Boston Taxi Owners Association, Inc. et al v. City of Boston et al

Filing 26

Judge Nathaniel M. Gorton: ORDER entered. MEMORANDUM AND ORDER denying 2 Emergency MOTION for Preliminary Injunction filed by Raphael Ophir, Boston Taxi Owners Association, Inc., Joseph Pierre.(Patch, Christine)

United States District Court
District of Massachusetts
)
BOSTON TAXI OWNERS ASSOCIATION, )
INC., RAPHAEL OPHIR and JOSEPH
)
PIERRE
)
)
Plaintiffs,
)
)
v.
)
)
CITY OF BOSTON, BOSTON POLICE
)
COMMISSIONER WILLIAM EVANS,
)
COMMONWEALTH OF MASSACHUSETTS,
)
MASSACHUSETTS DEPARTMENT OF
)
TRANSPORTATION, MASSACHUSETTS
)
DEPARTMENT OF PUBLIC UTILITIES
)
and SECRETARY OF STATE WILLIAM
)
F. GALVIN,
)
)
Defendants.
)
)

Civil Action No.
15-10100-NMG

MEMORANDUM & ORDER
GORTON, J.
In this action, the Boston Taxi Owners Association, Inc.,
along with two individual Boston taxicab license owners, Raphael
Ophir and Joseph Pierre, (collectively, “plaintiffs”), have
raised a federal constitutional challenge to recent amendments
to regulations relating to the registration of motor vehicles.
The suit is brought against the Commonwealth of Massachusetts,
the Massachusetts Department of Public Utilities (“DPU”), the
Massachusetts Department of Transportation (“MassDOT”) and
Secretary of State William F. Galvin (collectively, “the state
defendants”), and also against the City of Boston and Boston
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Police Commissioner William Evans (collectively, “the city
defendants”).
The recent amendments to the subject regulations establish
standards for the registration of motor vehicles providing
services for so-called Transportation Network Companies
(“TNCs”), such as Uber, Lyft and Sidecar. See 540 CMR 2.05.
Plaintiffs contend that those amendments create an arbitrary,
two-tiered system between TNCs and taxicabs that violate
plaintiffs’ constitutional rights.

Moreover, they argue that

the continuing failure of the City of Boston to enforce its own
local regulations governing the Hackney Carriage industry
against TNCs also violates plaintiffs’ constitutional rights.
Pending before the Court is plaintiffs’ emergency motion
for a preliminary injunction (1) to enjoin defendants from
enforcing the amendments to 540 CMR 2.05, which became effective
on January 16, 2015, and (2) to order the city defendants to
enforce certain regulations governing the Hackney Carriage
industry against TNCs.

For the reasons that follow, the motion

will be denied.
I.

Background
A.

Regulation of the Boston Taxi Industry

The main source of regulation for the City of Boston (“the
City” or “Boston”) taxicab industry is its Police Commissioner
(“the Commissioner”), who is authorized by state statute to
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regulate the taxi business in Boston.

In exercising that

authority, the Commissioner requires anyone who drives or is “in
charge of” a “hackney carriage” (i.e. taxicab) to possess a
license known as a “taxicab medallion.”

There are currently

1,825 city-issued medallions.
In 2008, the Commissioner issued a comprehensive set of
taxicab regulations under Boston Police Department Rule 403
(“Rule 403”).

Rule 403 defines a taxicab as “[a] vehicle used

or designed to be used for the conveyance of persons for hire
from place to place within the City of Boston.”

Since its

inception, Rule 403 has not been applied to livery vehicles,
despite the fact that the broad definition of a taxicab would
seem to encompass them.
The rule requires all taxicab operators, inter alia, to
possess a medallion, maintain a properly equipped and
functioning taxicab, display a hackney carriage license at all
times, refrain from cell phone use while operating a taxicab and
belong to an approved dispatch service or “radio association.”
Rule 403 also sets out the approved manner in which a taxicab in
the City can engage customers.
Beginning in around 2012, companies such as Uber, Lyft and
Sidecar began operations in Boston and surrounding communities.
The cellular phone app-based, for-hire transportation services
have quickly gained in popularity and serve as an alternative to
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traditional taxicab or livery services.

