Cambridge Taxi Drivers and Owners Association, Inc. v. City of Cambridge et al

Filing 25

Judge Nathaniel M. Gorton: ENDORSED ORDER entered. MEMORANDUM AND ORDER.For the forgoing reasons,1) plaintiffs motion for a preliminary injunction (Docket No. 2) is DENIED and2) defendants motion to dismiss (Docket No. 14) is ALLOWED. So ordered. (Caruso, Stephanie)

Case 1:16-cv-11357-NMG Document 25 Filed 01/25/17 Page 1 of 13

United States District Court
District of Massachusetts
)
)
)
)
)
Plaintiff,
)
)
v.
)
City of Cambridge, Nicole Murati )
)
Ferrer, E. Denise Simmons,
)
Christopher Burke and Richard
)
Rossi
)
)
Defendants.
)
Cambridge Taxi Drivers and
Owners Association, Inc.

Civil Action No.
16-11357-NMG

MEMORANDUM & ORDER
GORTON, J.
This case involves a dispute between Cambridge Taxi Drivers
and Owners Association, Inc. (“plaintiff”) and the City of
Cambridge, Cambridge Mayor E. Denise Simmons, the Chair of the
Cambridge License Commission, Nicole Murati Ferrer, Cambridge
Police Commissioner Christopher Burke and Cambridge City Manager
Richard Rossi (collectively, “defendants” or “the City”).

The

plaintiff protests the City’s decision not to apply the same
regulatory framework to transportation network companies
(“TNCs”) as it currently applies to taxicabs.
Plaintiff has filed a motion for a preliminary injunction
and defendants have responded with a motion to dismiss for
failure to state a claim.

For the following reasons,

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plaintiff’s motion for a preliminary injunction will be denied
and defendants’ motion to dismiss will be allowed.
I.

Background
A.

City Regulation of the Taxi Industry

Pursuant to state statute, the taxicab industry in the City
of Cambridge (“the City” or “Cambridge”) is regulated by the
Cambridge License Commission (“the Commission”).

In exercising

that authority, the Commission requires anyone who drives a
taxicab to possess a license known as a “taxicab medallion.”
The City has capped the number of medallions at 257.
The City has promulgated a comprehensive set of so called
Taxicab Rules and Regulations (“Taxicab Regulations”).

Those

regulations define a taxicab as
[a] motor vehicle licensed and approved by the License
Commission to carry passengers and articles, and is
authorized to accept street hails from persons in the
street.
The Taxicab Regulations require all taxicab operators,
inter alia, to possess a medallion, meet a minimum age
requirement, pay certain taxes and supply their contact
information to the Commission.

The Taxicab Regulations also

describe the approved manner in which a taxicab in the City can
engage customers.
Beginning in 2012, companies such as Uber, Lyft and Sidecar
began operations in Boston and surrounding communities.

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The

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cellular phone, app-based, for-hire transportation services have
quickly gained popularity and serve as an alternative to
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 Cambridge has neither issued regulations
specifically targeted at such companies nor enforced the Taxicab
Regulations against them.
B.

State Regulation of TNCs

In July, 2016, the Massachusetts General Court enacted and
the Governor of Massachusetts signed into law a comprehensive
statute, M.G.L. ch. 159A½ (“the Act”), regulating TNCs at the
state level.
The Act defines a TNC as
a corporation, partnership, sole proprietorship or
other entity that uses a digital network to connect
riders to drivers to pre-arrange and provide
transportation.
Id. § 1.

The Act also delegates regulation of TNCs to a new

state “division” within the Massachusetts Department of Public
Utilities. Id. § 2.

That division implements insurance

requirements, monitors fare estimates, ensures the safety and
annual inspection of TNC vehicles and monitors the accommodation
of riders with special needs. Id.

The division also issues

permits, which must be annually renewed, to TNCs and it has the

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power to conduct hearings and impose penalties on TNCs which are
noncompliant with the Act. Id. §§ 3, 6.
Moreover, the Act ostensibly removes TNCs from local
regulation.

