Boston Taxi Owners Association, Inc. et al v. Governor Charles Baker et al

Filing 50

Judge Nathaniel M. Gorton: ORDER entered. MEMORANDUM AND ORDER.For the forgoing reasons,1) plaintiffs motion for a preliminary injunction (Docket No. 25) is DENIED;2) the motion of defendant David M. Gibbons to dismiss (D ocket No. 16) is ALLOWED;3) the motion of defendants Governor Charles Baker, Angela M. OConnor, Jolette A. Westbrook, Robert Hayden and Stephanie Pollack to dismiss (Docket No. 32) is ALLOWED; and4) the motion of defendant Thomas P. Glynn to dismiss (Docket No. 35) is ALLOWED.So ordered.(Caruso, Stephanie)

United States District Court
District of Massachusetts
)
Boston Taxi Owners Association, )
)
Inc. and Steven Goldberg
)
)
Plaintiffs,
)
)
v.
)
)
Governor Charles Baker, Angela
)
M. O’Connor, Jolette A.
)
Westbrook, Robert Hayden,
)
Stephanie Pollack, Thomas P.
)
Glynn and David M. Gibbons
)
)
Defendants.
)

Civil Action No.
16-11922-NMG

MEMORANDUM & ORDER
GORTON, J.
This case arises out of a purported dispute between taxicab
medallion owners, Boston Taxi Owners Association, Inc. and
Stephen Goldberg (“plaintiffs”), and Massachusetts Governor
Charles Baker and six other defendants who represent the
Commonwealth of Massachusetts, the Massachusetts Port Authority
and the Massachusetts Convention Center Authority.

Plaintiff’s

complaint about the Commonwealth’s decision to apply a
regulatory scheme to transportation network companies (“TNCs”)
different from that applied to taxicabs by several
municipalities.
Plaintiff filed a motion for a preliminary injunction in
November, 2016, and defendants separately moved to dismiss the

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case for failure to state a claim.

For the following reasons,

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

Background
A.

Local Regulation of the Taxi Industry

The primary sources of regulation for the taxicab industry
are the municipalities which are authorized by M.G.L. c. 40,
§ 22 to regulate local taxi businesses.

As a result, taxis are

subject to a variety of regulatory schemes.
In the City of Boston specifically, the Police Commissioner
(“the Commissioner”) exercises that regulatory 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.”
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 rule’s 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

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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 2012, transportation network 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 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 Boston did not issue regulations specifically
targeted at such companies nor did it enforce Rule 403 against
them.
B.

State Regulation of TNCs

In July, 2016, the 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.

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Id. § 1.

The Act also delegates regulation of TNCs to a new

state “division” within the Massachusetts Department of Public
Utilities (“DPU”). 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
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 September, 2016, plaintiffs filed a five-count
complaint, in which they allege violations of the Takings Clause
(Count IV) and “due process/equal protection” provisions (Count
V) of the United States Constitution.

So-called Counts I

(declaratory judgment), II (injunctive relief) and III (damages)
simply describe plaintiffs’ requested relief.

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Plaintiffs

subsequently moved for a preliminary injunction to direct
defendants to suspend enforcement of M.G.L. ch. 159A½ and to
regulate TNCs under the local taxicab regulations, namely
Rule 403.
Defendant David M. Gibbons, the Executive Director of the
Massachusetts Convention Center Authority (“MCCA”) responded to
plaintiffs’ complaint in October, 2016, with a motion to dismiss
for lack of standing and failure to state a claim.
In December, 2016, defendants 1) Governor Baker, 2) Angela
M. O’Connor, Jolette A. Westbrook and Robert Hayden,
representatives of the DPU and 3) Stephanie Pollack,
Transportation Secretary of the Massachusetts Department of
Transportation, jointly moved to dismiss plaintiffs’ complaint.
That same day, defendant Thomas P. Glynn, Chief Executive
Officer of the Massachusetts Port Authority (“Massport”) filed
his own motion to dismiss plaintiffs’ complaint for failure to
state a claim.
Plaintiffs’ motion for a preliminary injunction and
defendants’ motions to dismiss are the subjects of this
memorandum.
II.

