FILED: NEW YORK COUNTY CLERK 12/23/2019 11:18 AM
`FILED: NEW YORK COUNTY CLERK 12m2019 11:18 A
`NYSCI
`3F DOC. NO. 101
`NYSCEF DOC. NO. 101
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`INDEX NO. 159195/2019
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`INDEX NO- 159195/2019
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`RfiC 1-IV1-D \lYSCEF:
`12/23/2019
`RECEIVED NYSCEF: 12/23/2019
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`SUPREME COURT OF THE STATE OF NEW YORK
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`NEW YORK COUNTY
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`PRESENT:
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`HON. LYLE E. FRANK
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`PART
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`IAS MOTION 52EI=M
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`Justice
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`-"*“X INDEX No.
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`159195/2019
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`ZEHN-NY LLC,ZWE|—NY LLC,ABATAR, LLC,UNTER
`LLC,UBER TECHNOLOGIES |NC.,UBER USA, LLC,
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`MOT'ON DATE m
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`_ V _
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`NEW YORK CITY TAXI AND LIMOUSINE COMMISSION,
`BILL HEINZEN, THE CITY OF NEW YORK,
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`DECISION + ORDER ON
`MOTION
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`________________________________________________________________________________x
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`Respondent.
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`The following e-filed documents. listed by NYSCEF document number (Motion 001) 2, 47, 48, 50, 64, 65,
`66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 85, 86, 87, 88, 89, 90, 91, 92, 94,
`95, 96, 97, 98, 99, 100
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`were read on this motion to/for
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`ARTICLE 78 (BODY OR OFFICER)
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`Petitionersl, commenced this Article 78 proceedings seeking an order of the Court
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`vacating and annulling the rules enacted in August 2019 codified at Title 35 Of the Rules of the
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`City of New York (“RCNY”), §§ 51-03, 59A-O6, 59D-O6, and 59D—21, 59A-11(e), 59B-17(c)-
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`(d) which, among other things, require that the City’s high—volume FHV bases maintain their
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`company-wide Manhattan core cruising time at a maximum of 31 percent of their total vehicle
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`hours travelling in the core Of Manhattan (the “Core”.)2
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`This Court finds that the rules adopted by the Taxi and Limousine Commission (TLC) on
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`August 7, 2019 as they relate to a cruising cap are arbitrary and capricious, specifically §59D-21
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`of the Rules Of the City of New York. This decision does not impact any other rules
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`promulgated on August 7, 2019.
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`' The Court includes the petitioners in the Tri-City matter, index number 159941/2019, for the purposes of this
`decision, as both Article 78 petitions seek the same relief.
`2 Pursuant to the RCNY §59D-21, beginning in February 2020 the cruising percentage is capped at 36 percent until
`August 2020 when the cap will be lowered to 31 percent.
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`159195/2019 Motion No. 001
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`FILED: NEW YORK COUNTY CLERK 12/23/2019 11:18 AM
`FILED: NEW YORK COUNTY CLERK 12m2019 11:18 .
`NYSCI
`3F DOC. NO. 101
`NYSCEF DOC. NO. 101
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`INDEX NO. 159195/2019
`INDEX NO- 159195/2019
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`R*.C*.IV*.D \IYSCEF:
`12/23/2019
`RECEIVED NYSCEF: 12/23/2019
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`Standard 0 Review
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`In an Article 78 proceeding, the scope ofjudicial review is limited to whether a
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`governmental agency’s determination was made in violation of lawful procedures, whether it
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`was arbitrary or capricious, or whether it was affected by an error of law (see CPLR § 7803[3];
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`Matter ofPell v Board ofEduc., 34 NY2d 222, 230 [1974]; Scherbyn v BOCES, 77 NY2d 753,
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`757—758 [1991]). A determination subject to review under Article 78 exists when, first, the
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`agency “reached a definitive position on the issue that inflicts actual, concrete injury and second,
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`the injury inflicted may not be significantly ameliorated by further administrative action or by
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`steps available to the complaining party” (Walton v New York State Dept. ofCorrectional Servs.,
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`8 NY3d 186, 194 [2007]). Article 78 review is permitted, where it is alleged a determination was
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`made “in violation of lawful procedure, was affected by an error of law or was arbitrary and
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`capricious or an abuse of discretion. . ..” NY CPLR §7803(3).
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`“Arbitrary” for the purpose of the statute is interpreted as “when it is without soundbasis
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`in reason and is taken without regard to the facts.” Pell 34 NY2d at 231.
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`A court can overturn an administrative action only if the record illuminates there was no
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`rational basis for the decision. Id. “Rationality is what is reviewed under both the substantial
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`evidence rule and the arbitrary and capricious standard.” Id. If the court reviewing the
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`determination finds that “[the determination] is supported by facts or reasonable inferences that
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`can be drawn from the records and has a rational basis in the law, it must be confirmed.”
