New York County Clerk’s Index No. 102783/12
Court of Appeals
STATE OF NEW YORK
GREATER NEW YORK TAXI ASSOCIATION and
EVGENY FREIDMAN,
Plaintiffs-Respondents,
against
THE STATE OF NEW YORK, THE NEW YORK STATE ASSEMBLY,
THE NEW YORK STATE SENATE; ANDREW M. CUOMO, in his official
capacity as Governor of New York, THE CITY OF NEW YORK;
MICHAEL R. BLOOMBERG, in his official capacity as Mayor
of the City New York; THE NEW YORK CITY TAXI AND LIMOUSINE
COMMISSION, a charter-mandated agency, and DAVID YASSKY,
in his official capacity as Chairman and Commissioner of
The New York City Taxi and Limousine Commission,
Defendants-Appellants,
and
LIVERY BASE OWNERS INC. and
THE EXCELLENT CAR SERVICE INC.,
Intervenors Defendants-Appellants.
>> >>
To Be Argued By:
Steven G. Mintz
Time Requested: 15 Minutes
BRIEF FOR PLAINTIFFS-RESPONDENTS
MINTZ & GOLD LLP
Attorneys for Plaintiffs-Respondents
470 Park Avenue South
New York, New York 10016
Tel. No.: 212-696-4848
Date Completed: March 1, 2013
Of Counsel:
Steven G. Mintz
Lisabeth Harrison
DISCLOSURE STATEMENT
Pursuant to Section 500.1(f) of this Court’s Rules of Practice, Plaintiff-
Respondent Greater New York Taxi Association states that it has no affiliates,
parents or subsidiaries.
Statement Pursuant to Rule 500.13(a) Regarding Related Litigations
Pursuant to Section 500.13(a) of this Court’s Rules of Practice, Plaintiff-
Respondent Greater New York Taxi Association states that as of this date, there
are two related litigations, Taxicab Service Association, et al. v. The State of New
York, et al. (Index No. 102553/2012) and Metropolitan Taxicab Board of Trade, et
al. v. Bloomberg, et al. (Index No. 10472/2012), both of which have been assigned
the same briefing schedule as the instant case.
i
TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES .................................................................. iii
PRELIMINARY STATEMENT ............................................................ 1
COUNTERSTATEMENT OF QUESTIONS PRESENTED ................ 8
COUNTERSTATEMENT OF THE CASE ........................................... 8
I. The City’s Historical Regulation of the Taxi Industry ................. 10
II. The Mayor Circumvents the City Council ................................... 10
III. The HAIL Act ............................................................................... 18
IV. Proceedings in the Supreme Court ............................................... 20
ARGUMENT .......................................................................................... 24
POINT I
THE HAIL ACT VIOLATES THE HOME RULE CLAUSE
OF THE STATE CONSTITUTION ............................................ 24
1. The Substantial State Interest Test .......................................... 25
A. The State Has No Interest, Substantial or Otherwise,
in Which Branch of New York City Government Has
the Power to Determine the Supply of Taxicabs
Within the City ................................................................. 29
B. The State Has No Substantial Interest In Regulating
the Supply of Taxis Available for Street Hail in
New York City ................................................................ 33
1. History Custom and Practice ........................................ 33
a. The Case Law ............................................................ 33
ii
b. The City’s Unique Historical Role in Regulating
Taxi Supply .............................................................. 36
2. The State’s Interest in Mass Transit Does Not Justify Its
Intervention in the New York City Taxi Industry .............. 40
3. The State Cannot Rely on New York’s Status as a Mecca
for Commerce and Tourism as a Basis for Regulating
Access to Taxis ................................................................. 42
POINT II
THE HAIL ACT VIOLATES THE DOUBLE ENACTMENT
CLAUSE OF THE CONSTITUTION ......................................... 44
POINT III
THE HAIL ACT VIOLATES THE EXCLUSIVE PRIVILEGES
CLAUSE OF THE CONSTITUTION ......................................... 47
CONCLUSION ....................................................................................... 49
iii
TABLE OF AUTHORITIES
CASES Page
19
th
St. Assocs. v. State of New York,
79 N.Y.2d 434 (1992) ......................................................................... 48
Adler v. Deegan,
251 N.Y. 467 (1929) .................................................................... passim
Admiral Realty Co. v. City of New York,
206 N.Y. 110 (1912) ..................................................................... 34, 40
Boreali v. Axelrod,
71 N.Y.2d 1 (1987) ............................................................................. 16
Bugeja v. City of New York,
24 A.D.2d 151 (2nd Dept. 1965), aff’d, 17 N.Y.2d 606 (1966) .......... 29
City of New York v. Patrolmen’s Benevolent Ass’n,
89 N.Y.2d 380 (1996) (“PBA I”) ................................................. passim
City of New York v. State,
94 N.Y.2d 577 (2000) ................................................................... 24, 35
City of New York v. Village of Lawrence,
230 N.Y. 429 (1929)……………………………………………………….32
Floyd v. New York State Urban Dev. Corp.,
33 N.Y.2d 1 (1973) ............................................................................. 45
In re New York Elevated Ry.,
70 N.Y. 327 (1877)………………………..………………………………26
McAneny v. Board of Estimate,
232 N.Y. 377 (1922) ..................................................................... 34, 40
Newell v. People,
7 N.Y. 9 (1852)……………………………………………………… 26, 46
iv
New York Steam Corp. v. City of New York,
268 N.Y. 137 (1935) ..................................................................... 28, 34
Noel v. New York City Taxi and Limousine Commission,
687 F.3d 63 (2d Cir. 2012) ................................................................. 41
Osborne v. Cohen,
272 N.Y. 55 (1936) ...................................................................... passim
People v. Rathbone,
145 N.Y. 434 (1895)……………………………………………………….46
Patrolmen’s Benevolent Ass’n v. City of New York,
97 N.Y.2d 378 (2001) (“PBA II”) ............................................... passim
Robertson v. Zimmermann,
268 N.Y. 52 (1935) ............................................................................. 34
Rudack v. Valentine,
163 Misc. 326 (Sup. Ct. N.Y. Co.),
aff’d, 274 N.Y. 615 (1937) ............................................... 10, 11, 12, 36
Town of Islip v. Cuomo,
64 N.Y.2d 50 (1984) ........................................................................... 28
United Taxicab Bd. of Trade v. City of New York,
150 Misc. 636 (Sup. Ct. N.Y. Co. 1933) ....................................... 10-11
Wambat Realty Corp. v. State,
41 N.Y.2d 490 (1977) .................................................................. passim
Wolpoff v. Cuomo,
80 N.Y.2d 70 (1992) ........................................................................... 16
v
STATE CONSTITUTION AND STATUTES
N.Y. Const., art. 3, § 17 ......................................................................... passim
N.Y. Const., art. 9, § 1(a) .......................................................................... 6, 31
N.Y. Const., art. 9, § 2(b)(1) .................................................................. passim
N.Y. Const., art. 9, § 2(b)(2) .................................................................. passim
N.Y. Const., art. 9, § 3(d)(4) ........................................................................... 3
N.Y. Exec. Law § 290 ................................................................................... 40
N.Y. Gen. Munic. Law § 181 ..................................................................... 6, 7
N.Y. Tax Law § 1281 ................................................................................... 40
N.Y. Transp. Law § 15-b .............................................................................. 40
N.Y. Veh. & Traffic Law § 370 .................................................................... 40
L. 1897, Ch. 378, § 49 .................................................................................. 10
L. 1934, Ch. 867 ........................................................................................... 11
L. 1935, Ch. 392 ........................................................................................... 11
L. 1937, Ch. 929 (Haas Act) ......................................................................... 36
CITY STATUTES AND ADMINISTRATIVE RULES
N.Y.C. Admin. Code § 19-504(i) ................................................................. 14
N.Y.C. Admin. Code § 19-532(b) ......................................................... passim
N.Y. City Charter § 2303(b)(4) ............................................................. passim
N.Y. City Local Law No. 12 (1971) ....................................................... 12, 37
34 RCNY § 54-20 ......................................................................................... 13
vi
35 RCNY § 55-20 ......................................................................................... 13
35 RCNY § 59B-17(c) .................................................................................. 13
TLC Industry Notice No. 12-25, July 20, 2012 ............................................ 38
OTHER AUTHORITIES
Home Rule and the New York Constitution,
66 Columbia L. Rev. 1145 (1966) .......................................................... 29
Tribe, American Constitutional Law (2d Ed) ............................................... 26
1
PRELIMINARY STATEMENT
This brief is submitted by Plaintiffs-Respondents Greater New York
Taxi Association (“GNYTA”) and Evgeny Freidman (collectively, the
“GNYTA Respondents”) in response to the separate briefs submitted by (1)
Defendants-Appellants State of New York (the “State”), Governor Andrew
M. Cuomo, the New York State Assembly and the New York State Senate
(collectively, the “State Appellants”), (2) Defendants-Appellants City of
New York (the “City”), New York City Mayor Michael Bloomberg (the
“Mayor”), the New York City Taxi and Limousine Commission (the “TLC”)
and TLC Commissioner David S. Yassky (collectively, the “City
Appellants”), and (3) Defendants-Intervenors-Appellants Livery Base
Owners, Inc. and The Excellent Car Service, Inc. (collectively, the City
Appellants, the State Appellants and the Livery Base Owners are referred to
as the “Appellants”).1
At the outset, it is important to stress what is not at issue in these
appeals. Notwithstanding Appellants’ extended and one-sided arguments
about the ostensible need for additional street-hail service in the outer
boroughs or even about the need for up to 2,000 wheelchair accessible
1 The GNYTA Respondents join in the arguments made in the separate briefs submitted
by plaintiffs-Respondents Metropolitan Taxicab Board of Trade, et al. and Taxicab
Service Association, et al.
