NEW YORK – A state court has agreed to a request made by credit union taxi medallion lenders to temporarily block implementation of a city law that would vastly increase the amount of taxis to the detriment of those already financed by credit unions.

The court also issued an order to show cause requiring the city and Mayor Bloomberg to explain the rationale behind the new law.

The New York Supreme Court, the trial court for the city, agreed to issue a temporary restraining order, while it considers the legality of the law, known as the HAIL Act. "The question here is basically whether the number of taxi medallions and the rules of outer-borough hails is primarily a matter of local or state concern," ruled the court in issuing the halt to the new law.

In his ruling, the judge wrote “plaintiffs are likely to succeed” on their claims that the state taxi law, signed by Governor Andrew Cuomo in February, violates the state constitution.

The judge was responding to three separate suits filed by medallion owners and medallion underwriters: the credit union group, the Metropolitan Taxicab Board of Trade, and the Greater New York Taxi Association, all of whom argued that the law violated the constitution and that it undermined the street-hail exclusivity upon which the million-dollar value of their medallions was based.

The law would implement Mayor Bloomberg’s 2011 plan to create a new class of up to 18,000 taxis authorized to pick up street hails in Brooklyn, Queens, the Bronx, Staten Island and much of Manhattan, in direct competition with the City’s iconic yellow cabs, and that authorizes the mayor to approve 2,000 new yellow cab medallions.

The credit union group, known as the Taxicab Service Association, alleges that the HAIL Act violates long-standing State constitutional principles that prohibit the State and the Mayor from interfering in the New York City Council’s regulation of the local taxi industry; that, if implemented, the new law will devalue yellow taxi medallions.

The suit, filed in New York State Supreme Court, New York County, alleges the Mayor’s Taxi and Limousine Commission has illegally begun to implement the Act without a proper review of the potentially disastrous environmental impact of 18,000 street hail livery vehicles on the City’s air and noise quality, traffic congestion, and neighborhood character.

Several individual credit unions have joined the suit, including Lomto FCU, Melrose CU, Montauk CU and Progressive CU.



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