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`American Telephone & Telegraph v State Tax Comm ’n 61 NY2d 393, 400 [1984]. Likewise,
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`“[i]f the reasons an agency relies on do not reasonably support its determination, the
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`administrative order must be overturned and it cannot be affirmed on an alternative ground that
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`159195l2019 Motion No. 001
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`FILED: NEW YORK COUNTY CLERK 12/23/2019 11:18 AM
`FILED: NEW YORK COUNTY CLERK 12m2019 11:18 A
`NYSCI
`3F DOC. NO. 101
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`NYSCEF DOC. NO. 101
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`INDEX NO. 159195/2019
`INDEX NO- 159195/2019
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`R*.C*.IV*.D \IYSCEF:
`12/23/2019
`RECEIVED NYSCEF: 12/23/2019
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`would have been adequate if cited by the agency.” Nat ’1 Fuel Gas Distribution Corp. v Pub.
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`Serv. Comm ’n ofNew York, 16 NY3d 360, .368 [2011].
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`Discussion-arbitrary and capricious
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`This Court takes issue with the calculation of “Cruising” as defined in Section 51—03 of
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`Title 35 of the Rules of the City of New York. Specifically, it is problematic that the time a
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`driver is travelling to pick up a passenger in the “Congestion Zone” 3, after a fare has already
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`been agreed upon and a car has been dispatched, is included in the calculation of “cruising.” The
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`Statement of Basis and Purpose to the rules promulgated not only does not support the TLC’s
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`argument, that the time travelling to a passenger should be included for the purposes of
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`calculating “Cruising”, but in fact undercuts that argument. According to the Statement of Basis
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`and Purpose, there is no indication congestion is caused by the time a driver drives to pick up a
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`passenger, but rather is caused by the “roughly 8 minutes a driver spends waiting for the next
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`trip, either parked, double parked or driving to an area where the driver expects to get another
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`trip. Because of high demand for on-street parking in the Manhattan core, most drivers are either
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`double-parked or driving, both of which contribute to congestion.” (emphasis added) As such,
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`the TLC has not shown any rational basis for why “Cruising” should include the time that
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`vehicles head to pick up identified passengers.
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`Moreover, any review done by TLC would be suspect if the time a driver is en route to a
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`passenger is included in “cruising.” It is likely that pursuant to the new rule that vehicles would
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`be less likely to pick up passengers the further one goes into the Congestion Zone (the “Zone”),
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`as that would require more time within the Zone to pick up a passenger, since there would be
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`3 The “Congestion Zone” is defined by 35 RCNY § 51-03 as the area of Manhattan south of and excluding 96th
`Street. ThlS area is also defined as the “core” in the Local Law 147 study. See
`https://wwwl .nyc.gov/assets/tlc/downloads/pdf/fl1v_congestion_study_report.pdf
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`159195/2019 Motion No. 001
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`FILED: NEW YORK COUNTY CLERK 12/23/2019 11:18 AM
`FILED: NEW YORK COUNTY CLERK 12m2019 11:18 .
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`3F DOC. NO. 101
`NYSCEF DOC. NO. 101
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`INDEX NO. 159195/2019
`INDEX NO- 159195/2019
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`R*.C*.IV*.D \IYSCEF:
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`fewer vehicles in the Zone at any one time. Therefore, the increase in wait times of about 13%
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`that TLC has anticipated would likely be higher the further one got from the boundary of the
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`Zone.
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`In addition, it is of concern that the economic modeling requested by the petitioners has
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`not been provided to them, especially since they were apparently relied on by the TLC in its
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`determination on the new rules promulgated. That the record for the basis of TLC’s actions is
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`incomplete simply works against the TLC when it comes to the promulgation of rules.
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`Consequently, the Court does not have a full record to evaluate the action taken by the TLC and
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`whether such action was rational.
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`Moreover, the Court notes that many stakeholders expressed concern with the proposed
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`new rules, representing many diverse interests, among then both the Manhattan and Queens
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`Chambers of Commerce, the New York Building Congress, the National Action Network, the
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`Black Institute, the Brooklyn Pride Center, and the Stonewall Community Development
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`Corporation. The TLC was in no way required to adopt what these entities suggested, but their
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`testimony was required to be addressed by the TLC before promulgation of the rule in question.
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`Because it was not, this Court has an incomplete picture of the reason for the TLC rejection of
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`their concerns. See Barry v O’Connell 303 NY 46, 51-52 [1951].
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`Additionally, the petitioners correctly point out that there is scant rationale for why the
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`31% number was chosen to be the number in the promulgation of the rules. The closest the
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`respondents come to giving reason for that number is in the affidavit of Rodney Stiles, the TLC
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`Assistant Commissioner who provided an affidavit for the record. In paragraph 56 of his
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`affidavit, Mr. Stiles indicates the percentages studied by TLC were 31%, 26% and 21%. There is
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`simply no indication where the numbers came from, except that Mr. Stiles states that the industry
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`159195/2019 Motion No. 001
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`FILED: NEW YORK COUNTY CLERK 12/23/2019 11:18 AM
`FILED: NEW YORK COUNTY CLERK 12m2019 11:18 .