2
yellow taxis, the issue here is not the wisdom of the challenged State
legislation but rather the method that was chosen to effectuate the stated
goals. Indeed, respondent GNYTA, whose members own approximately
1,500 taxi medallions, is widely known as a progressive organization that
represents fleets having the largest percentage of hybrid and wheelchair
accessible taxicabs in the City (G34). 2 Given their own commitment to the
goal of accessibility, the GNYTA Respondents certainly do not oppose an
expansion in the number of wheelchair accessible vehicles. They, along
with many others in the industry, however, have serious concerns about the
rapid addition of up to 20,000 new vehicles (a 151% increase over the
existing number of yellow taxis) that are licensed to accept street hails. In
view of Appellants’ admissions that City officials have thus far been unable
to effectively enforce the existing rules against livery drivers accepting street
hails, the GNYTA Respondents share the concerns of many local New York
City officials who are close to the problem, i.e., that increasing the number
of vehicles licensed for street hail from approximately 13,000 to over 33,000
will not only destabilize the medallion market but, more importantly, will
lead to exactly the kind of “Wild West” cut-throat competition and
2 Unless otherwise indicated, numbers inside parentheses preceded by the letter “G,”
“M,” or “T” refer, respectively, to pages in the Record on Appeal for Greater New York
Taxi Association v. State of New York, Metropolitan Taxicab Board of Trade v.
Bloomberg, or Taxicab Service Association v. State of New York.
3
congestion that prompted the adoption of the regulatory scheme that has
been in place since 1937.
In any event, the political and policy concerns of the parties are not
the critical question in these appeals. Rather, the question that the Court
must decide is whether the State Legislature in Albany, which is comprised
of representatives from all over the State (including rural and suburban
districts), may dramatically alter the dynamics of the taxi industry in New
York City by (1) shifting the decision-making authority from the City
Council to the Mayor, and (2) authorizing the Mayor to more than double
the number of vehicles for hailing on the City’s streets.
The Supreme Court, New York County (Engoron, J.), struck down the
State legislation on the grounds that it violated the State Constitution’s
Home Rule Clause, N.Y. Const., art. 9, §§ 2(b)(2), the Double Enactment
Clause, id., art. 9, § 2(b)(1), and Exclusive Privileges Clause, id., art. 3, § 17,
and, it is respectfully submitted, the court’s decision should be affirmed.
The challenged legislation, L. 2012, ch. 9 (the “HAIL Act”), is indisputably
a special law, since, “in terms and in effect,” it applies only to New York
City. See N.Y. Const., art. 9, § 3(d)(4). Accordingly, it required a “home
4
rule message”3 unless it bore a reasonable relationship to a matter of
substantial State concern. Id., art. 9, § 2(b)(2); Patrolmen’s Benevolent
Ass’n v. City of New York, 97 N.Y.2d 378, 386 (2001) (“PBA II”).
When distilled to the essentials, Appellants’ primary position appears
to be that the supply of street hail vehicles in New York City is a matter of
“substantial” State concern because it is a matter affecting the public welfare
in general. If that is all that is required, however, there would be no limits
on the State’s ability to enact special laws aimed solely at New York City,
and the constitutional Home Rule provisions would effectively be nullified.
Nothing in the case law – past or recent – suggests such a drastic result. To
the contrary, modern case law makes clear that the Home Rule provisions
are not to be construed and applied in a way that renders them toothless. See
City of New York v. Patrolmen’s Benevolent Ass’n, 89 N.Y.2d 380, 389-390
(1996) (“PBA I”). And, as the seminal cases in this area emphasize, the
most reasonable way to distinguish between matters of purely local concern
and those in which the State has a “substantial” interest is to look to custom,
tradition and history, at least where there is no other concrete State interest
3 A Home Rule message is a “request of two thirds of the total membership of [the local]
legislative body or . . . a request of its chief executive officer concurred in by a majority
of such membership.” N.Y. Const., art. 9, § 2(b)(2).
5
(such as statewide uniformity or public health4). See, e.g., Adler v. Deegan,
251 N.Y. 467, 477-78 (1929), Osborn v. Cohen, 272 N.Y. 55, 59-60 (1936),
and Wambat Realty Corp. v. State, 41 N.Y.2d 490, 494 (1977). Reliance on
the historical treatment of the issue is particularly appropriate in this context
not only because it provides a reliable and objective benchmark, but also
because it assures that the State will not have the unfettered authority to
interfere with the regulatory decisions of the local officials who have been
weighing the subtle policy and competing stakeholder interests for decades.
That approach is the one that best fosters the basic goals of the New York
State Constitution’s Home Rule requirements.
Even if some valid “substantial” State interest in the taxi supply in
New York City could be found, the State can have no similar interest in the
reallocation of the decision-making power from the legislative branch of
City government (the City Council) to the executive branch (the Mayor).
Significantly, the challenged legislation seeks to accomplish the goal of
expanding street hail and wheelchair-accessible vehicles not by creating an
4 Appellants have attempted to fit the State’s effort to intervene in the taxi supply issue
into the category of “transportation” legislation that has previously been treated as a
matter of State concern. However, as discussed infra, the prior cases all involved mass
transit, a subject matter that is far removed from the distinctly individualized service
provided by yellow taxis and for-hire vehicles. Moreover, the City has previously taken
the position that the taxi industry in New York is not part of the public transportation
system, but is a separate private industry. (G379, T2077-2080, T2124-2128). The City’s
attempt to take polar opposite positions in successive litigations should not be
countenanced.
6
entirely new class of licensed street hail vehicles and increasing the number
of wheelchair-accessible yellow cabs, but rather by simply taking the
authority to make such determinations from the City Council (where it has
resided since 1971 under N.Y.C. Charter § 2303[b][4]) and giving it to the
Mayor (who clearly would prefer not to be constrained by the City Council).
Such meddling in the distribution of power within City government strikes
at the heart of the value of Home Rule.
Further, it undermines the fundamental and inalienable right of a
municipality to maintain its own elected legislative body pursuant to the
constitutional bill of rights for local government. N.Y. Const., art. 9, § 1(a).
That right would have little force if the State can circumvent the authority of
a local legislature by taking away the specific powers it has been granted by
statute or charter, see General Municipal Law § 181; N.Y.C. Charter §
2303(b)(4), solely because the State Legislature disagrees with the choices
the local legislative body has made. The prospect of the State Legislature’s
dictating the balance of power between the City’s legislative and executive
branches is of particular concern because of the mischief that can easily
occur when the State and local legislative bodies are controlled by different
political parties.
In this case, the State Legislature’s ad hoc involvement is particularly
7
pernicious because it left intact the statutory and Charter provisions that give
the City Council the power to regulate the supply of taxis authorized to
accept street hails, see General Municipal Law § 181; N.Y.C. Charter §
2303(b)(4), and, consequently, left a big question mark over the issue of
exactly who is in now charge of determining the manner in which the yellow
cab and black car industries operate in New York City. The resulting
uncertainty will undoubtedly destabilize the market for medallions, whose
value derives directly from the exclusive right to accept street hails that they
confer. The value of these medallions, 42% of which represent substantial
investments by single individual owner-drivers, will suffer dramatically if
the Hail Act is upheld and, as a result, it remains unclear going forward
whether the State Legislature or the City Council -- or both – have
overlapping powers to set the number of vehicles authorized to accept street
hails.
In addition to being invalid under the Home Rule Clause of the
Constitution, the HAIL Act violates the Double Enactment Clause in that it
diminishes and/or contravenes the powers granted by N.Y. City Charter §
2303(b)(4), was not adopted by successive enactments in two consecutive
calendar years and is not justified by any substantial State interest.
8
Finally, the HAIL Act violates the Exclusive Privileges Clause, which
prohibits “private or local bill[s] . . . granting any private corporation,
association or individual any exclusive privilege . . . or franchise
whatsoever.” N.Y. Const., art. 3, § 13. Under the Act, only livery drivers
who have held their livery licensees for at least a year are eligible for the
new street hail licenses. Holders of taxi medallions are not entitled to apply.
