Vugo, Inc. v. City of New York

931 F.3d 42
CourtCourt of Appeals for the Second Circuit
DecidedJuly 16, 2019
DocketDocket 18-807; August Term, 2018
StatusPublished
Cited by28 cases

This text of 931 F.3d 42 (Vugo, Inc. v. City of New York) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Vugo, Inc. v. City of New York, 931 F.3d 42 (2d Cir. 2019).

Opinion

Katzmann, Chief Judge:

This appeal concerns a First Amendment challenge to nearly twenty-year-old New York City rules that ban advertisements in for-hire vehicles ("FHVs") absent authorization from the Taxi and Limousine Commission (the "TLC" or the "City"). See 35 R.C.N.Y. §§ 59A-29(e)(1), 59B-29(e)(1). A similar rule has applied to yellow and green taxicabs (collectively, "taxicabs," "taxis," or "cabs") for over two decades. See 35 R.C.N.Y. § 58-32(f). The TLC originally enacted these bans because, as the record reflects, passengers find in-ride advertisements-particularly, as relevant here, video advertisements-extremely annoying. However, in 2005, the TLC permitted a limited category of advertisements in taxis: those displayed on the screens of new equipment that the TLC required taxis to install ("Taxi TV"). This new equipment allows taxi riders, inter alia , to track the progress of their metered fare and pay by credit card. The TLC authorized advertising on Taxi TV to offset the cost to the taxi owners of installing the newly mandated equipment.

Plaintiff-Appellee Vugo, Inc. ("Vugo") has challenged the rules banning advertisements in FHVs because it wants to sell an advertising software platform it developed for certain FHVs, including Ubers and Lyfts. Vugo primarily argues that the ban is impermissibly underinclusive under the First Amendment because the City's interest in enacting the ban bears no relationship to the City's justification for exempting Taxi TV advertising.

The parties agree that the prohibition on advertising in FHVs is a content-based restriction on commercial speech and, as such, is subject to intermediate scrutiny. See Central Hudson Gas & Elec. Corp. v. Public Servs. Comm'n , 447 U.S. 557 , 100 S.Ct. 2343 , 65 L.Ed.2d 341 (1980). Under Central Hudson , courts ask whether (1) the expression is protected by the First Amendment; (2) the asserted government interest is substantial; (3) the regulation directly advances the government interest asserted; and (4) the regulation is no more extensive than necessary to serve that interest. Id. at 566 , 100 S.Ct. 2343 . The district court concluded that the ban fails the third prong of this test because the City's justification for the Taxi TV exception (compensating taxi owners for the cost of new equipment) "bears no relationship whatsoever" to the City's asserted interest (protecting passengers from annoying advertisements). Special App. at 16. Considering the fourth prong in tandem with the third, the district court also concluded that the ban was more extensive than necessary to advance the City's interest.

We respectfully disagree. First, we think there is a sufficient nexus here between the ban and its exception because both advance the City's interest in improving the overall passenger experience. Second, *45 the ban would be constitutional even if there were not such a relationship. The absence of a relationship between a government's interest in a ban and its basis for any exceptions may render a ban unconstitutionally underinclusive. Most notably, it may demonstrate that the ban was motivated by bias or remains incapable of achieving its stated aims. Here, however, on the uncontroverted record, the exception neither reflects discriminatory intent nor renders the ban ineffective at improving the in-ride experience for millions of New York City residents and visitors. The Taxi TV exception reflects the City's reasonable decision that the costs of permitting advertisements in taxicabs were outweighed by the benefits of compensating taxicab owners for the expense of installing new equipment that facilitated credit card payment and improved ride data collection. Vugo identifies no grounds for us to upset this policy judgment. See Metromedia, Inc. v. City of San Diego , 453 U.S. 490 , 512, 101 S.Ct. 2882 , 69 L.Ed.2d 800 (1981) (plurality opinion). Finally, we conclude that the City's ban is not substantially more restrictive than necessary to achieve the City's aims under the final prong of Central Hudson .

Accordingly, we REVERSE the judgment of the district court and direct the entry of judgment in favor of the City.

BACKGROUND

I. Factual History

The material facts are undisputed. "[T]ransporting passengers for hire by motor vehicle in the city of New York is affected with a public interest, is a vital and integral part of the transportation system of the city, and must therefore be supervised, regulated and controlled by the city." N.Y.C. Admin. Code § 19-501 (legislative findings). The New York City Council has tasked the TLC with regulating this critical component of the City's transportation system, which includes both taxis and FHVs. N.Y.C. Charter §§ 2300, 2303(a).

The term "taxicab" refers to yellow cabs and green cabs, which are the only vehicles the TLC allows to pick up passengers by street hail in New York City. See N.Y.C. Admin. Code § 19-504(1). 1 FHVs, by contrast, are vehicles "other than a taxicab" that "carr[y] passengers for hire in the city." N.Y.C. Admin. Code § 19-502(g). FHV rides are prearranged through businesses licensed by the TLC, such as limousine companies and, more common today, companies like Uber and Lyft. See N.Y.C. Admin. Code § 19-516(a) ("For-hire vehicles ... may accept passengers only on the basis of telephone contract or prearrangement."). FHVs comprise a growing share of the passenger vehicle market. As of August 2016, the TLC regulated 94,000 vehicles. More than seventy-five percent of these were FHVs. Around that same time, riders took approximately 370,000 daily trips in yellow taxis and 213,000 daily trips in Uber and Lyft vehicles.

One of the TLC's statutory mandates is to "promot[e] and protect[ ] ... public comfort and convenience." N.Y.C. Charter § 2300. Consistent with this mandate, the TLC sets comprehensive standards for driver licensing, vehicle equipment, and vehicle markings in both taxis and FHVs.

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Bluebook (online)
931 F.3d 42, Counsel Stack Legal Research, https://law.counselstack.com/opinion/vugo-inc-v-city-of-new-york-ca2-2019.