Motions to Dismiss
The seven named defendants filed three separate motions to

dismiss primarily for failure to state claims upon which relief
can be granted.

Although the complaint does not specify whether

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the defendants have been sued in their official or individual
capacities, the parties in their briefings on the motions agree
that the defendants have been sued in their official capacities.
The Court will thus analyze the motions as if they were asserted
by the entities that the defendants represent. See Kentucky v.
Graham, 473 U.S. 159, 166 (1985).
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

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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.

Motion to Dismiss by Defendant Glynn

Defendant Thomas P. Glynn moves to dismiss plaintiffs’
claims against Massport on the grounds that plaintiffs 1) lack
standing and 2) fail to state a claim upon which relief can be
granted.
To allege standing to bring a particular claim, a plaintiff
must show that
(1) it has suffered an “injury in fact” that is (a)
concrete and particularized and (b) actual or
imminent, not conjectural or hypothetical; (2) the
injury is fairly traceable to the challenged action of
the defendant; and (3) it is likely, as opposed to
merely speculative, that the injury will be redressed
by a favorable decision.
Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc.,
528 U.S. 167, 180-81 (2000).
Glynn correctly maintains that Massport is mentioned just
once in the entire complaint when it is alleged that:
The TNC Law allows MassPort and MCCA to establish
rules to allow TNCs to pick up at both Logan Airport
and the Convention Center.
That sole allegation fails, however, to support the
causation requirement for standing.

Plaintiffs’ purported harm,

the loss of exclusivity in the transport-for-hire market, is
based upon the alleged unfair impact of municipal taxi

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regulations now that a new state statute has been enacted to
regulate TNCs, i.e. M.G.L. 159A½.

Plaintiffs have thus not

alleged that Massport has caused the purported harm. See Katz v.
Pershing, LLC, 672 F.3d 64, 71-72 (1st Cir. 2012) (“[C]ausation
is absent if the injury stems from the independent action of a
third party.”).
Even if that single allegation were sufficient to establish
standing, it is “too meager” to support an inference that
Massport is liable for any misconduct. SEC v. Tambone, 597 F.3d
436, 442 (1st Cir. 2010) (citing Twombly, 550 U.S. at 555).
Plaintiffs’ claims against Massport are therefore also subject
to dismissal for failure to state a claim.
Accordingly, all claims against Massport will be dismissed.
C.

Motion to Dismiss by Defendant Gibbons

David M. Gibbons, Executive Director of the MCCA, moves to
dismiss the complaint against the MCCA for failure to state a
claim upon which relief can be granted.
Again, plaintiffs’ only allegation against the MCCA is
that:
[t]he TNC Law allows MassPort and MCCA to establish
rules to allow TNCs to pick up at both Logan Airport
and the Convention Center.
As explained above, the crux of plaintiffs’ argument is
that, as a result of the enactment of M.G.L. 159A½, the
distinction between in state regulation of TNCs and local

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regulation of taxis has led to an alleged loss of market
exclusivity.

Without more, plaintiffs’ lone allegation against

the MCCA is not sufficient to show the MCCA had any involvement
in the alleged harm to the plaintiffs.
Although in the complaint, plaintiffs also describe the
history of funding for the Boston Convention and Exhibition
Center (“BCEC”), which is under the direction of the MCCA, those
allegations further emphasize that it is state law not the MCCA
that differentiates between taxis and TNCs:
despite being financed off the backs of taxi
medallions, the TNC Law allows TNCs to provide
services and pick up at the bustling BCEC.
Because plaintiffs’ have not sufficiently alleged a claim
against the MCCA, the Court will dismiss plaintiffs’ claims
against it.
D.