The restriction cannot be justified as a reasonable licensing restriction, as
Appellants have argued, since the street hail license is immediately
transferrable to any driver with a livery license regardless of how long it has
been held. Given the relatively low price set by the Legislature for the
license’s initial sale ($1,500 during the first year, $3,000 during the second
year and $4,500 during the third year), the limited class of existing livery
licensees eligible to purchase the license will have the opportunity to make
an immediate, sizeable profit. As the Supreme Court concluded, this part of
the statute has all of the earmarks of special-interest legislation and falls
within the evil that the Exclusive Privileges Clause was adapted to prevent.
COUNTERSTATEMENT OF QUESTIONS PRESENTED
1. May the State Legislature shift the power to regulate the supply of
vehicles licensed to accept street hails in New York City from the City
9
Council to the Mayor without either a Home Rule message or an identifiable
substantial interest in the rearrangement of government functions?
The Supreme Court answered the question in the negative, holding that
the challenged statute violated the Home Rule Clause, art. 9, § 2(b)(2), of
the State Constitution.
2. Does the State have a substantial interest in usurping the City’s
traditional authority to regulate the supply of vehicles licensed to accept
street hails in New York City?
The Supreme Court answered the question in the negative.
3. Did the State’s usurpation of the City’s traditional authority to
regulate the supply of vehicles licensed to accept street hails in New York
City violate the Double Enactment Clause of the New York State
Constitution, art. 9, § 2(b)(1)?
The Supreme Court answered the question in the affirmative.
4. Does the provision of the HAIL Act limiting the initial sale of the new
class of street hail licenses to livery licensees who have held their licenses
for at least a year violate the Exclusive Privileges Clause of the New York
State Constitution, art. 3, § 13?
The Supreme Court answered the question in the affirmative.
10
COUNTERSTATEMENT OF THE CASE
I. The City’s Historical Regulation of the Taxi Industry
Contrary to the claim in the City Appellants’ brief (p. 6), the State has
not historically played a substantive role in the regulation of the taxi industry
in New York City. The first Greater New York Charter, which was adopted
by the State Legislature in 1897, L. 1897, ch. 378, § 49, gave the City’s
legislative body the exclusive power “to provide for the licensing and
otherwise regulating the business of . . . hackmen.” See Matter of Rudack v.
Valentine, 163 Misc. 326, 327 (Sup. Ct. N.Y. Co.), aff’d, 274 N.Y. 615
(1937); L. 1897, ch. 378, § 49. The substance of this Charter provision has
been continued to the present without substantive change.
A 1913 “Public Hack Ordinance” adopted by the City gave the power
to license taxis to the Bureau of Licenses, a component of the executive
branch of City government (City Appellants’ Brief, pp. 6-7). The licensing
and regulatory functions were later transferred to the New York City Police
Department by act of the City’s Board of Aldermen. Local Law No. 9
[1925] of the City of New York; see United Taxicab Bd. of Trade v. City of
New York, 150 Misc. 636, 638 (Sup. Ct. N.Y. Co. 1933). From 1931 to
1933, the regulatory authority was exercised by the City’s Board of Taxicab
Control. See United Taxicab Bd., 150 Misc. at 638. During that period, the
11
Board of Taxicab Control adopted a comprehensive code “covering the
entire subject of licensing taxicabs, rates of fare to be charged and other
regulations concerning taxicabs.” Id. Regulatory authority over taxicabs
was returned to the Board of Aldermen in 1933. Id.
The City government’s authority to regulate the taxi industry was
continued through the Charter revision process that took place in 1934 and
1935. See L. 1934, ch. 867; L. 1935, ch. 292. When the City Council was
created, the legislative functions of the Board of Aldermen were transferred
to it, the City’s authority to act as a licensing entity was acknowledged and
the Police Commissioner was granted the licensing authority (City
Appellant’s Brief, p. 9).
By the mid-1930’s, New York City had an oversupply of private taxis,
leading to a host of social ills, including traffic congestion, “excessive”
competition among drivers and inadequate driver income. Matter of
Rudack, 163 Misc. at 327-28. Between 1930 and 1936, both the City
officials and the State Legislature studied the problem and found, not
surprisingly, that the answer lay in limiting the number of available taxicab
licenses or “medallions.”5 Id. at 329. The result was the Haas Law, an
5 A taxicab medallion is a transferable license that gives a vehicle the exclusive right to
pick up passengers in response to street hails in the City of New York and at its airports.
Each medallion owner is issued a metal plate by the TLC, which displays the medallion
12
enactment of the City Board of Aldermen that prohibited the issuance of
new medallions unless the hack bureau of the police department determined,
after public hearings, that public welfare required additional cabs.6 Id. In
1971, a local law transferred the power to increase the number of medallions
to the City Council, but only upon the enactment of a local law. See N.Y.
City Local Law No. 12 (1971); N.Y.C. Charter § 2303(b)(4).
Since the Haas Law was passed in 1937, the number of outstanding
medallions remained fairly constant. Over the years, the demand for taxi
service has risen as has the selling price of medallions (T303, 311-314). To
address concerns related to the need for additional street hail service or
wheelchair accessible vehicles, the City’s legislative body has not hesitated
to craft measured solutions after weighing all of the competing concerns.
Thus, in 1996, the City issued a Home Rule message asking the
Legislature to authorize the issuance and auctioning of 400 new medallions
number of the owner's taxicab. TLC regulations require licensed taxicabs to be painted
yellow, so medallion taxicabs are also known as "yellow cabs" (G36).
6 As Appellants have noted, the State Legislature had created a Joint Committee to study
the oversupply problem and, like the City, determined that limiting taxi licenses was the
best solution. However, the Legislature did not take any action as a result of this
conclusion. Nonetheless, in an effort to inflate the Legislature’s role, the State
Appellants suggest that the Haas Law was somehow the result of the Joint Committee’s
recommendation. See State Appellants’ Brief, p. 16. This formulation, however,
completely ignores that the real impetus for the Haas Law was (1) a 1930 survey and
report prepared by a commission appointed by Mayor Walker, (2) a 1934 study and
report by a committee appointed by Mayor LaGuardia, and (3) public hearings held by a
committee of the Board of Aldermen. Matter of Rudack, 163 Misc. at 329.
13
(T300-301, G37).7 Adopting a similar measured approach in 2003, the City
Council initiated two separate Home Rule messages asking for additional
medallions, with the result that another 1,050 were authorized and auctioned
(G37, T220-221, M164-165). With respect to wheelchair accessibility, the
City Council took the initiative by (1) mandating that at least 9% of the new
medallions authorized in 2003 be wheelchair accessible, see N.Y.C. Admin.
Code § 19-532(b), (2) mandating that all of the medallions issued in 2006 be
wheelchair accessible, and (3) adopting rules that fostered wheelchair and
service animal accessibility, see 35 RCNY §§ 59B-17(c), 54-20, 55-20
(G384).
In other words, since its existence, the City Council, whose members
are elected from the various neighborhoods in the five boroughs, has
responded to the needs of the taxi-riding public and the members of the
industry by balancing the various considerations and authorizing measured
increases in medallions as it has deemed appropriate. While the immediate
needs of riders were considered, the City Council also took into account the
need to resist measures that would destabilize the medallion market, since a
7 The City Council does not require the permission of the State to issue new medallions.
A Home Rule message was sent because the State has to approve selling medallions at a
price higher than the administrative cost as the differential is considered to be a tax.
14
lack of stability could well have a negative effect on the taxi industry.8
While the Mayor or particular interest groups may have disagreed with the
City Council’s responses, no one could dispute that, pursuant to the
allocation of power in the City Charter, see N.Y.C. Charter § 2303(b)(4), the
City Council’s legislative choices on the issue of new medallions were – at
least until recently -- conclusive.
II. The Mayor Circumvents the City Council
The City Charter’s allocation of the authority to determine the number
of outstanding medallions was upended, however, in 2011, when Mayor
Bloomberg became dissatisfied with the appropriate legislative process as a
means to meet his own goals and decided to take matters into his own hands.
Apparently, the Mayor saw an opportunity to address his perceived shortage
of yellow taxis available for hailing in Northern Manhattan and the outer
boroughs, while at the same time improving his budgetary position through
8 Medallions can be transferred at fair market value to any buyer who meets certain
qualifications and can be used as collateral for loans (G38). Because only holders of
medallions have the exclusive legal right to accept street hails from any location within
the City of New York, medallions have been valuable investments, recently selling for
between $700,000 and $1 million (G38). In making the significant business decision to
purchase a medallion, buyers and prospective buyers rely largely on the stability of the
regulatory scheme that guarantees the exclusive right to pick up street hails (G38).
Significantly, pursuant to N.Y.C. Admin. Code § 19-504(i), 42% of the outstanding
medallions are held by single individual driver-owners, as opposed to corporate owners
(M34, T142). These individual medallion owners, many of whom have borrowed large
sums to purchase their medallions, are at great risk of losing their entire investments if
the market is destabilized as a result of the HAIL Act.
15
the revenues to be gained from auctioning the new street hail licenses (M23-
24, T131-32, T1288-1289).