Section 10 provides, in part:

[N]o municipality or other local or state entity,
except the Massachusetts Port Authority . . . may
subject a [TNC] to the municipality’s or other local
or state entity’s rate or other requirements . . . .
M.G.L. ch. 159A½, § 10.

The Act does not, however, prevent

municipalities from regulating “traffic flow and traffic
patterns to ensure public safety and convenience.” Id.
C.

Procedural History

In June, 2016, plaintiff filed a five-count complaint, in
which they allege substantive claims for violations of the
Takings Clause (Count IV) and “due process/equal protection”
provisions (Count V) of the United States Constitution.1

So-

called Counts I (declaratory judgment), II (injunctive relief)
and III (damages) simply describe plaintiffs’ requested relief.
On the same day, plaintiff also filed a motion for a preliminary
injunction to direct defendants to regulate TNCs in accordance
with the local taxicab regulations.2

1

Plaintiff mislabeled its complaint. Although the final count
is labeled “VI,” it is the fifth count.
2 This session has just resolved an almost identical action
brought, on behalf of similarly-situated taxicab owners and
drivers in the City of Boston, by the same plaintiffs’ counsel.
See Bos. Taxi Owners Ass’n, Inc. v. City of Boston, Docket No.
15-10100, 2016 WL 7410777 (D. Mass. Dec. 21, 2016); see also
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Defendants responded in August, 2016, with a motion to
dismiss for failure to state a claim.

Both pending motions are

the subjects of this memorandum.
II.

Defendants’ Motion to Dismiss
A.

Legal Standard

To survive a motion to dismiss for failure to state a claim
under Fed. R. Civ. P. 12(b)(6), a complaint must contain
“sufficient factual matter” to state a claim for relief that is
actionable as a matter of law and “plausible on its face.”
Ashcroft v. Iqbal, 556 U.S. 662, 667 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

A claim is

facially plausible if, after accepting as true all nonconclusory factual allegations, the court can draw the
reasonable inference that the defendant is liable for the
misconduct alleged. Ocasio-Hernandez v. Fortuno-Burset, 640 F.3d
1, 12 (1st Cir. 2011).

A court may not disregard properly pled

factual allegations even if actual proof of those facts is
improbable. Id.

Rather, the relevant inquiry focuses on the

reasonableness of the inference of liability that the plaintiff
is asking the court to draw. Id. at 13.
When rendering that determination, a court may not look
beyond the facts alleged in the complaint, documents

Bos. Taxi Owners Ass’n, Inc. v. Baker, Docket No. 16-11922 (D.
Mass. Jan. 24, 2017).
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incorporated by reference therein and facts susceptible to
judicial notice. Haley v. City of Boston, 657 F.3d 39, 46 (1st
Cir. 2011).
B.

Application
1.

Counts I and II: Claims for Declaratory and
Injunctive Relief

Defendants move to dismiss as moot plaintiffs’ claims for
declaratory and injunctive relief (Counts I and II,
respectively) on grounds that the Act preempts municipal
regulation of TNCs.

Plaintiff responds that the Act provides an

exception under which defendants can still regulate TNCs.
Mootness is a constitutional issue that a court should
ordinarily resolve before reaching the merits. ACLU of Mass. v.
U.S. Conference of Catholic Bishops, 705 F.3d 44, 52 (1st Cir.
2013).

The mootness doctrine ensures that claims are to be

justiciable throughout litigation not only when a claim is
initially filed. Id.

The First Circuit Court of Appeals has

identified the following instances of cases becoming moot:
1) when the issues presented are no longer live or the
parties lack a legally cognizable interest in the
outcome;
2) when the court cannot give any effectual relief to
the potentially prevailing party; and
3) if events have transpired to render a court opinion
merely advisory.
KG Urban Enters., LLC v. Patrick, 969 F. Supp. 2d 52, 56 (D.
Mass. 2013) (citing Catholic Bishops, 705 F.3d at 52-53).

