New York’s ‘secret’ scheme to pay taxi drivers more

Mayor Bloomberg and David Yassky in a taxi. (Spencer T Tucker via nyc.gov)
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On Friday the Greater New York Taxi Association, which represents some of the city's wealthiest taxi medallion owners, and Evgeny Freidman, one such owner, sued Mayor Michael Bloomberg's Taxi and Limousine Commission, alleging, among other things, that it and the Taxi Workers Alliance (the closest thing taxi drivers have to a union) reached "a corrupt, surreptitious agreement" designed, in part, to retaliate against taxi owners.

Here's the suit, first reported by the New York Post, in full.

In particular, the Association and Freidman allege that the city agreed to give taxi drivers—as represented by Alliance executive director Bhairavi Desai—a fare hike, lower credit card transaction fees, and a disability fund in exchange for their support of the mayor's ambitious borough taxi plan.

The drivers did indeed recently win a fare hike, limits on credit card transaction fees, and a disability fund. And the drivers did also support the mayor's borough taxi plan.

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But the plan, which would have empowered 18,000 livery car drivers to pick up street hails in the outer boroughs and upper Manhattan, something they routinely do now illegally, is held up in court.

In the drivers' support for that plan, and the commissioner's support of rules improving drivers' lives, the owners see only vindictiveness and collusion.

“These illegal actions are all part of a concerted plan concocted by Mayor Michael Bloomberg (“the Mayor”) and Yassky to severely and recklessly diminish the value of taxi medallions for no reason other than to retaliate against medallion owners who successfully challenged the Mayor’s previous illegal plans," the suit reads. "They are also the direct result of a secret deal the TLC made with an alliance of taxi drivers to gain the drivers’ support for a piece of legislation that has now been found to be unconstitutional.”

Here's the suit's evidence: in March 2011, Desai opposed the city's plan to create a new fleet of taxis to service the outer boroughs, long neglected by the yellow cab industry. Three months later, she came out in support of the measure, and in a newsletter to alliance members told them, according to the suit, that she was supporting the plan because the TLC had agreed to a fare hike, lower credit card fees and the creation of a health care fund.

"Secret" is a subjective term, maybe, but it should be noted that Desai wrote about it in a newsletter, and discussed aspects of the agreement at a press conference.

Desai, in an interview with Capital, called the suit's allegations, "absurd."

"We haven't had an overall raise in eight years," said Desai. "Gas prices have gone up four dollars, from $1.80 to over $4 in that time period. And how is creating a health and disability fund for low-income workers retaliation against the owners? They don't even have to pay for it."

According to the suit, the TLC was angry that the industry has succeeded in foiling new rules designed to encourage the use of hybrid cabs, and other rules designed to shift the burden of sales tax payments from drivers to medallion owners.

"There is no other reason to explain why every penny of the recent 17% fare increase went exclusively to the drivers, while the taxi owners’ income was simultaneously reduced by the rule changes,” according to the owners.

There are, actually, good reasons why the 17 percent fare increase went to the drivers, and only the drivers.

Unlike medallion owners, who control million-dollar assets, taxi drivers operate in what one Times reported recently described as a "feudal" state.

In other words, they could really use the extra cash.

The suit also argues, somewhat outlandishly, that the replacement of the word "Taxi" with the letter "T" on the exterior of yellow cabs was designed to, "end distinctions between yellow medallion cabs and livery cabs in what appears to be an effort to confuse customers."

In other words, should the borough taxi law ultimately come into effect, riders will no longer be able to distinguish lime-green borough taxis from yellow yellow cabs.

"Even though only yellow cabs can legally pick up hails in Manhattan, consumers would not have been able to differentiate between the two types of cars and the services they can legally provide,” the suit argues, dismissing the difference between the still-aspirational lime-green borough taxis and the bright yellow regular taxis, as "a slight difference in color; a difference that almost completely vanishes at night under the City’s street lights."

Further, the suit argues that the commission has no authority to set up a disability health fund for taxi drivers, derived from a $.06-per-ride surcharge.

"This is pure petty arrogance that they cannot stand the idea that people at CIty Hall are listening to the plight of taxi drivers," said Desai, who said the Alliance will be participating in the lawsuit in some form. "That's it. There's nothing more to it than that."

In reaction to the suit, city Taxi and Limousine commissioner David Yassky said, “I haven’t read a good John Grisham novel in a while, so it fills that void."