Discussions among the Mayor’s office, industry representatives and
members of the City Council were conducted through the spring of 2011
(T1289). Understandably, industry representatives had legitimate concerns
about the effect that the introduction of a new class of 18,000 street hail
licenses would have on the value of their medallion investments, on traffic
conditions in the City and on the highly competitive street-hail market
(T456, T467-468, T488-491, T957-962, T1289). Throughout the
negotiations, it was assumed that the City Council had the ultimate
responsibility for approving or disapproving the Mayor’s plan and that a
Home Rule message from the City Council would be needed before any plan
could be implemented through a resolution of the State Legislature (M168-
171, T371).9 After attempting unsuccessfully to reach a compromise that
would address the industry’s legitimate concerns, the Mayor and the
members of the City Council terminated their discussions before a City
Council vote could be taken (M172-175). In exercising its own judgment
and declining to simply accede to the Mayor’s plan, the City Council was
9 Even TLC Commissioner Yassky recognized that there would have to be a “full
legislative process” on the Mayor’s plan, “requir[ing] City Council approval.” (M168-71;
T371).
16
not just being obstinate, but rather was performing appropriately as the
City’s elected legislative body charged with weighing competing interests
and crafting government policy. See, e.g., Wolpoff v. Cuomo, 80 N.Y.2d 70,
79 (1992); Boreali v. Axelrod, 71 N.Y.2d 1, 12 (1987).
In declining to rubber stamp the Mayor’s plan, the City Council
recognized that demand for additional medallions has fluctuated over the
years, and previous evaluations have concluded that no additional taxicabs
were appropriate (T296, T298). Increased demand has resulted in increased
productivity as drivers have transported passengers for more of their shift
and remained empty for less time (T296). Notably, when demand
outstripped supply in the past, the City Council responded appropriately, by
raising the number of medallions on three separate occasions, adding over
1,000 new medallions in the last decade alone and explicitly recognizing the
need to increase taxicab availability for the disabled (M164-M165, M207-
221).10
10 While Appellants criticize the City Council for not solving the problem of illegal street
hails in the outer boroughs, the fact is that this issue spent little time percolating in City
government before Mayor Bloomberg ran to Albany. The only TLC study on which
Respondents rely to support the assertion that illegal street hails were widespread, was
done in November 2010, just two months before Mayor Bloomberg rolled out his plan
(M24, M115). The State Appellants’ claim that there was a demonstrated failure by the
City Council to act on a demonstrated need is certainly debatable, if not outright
inaccurate.
17
Undeterred by his failure to persuade the City Council, the Mayor
decided to do an end run around the elected City legislative body by taking
his case directly to the State Legislature without the benefit of a Home Rule
message (M172-175). As the Supreme Court noted, over the course of six
days (including a weekend), the Legislature hastily adopted the Mayor’s
proposal – without holding any hearings -- in the closing days of its 2011
session (G368).11 Such precipitous action was particularly troubling, since
the state legislators were not independently familiar with the issues
associated with the New York City taxi industry and were certainly not as
familiar with those issues as the City Council members who had not adopted
the Mayor’s plan.
Apparently uncomfortable with the hastily adopted bill, the Governor
held a “Taxi Summit” in December 2011, and helped to broker a deal in
which he would sign the bill into law if it were amended to address certain
issues relating to access for the disabled (T1290). The HAIL Act was
signed on December 21, 2011, L. 2011, ch. 602, and agreed-upon
amendments were signed on February 17, 2012, L. 2012, ch. 9, again
without a Home Rule Message.
11 The Mayor’s bill, which was introduced on June 18, 2011, passed the Assembly on
June 21 and passed the Senate on June 24, 2011 (G368).
18
III. The HAIL Act
As a prologue, the Legislature set forth the “findings” that ostensibly
led to the HAIL Act’s passage. The statement of “findings” began with the
assumption that “the public health, safety and welfare of the residents of the
State of New York traveling to, from and within the city of New York is a
matter of substantial state concern, including access to safe and reliable mass
transportation such as taxicabs” (G369). The Legislature then “found” that
“the majority of residents and nonresidents of the city of New York do not
currently have sufficient access to legal, licensed taxicabs available for street
hails,” and that “the supply of accessible vehicles is insufficient to provide
adequate and reliable transportation for the residents of and the commuters
and visitors to New York City who have disabilities” (G369). Finally, the
Legislature declared that “[i]mproving access to mass transportation,
including taxicabs, for the residents of and the commuters and visitors to
New York City further these matters of substantial state concern” (G369).
Given the haste with which the HAIL Act was introduced and then
voted on in the Legislature (6 days, including an intervening weekend) and
given the absence of hearings, it strains credulity to believe that the
Legislature actually made findings of its own, as opposed to merely rubber
stamping the arguments put forth by the Mayor and the other HAIL Act
19
partisans. Tellingly, the Legislature created a joint committee and produced
its own written recommendations when the problem of oversupply was
under discussion in the mid 1930’s. Even then, the Legislature did not act
precipitously as it did here, but instead deferred completely to the City’s
ability to govern the industry when the city adopted the Haas Act.
The details of the HAIL Act itself are accurately described in the
Supreme Court’s well-reasoned decision and need not be repeated here. The
critical features of the Act, for purposes of these appeals are:
(1) A new class of licenses would be created that would authorize the
licensee to accept street hails in the outer boroughs (excluding the
two Queens airports) and northern Manhattan (“Hail licenses”)
(HAIL Act § 4[b]-[c]);
(2) The TLC (with no input from the City Council) would have the
authority to sell up to 450 vehicle base station permits to existing
base stations for $3,000 each, with the license valid for three years
and automatically renewable if maintained in good standing (HAIL
Act § 4);
(3) The TLC (with no input from the City Council) would have the
authority to issue, over a three-year period, up to 18,000 Hail
licenses (20% of which must be wheelchair accessible), with the
initial issuance limited to existing owners of for-hire12 vehicles or
drivers in good standing who have been licensed by the TLC for at
least a year (HAIL Act § 5)13;
12 In New York City, the phrase “for-hire” vehicle refers to “black cars,” community car
service vehicles and luxury limousines (as distinguished from yellow taxis). See
http://www.nyc.gov/html/tlc/html/industry/current_licensees.shtml
13 In comparison, a taxi medallion can cost up to one million dollars and represents a far
greater investment than the cost of a livery license, and the creation of this new class of
20
(4) The initial selling price for the new Hail licenses would be
$1,500 during the first year, $3,000 during the second year and
$4,500 during the third year (HAIL Act § 5);
(5) Once purchased, the Hail licenses would be transferrable to for-
hire drivers in good standing, with no restrictions as to the price
(HAIL Act § 5);
(6) Hail licensees would be eligible to apply to the City for grants up
to $15,000 to purchase wheelchair accessible vehicles or retrofit an
existing vehicle for use with the Hail license, with the total amount
of grants to be no more than $54 million (HAIL Act § 9);
(7) In addition to the Hail licenses, the Mayor (without input from
the City Council) would have the prerogative to authorize the TLC to
auction up to 2,000 fully transferrable new taxi medallions for
wheelchair accessible vehicles, with the City to realize the auction
profits (HAIL Act § 8);
(8) Any agency that issues a summons for violation of the HAIL Act
(e.g., the State Police, the New York City Police, the Port Authority
of New York & New Jersey Police, and the Metropolitan
Transportation Authority Police) would be entitled to retain any
funds collected as a penalty (HAIL Act § 23); and
(9) If any part of the HAIL Act is judicially invalidated, “the
remainder of th[e] act shall be invalidated and shall be deemed to
have not taken effect” (HAIL Act § 6 [the “poison pill” provision]).
IV. Proceedings in the Supreme Court
In April and May, 2012, a diverse group of plaintiffs (Respondents
herein) commenced three separate actions to challenge the HAIL Act (G28-
58, M36-68, T15-44). The actions alleged, among other things, that the
vehicles competing with medallion owners will likely lead to a substantial loss of income
and could lead to the loss of the life savings of many individual driver owners (T457).
21
HAIL Act violates the New York State Constitution, specifically, (i) the
Home Rule Clause, N.Y. Const., art. 9, §§ 2(b)(2); (ii) the Double
Enactment Clause, N.Y. Const., art. 9, § 2(b)(1); and (iii) the Exclusive
Privileges Clause N.Y. Const., art. 3, § 17. On June 1, 2012, the Supreme
Court granted Respondents’ application for a temporary restraining order
enjoining implementation of the HAIL Act during the pendency of the action
(G231-234). Thereafter, upon cross-motions for summary judgment, the
court held that the HAIL Act is violative of the Home Rule, Double
Enactment and Exclusive Privileges Clauses and issued a final judgment
declaring the Act “null, void and unconstitutional.” (G4-8, M5-10, T5-11).