The new companies rely,

to varying degrees, on drivers who provide pre-arranged
transportation services in their own private vehicles.

The City

of Boston has yet to issue regulations applicable to such
companies, nor does it enforce Rule 403 against them.

In

October, 2014, however, the City convened a “Taxi Advisory
Committee” which is authorized to examine the City’s regulatory
framework of for-hire transportation services and perhaps to
develop new policies to account for these relatively new
entrants into the market.
B.

State Regulation of Motor Vehicle Registration

Overlaying the specific city regulations for taxicabs,
MassDOT has enacted statewide requirements for the registration
of all motor vehicles. 540 CMR 2.05.

Prior to the recent

amendments, 540 CMR 2.05 outlined two ways in which small-scale
vehicles (designed to carry 15 or fewer passengers) need be
registered in order to carry passengers for hire.

The first

kind of registration pertained to “taxicabs”, defined as
any vehicle which carries passengers for hire, and
which is licensed by a municipality pursuant to M.G.L.
c. 40, § 22 as a taxicab.
The second kind of registration was for a “livery vehicle”,
defined as
any limousine or other vehicle which
passengers for hire ... [but] is not

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... carries
required to

obtain a taxicab license pursuant to M.G.L. c. 40,
§ 22.
As of January 16, 2015, MassDOT revised 540 CMR 2.05 to
include a third alternative for the registration of small-scale
vehicles used to carry passengers for hired transportation.
Under this third option, private passenger vehicles can be
registered and used as “personal transportation network
vehicles” on behalf of Transportation Network Companies, or
TNCs.

TNCs are defined as

entit[ies]
operating
in
Massachusetts
that,
for
consideration, will arrange for a passenger to be
transported by a driver between points chosen by the
passenger.
The amended regulations also restrict the way in which
drivers using their own private vehicles on behalf of a TNC can
solicit customers.

Specifically, the TNC must have pre-arranged

for the driver to provide transportation services and the driver
is not permitted to solicit or accept an on-demand ride,
otherwise known as a “street hail” or “hail pick-up.”

Thus, the

amended regulations broadly define TNCs and permit TNC drivers
to use their own private vehicles so long as they register the
vehicle as a “personal transportation network vehicle” and
provide transportation services only to passengers that the TNC
pre-arranged.

Accordingly, the new regulations provide some

restrictions on the way in which companies such as Uber, Lyft
and Sidecar operate within the Commonwealth.
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The amendments to 540 CMR 2.05 also (1) require TNCs to
obtain a certificate from the DPU in order to do business in
Massachusetts, (2) require TNCs and their drivers to carry
appropriate liability insurance, (3) require TNCs to perform
background checks on their drivers and (4) set standards for TNC
drivers.
The new state regulations do not address whether TNC
drivers must obtain taxi medallions which is a matter of local
regulation.
C.

Procedural History

Plaintiffs filed their lawsuit and emergency motion for
preliminary injunction on January 16, 2015, the same day that
MassDOT’s amendments to 540 CMR 2.05 went into effect.

After

another United States District Judge entered an Order of
Recusal, the case was assigned to this Session on January 20,
2015.

The Court held a hearing on the pending motion shortly

thereafter.
II.

Plaintiffs’ Motion for a Preliminary Injunction
Plaintiffs’ motion for a preliminary injunction seeks two

separate kinds of injunctive relief.

First, plaintiffs seek a

negative injunction to prevent the enforcement of MassDOT’s
amendments to 540 CMR 2.05.

They assert that the amendments

permit TNCs to operate as “de facto taxis” and “create an
irrational, two-tiered regulatory system” that
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unconstitutionally violate the due process and equal protection
clauses.

Second, plaintiffs seek an affirmative injunction that

would mandate that the City of Boston enforce its existing
taxicab regulations, encompassed in Rule 403, against TNCs
operating within city limits.

They contend that the City’s

failure to do so violates their equal protection rights and
constitutes an unconstitutional taking of their property.
A.

