Business

E-hailing startups given green light by NY Court of Appeals

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E-hailing startups fought repeated battles for survival across the country and today won a major victory.

New York’s Mayor Bloomberg announced that New York’s highest court unanimously upholds the state law authorizing “e-hailing.”

This means that the Taxi and Limousine Comission (TLC) can permit e-hail apps to provide yellow taxi service and pay for it via smartphone apps like Uber, Hailo and now Taxi Magic. Another decision today said that licensed drivers and cars are now allowed to accept street hails.

E-hailing and ridesharing startups have been embroiled in legal battles with taxi companies and transportation commissions since their conception. New York and other cities have repeatedly tried to shut these services down.

In the three cases (Metropolitan Taxicab Board of Trade  v. Bloomberg, Taxicab Services Assoc. v. State of New York, and Greater New York Taxicab Assoc. v. State of New York), members of the yellow taxi industry claimed e-hailing apps violate the state’s constitution. Today, the NY Supreme Court decided that “hailing” apps are constitutional because they advance a “substantial state interest” by improving access to transportation, and that a law protecting the defendants does not stand.

“The thing about the ridesharing platform is pretty simple, really….they fall into a kind of “universal reality” category,” said Allen Fromberg of the TLC in an email. ” The bottom line is that, if you are providing point-to-point “livery” or “taxi” service for-hire in the City of New York, which rideshares would, you need a license so that we can assure users that the vehicle is properly insured and inspected, and that the driver is properly licensed, background-checked and drug-tested….all of the protections that consumers deserve.  If you are operating outside of this “umbrella”, TLC enforcement will rain on your parade!  Passengers demand and deserve the levels of consumer protection our rules provide, and I don’t see that changing any time soon!”

E-hailing is a convenient alternative to hailing a taxi cab on the street or calling a phone number, and the court found that it is in New York’s best interest to make transportation as accessible as possible. In April, the New York City Taxi and Limousine Commission gave Uber permission to participate in a new pilot program that allowed it to operate as a test for e-hailing in NYC. New York has a thriving taxi businesses and is one of the biggest markets for these startups.

Today’s decision is a significant step forward in the ongoing battle between cab alternatives  and State authorities. However, it does not permit ridesharing startups like Lyft, SideCar, Relay Rides which operate peer-to-peer services where drivers are not licensed cab drivers. Allowing these companies to function could be the next step. Uber added ridesharing as one of its services following “massive regulatory ambiguity” and Lyft recently raised $60 million and continued its national expansion.

Photo Credit: Thomas Hawk/Flickr 


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