In holding that the HAIL Act violates the Home Rule Clause, the
court took note of what it viewed as the “‘soft underbelly’ of [Appellants’]
‘home rule’ argument,’” i.e., “the fact that after declaring a substantial State
interest in more and better taxicab service . . . rather than pass a law to that
effect, the State Legislature transferred authority to the executive branch [of
City government] to accomplish those goals.” (G378-379). As the Supreme
Court observed, the Legislature’s findings “d[id] not address the power-
shifting aspects of the subject legislation, and the State could hardly have a
substantial interest in that.” (G379).
The Supreme Court also considered the unbroken 75-year history of
22
City regulation of the private taxicab industry (G379). While it recognized
Appellants’ contention that the historical factor is not a dispositive
consideration in determining the constitutional need for a Home Rule
message, the court gave the argument little credence, noting that three of the
key Home Rule cases, Adler v. Deegan, 251 N.Y. 485, 478 (1929), Osborn
v. Cohen, 272 N.Y. 55, 59 (1936), and Wambat Realty Corp. v. State, 41
N.Y.2d 490, 494 (1977), explicitly approved the use of history, custom and
practice as a central analytical touchstone (G379-380). The court found it
particularly interesting that the HAIL Act “appears to be the first instance in
which the State Legislature passed a law without a home rule message after
having passed laws on the very same subject with a home rule message.”
(G380).
The court also rejected the State’s claimed interests in the supply and
accessibility of private hail taxicabs as too insubstantial to justify its
adoption of the HAIL Act without a Home Rule message (G381-383).
Specifically, the court reasoned that (1) the issue of taxicab supply was one
of convenience rather than genuine “health and safety”; (2) the instances of
cross-border travel by taxi were too “[o]ccasional” to justify a special law;
and (3) there is no reason to believe that the availability of taxis on the
City’s streets has a serious negative impact on its status as a mecca for
23
travellers (G382-383). While acknowledging the value of wheelchair
accessibility, the Supreme Court stressed that (1) the City had adopted
measures to promote that goal long before the State developed its “sudden
interest” and (2) any genuine State interest in the subject could have been
effected “without scrambling New York City government.” (G384).14
For similar reasons, the Supreme Court held that the HAIL Act
violated the Double Enactment Clause of the State Constitution, N.Y.
Const., art. 9, § 2(b)(1), because it “repeal[ed], diminish[ed] and/or
impair[ed] powers granted in the Statute of Local Government,” without a
substantial State interest or enactment in two successive calendar years
(G388). Finally, the HAIL Act violated the “Exclusive Privileges Clause,”
N.Y. Const., art. 3, § 17, in that it granted the right to apply for the new Hail
licenses to a particular class of individuals holding livery licenses for at least
a year, who would then be in a position to immediately profit by reselling
the license to anyone holding a livery license (G388-389). Respondents
respectfully submit that the Supreme Court’s holdings were correct and that
the judgment should be affirmed in all respects.
14 The Supreme Court also held that the HAIL Act infringed on the fundamental power of
the City to determine its own financial obligations, N.Y. Const., art. 9, §§ 2(c)(3)-(4) and
the right of the City Council to approve all expenditures, City Charter, chapter 10 (G386).
The HAIL Act both “expose[s] the City to as much as $54,000 in grants [for wheelchair
accessible vehicles]” and “creates a ‘bounty system’ whereby ‘law enforcement agencies
at both the state and local level [can] fund themselves off-budget’” (G386).
24
ARGUMENT
POINT I
THE HAIL ACT VIOLATES
THE HOME RULE CLAUSE OF
THE STATE CONSTITUTION
The basic legal principles that govern these appeals are not in dispute.
The Home Rule Clause of art. 9, § 2(b)(2), provides that, with respect to
New York City, the State may “act in relation to the property, affairs or
government of any local government . . . by special law only . . . on request
of two-thirds of the total membership of its legislative body or on request of
its chief executive officer concurred in by a majority of such membership.”
In other words, a Home Rule message is required for the adoption of a
special law. However, “notwithstanding the legislation’s impact on local
concerns,” a Home Rule message may not be required “where State interests
are involved ‘to a substantial degree in depth or extent,”’ provided that the
special law bears a “reasonable relationship to the legitimate, accompanying
substantial State concern.” City of New York v. State, 94 N.Y.2d 577, 589-
590 (2000) (quoting Wambat Realty Corp. v. State, 41 N.Y.2d 490, 494
(1977)); see City of New York v. Patrolmen’s Benevolent Ass’n, 89 N.Y.2d
380, 391 (1996) (“PBA I”).
All of the parties in this case agree that the HAIL Act is a “special
25
law” in that it concerns only the taxicab industry within New York City.
Thus, the critical question in these appeals is whether the HAIL Act was
supported by a “substantial” State concern and whether each of the Act’s
provisions bears a reasonable relationship to that concern. Notably, the
Legislature included a “poison pill” clause expressing its intent that the
entire statute be invalidated if any one of its provisions is determined to be
unlawful. Thus, the Law can be upheld only if each and every one of its
initiatives is supported by a substantial State interest.15
I. The Substantial State Interest Test
The rule that dispenses with the need for a Home Rule message where
a special law is adopted to address a substantial State interest originated in
Adler v. Deegan, 251 N.Y. 467 (1929), and, more specifically in the
concurring opinion of Judge Cardozo, who stated: “The test is . . . this, that
if the subject be in a substantial degree a matter of State concern, the
Legislature may act, though intermingled with it are concerns of the
locality,” id. at 491 (Cardozo, J., concurring).
As subsequent case law made clear, the “substantial State interest”
15 The GNYTA Respondents have never had any quarrel with the notion of augmenting
the yellow taxi population with a significant increase of vehicles that are wheelchair
accessible. They do, however, object to the Legislature’s bypassing the City Council in
authorizing the new medallions, the large amount of new medallions being allocated all at
once, the creation of a new hail license that will impact on their business, and the
resulting uncertainty in the industry created by the State’s involvement.
26
requirement is not satisfied by the “‘largely toothless’” minimal scrutiny
associated with equal-protection rational-basis analysis or by a law that
“merely bears some relationship to some conceivable State interest,” PBA I,
89 N.Y.2d at 389-390 (quoting Tribe, American Constitutional Law, at
1443, 1601 [2d ed.]). Indeed, the New York Constitution “is the voice of the
people, speaking in their sovereign capacity.” In re New York Elev. Ry. Co.,
70 N.Y. 327, 342 (1877). It is the “most solemn and deliberate of all human
writings,” ordaining “the fundamental law of states.” Newell v. People, 7
N.Y. 9, 97 (1852).
The New York Constitution is unique, and its interpretation is not
analogous to interpreting a statute (or even the federal Constitution). Unlike
a statute, every word in the New York Constitution has been considered and
enacted by vote of the People. Indeed, the New York Constitution, in toto,
has been adopted or re-adopted five times (in 1777, 1821, 1846, 1894 and
1938) and amended in part by vote of the People on numerous other
occasions throughout its 232-year history. It is imperative to account for this
in interpreting its meaning.
Reprising Judge Cardozo’s formula in Adler, 251 N.Y. at 491
(Cardozo, J., concurring), this Court stated in PBA I, 89 N.Y. at 392-94, as
well as Wambat Realty Corp. v. State, 41 N.Y.2d at 494, and City of New
27
York, 94 N.Y.2d at 590, the State interests must be present “to a substantial
degree, in depth or extent.” It follows that the Court is not limited to
accepting the Legislature’s recitation of its “findings,” but rather is expected
to conduct its own inquiry into the actual “substantiality” of the State’s
interests.
To the extent that Appellants attempt to use the holdings in PBA I and
PBA II to suggest that there should be no further inquiry into the State’s
interest beyond the Legislature’s stated “findings,” their argument misses the
mark. See State Appellants’ Br., pp. 39-40, 44-46; City Appellants’ Br.,
pp.45-49. Contrary to Appellants’ argument, the PBA I Court did not
invalidate the challenged legislation solely because of an absence of
legislative findings; instead, the Court independently examined the
underlying legislative record and, on that basis, determined that the law
could not be upheld because it bore no reasonable relationship to “the
substantial State concern sought to be addressed.” See PBA I, 89 N.Y.2d at
392-94. Indeed, in PBA II, 97 N.Y.2d at 388-89, in which similar legislation
was upheld against a Home Rule challenge, the Court stated that it had
invalidated the PBA I legislation because, in addition to “target[ing] one
locality” and failing to set forth explicit findings, it failed to ensure that the
legislation was reasonably related to the ostensible State concern.
28
In other words, the absence of legislative findings in PBA I and the
presence of legislative findings in PBA II were not dispositive and did not
actually drive the analysis. The same infirmity exists in Appellants’ effort to
use the absence of an express legislative statement of purpose to explain
away the holding in Matter of Osborn, 272 N.Y. 55. As a reading of that
case makes clear, the Court struck the challenged statute not because of the
absence of a legislative statement of purpose, but rather because the subject
matter of the legislation was “[h]istorically and as a matter of common
knowledge” considered an issue of local concern. Id. at 58.