Legal Standard

In order to obtain a preliminary injunction, the moving
party must establish
(1) a substantial likelihood of success on the merits, (2)
a significant risk of irreparable harm if the injunction is
withheld, (3) a favorable balance of hardships and (4) a
fit (or lack of friction) between the injunction and the
public interest.
Nieves-Marquez v. Puerto Rico, 353 F.3d 108, 120 (1st Cir. 2003)
(citation omitted).

Out of these factors, the likelihood of

success on the merits “normally weighs heaviest on the
decisional scales.” Coquico, Inc. v. Rodriguez-Miranda, 562 F.3d
62, 66 (1st Cir. 2009).
Importantly, “[a] preliminary injunction is an
extraordinary and drastic remedy” that “is never awarded as of
right.” Voice of the Arab World, Inc. v. MDTV Medical News Now,
Inc., 645 F.3d at 32 (quoting Munaf v. Green, 553 U.S. 674, 68990 (2008)).

An “injunction should issue only where the

intervention of a court of equity is essential in order
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effectually to protect property rights against injuries
otherwise irremediable.” Weinberger v. Romero-Barcelo, 456 U.S.
305, 312 (1982) (citation and internal quotations omitted).
The Court may accept as true “well-pleaded allegations [in
the complaint] and uncontroverted affidavits.” Rohm & Haas Elec.
Materials, LLC v. Elec. Circuits, 759 F. Supp. 2d 110, 114, n.2
(D. Mass. 2010) (quoting Elrod v. Burns, 427 U.S. 347, 350, n.1
(1976)).

The Court may also rely on otherwise inadmissible

evidence, including hearsay, in deciding a motion for
preliminary injunction. See Asseo v. Pan American Grain Co.,
Inc., 805 F.2d 23, 26 (1st Cir. 1986).
B.

Application
1.

Likelihood of Success
i.

Takings Clause

Plaintiffs initially contend that Boston taxicab owners
have a property interest in city-issued medallions.

Plaintiffs

assert that the City has effectively taken the exclusive rights
to operate taxicabs within Boston from medallion owners without
just compensation by its continuing decision not to enforce Rule
403 against TNCs.

Moreover, plaintiffs argue that the enactment

of the amendments to 540 CMR 2.05 expressly authorizes TNCs to
operate in the City without buying or leasing medallions.

They

contend that this unconstitutional taking adversely affects the

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market value of their medallions and is therefore
unconstitutional.
In opposition, the city defendants proffer three reasons
why plaintiffs’ takings clause claim should fail: (1) plaintiffs
do not have a constitutionally protected property interest in
the market value of taxi medallions, (2) the City’s nonenforcement of Rule 403 against TNCs is not an affirmative
governmental act giving rise to a takings claim and (3) nonenforcement of Rule 403 as to TNCs is not a regulatory taking
against medallion owners.
Also in opposition, the state defendants contend that
plaintiffs’ takings claim fails to account for the fact that
amended 540 CMR 2.05 does not in any way regulate plaintiffs’
property interest, if one in fact exists, in taxi medallions.
Instead, the state defendants assert that the amended
regulations merely create a new registration option for vehicles
legally to provide pre-arranged transportation services.

That

is, whether TNCs and their drivers need to comply with Rule 403
and its accompanying medallion rules is up to local authorities
and is not affected by the amendments to 540 CMR 2.05.

Thus,

they conclude that the takings claim is viable only against the
City.

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a.

Legal Standard

The Takings Clause of the Fifth Amendment prohibits the
government from taking private property for public use without
just compensation. Maine Educ. Ass’n Benefits Trust v. Cioppa,
695 F.3d 145, 152 (1st Cir. 2012).

The clause applies to

not only the paradigmatic physical taking ... but also
to regulatory interferences, which transpire when some
significant restriction is placed upon an owner’s ...
property [use] for which fairness and justice require
that compensation be given.
Id. (citation and internal quotations omitted).
When assessing whether a regulatory taking occurred, courts
utilize a three-pronged analysis which considers (1) the extent
to which the regulation interferes with the claimant’s
reasonable investment-backed expectations, (2) the regulation’s
economic impact on the property owner and (3) the character of
the government action. Id. at 153 (citing Penn Cent. Transp. Co
v. City of New York, 438 U.S. 104, 124 (1978)).

