United States District Court, S.D. New York
OPINION & ORDER
ABRAMS, UNITED STATES DISTRICT JUDGE.
an interest in promoting and protecting passenger comfort,
the New York City Taxi and Limousine Commission
("TLC") promulgated rules that prohibit the display
of advertising in certain types of for-hire vehicles without
prior authorization. Although the TLC's regulatory scheme
permits advertising in medallion taxis and street-hail
liveries, it is effectively banned in all other vehicles.
Vugo, Inc., a Minnesota-based company that places digital
content, including advertising, in rideshare vehicles such as
those affiliated with Uber and Lyft across the country, has
sought to expand its business into New York City. After the
TLC refused Vugo authorization to do so, it brought this
First Amendment challenge.
Vugo and the City now move for summary judgment. Because the
City is unable to justify the challenged regulations, even
under the relaxed judicial scrutiny applied to restrictions
on commercial speech first articulated in Central Hudson
Gas & Electric Corp. v. Public Service Commission of New
York, Vugo's motion is granted and the City's
motion is denied.
following facts, which are based on the parties' Rule
56.1 statements and supporting materials, are undisputed
unless otherwise noted. The TLC, a City agency, is responsible
for the "regulation and supervision" of vehicles
for hire in the City. N.Y.C. Charter § 2303(a). In
connection with its obligation to establish a comprehensive
transportation policy, it is tasked with considering, among
other things, "the promotion and protection of the
public comfort." Id. § 2300. Its authority
extends to "[t]he regulation and supervision of
standards and conditions of service, " id.
§ 2303(b)(2), and it is expressly empowered to establish
"standards of.. . comfort... in the operation of
vehicles and auxiliary equipment, " id. §
2303(b)(6). As of August 2016, the TLC oversaw more than 94,
000 vehicles, including medallion taxis and for-hire vehicles
("FHVs").Def. 56.1 ¶¶ 3-4, ECF No. 47. The
following vehicles are considered FHVs: community-based
liveries, black cars, luxury limousines, and street-hail
liveries ("SHLs"). Def. 56.1 ¶ 5.
currently allows two types of regulated vehicles to display
interior advertising: medallion taxis and SHLs. Pl.56.1
¶¶ 10, 12, 14, ECF No. 39. Medallion taxis are New
York City's ubiquitous "yellow cabs." Pl.56.1
¶ 4. SHLs, which are commonly known as "green"
or "borough" taxis, are a relatively new class of
FHVs that are authorized to accept street hails in the Bronx,
Brooklyn, Queens (with the exception of the airports), Staten
Island, and in certain parts of Manhattan. Def. 56.1
¶¶ 5, 30. In addition to being the only two types
of regulated vehicles allowed to display interior
advertising, medallion taxis and SHLs are also the only
regulated vehicles that accept street hails. Def. 56, 1
May 2005, no TLC-regulated vehicles were authorized to
display interior advertising. See Def. 56.1 ¶
13; Wanttaja Decl. ¶ 22, ECF No. 50. The rules being
challenged in this action, which prohibit interior
advertising in FHVs, were originally adopted as a single rule
(the "Original Rule") on August 5, 1999.
See Pl.56.1 ¶ 3. The Original Rule provided, in
relevant part, that "[a]n owner may not display any
advertising, either on the exterior or the interior of a
for-hire vehicle, unless such advertising has been authorized
by the Commission." Wanttaja Decl. Ex. B, at NYC0263. It
was adopted "to establish consistency between TLC's
regulation of advertising in medallion taxicabs and
FHVs." Wanttaja Decl. ¶ 20. The rule governing
interior advertising in medallion taxis at the time
prohibited taxicab owners from "displaying] inside a
taxicab any advertising or other notice not specifically
authorized by [the Taxicab Owners Rules] or the
Commission's Marking Specifications for Taxicabs unless
approved by the Commission." Wanttaja Decl. Ex. A, at
Original Rule was codified at 35 R.C.N.Y. § 6-12(f)(2).