To be sure, since the introduction of the “substantial” State interest
test in Adler, 251 N.Y.2d 467, this Court has shown a willingness to uphold
special laws that were adopted without Home Rule messages, where specific
State interests were identified. See, e.g., PBA II, 97 N.Y.2d at 388-89
(uniform labor dispute resolution for local police officers and firefighters);
Wambat, 41 N.Y.2d at 492-96 (preservation of the “priceless Adirondack
Park” that extends over 119 separate localities); Matter of Town of Islip v.
Cuomo, 64 N.Y.2d 50, 52 (1984) (protecting drinking water supply); N.Y.
Steam Corp. v. City of New York, 268 N.Y. 137, 143 (1935) (Depression-era
legislation aimed at alleviating “widespread unemployment [that] has
undermined standards of living to a degree which threatens the economic
29
stability of State and nation”); Adler, 251 N.Y. at 478 (protecting public
health from unhygienic tenement conditions); Bugeja v. City of New York,
24 A.D.2d 151, 151 (2nd Dept. 1965), aff’d, 17 N.Y.2d 606 (1966) (assisting
funding of City’s pension and retirement obligations for civil servants who
deal with issues of State concern). However, up to this point, the Court has
not stretched the Adler “substantial State interest” standard (which has
already been criticized as “emasculating” the concept of Home Rule in New
York)16 so far as to justify rubber stamping any special law that is supported
only by a general appeal to the “public welfare” or the overall importance of
the locality as a center of commerce. It should not do so in this case, since
such a ruling would virtually obliterate what remains of the home rule
principle.
A. The State Has No Interest, Substantial or Otherwise, in Which
Branch of New York City Government Has the Power to
Determine the Supply of Taxicabs Within the City
The State has overstepped its proper sphere of authority by enacting a
statute that moves the power to issue new taxi licenses from the legislative
branch of City government (the City Council), see New York City Charter §
2303(b)(4), to the executive branch (the Mayor and the TLC), thereby
16 See Note, Home Rule and the New York Constitution, 66 Columbia L. Rev. 1145, 1149
(1966) (noting that “the generally loose and confused construction of the [Adler] doctrine
had, by 1963, weakened the constitutional guarantee of a modicum of local legislative
integrity”).
30
reordering the balance of powers within City government. The HAIL Act
bypasses the City Council, gives the Mayor the sole authority to issue up to
2,000 new medallions for wheelchair accessible vehicles and gives the TLC
(acting without any input from the City Council) the right to issue up to
18,000 Hail licenses to for-hire vehicles.
There can be no doubt that the allocation of powers and duties within
municipal government is central to “the property, affairs or government of
cities” and thus falls squarely within the constitutional Home Rule Clause.
Appellants have not even attempted to justify the State’s reallocation of the
power to control the supply of taxis by identifying a substantial State
concern. Moreover, it is difficult to imagine what legitimate State interest
there could possibly be in shifting decision-making authority from the City
Council to the Mayor and the Mayor’s appointed TLC. Indeed, given the
events leading to the adoption of the HAIL Act, the conclusion is
inescapable that the shift in power represents the Legislature’s acquiescence
in the Mayor’s wish to control the process so that he can implement his own
agenda unfettered by the City Council’s concerns.
Appellants seem to be arguing that the Legislature is entitled to shift
decision-making authority from the legislative to the executive branch of
local government as a means of effectuating a particular substantial State
31
interest. However, they have not cited a single Court of Appeals case in
which such a reshuffling of authority within municipal government has been
upheld against a Home Rule challenge. Nor have Appellants addressed the
destabilizing effect of a regulatory system in which the existing statutes and
ordinances authorize three separate governmental bodies (the Mayor, the
City Council and the State Legislature) to make decisions about the same
issue (i.e., the supply of vehicles authorized to accept street hails) without
binding consultation with the others. See General Municipal Law § 181;
N.Y.C. Charter § 2303(b)(4). The open question of exactly “who is in
charge” will make it difficult, if not impossible, for the players in the taxi
industry (e.g., the individual taxi drivers and corporate entrepreneurs who
buy and sell medallions and the companies that finance the transactions
through loans) to make reasoned and responsible investment decisions.
Moreover, acceptance of Appellants’ argument would significantly
undermine the constitutional assurance in the local government bill of rights
that all municipalities are entitled to maintain elected legislatures, N.Y.
Const., art. 9, § 1(a). Notably, under the Constitution, this assurance trumps
the State Legislature’s right “to act in relation to the property, affairs or
government of any local government” by general or special law, by Home
Rule message, certificate of necessity or otherwise. See N.Y. Const., art 9, §
32
2(b). While the HAIL Act does not eliminate the City’s legislative body, it
does reduce the powers granted to it by the City Charter and State statute.
See General Municipal Law § 181; N.Y.C. Charter § 2303(b)(4). If the
powers of the City Council can be taken from it and given to the Mayor
every time the State Legislature disagrees with the Council’s resolution of a
particular issue, then the guarantee of local government by locally-elected
legislators would be toothless.
Indeed, this Court has held that the phrase “relating to its property,
affairs or government” in Article IX is a limitation on the State’s power to
pass legislation which “deal[s] directly with the internal affairs of a city or
the functions of its officers.” City of New York v. Village of Lawrence, 250
N.Y. 429, 443 (1929).
Since Appellants’ have not advanced a substantial State interest in
moving the power to put more street hail vehicles on the street from the City
Council to the Mayor – and no such interest is discernible – this aspect of the
HAIL Act must be held violative of the Home Rule Clause of the State
Constitution. And, since the Legislature included a “poison pill” clause in
the HAIL Act, the invalidation of the provisions shifting decision-making
authority from the City Council to the City’s executive branch requires the
invalidation of the Act in its entirety.
33
B. The State Has No Substantial Interest In Regulating the Supply of
Taxis Available for Street Hail in New York City
In addition to the HAIL Act’s improper interference with the
allocation of power within City government, the Act must be invalidated
because, by any recognized measure, the State does not have a substantial
interest in regulating the supply of vehicles available for street hail in New
York City. As is discussed below, none of the factors that have previously
been considered in connection with the “substantial interest” inquiry support
Appellants’ position here.
1. History, Custom and Practice
a. The Case Law
A key factor in separating matters of purely local concern from those
in which the State has a substantial interest is how the matter has been
treated in the past. While Appellants would have the Court believe that the
historical treatment of a particular legislative issue does not matter, the case
law is clearly to the contrary.
As early as the seminal decision in Adler, 251 N.Y. at 478, Justice
Crane said “[l]et us recognize in our decision the useful division which
custom and practice have made between those things that are considered
State affairs, and those which are purely the affairs of cities.” See also id. at
489 (in determining the “line of division between city and State concerns”
34
courts may resort “to history or to tradition or to the existing forms of the
charters”).
Similarly, in Osborn, 272 N.Y. at 59, the Court stated: “Historically
and traditionally the state has functioned in certain fields of government, the
municipalities in certain other fields. While always and unavoidably there
has been an obscure zone between the two fields, the basic distinction
between them remains.” Id. at 60. In fact, in invalidating a State law
directing New York City fire fighters’ work shifts, the Osborn Court
declined to accept the proffered State interest of safety and welfare and
instead relied on the historical fact that “fire departments have been
recognized agencies of municipal government, and their organization,
operation, and administrative control have been deemed matters of local
concern.” Id. at 58-59. Significantly, the Osborn Court stated that the
holdings in New York Steam Corp. v. City of New York, 268 N.Y. 137
(1935), Robertson v. Zimmermann, 268 N.Y. 52 (1935), McAneny v. Board
of Estimate, 232 N.Y. 377 (1922), and Admiral Realty Co. v. City of New
York, 206 N.Y. 110 (1912), all “rested upon the same foundation” in that the
subjects of the legislation upheld in those cases “have been, by custom,
tradition and practice, considered as matters of State concern.” Osborn, 272
N.Y. at 59 (emphasis supplied). The same principle was applied some 41
35
years later in Wambat, 41 N.Y.2d at 494-495, which upheld a State law
involving the Adirondack Park, stating that “[a]ll but conclusive of this
aspect of the issue is the constitutional and legislative history stretching over
80 years to preserve the Adirondack area from despoliation . . . . ”
Although Appellants claim that history, custom and past practice are
not relevant, they have not cited a single case that abrogates the analyses in
Adler, Osborn and Wambat. Appellants’ reliance on City of New York, 94
N.Y.2d at 591, is misplaced. In that case, the Court merely held that the
City’s issuance of a Home Rule message asking for authorization for a
commuter tax did not preclude the State’s power to repeal the tax without a
similar Home Rule message. The holding in City of New York rested on the
fact that the challenged State law involved the power of taxation, which can
never be surrendered by the State. See N.Y. Const., art. 16, § 1. The
situation in City of New York was a far cry from the situation in this case,
which involves an unbroken 75-year history of City control over the
regulation of the taxi industry. Moreover, nothing in that decision supports
even an inference that the Court intended to abandon custom, tradition and
history as a touchstone for determining whether the State can interfere in
local concerns.
