MassDOT has enacted statewide requirements for the registration of all motor vehicles. 540 CMR § 2.05. Prior to a set of amendments enacted in 2015, 540 CMR § 2.05 outlined two ways in which small-scale vehicles (designed to carry 15 or fewer passengers) need to be registered in order to carry passengers for hire. The first kind of registration pertained to “taxicabs”, defined as

any vehicle which carries passengers for hire, and which is licensed by a municipality pursuant to M.G.L. c. 40, § 22 as a taxicab.

The second kind of registration was for a “livery vehicle”, defined as

any limousine or other vehicle which ... carries passengers for hire ... [but] is not required to obtain a taxicab license pursuant to M.G.L. c. 40, § 22.

As of January 16, 2015, MassDOT revised 540 CMR § 2.05 to include a third alternative for the registration of small-scale vehicles used to carry passengers for hired transportation. Under this third option, private passenger vehicles can be registered and used as “personal transportation network vehicles” on behalf of Transportation Network Companies, or TNCs. TNCs are defined as

entit[ies] operating in Massachusetts that, for consideration, will arrange for a passenger to be transported by a driver between points chosen by the passenger.

The amended regulations also restrict the way in which drivers using their own private vehicles on behalf of a TNC can solicit customers. Specifically, the TNC must have pre-arranged for the driver to provide transportation services and the driver is not permitted to solicit or accept an on-demand ride, otherwise known as a “street hail” or “hail pick-up.” Thus, the amended regulations broadly define TNCs and permit TNC drivers to use their own private vehicles so long as they register the vehicle as a “personal transportation network vehicle” and provide transportation services only to passengers that the TNC pre-arranged. Accordingly, the new regulations provide some restrictions on the way in which companies such as Uber, Lyft and Sidecar operate within the Commonwealth. The new state regulations do not address whether TNC drivers must obtain taxi medallions, which is a matter of local regulation.

The amendments to 540 CMR § 2.05 also set standards for TNC drivers' driving records. Further, although the regulations were promulgated by MassDOT, they instruct DPU to regulate TNCs by (1) requiring TNCs to obtain a certificate from DPU in order to do business in Massachusetts, (2) ensuring that TNCs and their drivers to carry appropriate liability insurance and (3) requiring TNCs to perform background checks on their drivers.

Since the amendments were promulgated, however, the new gubernatorial administration has adopted a different interpretation of DPU's authorizing legislation which does not permit DPU to implement the aforementioned duties without a further legislative act granting the agency the authority to do so. Accordingly, the restrictions on TNCs which were to be implemented by DPU have not yet begun to be enforced.

C. Procedural History

Plaintiffs filed their lawsuit and an emergency motion for a preliminary injunction on January 16, 2015, the same day that MassDOT's amendments to 540 CMR § 2.05 went into effect. After briefing by both parties and a hearing, the Court denied the motion on February 5, 2015. In a memorandum and order, the Court explained that its assessment of the balance of harms entailed by the proposed preliminary injunction was informed by its conclusion that issuing an injunction at that moment would short-circuit an ongoing political process at the city and state level through which potential legislation regulating TNCs was being considered.

The Court stated, however, that it expected that the City would demonstrate a purposeful commitment to action by promptly submitting recommendations on the regulation of TNCs to the City Council. The City was warned that failure to do so would cause the Court to re-examine plaintiffs' request for injunctive relief.

On May 15, 2015, after plaintiffs had filed an amended complaint, defendants filed three motions to dismiss, one by the City of Boston, one by Commissioner Evans and one by the state defendants. On August 26, 2015 plaintiffs filed a second motion for a preliminary injunction against the City.

D. Legislative and Regulatory Developments Since the Court's Consideration of Plaintiffs' First Motion for a Preliminary Injunction

Since the Court's ruling on plaintiffs' first motion for a preliminary injunction, developments with respect to the potential regulation of TNCs have occurred at both the city and state level. Specifically, the City of Boston's Taxi Advisory Committee has continued to convene and Commissioner Evans has purportedly been considering several changes to Rule 403, including a reduction in the required vehicle lease rates for taxi drivers, elimination of the requirement that medallion owners be radio association members and withdrawal of the requirement that taxicabs be factory new...