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Committee for Taxi Safety, Inc. v. City of New York

Supreme Court of New York, New York County

May 15, 2013

COMMITTEE FOR TAXI SAFETY, INC., and Taxifleet Management LLC, Petitioners,
v.
CITY OF NEW YORK; Michael R. Bloomberg, in his Official Capacity as Mayor of the City of New York; The New York City Taxi & Limousine Commission; David Yassky, in his Official Capacity as Commissioner, Chair, and Chief Executive Officer of the New York City Taxi & Limousine Commission, Respondents.

[971 N.Y.S.2d 794] O'Dwyer & Bernstein, LLP, New York City (Brian O'Dwyer, Gary Silverman and Joy Mele of counsel), for petitioners.

Michael A. Cardozo, Corporation Counsel, New York City (Nicholas Ciappetta of counsel), for respondents.

PETER H. MOULTON, J.

In this Article 78 proceeding petitioners seek a declaration that respondents have exceeded their powers, violated law, and acted arbitrarily and capriciously by adopting rules establishing the Nissan NV200 as the " Taxi of Tomorrow" and entering into a 10 year, exclusive manufacturing and supply contract with a subsidiary of Nissan North America, Inc.

BACKGROUND

The Taxi of Tomorrow program was initiated by respondent Taxi & Limousine Commission (the " TLC" ) in 2007 to consider options to improve taxicabs in New York City. As a result of a lengthy process involving requests for proposals (" RFPs" ) Nissan North America, Inc. (" Nissan" ) was chosen in 2009 to be the sole manufacturer of a purpose built taxi vehicle, the Nissan NV200 (hereinafter referred to as the " ToT" ). The ToT rules were approved by the Taxi & Limousine Commission (the " TLC" ) on September 20, 2012 and were published on October 1, 2012. They became effective 30 days after publication. The anticipated " activation date" of the [971 N.Y.S.2d 795] ToT rules is October 31, 2013. The rules apply to almost all of the over 13,000 New York City taxis, except for a few hundred restricted medallions which are exempt. [1] Pursuant to the ToT rules, taxicab and medallion owners will be required to purchase the Nissan NV200 when their existing vehicles need to be replaced.

Petitioner Committee for Taxi Safety, Inc. is a trade association of licensed leasing agents which manages over 2,000 of the more than 13,000 taxicabs that are licensed by the TLC to accept street hails. Petitioner Taxifleet Management LLC manages approximately 725 unrestricted taxi medallions. Respondent TLC was created under the New York City Charter for the purpose of the continuance, development and improvement of taxi service, and was granted power to set various enumerated standards ( see New York City Charter § 2300).

The TLC contends that the ToT is a " superior vehicle" which will increase passenger comfort. Taxi equipment will be installed in the ToT during the manufacturing process. The current practice is to " hack up" an existing vehicle with taxi accessories post manufacture. The ToT will have extra legroom, rear HVAC controls, passenger controlled reading lights, floor lighting, a transparent roof panel, extra room for luggage, a six-way adjustable driver's seat, and a built-in navigation system. Safety features will include sliding passenger doors to minimize the risk of pedestrians and cyclists getting struck, illuminated lights that inform the public that doors are opening, and passenger airbags around the partition— an important feature given that there is currently no way to control whether partitions installed during hack-up will interfere with passenger air bags. The ToT will also include some features for the disabled, but is not wheelchair accessible.

In this lawsuit, petitioners question the wisdom of dictating the Nissan NV200 (which has never before been manufactured) as the one and only taxi in New York City, and assert an array of causes of action. Petitioners maintain that the TLC exceeded its rule making authority under the guise of its power to establish standards. They argue that the ToT rules are anti-competitive and therefore violate the General Business Law and the New York State Constitution. Petitioners assert that respondents violated the hearing requirements of New York Procurement Policy § 2-11 and New York City Charter § 326. Petitioners aver that a conflict of interest existed because the engineering experts who evaluated the RFPs had a long-standing business relationship with Renault, S.A., which holds a significant stake in Nissan. Petitioners raise numerous concerns in an effort to demonstrate that the ToT rules are irrational, including concerns regarding the lack of road testing, concerns regarding adequate supply and cost of the vehicles and parts, and concerns that the glass roof prevents roof top advertising. Petitioners also mention that the Nissan NV200 is not wheelchair accessible, violating the Americans With Disabilities Act (the " ADA" ). The ADA argument is not asserted as a cause of action but is asserted, and developed, in a related [971 N.Y.S.2d 796] proceeding which is also pending before this court, Greater New York Taxi Association, Evgency Freidman, and Cliff Hammond-Adler v. The New York City Taxi Limousine Commission et al., Index Number 100135/13.[2] Finally, and dispositively, petitioners argue that the ToT rules violate New York City Administrative Code § 19-533 because the Nissan NV200 is admittedly not a hybrid-electric (" hybrid" ) vehicle.

