A federal court sided with the Philadelphia Parking Authority on Monday, determining that the regulatory agency wasn’t liable for the damage that ride-share businesses like Uber and Lyft have done to taxis in the city.
District Judge Michael Baylson granted the PPA’s request for a summary judgment in the case brought by the owners of hundreds of taxi medallions and led by Checker Taxi Cab and Germantown Taxi Cab.
The value of medallions plummeted as Uber and Lyft caught on with Philadelphia riders, and the companies’ lawsuit was an attempt to get compensation from the PPA for their losses. The PPA imposed stringent and costly regulations on cab companies, they argued, while the new competitors initially operated with no oversight. Medallions worth $545,000 in 2014 had a value of $10,000 just two years later.
Baylson, though, argued that the PPA could not be held accountable for failing to regulate an illegal service as it did legal cabs. And it wasn’t in the court’s purview to redeem losses a business suffered due to competition. The PPA, though it regulated cab medallions, had no obligation to ensure their value.
“A court is not suited to protect market participants from competition, or from changing consumer preferences,” Baylson wrote in his decision. “The marketplace still speaks loudly, probably louder than a court can, and the resolution of competitive combatants must take place in the marketplace rather than in a courtroom.”
The lawsuit was filed in August 2016. In it, two distinct perspectives emerged on how the PPA reacted to the arrival of Uber and Lyft. The PPA described itself as an overwhelmed but well-meaning regulatory agency. During Uber and Lyft’s period of illegal operation in Philadelphia, the PPA did operate stings to ensnare ride-share drivers but had little success denting the rise of the new service.
The cab companies, meanwhile, saw the PPA as hapless and willing to overlook Uber and Lyft’s flouting of the law due to the popularity of the service. The companies contended they were excluded from the negotiations that led to Uber and Lyft becoming legal.
By November 2016, the Pennsylvania legislature had passed a law that granted the PPA oversight of Transportation Network Companies (TNCs) like Uber and Lyft. The PPA’s new chief executive, Scott Petri, praised the decision.
“The cab owners’ position would have wreaked havoc on the industry and seriously hampered the PPA’s ability to protect the riding public,” he said. “Moving ahead, we look forward to meeting with representatives from the taxi, limo, and TNC industries to make certain that regulations protect the riding public and ensure the safe operation of these entities while recognizing the significant differences between them.”
Several cab owners in the city referred calls to the lawyer representing them in the suit, Brett Berman. He did not return a call for comment.
The taxi companies argued that the PPA violated the Constitution’s Equal Protection Clause by treating two similar businesses differently and by selectively enforcing cab regulations.
Along with the differences in how ride shares and cabs were hailed and paid, the subsequent language of legislation that legalized Uber and Lyft provided evidence that they were a very different kind of service from taxis.
“The Pennsylvania legislature enacted substantially new legislation specifically governing TNCs,” Baylson wrote. “The legislature therefore clearly considered TNCs to be a new form of for-hire transportation, separate and distinct from taxicabs.”
Baylson agreed the evidence showed the PPA was not as aggressive as it might have been in reining in Uber and Lyft but determined the PPA had the right to regulate as it saw fit.
The agency’s “conduct, or absence of conduct, was well within in its discretionary rights, whether because of financial pressures, public sentiment, availability, or internal administrative decision making,” Baylson wrote.
The PPA, he said, was under no obligation to treat cabs and ride-share companies the same.
“The taxi companies have offered no legal support for the proposition that a legal participant in a regulated market is ‘similarly situated’ to an illegal participant in the same regulated market,” Baylson wrote.