Rather than

operating as a set formula or checklist, these factors serve as
“a lens through which a court can view and process the facts of
a given case.” Philip Morris, Inc. v. Harshbarger, 159 F.3d 670,
674 (1st Cir. 1998).
b.

Application

For a variety of reasons, plaintiffs have failed to show a
likelihood of success on the merits of their Takings Clause
claim.
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First, the Court agrees with the state defendants that the
takings claim is appropriately asserted only against the city
defendants.

The amendments to 540 CMR 2.05 in no way alter the

City’s ability to regulate taxicabs or plaintiffs’ ability to
use their medallions.

The regulations simply set forth various

options for motor vehicle registration within the Commonwealth
at-large.

In fact, the amendments leave open the possibility

that the City could enforce its local taxicab regulations
against TNC drivers.

If the City chooses to do so, TNC drivers

will need to comply with both the requirements imposed on them
by 540 CMR 2.05 and Rule 403.

Thus, the Court concludes that

there has been no action of the state defendants that can
reasonably be construed as a “taking” of plaintiffs’ property
interests.
Second, plaintiffs have failed to convince this Court that
medallion owners have a protected property interest in the
market value of their medallions for purposes of the Takings
Clause.

Here, plaintiffs have not asserted that a government

entity has actually revoked their medallions or restricted their
ability to use them.

Plaintiffs assert only that a government

taking has occurred because the state regulations and the City’s
unwillingness to enforce Rule 403 against TNCs effectively
reduces the market value of a City taxicab medallion.

As the

Eighth Circuit Court of Appeals previously has held, however,
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any property interest that [] taxicab-license holders'
may possess does not extend to the market value of the
taxicab licenses derived through the closed nature of
the City's taxicab market.
Minneapolis Taxi Owners Coal., Inc. v. City of Minneapolis, 572
F.3d 502, 509 (8th Cir. 2009); see also Dennis Melancon, Inc. v.
City of New Orleans, 703 F.3d 262, 273-74 (5th Cir. 2012)
(taxicab license was only a “privilege” that existed as a direct
“product of a regulatory scheme that vested the [c]ity with
broad discretion to alter or extinguish that interest”).

The

Court agrees that the market value in a taxicab medallion, which
is derived solely from the strict regulation of taxicabs in the
City, cannot constitute a protected property interest in the
context of the Takings Clause. See Dennis Melancon, 703 F.3d at
272 (“a protected property interest simply cannot arise in an
area voluntarily entered into ... which, from the start, is
subject to pervasive [g]overnment control, because the
government's ability to regulate in the area means an individual
cannot be said to possess the right to exclude.”) (citations and
internal quotations omitted).
Third, even assuming the existence of a protected property
interest in a medallion’s market value, any “reasonable
investment-backed expectations” held by plaintiffs in their
medallions must be significantly tempered in light of the
decades-long, highly regulated nature of the taxicab industry

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within the City. See, e.g., Maine Educ. Ass’n, 695 F.3d at 154;
Franklin Mem’l Hosp. v. Harvey, 575 F.3d 121, 128 (1st Cir.
2009) (remarking on highly regulated hospital industry).
Ultimately, purchasing a taxicab medallion does not entitle the
buyer to “an unalterable monopoly” over the taxicab market or
the overall for-hire transportation market.
Owners, 572 F.3d at 508.

Minneapolis Taxi

Medallion owners must be cognizant of

the possibility that new regulations or a decision to enforce
Rule 403 by the City can alter the market value of a medallion.
Maine Educ. Ass’n, 695 F.3d at 154.
Finally, the Court fails to perceive how the City’s
decision not to enforce Rule 403 against TNCs constitutes a
“taking” of plaintiffs’ property.

The City’s inaction

undoubtedly permits new companies to offer services that
directly compete with traditional taxicab services but simply
allowing increased market competition, which may ultimately
reduce the market value of a medallion does not constitute a
taking.
Plaintiffs fail to proffer any legal support for their
contention that the City’s inaction constitutes a taking.

