Glyka Trans, LLC v. City of N.Y.

161 A.D.3d 735

76 N.Y.S.3d 585

In the Matter of GLYKA TRANS, LLC, et al., appellants,

v.CITY OF NEW YORK, et al., respondents.

2015–11661

Index No. 8962/15

Supreme Court, Appellate Division, Second Department, New York.

Submitted—October 2, 2017

May 2, 2018

Cuti Hecker Wang LLP, New York, N.Y. (Eric Hecker, John R. Cuti, and Daniel Mullkoff of counsel), for appellants.

Zachary W. Carter, Corporation Counsel, New York, N.Y. (Scott Shorr and MacKenzie Fillow of counsel), for respondents.

RUTH C. BALKIN, J.P., JOSEPH J. MALTESE, BETSY BARROS, FRANCESCA E. CONNOLLY, JJ.

DECISION & ORDER

In a hybrid proceeding pursuant to CPLR article 78 and action for declaratory relief, the petitioners/plaintiffs appeal from an order and judgment (one paper) of the Supreme Court, Queens County (Allan B. Weiss, J.), entered November 19, 2015. The order and judgment granted the respondents/defendants' motion pursuant to CPLR 3211(a) and 7804(f) to dismiss the amended petition/complaint, denied the amended petition/complaint, and dismissed the proceeding/action.

ORDERED that the order and judgment is affirmed, with costs, and the matter is remitted to the Supreme Court, Queens County, for the entry of an amended judgment, inter alia, declaring, among other things, that the decision of the New York City Taxi and Limousine Commission to allow companies such as Uber Technologies, Inc., to pick up passengers via a smartphone application does not constitute an unconstitutional taking of the petitioners' property.

This proceeding/action arises out of the rapid growth of for-hire vehicle services provided by companies such as Uber Technologies, Inc. (hereinafter Uber), which allow passengers to use a smartphone application to electronically request on-demand ground transportation. The petitioners/plaintiffs (hereinafter collectively the petitioners) are taxicab medallion owners, drivers of taxicabs, leasing agents, entities that manage taxicab medallions, and a trade association of licensed leasing agents that manage taxicab medallions.

In New York City, there are three types of vehicles that are available to passengers for hire: (1) yellow medallion taxicabs; (2) Street Hail Liveries, which are green taxicabs; and (3) for-hire vehicles (hereinafter FHVs). FHVs include livery cars, luxury limousines, and "black cars," which are FHVs that are "dispatched from a central facility ..., where such central facility has certified to the satisfaction of the [TLC] that more than ninety percent of the central facility's for-hire business is on a payment basis other than direct cash payment by a passenger" (Administrative Code of the City of New York § 19–502[u] ). Pursuant to Administrative Code of the City of New York § 19–504(a)(1), "[n]o motor vehicle other than a duly licensed taxicab shall be permitted to accept hails from passengers in the street." State legislation known as the "HAIL Act" similarly provides that medallion taxicabs are "permitted to pick up passengers via street hail from any location within the city of New York." Medallion taxicabs also retain "the exclusive right ... to pick up passengers via street hail" in the "HAIL exclusionary zone," which is the New York City airports and the area of Manhattan south of East 96th Street and south of West 110th Street (L 2011, ch 602, as amended by L 2012, ch 9, §§ 4[c]; 11). Street Hail Liveries are permitted to pick up passengers by street hail anywhere in New York City except in the HAIL exclusionary zone. FHVs are prohibited from picking up passengers by street hail, and may only accept passengers "on the basis of telephone contract or prearrangement" (Administrative Code of City of N.Y. § 19–507[a][4]; see L 2011, ch 602, as amended by L 2012, ch 9, § 11).

On or about March 31, 2015, the petitioners commenced this hybrid CPLR article 78 proceeding and declaratory judgment action against the respondents/defendants (hereinafter collectively the respondents). The petitioners alleged in the amended petition/complaint that, in January 2015, the respondent/defendant New York City Taxi and Limousine Commission (hereinafter the TLC) adopted rules known as the "E–Hail Rules," which "allow passengers to summon taxicabs and Street Hail Liveries in New York City by E–Hail and to make E–Payments." In its notice of promulgation of the rules, the TLC stated that the E–Hail Rules were enacted based on data collected during a pilot program which "show that E–Hail [applications on cell phones] make[ ] it easier for passengers and drivers to connect without reducing the availability of the hallmark New York City hand-hail for other passengers." Thereafter, on or about April 24, 2015, the TLC published a set of proposed rules, referred to herein as the FHV E–Dispatch Rules, to "impose uniform standards on all current and future apps used by FHVs, whether they are offered by a base or by a licensed independent app company utilized by a base."