Motions to Dismiss by Defendants Governor Baker,
Hayden, O’Connor, Pollack and Westbrook

The remaining defendants, Governor Charles Baker, Angela
O’Connor, Jolette Westbrook, Robert Hayden and Stephanie Pollack
(collectively, “the Commonwealth defendants”) move to dismiss
all plaintiffs’ claims.
1.

Plaintiffs’ Takings Claim (Count IV)

In Count IV, the first substantive claim, plaintiffs allege
that the enactment of M.G.L. ch. 159A½ by the state legislature,

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violates the Takings Clause because it constitutes a taking of
property without the payment of just compensation.
a.

Legal standard

The Takings Clause of the Fifth Amendment of the United
States Constitution 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

Plaintiffs contend that they hold property rights in their
medallions which provide the “exclusive means” to engage in the
taxi business.

By eliminating that exclusivity, plaintiffs

aver, the Commonwealth took their property without paying just
compensation.
Plaintiffs correctly note that 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, for the sake of argument, that medallions are

property, by purchasing medallions plaintiffs obtained an
individual right to enter the transportation-for-hire market.

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Each medallion owner has the right to exclude others from using
his or her medallion and the authority it confers to provide
taxi services.
But the owner of a medallion does not possess a property
interest in the transportation-for-hire market itself.

Thus, a

medallion owner has no right to exclude others from the market.
This is manifest from the fact that taxi medallion owners may
not exclude other taxi medallion owners from participating in
the market.

Nor can they exclude new medallion purchasers when

cities summarily increase the number of available medallions.
Similarly, the aggregation of the rights of all medallion owners
is not immutable.

For example, Rule 403 does 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).
The exclusivity of medallion owners’ access to the market
prior to the arrival of TNCs existed by virtue of local
regulatory structures, not as a result of the medallion owners’
property rights.

Medallion owners have no property interest in

the enforcement of local taxi regulations against others. See
Town of Castle Rock v. Gonzales, 545 U.S. 748, 766 (2005).
Plaintiffs have not alleged that the Commonwealth has
revoked, suspended or impeded its ability to use its medallions.
Their sole claim is that the loss of market exclusivity caused

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by the enactment of the new TNC statute has diminished the value
of their medallions.

Because plaintiffs have no rights to

market exclusivity, they have failed to state a claim upon which
relief can be granted.

As such, the motion of the Commonwealth

defendants to dismiss Count IV will be allowed.
2.

Plaintiffs’ Equal Protection Claim (Count V)

Plaintiffs allege in Count V that M.G.L. ch. 159A½ violates
their equal protection rights because it regulates TNCs
differently than taxis without any rational basis.
a.

Legal standard

The Equal Protection Clause of the Fourteenth Amendment
“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).
Rational basis review simply requires that there be “any
reasonably conceivable set of facts” justifying the disparate

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treatment. FCC v. Beach Commc’ns, Inc., 508 U.S. 307, 313-14
(1993).

Although the Commonwealth

may not rely on a classification whose relationship to
an asserted goal is so attenuated as to render the
distinction arbitrary or irrational
City of Cleburne, 473 U.S. at 446, the basis for the legislation
need not be supported by evidence in the record. Beach Commc’ns,
508 U.S. at 315.
b.

Application

Plaintiffs contend that taxicabs and TNCs are similarly
situated and that there is no rational basis for regulating the
two groups differently.

The Commonwealth defendants respond

that TNCs and taxis are not similarly situated and proffers a
number of bases for the differences purportedly supporting the
TNC legislation.
Even taking as true all of plaintiffs’ allegations that
taxicabs and TNCs are similarly situated, plaintiffs have failed
to negate all of the purported bases for the enactment of M.G.L.
ch. 159A½. See Beach Commc’ns, 508 U.S. at 315 (placing the
burden on the plaintiffs to refute every possible legitimate
basis for the subject legislation).
The Commonwealth defendants maintain that differentiating
between TNCs and taxicabs is rationally related to a legitimate
government interest in “fostering a diverse” transportation-forhire market.