To

the contrary, courts have found that the government must act
affirmatively to warrant the application of the Takings Clause.
Nicholson v. United States, 77 Fed. Cl. 605, 620 (2007) (“The
Court [of Federal Claims] has consistently required that an
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affirmative action on the part of the [g]overnment form the
basis of the alleged taking.”); Valles v. Pima Cnty., 776 F.
Supp. 2d 995, 1003 (D. Ariz. 2011) (discussing plaintiffs’
failure to cite to any case law that supports the proposition
that government inaction can amount to a taking).

The Court

concludes, accordingly, that the City has taken no action that
reasonably could be construed as a taking of plaintiffs’
property.
ii.

Equal Protection Clause
a.

Legal Standard

The Fourteenth Amendment’s Equal Protection Clause
“requires that all persons similarly situated ... be treated
alike.” Rocket Learning, Inc. v. Rivera-Sanchez, 715 F.3d 1, 10
(1st Cir. 2013) (quoting City of Cleburne v. Cleburne Living
Ctr., 473 U.S. 432, 439 (1985)).

Unless a fundamental right or

a suspect classification is at issue,
courts will uphold legislation that provides for
differential treatment upon a mere showing of a
rational relationship between the disparate treatment
and a legitimate government objective.
Starlight Sugar, Inc. v. Soto, 253 F.3d 137, 145 (1st Cir. 2001)
(citation omitted).
Under rational basis review, social or economic legislation
is entitled to a “strong presumption of validity.” Kittery
Motorcycle, Inc. v. Rowe, 320 F.3d 42, 47 (1st Cir. 2003)

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(citation omitted).

Rational basis review is a “paradigm of

judicial restraint” and simply requires that there be “any
reasonably conceivable set of facts” justifying the disparate
treatment. FCC v. Beach Commc’ns, Inc., 508 U.S. 307, 313-14
(1993); see also Starlight Sugar, 253 F.3d at 145 (“In fact, the
party challenging the legislation bears the burden of negating
every conceivable basis which might support it.”).
b.

Application

Plaintiffs concede that rational basis review applies in
this case but nevertheless contend that the disparities in
treatment between taxi companies and TNCs, which they contend
are “de facto taxis”, are arbitrary, irrational and
fundamentally unfair.

Plaintiffs thus assert that this

irrational economic disparate treatment between similarly
situated for-hire transportation operators is unconstitutional.
Plaintiffs have not, however, convinced this Court that
either (1) the recent amendments to 540 CMR 2.05 or (2) the
City’s decision not to enforce Rule 403 against TNCs runs afoul
of the Equal Protection Clause.
First, it is not self evident that traditional taxicab
operators and TNCs are similarly situated in the context of
Equal Protection.

Plaintiffs’ contention that both involve

“driver, vehicle, passenger and payment” and therefore must be

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treated equally does little to support its assertion that the
two are similarly situated.
TNCs operate in a fundamentally different manner from
traditional taxicabs.1

Taxicabs must be clearly identifiable as

such from the street and are typically hailed by random
customers who are unknown to the driver.

On the other hand,

TNCs are structured so as to permit a customer to request a ride
through his/her smartphone application.

The TNC connects the

customer to a particular driver and payment is made by credit
card directly through the application.
use their own private vehicles.

Many of those drivers

Such a pre-arranged method of

providing for-hire transportation, and its various other
accompanying features, distinguishes it from traditional taxi
service.

In summary, there are significant distinctions between

their business models, of which the Court only scratches the
surface, that permit state or local authorities to treat them
differently without implicating the Equal Protection Clause.
Nevertheless, assuming for the sake of argument that
traditional taxicabs and TNCs are similarly situated for
purposes of the Equal Protection Clause, plaintiffs have failed
to carry their burden of establishing that either the amended

1

The same can be said of livery vehicles which have long been
treated differently from taxicabs by (1) the state’s motor
vehicle registration requirements and (2) the City’s decision
not to enforce Rule 403 against them.
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state regulations or the City’s enforcement of Rule 403 only
against taxicabs lacks a rational basis in the distinctions they
draw.
The amendments to 540 CMR 2.05 draw distinctions in the
various kinds of vehicles that can carry passengers for hire.
By amending the regulations to include TNCs, the Commonwealth
brings this new business model under at least a minimum level of
scrutiny by providing a baseline of requirements.