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a.

Preemption

Under Massachusetts law, a local regulation is preempted if
1) the statute explicitly provides for preemption or 2) the
purpose of the state law would be “frustrated” by local
regulation such that there is an inference that the legislature
intended to preempt “the field”. St. George Greek Orthodox
Cathedral of W. Mass., Inc. v. Fire Dep’t of Springfield, 967
N.E.2d 127, 132 (Mass. 2012) (quoting Town of Wendell v. Att’y
Gen., 476 N.E.2d 585, 589 (Mass. 1985)).
Here, the Act expressly prohibits defendants from
regulating TNCs:
[N]o municipality or other local or state entity,
except the Massachusetts Port Authority . . . may
subject a [TNC] to the municipality’s or other local
or state entity’s rate or other requirements . . . .
M.G.L. ch. 159A½, § 10.
Moreover, the comprehensiveness of the Act creates a strong
inference that defendants are barred from regulating TNCs.

For

example, the Act creates a new state division to regulate TNCs
and contains numerous operational requirements. M.G.L. ch.
159A½, §§ 2, 3. See St. George, 967 N.E.2d at 133-34.
Plaintiff maintains that the Act contains an exception for
municipalities to regulate “traffic flow and traffic patterns.”
Id. § 10.

Thus, according to plaintiff, defendants can still

regulate TNCs, by, for instance, applying certain taxi medallion

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and driver requirements to TNCs.

Plaintiff’s expansive reading

of the exception would, however, render the entire regulatory
scheme of the Act nugatory and would “frustrate” the purpose of
the statute.

The Court therefore concludes that the Act

preempts local regulation of TNCs.
b.

Mootness

Because local regulation of TNCs is preempted by the new
state statute, plaintiff’s claims for declaratory and injunctive
relief are moot.
First, plaintiff petitions the Court to declare that TNCs
must comply with local taxi ordinances.

After enactment of the

new statute, however, defendants cannot regulate TNCs and thus
any declaration of this Court would be strictly advisory. See
New Eng. Reg’l Council of Carpenters v. Kinton, 284 F.3d 9, 18
(1st Cir. 2002) (remarking that it would be “pointless” to
declare the constitutionality of a policy that had been revised
during litigation).
Plaintiff also asks the Court to direct defendants to
regulate TNCs under the current Taxicab Regulations.

That, too,

is moot because such an injunction would require defendants to
violate state law.

Because defendants cannot regulate TNCs,

there is “no ongoing conduct to enjoin”. See Town of Portsmouth
v. Lewis, 813 F.3d 54, 58 (1st Cir. 2016).

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Accordingly, the Court will allow defendants’ motion to
dismiss Counts I and II.
Plaintiff also seeks monetary damages (Count III) for the
alleged takings, due process and equal protection violations
(Counts IV and “VI”).

Because a claim for monetary damages can

save a claim from mootness even when declaratory or injunctive
relief cannot, Cty. Motors, Inc. v. Gen. Motors Corp., 278 F.3d
40, 43-44 (1st Cir. 2002), the Court will address plaintiff’s
substantive claims.
2.

Count IV:
a.

Takings Claim

Legal standard

The Takings Clause of the Fifth Amendment prohibits the
government from taking private property for public use without
just compensation. Me. Educ. Ass’n Benefits Tr. 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).
b.

Application

Plaintiff’s first substantive claim alleges that the City’s
failure to enforce the Taxicab Regulations against TNCs violates
the Takings Clause because it constitutes a taking of property
without the payment of just compensation.

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Plaintiff contends

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that it holds property rights in its medallions which it claims
provide it with the “exclusive means” to engage in the taxi
business.

By eliminating that exclusivity, plaintiff avers, the

City took its property without paying just compensation.
The right to exclude others from one’s property is “perhaps
one of the most fundamental” property interests. Lingle v.
Chevron U.S.A., Inc., 528, 539 (2005).