Moreover, the argument that history, custom and practice should not
36
be considered is untenable, since it would leave the courts with no clear
objective benchmark for distinguishing between State and purely local
concerns. In the absence of such an objective criterion, appeals by the State
to such general and amorphous criteria as the “public welfare” are likely to
trump even the most well-rooted instances of local control. As a result, the
Home Rule provisions of the Constitution and the “sensitive balancing” of
State and local interests that is required, see PBA I, 89 N.Y.2d at 389-390,
would soon be dead letters.
b. The City’s Unique Historical Role in Regulating Taxi Supply
The need for regulation of the taxi supply became apparent in the
mid-1930’s. Matter of Rudack, 163 Misc. at 327-328. Although the State
Legislature initially toyed with the matter by creating a study committee and
proposing a resolution recommending that the number of taxi licenses be
capped, it was the City that ultimately acted with a concrete regulatory
measure by adopting the Haas Law, which limited the number of taxi
medallions to the then-existing 13,595.17 The State’s only role was to
include the Haas Act when it re-codified the New York City Code. See ch.
929, § 1, 1937 N.Y. Laws (vol. II) 1, 262-263. Thereafter, the power to
17 Ironically, even though the economic stakes are much higher and the regulatory
landscape far more complex, the 2011/2012 Legislature had no apparent qualms about
usurping local authority and introducing its own “solution” to a perceived problem
without the benefit of either a committee report or a public hearing.
37
determine the number of outstanding medallions was exercised by the City’s
police department until it was permanently vested in the City Council in
1971. See New York City Charter § 2303(b)(4); New York City Local Law
No. 12 (1971). As this history indicates, regulation of the supply of taxi
medallions in New York City is a function that has always been exercised by
the City and not the State, and, in fact, has consistently been exercised upon
the initiative of the City Council since 1971.
This tradition of local regulation makes eminent sense in view of the
complex mix of local interests that are at stake. While the taxi-riding public
has an obvious interest in an adequate supply of street taxis, the City and the
public also have an interest in ensuring the stability of the market for
medallions. Current owners (and their lenders) have a significant
investment in their medallions, which now sell for between $700,000 and $1
million (G38). A precipitous increase in the number of medallions or a
significant change in the conditions of the industry (such as the infusion of
18,000 for-hire vehicles with the right to accept street hails in some parts of
the City) would unquestionably destabilize the medallion market and thereby
have a negative impact on the industry as a whole. Further, uncertainty
about “who is in charge,” i.e., which level of government has the authority to
decide issues involving taxi supply in New York City, will itself lead to
38
instability in the medallion market. Finally, and most importantly, the
introduction of 2,000 additional yellow taxis and 18,000 for-hire vehicles
could well lead to a chaotic situation similar to the one that the Haas Act was
enacted to combat.18 Indeed, the HAIL Act calls for a 151% increase in the
number of vehicles that can accept hails in the City over a relatively short
time period, bringing back the specter of the pre-1937 “Wild West” era in
the taxi industry.
State legislators, some of whom are from upstate and western New
York, have little understanding of the complex factors that must be balanced
in deciding when and how to tinker with the City’s taxi supply. On the other
hand, City Council members, who are closer to the problems and have been
working with the issue for decades, are well-positioned to make the
18 It would be naïve to believe that the HAIL Act license restrictions will be scrupulously
obeyed or that the TLC’s enforcement mechanisms will be sufficient to assure that the
new for-hire licensees will limit their hail business to the outer boroughs and northern
Manhattan. The TLC Commissioner himself has acknowledged that its enforcement
efforts have not prevented for-hire drivers from making thousands of illegal pickups each
day even under the current system (M25-26). Furthermore, poaching of hail passengers
by for-hire vehicles in central Manhattan is commonplace under the present system, and
the TLC’s weak enforcement system seems powerless to prevent it (M996). Adding
18,000 for-hire vehicles that are licensed for street pick ups will flood the market and
provide for-hire drivers with every incentive to compete with yellow taxis for the
lucrative mid-town Manhattan business. Many of the trips that begin in the outer
boroughs will end in mid-town, and the temptation to pick up a fare there instead of
returning to the outer boroughs empty will inevitably lead to evasions of the geographic
restrictions. Plus, the unilateral decision by TLC Commissioner Yassky to make the
exteriors of yellow cabs and the newly licensed street hail vehicles virtually identical
(apart from a difference in color that may be difficult to discern at night) (TLC Industry
Notice #12-25, dated July 20, 2012), makes it even easier for the outer borough cars to
poach in the forbidden mid-town zone, especially with tourists (M997).
39
necessary subtle adjustments in the system.
Mindful of the weakness of their position, Appellants have attempted
to demonstrate that the State has, in fact, been a participant in issues
involving the taxi industry in New York City. For example, the State
Appellants assert that it has “kept a watchful eye on the taxi supply on the
taxi supply in New York City,” but it has cited only the abortive efforts of
the 1936 joint legislative committee that produced no legislation (State
Appellants’ Br., pp. 56-57).
The State and City also rely on the fact that the City’s long history of
regulating the taxi supply rests on both the authority delegated to it by the
State and on the Legislature’s ratification of the local ordinances through the
codification of the Administrative Code (State Appellants’ Br., pp. 57-58;
City Appellants’ Br., pp. 39-40). That argument, once again, proves too
much. Cities and other municipalities are creatures of the State and,
consequently, are dependent on the State for their powers. If delegation of a
regulatory power were alone sufficient to constitute historic State
involvement, there would never be a case in which the State could not claim
that it has a history of participation in the regulatory issue.
Finally, Appellants cannot seriously claim that the State’s enactment
of laws (mostly laws of general applicability) in fields that are “closely
40
related” to the for-hire transportation business19 is sufficient to overcome the
fact that, for the past 75 years, the City has had the responsibility for the
local concern of regulating the number of licensed taxis available for street
hails (see State Appellants’ Br., pp. 58-59; City Appellants’ Br., p. 40).
2. The State’s Interest in Mass Transit Does Not Justify Its Intervention
in the New York City Taxi Industry
Notwithstanding the passing comment in Osborn, 272 N.Y. at 59, that
“[t]ransportation” is a matter of State concern, the fact is that there are
considerable differences between the mass transit transportation systems that
the State has regulated in the past and the private, for-hire taxi service that
has always been the province of New York City. Indeed, both of the cases
cited in the Osborn opinion, Admiral Realty, 206 N.Y. 110 (1912), and
Matter of McAneny, 232 N.Y. 377 (1922), involved legislation affecting
rapid transit systems, which are quintessential forms of “mass transit.”
In general, all of the forms of “mass transit,” including subways,
buses and commuter vans, are characterized by their ability to transport large
groups of riders from one public point to another. They also bring thousands
of passengers to and from major hubs like Grand Central Station and Penn
19 See Tax Law § 1281 (imposing surcharge on taxi rides originating in New York City to
raise funds for the Metropolitan Transit Authority); Vehicle & Traffic Law § 370(1)
requiring drivers of for-hire vehicles to file proof of insurance with the State Department
of Transportation); Executive Law § 290 (forbidding discrimination on the basis of
disability); Transportation Law § 15-b(1)(d) (requiring the City to provide additional
alternatives for disabled individuals who are unable to use mass transit).
41
Station, which serve as arrival and departure points for trips in and out of the
City and State. Those characteristics make them matters of clear State-wide
concern. The service provided by taxicabs and for-hire vehicles, in contrast,
is a convenience for individuals who wish to be taken, alone or in small
groups, from door to door -- or from sidewalk to an individual, personal
destination. Such individualized service is the very antithesis of the mass
transit service that was referred to in Osborn. The distinctly private and
personal character of the service provided by taxis belies any attempt to
analogize the taxi industry to the “mass transit” system in which the State
has a legitimate concern.20
Nor may the State rely on the occasional trips that are made by taxis
and for-hire vehicles from the outer boroughs or from northern Manhattan to
destinations outside of the City. While there is no doubt that such cross-
border trips occur, they represent a tiny fraction of the industry (2% for
livery vehicles; probably much less for taxicabs) (G383). They certainly
cannot be cited as the basis for a “substantial” State interest.
As the Supreme Court concluded, access to taxis may be a
convenience for City residents, but the industry is not fundamental to the
20 Indeed, in Noel v. New York City Taxi and Limousine Commission, 687 F.3d 63 (2d
Cir. 2012), the TLC took the exact opposite position arguing that the taxi industry in New
York City is a private industry and not part of the public transportation system (G379,
T2077-2080, T2124-2128).
42
public welfare in the same way as is the availability of safe and sanitary
housing, see Adler, 251 N.Y. 467, and safe water supply, see Town of Islip,
64 N.Y.2d 50. Surely, the interest that the State had in alleviating squalid
and dangerous living conditions of citizens relegated to tenements in Adler,
is far different than the interest asserted here of facilitating the availability of
a taxi cab for residents and visitors raising their hands on the street to go see
a Broadway show. Thus, unless this Court is prepared to say that any and
all aspects of private commercial activity in New York City are subjects in
which the State has a substantial interest, it should conclude that regulation
of the number and types of taxis that roam New York City’s streets is a
matter of purely local concern.