Ultimately,

plaintiff has not established that the Commonwealth’s creation
of a third registration option for vehicles providing smallscale, for-hire transportation services on behalf of TNCs is
arbitrary or irrational.

To the contrary, the amendments seem

to fill a regulatory gap with respect to this relatively new
kind of for-hire transportation service.
Furthermore, the City’s ongoing decision not to enforce
Rule 403 against TNCs can be viewed as rational for at least two
reasons.

First, the City has an interest in increasing the

availability and accessibility of cost-effective transportation.
See Joe Sanfelippo Cabs Inc. v. City of Milwaukee, 2014 WL
4546782, at *3 (E.D. Wis. Sept. 12, 2014).

Exempting TNCs from

the restrictions of Rule 403 does just that by permitting an
alternative transportation option to traditional taxicabs.
Second, the City is actively engaged in a political process to
determine the degree to which to regulate TNCs.
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The City’s

decision to allow that process to run its course before
finalizing regulations is hardly irrational, especially in light
of the City’s awareness of the decision by the Commonwealth to
amend 540 CMR 2.05 to account for TNCs and to establish a
baseline of operational requirements.
The Court need go no further.

It perceives a number of

rational bases why traditional taxicabs and TNCs warrant
disparate treatment by both state and local authorities.
Plaintiff has accordingly failed to show a likelihood of success
on the merits of it Equal Protection Clause claim.
2.

Remaining Factors

Plaintiffs’ inability to show a likelihood of success on
the merits renders the remaining factors “matters of idle
curiosity.” Maine Educ. Ass’n Benefits Trust v. Cioppa, 695 F.3d
145, 152 (1st Cir. 2012) (additionally describing likelihood of
success as the “touchstone of the preliminary injunction
inquiry”).

Nevertheless, the Court briefly addresses each of

the remaining factors.
First, with respect to a showing of irreparable harm,
plaintiffs contend that the influx of TNCs has caused taxicab
operators to suffer “substantial economic harm.”

Plaintiffs

alleged economic harm does not, however, threaten the very
existence of their business and can be remedied by compensatory
damages.

It does not therefore rise to the level of being
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irreparable. See Vaqueria Tres Monjitas, Inc. v. Irizarry, 587
F.3d 464, 486 (1st Cir. 2009).
Moreover, plaintiffs fail to establish that the balance of
the harms weighs in their favor at this stage in the litigation
or that the public interest is served by issuing an injunction.
The challenged state regulations have already gone into effect
and any economic consequences suffered by plaintiffs can be
remedied if they ultimately prevail.
On the other hand, the recently-constituted Taxi Advisory
Committee is actively considering rules and regulations for
TNCs.

To issue an injunction now would short-circuit that

political process by mandating enforcement of Rule 403 against
TNCs.

Such intervention is unwarranted.

The public interest is

best served by the existence of a diverse and competitive market
for transportation services, including both traditional taxicabs
and TNCs.

Restricting the development of that market at this

early stage of the litigation would not be in the public
interest.
The Court, nevertheless, anticipates that the City and its
Taxi Advisory Committee will act expeditiously in determining
the degree to which TNCs are to be regulated in Boston.

During

the pendency of this litigation, the Court expects the City to
demonstrate a purposeful commitment to action by the prompt
submission of recommendations to the Boston City Council.
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Failure to do so will cause this Court to re-examine (1) the
City’s assertion that it is actively and seriously considering
the promulgation of TNC regulations that will be fair to the
taxi industry and ensure public safety and (2) plaintiffs’
request for injunctive relief.
ORDER
For the forgoing reasons, plaintiffs’ emergency motion for
a preliminary injunction (Docket No. 2) is DENIED.
So ordered.
_/s/ Nathaniel M. Gorton____
Nathaniel M. Gorton
United States District Judge
Dated February 5, 2015

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