Wanttaja Decl. Ex. B, at NYC0263. In 2010, the Original Rule
was re-codified as 35 R.C.N.Y. § 59A-29(e)(1) as part of
a reorganization of the TLC's rulebooks. Wanttaja Decl.
¶ 21 n.7. The TLC also adopted a parallel provision that
applies to FHV owners, which is codified at 35 R.C.N.Y.
§ 59B-29(e)(1). Pl. 56.1 ¶ 6. The language in these
provisions differs somewhat from the Original Rule, but the
parties agree that the differences are not
"substantive." Pl. 56.1 ¶ 4; Wanttaja Decl.
¶ 21 n.7. In its current form, 35 R.C.N.Y. §
59A-29(e)(1) provides that "[a]n Owner must not display
any advertising on the exterior or the interior of a [FHV]
unless the advertising has been authorized by the Commission
and a License has been issued to the Owner following the
provisions of the Administrative Code." Similarly, 35
R.C.N.Y. § 59B-29(e)(1) provides that "[a] Vehicle
must not display advertising on the outside or the inside
unless the Commission has authorized the advertising and has
given the Vehicle Owner a permit specifying that the
advertising complies with the Administrative Code."
disfavors interior advertising in all of the vehicles that it
licenses and regulates. Wanttaja Decl. ¶¶ 25, 28,
52. "Because the Commission had authorized no form of
interior advertising in taxicabs or FHVs prior to 1999,
passage of the rule did not alter the fundamental fact that
advertising was not authorized in either taxicabs or FHVs at
that time. Rather, the rule was intended to make clear that
interior advertising was not permitted and inform licensees
that they could not display interior advertising without
prior TLC authorization." Wanttaja Decl. ¶ 22.
allows advertising in medallion taxicabs and SHLs for one
reason: to offset the costs associated with the technology
systems that must be installed in those vehicles.
See Def. 56.1 ¶ 28; Wanttaja Decl. ¶ 47.
In 2004, the TLC
promulgated rules requiring [medallion] taxicabs ... to
install equipment capable of performing the following
functions: (1) electronic receipt and collection of trip
data; (2) acceptance of debit cards and credit cards for
payment; (3) driver receipt of text messages; and (4) display
of route guidance and other important information to
passengers via passenger information monitors
Decl. ¶ 30. The new equipment was intended to serve a
variety of policy objectives. The goal of the electronic
receipt and collection of trip data was to establish "an
efficient and accurate method of maintaining information
regarding the date, time, and location of passenger pick-ups
and drop-offs, duration of the trip, the number of
passengers, and the metered fare paid by the passenger(s),
among other data." Wanttaja Decl. ¶ 31. This
electronic collection of data was intended to allow the TLC
to "more efficiently synthesize and analyze this
enormous volume of data so as to guide the agency in its
day-to-day operations and larger policy decisions."
Wanttaja Decl. ¶ 31. The acceptance of debit and credit
cards was intended to provide a convenience for passengers
and improve the safety of drivers, as they would presumably
carry less cash. Wanttaja Decl. ¶ 32. The purpose behind
the text messaging system was threefold: (1) "to
communicate public service announcements and emergency
notifications to taxicab drivers"; (2) "to assist
in the recovery of lost property"; and (3) "to
inform drivers of fare opportunities, which [would] improve[
] overall customer service." Wanttaja Decl. ¶ 33.
The PIM was intended "to display the total fare at the
end of every trip, communicate public service announcements
to passengers, allow passengers to track their route, and
allow passengers to complete credit card payments."
Wanttaja Decl. ¶ 34. The purpose of these features was
to prevent customers from being overcharged by providing them
with greater transparency with respect to their fare and
route. Wanttaja Decl. ¶ 34.
equipment contemplated by these rules came to be known as the
Taxicab Passenger Enhancement Program ("TPEP"),
which is now required to be installed in all medallion taxis.