3. The State Cannot Rely on New York’s Status as a Mecca for
Commerce and Tourism as a Basis for Regulating Access to Taxis
As a final source of “substantial” State concern in the taxi industry,
Appellants rely on the State’s interest in attracting commerce and tourists to
the City. Once again, the State’s argument proves too much, since it would
give the State license to regulate every matter of local concern including
such trivial items as the location of sidewalk hot dog vendors. If the State
may intervene in any local matter that could have an impact on visitors to
New York City or on commerce within its borders, the Home Rule Clause of
43
the Constitution would provide the City with virtually no protection from
State interference with matters that are truly local in nature.
* * * * * *
In the final analysis, it is clear that the hastily enacted HAIL Act
covers subjects of purely local concern and that its provisions require a
Home Rule message. While reasonable minds can differ on the wisdom of
the HAIL Act’s various substantive initiatives, such differences of opinion
are ultimately political matters that are properly resolved at the local level
through the interaction of the City’s legislative and executive bodies. That is
the point that lies at the heart of the Constitutional Home Rule Clause. Since
the State Legislature ignored the strictures of that Clause and ran roughshod
over the City’s right to regulate matters of purely local concern, the Supreme
Court’s declaration invalidating the HAIL Act was correct and should be
affirmed.21
21 Even assuming that the State had a substantial interest in assuring an adequate supply
of wheelchair accessible taxicabs, the HAIL Act’s provisions on that subject cannot be
permitted to stand since they are part of a larger law that contains other constitutionally
invalid provisions and that was drafted to ensure that the law as a whole must rise and fall
as a non-severable whole. HAIL Act § 6. Notably, the salutary goal of increasing the
number of wheelchair accessible vehicles could have been accomplished, without
implicating Home Rule at all, through the enactment of a general law requiring that all
taxi fleets in the State include a fixed percentage of such vehicles.
44
POINT II
THE HAIL ACT VIOLATES
THE DOUBLE ENACTMENT
CLAUSE OF THE CONSTITUTION
Art. 9, § 2(b)(1), of the State Constitution provides that the State
Legislature must adopt a “statute of local governments” that grants
municipalities local powers, including powers of local legislation and
administration. The powers granted in the statute of local governments can
be diminished, impaired, suspended or repealed “only by enactment of a
statute by the legislature with the approval of the governor at its regular
session in one calendar year and the re-enactment and approval of such
statute in the following calendar year.” Id. Section 10(1) of the Statute of
Local Governments grants cities the power “to adopt, amend and repeal
ordinances, resolutions and rules and regulations in the exercise of its
functions, powers and duties,” and Municipal Home Rule Law, art 2, §
10(1), authorizes local governments to adopt local laws relating to its
property, affairs or government as long as they are not inconsistent with the
Constitution or any general law. The net result of these provisions is that the
State Legislature may override local ordinances and regulations that relate to
the locality’s “property, affairs or government” only by “Double Enactment”
at two successive legislative sessions. The purpose of this provision is to
45
“afford localities protection from hasty and ill-considered legislative
judgments.” Wambat Realty, 41 N.Y.2d at 491-92. This case would appear
to be the “poster child” for the Double Enactment rule.
Here, there is unquestionably a State enactment that repeals or
diminishes powers relating to the “property, affairs or government” of New
York City that have been granted through City Charter § 2303(b)(4), which
was, in turn, enacted pursuant to section 10(1) of the Statute of
Governments. Thus, the HAIL Act is “a special act, disruptive of the
powers” previously given to New York City. Floyd v. New York State
Urban Dev. Corp., 33 N.Y.2d 1, 6 (1973), and is subject to the Double
Enactment rule.
To be sure, as noted by the Supreme Court, the Double Enactment
Clause is similar to the Home Rule Clause in that, by judicial construction,
the State is exempt from complying if its enactment involves a substantial
State concern. Wambat Realty, 41 N.Y.2d at 491. Added to the
Constitution in 1963, this provision was “intended to expand and secure the
powers enjoyed by local governments” and “to impede encroachment on the
granted local powers. Wambat, 41 N.Y. 2d at 496, citing Memorandum of
Office for Local Government, N.Y. Legis. Ann. 1963, p. 223.
Notwithstanding this intent, the rights guaranteed to local governments by
46
the Double Enactment Clause have been held to be subordinate to the State’s
reservation of the right to adopt legislation of substantial state concern, even
where the legislation relates to a matter involving the “property, affairs and
government” of the locality, Wambat, 41 N.Y.2d at 496-497. Indeed, the
Wambat Court inferred from the drafters’ use of that phrase, which is “so
heavily laden with the judicial gloss of the pre-1963 cases,” that the drafters
intended to subordinate the Double Enactment requirement to the same
substantial state interest test as is applied to the requirements of the Home
Rule Clause. Thus, if the substantial state interest criterion is applied as a
toothless test justifying virtually any State incursion on the “property, affairs
or government” of municipalities, it will vitiate not only the Home Rule
Clause but also the Double Enactment Clause, thereby emasculating both of
the protections for municipalities that the Constitution’s framers adopted.22
22As pointed out by Appellants, since the Court decided Wambat, 41 N.Y.2d 49, in 1977,
not a single law has been overturned under the Double Enactment clause. Perhaps it is
time for the Court to revisit its decision in Wambat insofar as it held that a law does not
need to be passed in two successive legislative if the law advances a substantial state
interest. Id. at 496-97. Indeed, the Court’s holding seems to ignore the fact that the
Home Rule provision and the Double Enactment clause, although similar in their goal of
protecting local governments, are two separate clauses, adopted at two different times.
Moreover, the Wambat holding seems to disregard the clear language of the clause. See
People v. Rathbone, 145 N.Y. 434, 438 (1895) (Having been “adopted by the people, the
intent” of the New York Constitution “is to be ascertained, not from speculating upon the
subject, but from the words in which the will of the People has been expressed. To hold
otherwise would be dangerous to our political institutions.”). While the plain language of
any text is always the interpretive starting (and ending) point wherever possible, “the rule
rises to a very high degree of significance” when interpreting the New York Constitution.
Newell v. People, 7 N.Y. 9, 97 (1852). “It must be very plain, nay, absolutely certain that
47
POINT III
THE HAIL ACT VIOLATES
THE EXCLUSIVE PRIVILEGES
CLAUSE OF THE CONSTITUTION
Article 3, § 17, of the New York State Constitution provides that the
“legislature shall not pass a private or local bill … granting to any private
corporation, association or individual any exclusive privilege … or franchise
whatsoever.” There can be no doubt that the HAIL Act grants an “exclusive
privilege” to one favored class, i.e., livery licensees who have held their
licenses for at least a year. There is also no doubt that the privilege being
conferred is not just the right to acquire a street hail license, but also the
right to purchase an eminently saleable asset that may immediately be
transferred at a considerable premium over the initial purchase price
(M30). Appellants argue that the new street hail licenses do not confer a
monopoly, since they merely confer the right to accept street hails that
yellow taxis continue to have. This argument, however, is misdirected.
the people did not intend what the language they have employed, in its natural
signification, imports, before a court will feel itself at liberty to depart from the plain
reading of a constitutional provision.” Id. Thus, the Wambat Court may have gone too
far in “allowing the exception to swallow the rule” and refusing to follow the words of
the Double Enactment Clause, so that every piece of State legislation where the State has
an interest passes constitutional muster, no matter how emasculating, or “hasty and ill-
conceived” the legislation is. Wambat, 41 N.Y.2d at 492. In so doing, the court has
rendered the Double Enactment Clause completely superfluous and a dead letter.
48
The “exclusive privilege” that the HAIL Act confers is not the right to
pick up street hails, but rather the right to purchase a street hail license at a
very favorable price and then to enjoy a windfall by immediately reselling it
to members of a much broader group at a much higher market price. Since
this very valuable privilege is available only to one group (i.e., those holding
livery license for more than a year) and is not available at all to holders of
yellow cab licenses (regardless of the duration of their licenses), it violates
the Exclusive Privileges Clause.
In sum, the HAIL Act has “all the indicia of special interests
legislation” and is within both the letter and spirit of the Exclusive Privileges
Clause. See 19th St. Assocs. v. State of New York, 79 N.Y.2d 434, 444
(1992). Accordingly, the Supreme Court judgment declaring the HAIL Act
unconstitutional under art. 3, § 17, should be affirmed.
49
CONCLUSION
For all of the forgoing reasons, the judgment of the Supreme Court
should be affirmed in all respects.
Dated: New York, New York
March 1, 2013
Respectfully submitted,
MINTZ & GOLD LLP
By:_____________________
Steven G. Mintz
Lisabeth Harrison
470 Park Avenue South
10th Floor
New York, New York 10016
(212) 696-4848
Attorneys for Plaintiffs
mintz@mintzandgold.com
harrison@mintzandgold.com