Assuming, arguendo, that

medallions are property, by purchasing medallions plaintiff
obtained an individual right to enter the transportation-forhire market.

Each medallion owner has the right to exclude

others from using his or her medallion and the authority it
confers to provide taxi services.
The owner of a medallion does not, however, possess a
property interest in the transportation-for-hire market itself.
Thus, a medallion owner has no right to exclude others from the
market.

For example, taxi medallion owners may not exclude

other taxi medallion owners from participating in the market.
Nor can they exclude new medallion purchasers when the City
summarily increases the number of available medallions.
Similarly, the aggregation of the rights of all medallion owners
is not immutable.

The Taxicab Regulations did not provide

medallion owners with “an unalterable monopoly” over the
transportation-for-hire market. Minneapolis Taxi Owners’ Coal.
v. City of Minneapolis, 572 F.3d 502, 508 (8th Cir. 2009).

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The exclusivity of medallion owners’ access to the market
prior to the arrival of TNCs existed by virtue of the City’s
regulatory structure, not as a result of the medallion owners’
property rights.

Medallion owners have no property interest in

the enforcement of the Taxicab Regulations against others. See
Town of Castle Rock v. Gonzales, 545 U.S. 748, 766 (2005).
Plaintiff has not alleged that the City has revoked,
suspended or impeded its ability to use its medallions.
Plaintiff’s sole claim is that the loss of market exclusivity
caused by the City’s failure to enforce the Taxicab Regulations
against TNCs has diminished the value of their medallions.
Because plaintiff has no right to market exclusivity, it has
failed to state a claim upon which relief can be granted.
Therefore, defendants’ motion to dismiss Count IV will be
allowed.
3.

Count VI:
Claims
a.

Due Process and Equal Protection

The Due Process Claim

Although plaintiff includes few factual allegations with
respect to its due process claim in the complaint, it suggests
in its opposition memorandum that defendants violated its due
process rights by taking away its exclusive right to operate
taxis in Cambridge.

As discussed above, however, plaintiff does

not have a constitutionally protected interest in the

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transportation-for-hire market.

Plaintiff’s due process claim

thus fails for the same reasons that its takings claim fails.
b.

The Equal Protection Claim

To bring an equal protection claim against defendants,
plaintiff must identify a policy or custom of the City of
Cambridge that violates its rights. Los Angeles County v.
Humphries, 562 U.S. 29, 36 (2010).
As explained above defendants are preempted from regulating
TNCs.

Consequently, state policy, not municipal policy, now

prevents defendants from regulating TNCs.

Because

municipalities are liable only for their own illegal acts,
Connick v. Thompson, 563 U.S. 51, 60 (2011), defendants cannot
be held liable for the conduct alleged in the complaint. See Yeo
v. Town of Lexington, 131 F.3d 241, 257 (1st Cir. 1997) (Stahl,
J., concurring) (citing Surplus Store & Exch., Inc. v. City of
Delphi, 928 F.2d 788, 791-92 (7th Cir. 1991)).
Therefore, the Court will allow defendants’ motion to
dismiss plaintiff’s equal protection claim in Count VI.

Because

Count III is merely a request for damages, and the Court has
determined it will allow defendants’ motion with respect to
plaintiffs’ takings, due process and equal protection claims,
the Court will also dismiss Count III.

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III. Plaintiff’s Motion for a Preliminary Injunction
Plaintiff’s motion for a preliminary injunction will be
denied as moot because the Court will allow defendants’ motion
to dismiss with respect to all of plaintiff’s claims.

ORDER
For the forgoing reasons,
1)

plaintiff’s motion for a preliminary injunction
(Docket No. 2) is DENIED and

2)

defendants’ motion to dismiss (Docket No. 14) is
ALLOWED.

So ordered.

/s/ Nathaniel M. Gorton_____
Nathaniel M. Gorton
United States District Judge
Dated January 25, 2017

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