Def. 56.1 ¶¶ 8-9; Wanttaja Decl. ¶ 13. A
similar system called the Street Hail Livery Technology
System ("LPEP") must be installed in SHLs. Wanttaja
Decl. ¶ 44. The TPEP and LPEP requirements "added a
significant new cost to vehicle owners without any
expectation of increased business." Wanttaja Decl.
¶ 47. "[A]s a means by which owners could offset
the new costs, " the TLC crafted an exception to its ban
on interior advertising and promulgated new rules authorizing
interior advertising on the PIMs of medallion taxis and SHLs.
Wanttaja Decl. ¶ 47; see also PI. 56.1
¶¶ 10, 12-13. Consequently, as of August 2016,
interior advertising was permitted in about twenty-two
percent of the vehicles licensed and regulated by the TLC.
Def. 56.1 ¶ 27.
in 2015, Vugo is a media distribution company headquartered
in Minneapolis, Minnesota that distributes advertisements,
entertainment content, and public service announcements.
Pl.56.1 ¶¶ 16-17. Vugo partners with rideshare
drivers affiliated with companies such as Uber and Lyft.
Pl.56.1 ¶ 18. Drivers download Vugo's software onto
tablets that are mounted in their vehicles in a manner that
allows passengers to view and interact with the tablets.
Pl.56.1 ¶ 18. Approximately seventy-five percent of the
screen displays primary content-typically video-while the
remaining portion is a static display related to the main
content, the Vugo logo, and volume controls. Pl.56.1 ¶
27. Passengers cannot turn off the display, but they can
reduce the volume to a "near-mute" level. Pl.56.1
¶ 30. Advertisers pay Vugo to display their content and
Vugo provides the drivers with sixty percent of the
advertising revenue. Pl.56.1 ¶ 32.
spring of 2015, Vugo launched its beta program, making the
platform available to ride-share drivers across the country.
Pl.56.1 ¶ 33. During the beta period, a driver from New
York City informed Vugo that TLC rules banned advertising in
for-hire vehicles. Pl.56.1 ¶ 34. Vugo contacted the TLC
about entering the New York market and was informed that its
product was prohibited because FHVs are not permitted to
display advertisements. Pl.56.1 ¶¶
II. PROCEDURAL HISTORY
October 20, 2015, Vugo filed a Complaint alleging that the
TLC's ban on advertising in FHVs violates the First
Amendment. ECF No. 1. Before the Court are the parties'
cross-motions for summary judgment. ECF Nos. 38, 45,
STANDARD OF REVIEW
is entitled to summary judgment if it "shows that there
is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law."
Fed.R.Civ.P. 56(a). "A fact is material if it might
affect the outcome of the suit under the governing law, and a
dispute is genuine if the evidence is such that a reasonable
jury could return a verdict for the nonmoving party."
Baldwin v. EMI Feist Catalog, Inc., 805 F.3d 18, 25
(2d Cir. 2015) (citation and internal quotation marks
omitted). "[T]he moving party bears the burden of
demonstrating the absence of a material factual question, and
in making this determination, the court must view all facts
'in the light most favorable' to the non-moving
party." VW Credit, Inc. v. Big Apple Volkswagen,
LLC, No. 11-CV-1950 (PAE), 2012 WL 5964393, at *2
(S.D.N.Y. Nov. 29, 2012) (quoting Dickerson v.
Napolitano, 604 F.3d 732, 740 (2d Cir. 2010)).
cross motions for summary judgment are made, the standard is
the same for that of individual motions." JPMorgan
Chase Bank, N.A. v. Freyberg,171 F.Supp.3d 178, 184
(S.D.N.Y. 2016). "[N]either side is barred from
asserting that there are issues of fact, sufficient to
prevent the entry of judgment, as a matter of law, against
it." Heublein, Inc. v. United States, 996 F.2d
1455, 1461 (2d Cir. 1993). "[E]ach party's motion
must be examined on its own merits, and in each case all
reasonable inferences must be drawn against ...