The petitioners challenged the decision of the TLC to, among other things, "allow black cars to accept e-hails." The first cause of action in the amended petition/complaint alleged, inter alia, that the TLC's decision to "allow black cars to accept e-hails is arbitrary and capricious, an error of law, and a failure to perform a mandatory duty," and sought to compel the TLC to enforce "its e-hail rules against black cars," "its base station dispatch rules against Uber," and "its base station franchise/cooperative rules against Uber." The second cause of action, entitled "Violation of NYC Charter § 2303(b)(4)," alleged that "[b]y permitting black cars to accept e-hails anywhere in the city, the TLC has effectively expanded the number of medallions in circulation without legislative authorization," and sought to compel the TLC to enforce "its e-hail rules against black cars." The third cause of action sought a judgment declaring that "the TLC's decision to allow black cars to pick up e-hails ... violates SEQRA and [City Environmental Quality Review]." The fourth and fifth causes of action sought a judgment declaring that "the City's decision to allow black cars to pick up e-hails constitutes an unconstitutional taking of the Petitioners' property without just compensation" under the Takings Clause of the Fifth Amendment of the United States Constitution and article I, § 7 of the New York Constitution.

The petitioners alleged in the amended petition/complaint that medallion yellow taxicabs have the exclusive right to pick up passengers via "hail," which includes both a "request, either through a verbal (audio) action ... and/or a visible physical action" and "an electronic method such as an E–Hail App" (35 RCNY 51–03). The petitioners alleged that "[t]he TLC's decision to allow companies like Uber to pick up e-hails—even though Uber is not required to shoulder the enormous financial burden of purchasing medallions and is not bound by the fare limitations and other significant restrictions that apply to yellow taxis in consideration for their hail exclusivity—enables Uber to compete unfairly with yellow taxis." They also alleged that "Uber's explosive growth and brazen encroachment upon the hail exclusivity that belongs to medallion owners have caused Petitioners to suffer very significant economic harm, both to the value of their medallions and to their incomes."

The respondents moved pursuant to CPLR 3211(a) and 7804(f) to dismiss the amended petition/complaint on the grounds that the petitioners lacked standing to commence this proceeding/action, that the proceeding/action was time-barred, and that the petitioners failed to state a cause of action. The Supreme Court granted the respondents' motion, denied the amended petition/complaint, and dismissed the proceeding/action. The petitioners appeal.

As a threshold matter, the respondents failed to establish, as a matter of law, that the petitioners lacked standing to maintain causes of action seeking relief in the nature of mandamus to compel, mandamus to review, and damages for an unconstitutional taking (see Brown–Jodoin v. Pirrotti, 138 A.D.3d 661, 29 N.Y.S.3d 426 ; see also North State Autobahn, Inc. v. Progressive Ins. Group Co., 102 A.D.3d 5, 17, 953 N.Y.S.2d 96 ; Matter of Ricket v. Mahan, 97 A.D.3d 1062, 949 N.Y.S.2d 272 ). Contrary to the respondents' contention, the allegations in the amended petition/complaint were "sufficient to satisfy the requirements that [the petitioners] have an actual stake in the litigation and suffer a harm that is different from that of the public at large" ( Matter of Association for a Better Long Is., Inc. v. New York State Dept. of Envtl. Conservation, 23 N.Y.3d 1, 7–8, 988 N.Y.S.2d 115, 11 N.E.3d 188 ). The respondents also failed to demonstrate, as a matter of law, that those causes of action were barred by the applicable four-month statute of limitations (see Roman Catholic Diocese of Brooklyn, N.Y. v. Christ the King Regional High Sch., 149 A.D.3d 994, 997, 53 N.Y.S.3d 85 ; Cali v. Savino, 127 A.D.3d 404, 405, 4 N.Y.S.3d 499 ; Vekiarellis v. Pall Corp., 302 A.D.2d 377, 378, 754 N.Y.S.2d 565 ; see also Matter of Seniors for Safety v. New York City Dept. of Transp., 101 A.D.3d 1029, 1031–1032, 957 N.Y.S.2d 710 ). The respondents rely on an "Industry Notice," which is dehors the record and so not properly before the Court on this appeal (see CPLR 5526 ; Nadasi v. Nadel–Nadasi, 153 A.D.3d 1346, 1351, 60 N.Y.S.3d 488 ; Castello v. Castello, 144 A.D.3d 723, 727, 41 N.Y.S.3d 250 ). Accordingly, the Supreme Court erred in determining that the cause of action in the nature of mandamus to review was time-barred.

However, we agree with the Supreme Court's determination that the petitioners failed to demonstrate a clear legal right to relief in the nature of mandamus to compel the TLC to enforce "its e-hail dispatch rules against black cars," "its base station dispatch rules against Uber," and "its base station franchise/cooperative rules against Uber" (see New York Civ. Liberties Union v. State...