The Bloomberg BNA Tax Management Weekly State Tax Report filters through current state developments and analyzes those critical to multistate tax planning.
Sept. 28 — A first-in-the-nation Massachusetts law illegally gives ride-sharing companies like Uber Technologies Inc. and Lyft Inc. a competitive advantage over taxis, a group of taxi medallion owners claim in a federal lawsuit ( Boston Taxi Owners Association, Inc. v. O'Connor, D. Mass., No. 1:16-cv-11922, complaint filed 9/23/16 ).
The Boston Taxi Owners Association, Inc., a nonprofit organization representing people who own taxi medallions, seeks an injunction to stop the new law from being enforced, plus monetary damages. The lawsuit was filed Sept. 23 in the U.S. District Court in the District of Massachusetts and names Gov. Charlie Baker (R) and members of his cabinet as defendants.
The law violates the owners' constitutional rights to just compensation, equal protection and due process, according to the lawsuit.
Baker was pleased to sign the legislation, Billy Pitman, Baker spokesman, told Bloomberg BNA in a Sept. 28 e-mail.
The bill establishes a regulatory framework for ride-sharing companies that didn’t previously exist and includes some of the strongest ride-for-hire background check systems in the nation, Pitman said.
The governor has made it clear to ride-sharing services and taxis that “the administration is open to having future conversations on any outstanding issues,” Pitman said.
The new law, enacted Aug. 5, spells out requirements for ride-sharing services, including paying the state a 20-cent-per-ride tax and other fees, carrying adequate car insurance and undergoing background checks (2016 Weekly State Tax Report 25, 8/5/16).
The law also prevents cities and towns from regulating or taxing ride-sharing companies.
Taxi companies are exclusively regulated by towns and cities, which apply unfairly burdensome requirements, according to the complaint.
The lawsuit points to the Boston medallion system as an example of a costly permit requirement that because of the new law, is levied against cab owners and not ride-sharing services.
Medallions are required to drive a cab in Boston. There are just 225 medallions and they are bought, sold, invested in and rented. People can amass multiple medallions, which until recently cost $700,000, but now cost about $175,000.
The influx of ride-sharing services have caused the price of medallions to plummet, the lawsuit said.
By not protecting medallion owners from their loss in value, the state has violated the takings clause, the lawsuit said.
“Without compensation to the medallion owners or the lenders holding security interests in the medallions, the Commonwealth allows the de facto taxi companies to usurp and trespass upon the exclusive property rights of medallion owners by providing those services without buying or leasing medallions or complying with the taxi regulations,” the lawsuit said.
“The Commonwealth has thereby taken exclusive rights from medallion owners and transferred them to the de facto taxi companies without any compensation, let alone the just compensation that the Takings Clause requires,” the lawsuit continued.
The plaintiffs are also seeking a declaratory judgment as to the validity of the law and whether ride sharing services must be required to comply with state and local laws, they said.
“Two similarly situated industries are being regulated by different government bodies in an entirely unequal way thereby violating the taxi owners’ constitutional rights,” the complaint alleged.
The medallion owners want the state to be permanently enjoined from enforcing the law. They also want the court to order the state to apply taxi cab laws, taxes and rules to ride sharing services, or for the two entities to otherwise be regulated the same.
The medallion owners also are seeking monetary damages if they don't receive swift injunctive relief.
To contact the reporter on this story: Adrianne Appel in Boston at firstname.lastname@example.org
To contact the editor responsible for this story: Ryan C. Tuck at email@example.com
Text of the complaint is at http://src.bna.com/iXA.
Copyright © 2016 Tax Management Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)