The Court agrees.

For example, the distinctions

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in fare structure between TNCs and taxis is fairly and
substantially related to the goal of providing a diverse market
of transportation options.

TNCs employ variable pricing which

“surges,” i.e., increases, during high demand, whereas taxis
provide flat, metered fares.

The Commonwealth defendants (or

the legislature acting on their behalf) could rationally
conclude that those distinctions provide individuals with an
opportunity to balance price and convenience in their
transportation decisions and that TNCs represent a new addition
to the market to compete with taxis, livery vehicles and public
transportation. See Ill. Transp. Trade Ass’n v. City of Chicago,
839 F.3d 594, 599 (7th Cir. 2016) (concluding that regulatory
distinctions between taxis and TNCs are permissible to support
competition in the transportation-for-hire market).
Furthermore, it is conceivable that the state legislature
concluded that taxis should be subject to tighter regulation of
rates to protect passengers.

Unlike TNCs, which can only pickup

passengers through pre-arrangement, taxis can accept street
hails.

As the Commonwealth defendants argued in their

memorandum in support of the motion to dismiss, the consumer
knows what to expect when arranging for a TNC and even has the
opportunity to shop for better fares but in the case of a street
hail the passenger has no information about the taxi driver and
has no opportunity to negotiate the fare.

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Thus, the legislature

could have rationally decided to impose tighter restrictions on
taxis than on TNCs. See Desoto CAB Co. v. Picker, Docket No. 15cv-04375, 2017 WL 118810, at *7 (N.D. Cal. Jan. 12, 2017).
Finally, in the three cases of which the Court is aware
that address equal protection claims similar to those here,
respected jurists on the Seventh Circuit Court of Appeals, the
United States District Court for the District of Columbia and
the United States District Court for the Northern District of
California uniformly dismissed those claims. See generally Ill.
Transp. Trade Ass’n v. City of Chicago, 839 F.3d 594 (7th Cir.
2016) (reversing the district court’s decision not to dismiss
the equal protection claim); Desoto CAB Co. v. Picker, Docket
No. 15-cv-04375, 2017 WL 118810 (N.D. Cal. Jan. 12, 2017);
Gebresalassie v. District of Columbia, 170 F. Supp. 3d 52
(D.D.C. 2016).

Consequently, although this Court suggested,

before the enactment of M.G.L. ch. 159A½, that there was no
rational basis for the City of Boston to differentiate between
taxis and TNCs, current, persuasive authority, buttressed by
such enactment, favors the Commonwealth defendants in this
action.
Accordingly, because there is at least one rational basis
that is fairly related to the disparate treatment of TNCs and
taxis, the Court will dismiss Count V.

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3.

Plaintiff’s remaining claims for Declaratory
Relief (Count I), Injunctive Relief (Count II)
and Monetary Damages (Count III)

Because the first three counts in plaintiffs’ complaint
merely describe the requested relief and the Court has
determined to dismiss plaintiffs’ underlying substantive claims,
Counts I, II and III will also be dismissed.
III. Plaintiff’s Motion for a Preliminary Injunction
Plaintiffs’ motion for a preliminary injunction will be
denied as moot because the Court will allow defendants’ separate
motions to dismiss with respect to all of plaintiffs’ claims.

ORDER
For the forgoing reasons,
1)

plaintiffs’ motion for a preliminary injunction
(Docket No. 25) is DENIED;

2)

the motion of defendant David M. Gibbons to dismiss
(Docket No. 16) is ALLOWED;

3)

the motion of defendants Governor Charles Baker,
Angela M. O’Connor, Jolette A. Westbrook, Robert
Hayden and Stephanie Pollack to dismiss (Docket No.
32) is ALLOWED; and

4)

the motion of defendant Thomas P. Glynn to dismiss
(Docket No. 35) is ALLOWED.

So ordered.

/s/ Nathaniel M. Gorton_____
Nathaniel M. Gorton
United States District Judge
Dated January 24, 2017

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