`NYSCI
`3F DOC. NO. 101
`NYSCEF DOC. NO. 101
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`INDEX NO. 159195/2019
`INDEX NO- ”9195/2019
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`R*.C*.IV*.D \IYSCEF:
`12/23/2019
`RECEIVED NYSCEF: 12/23/2019
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`has cruising rates of 34% in non-core areas and Via, a different kind of service, has a cruising
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`rate of 13% within the Zone. Mr. Stiles said that 31% was chosen because it will provide
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`“meaningful results without unduly impacting the [relevant] companies.” Mr. Stiles then goes
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`on to note that there will be a regular review of cruising rates required in the new rule. The
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`Court agrees with the petitioners that this rationale is simply insufficient is simply insufficient, as
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`the numbers should have been derived at as a result of the review undertaken, and not as a
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`starting point.
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`Finally, the affidavit of Mr. Stiles, in discussing the “elasticity coefficient,” notes that
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`that the “study team used the .060 coefficient discussed in the Driver Pay Report... The Driver
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`Pay Report, however, incorrectly cites the source for this estimated value; the authors of the pay
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`report set this value after consulting with Jonathan Hall, Chief Economist at Uber, in May 2018.”
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`This calls into question the methodology relied upon, especially where Mr. Hall strongly
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`disputes the reasonableness of the elasticity coefficient used.
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`Preemption, Delegation and Donnelly Act
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`As to the other issues addressed by the petitioners, the Court notes that it has previously
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`reviewed the arguments by the petitioners regarding the issues of preemption and improper
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`delegation and finds them unavailing. As to the issue of state preemption, the Court relies on its
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`prior decision under index number 151730/2019, dated October 28, 2019. To reiterate, the Court
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`does not find that the state laws in question act to preempt Local Law 147 or the rules
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`promulgated therefrom. These laws and rules are meant to reduce congestion, just as the state
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`laws purport to do. The Court again agrees, the state laws could have had language to preempt
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`local laws and rules but does not. Any impact it has on the monies meant to be used to fund
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`mass transit are merely incidental to the reach of the laws and rules.
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`159195/2019 Motion No. 001
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`FILED: NEW YORK COUNTY CLERK 12/23/2019 11:18 AM
`FILED: NEW YORK COUNTY CLERK 12E2019 11:18 A
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`NYSCI
`3F DOC. NO. 101
`NYSCEF DOC. NO. 101
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`INDEX NO. 159195/2019
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`INDEX NO- 159195/2019
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`R*.C*.IV*.D \IYSCEF:
`12/23/2019
`RECEIVED NYSCEF: 12/23/2019
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`As to petitioners’ argument of improper delegation, the Court finds that the parts of Local
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`Law 147 challenged, and the rules promulgated thereunder, were a proper delegation. While the
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`language is somewhat vague in Local Law 147 as to how the TLC should arrive at the utilization
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`standards in question, the Court does not find that it was an improper delegation. As in the prior
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`case, the Court finds that the City Council did not delegate its policy making authority, but rather
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`gave policy standards for the TLC and the Department of Transportation to address and use its
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`expertise in the area of traffic and for-hire vehicles. The Court also disagrees with the petitioners
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`that the standards in the rules do not mirror the standards set forth by Local Law 147. Certainly,
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`the TLC, in its study, could have determined the most important of the items it should study from
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`the Local Law 147 list on an ongoing basis. Moreover, the list in both Local Law 147 and the
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`new rules provide miscellaneous provisions that allow the TLC to continue to use whatever
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`variables it deems fit in its ongoing analysis.
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`Finally, the Court continues to find that the Donnelly Act is inapplicable to the instant
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`matter and finds arguments to the contrary unavailing. Based on the foregoing, it is
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`ORDERED that the Article 78 petition is granted in part and Section 59D-21 of the Rules
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`of the City of New York is annulled.
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`This constitutes the Decision and Order of this Court.
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`12/23/2019
`DATE
`CHECKONE:
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`APPLICATION:
`CHECK IF APPROPRIATE:
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`CASE DISPOSED
`GRANTED
`SETTLE ORDER
`INCLUDES TRANSFER/REASSIGN
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`El DENIED
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`RAN
`LYLE E. FRANK, J.S.C.
`NON-FINAL DISPOSIfloN. LYLE E' F J s c_
`GRANTED IN PART
`B OTHER
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`SUBMIT ORDER
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`FIDUCIARY APPOINTMENT
`I] REFERENCE
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`159195I2019 Motion No. 001
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