In opposition to the petition, respondents maintain that the TLC did not exceed any rule making authority, because the TLC can set standards under New York City Charter § 2303[b][6].[3] They assert that the ToT rules are not anti-competitive because petitioners cannot point to a conspiracy, nor allege an " agreement" or an " unreasonable" restraint on trade. Respondents assert that " [m]anufacturing a custom-designed vehicle for a limited market is cost prohibitive... it would be difficult, if not impossible, to expect a manufacturer to build such a vehicle if it was not given assurances that the majority of the industry would have to purchase the vehicle" ( see Respondents' Mem. of Law In Opp. at 10). Such assurances amount to a non-actionable unilateral act by the City to open bidding to select a single purpose-built vehicle.[4] Respondents further maintain that petitioners' argument concerning compliance with procurement rules is without basis. They point out that the selection of Nissan was the result of RFPs, and therefore maintain that the sole source procurement rules are irrelevant. Further, respondents contend that the selection of a single design is not irrational and serves multiple interests. Drivers and passengers will know what to expect and they will recognize the iconic design. Comfort and convenience can be set " more precisely" because respondents are not " limited to painting on an existing canvas" and they can design the taxi for stop-and-go traffic or poor roads (Respondents' Mem. of Law In Opp. at 7). Additionally, respondents maintain that owners will benefit from the 150,000 mile warranty, predictable price increases and a mandated owners' input process. Respondents also maintain that the ToT rules do not violate New York City Administrative Code § 19-533, although as discussed below their argument on this point is terse and unpersuasive.

After oral argument, the court requested further briefing on Administrative Code § 19-533, and whether the ToT rules comply with this section's mandate that the TLC " approve one or more hybrid electric vehicle models for use as a taxicab" (Administrative Code § 19-533).[5] This decision only focuses on the narrow issue of whether respondents violated New York City Administrative Code § 19-533, an issue which has been all but conceded. The decision focuses on this issue because it [971 N.Y.S.2d 797] dooms the existing ToT rules, and renders it unnecessary to address any other argument.

DISCUSSION

Generally, courts will not interfere with agency determinations unless " there is no rational basis for the exercise of discretion or the action complained of is arbitrary and capricious" ( Matter of Pell v. Board of Education of Union Free School District No. 1 of Towns of Scarsdale and Mamaroneck, Westchester County, 34 N.Y.2d 222, 231, 356 N.Y.S.2d 833, 313 N.E.2d 321 [1974] [internal quotation marks omitted] ). However, where the issue is one of law, the agency is not entitled to deference because that issue is for the court ( see e.g., Matter of Bikman v. New York City Loft Bd., 14 N.Y.3d 377, 902 N.Y.S.2d 11, 928 N.E.2d 393 [2010] [agency is not entitled to deference in interpreting the multiple dwelling law and the Rules of the City of New York; matters of statutory interpretation do not require specialized agency knowledge] ). The Court of Appeals has long held that " [t]he Legislature may authorize an administrative agency ‘ to fill in the interstices in the legislative product by prescribing rules and regulations consistent with the enabling legislation’ " ( Matter of Mayfield v. Evans, 93 A.D.3d 98, 103, 938 N.Y.S.2d 290 [1st Dept. 2012] [internal citations omitted] ). Although the agency can go beyond the text of legislation, if not inconsistent with the statutory language or underlying purpose, " an agency cannot promulgate rules or regulations that contravene the will of the Legislature" or the terms of the authorizing statute ( id. ). The existing ToT rules run afoul of this final restriction on agency action, because they violate New York City Administrative Code § 19-533, which " has the force of a statute in the City of New York" ( Bittrolff v. Ho's Dev. Corp., 77 N.Y.2d 896, 899 n. 1, 568 N.Y.S.2d 902, 571 N.E.2d 72 [1991] ).

New York City Administrative Code § 19-533 provides, in relevant part:

Clean air taxis. The commission shall approve one or more hybrid electric vehicle models for use as a taxicab within ninety days after the enactment of this law. The approved vehicle model or models shall be eligible for immediate use by all current and future medallion owners. For the purposes of this chapter, a hybrid electric vehicle shall be defined as a commercially available mass production vehicle originally equipped by the manufacturer ...

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