Newark Cab Association v. City of Newark , 901 F.3d 146 ( 2018 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 17-1358
_____________
NEWARK CAB ASSOCIATION;
NEWARK TAXI OWNER ASSOCIATION;
TETERBORO AIRPORT LIMOUSINE SERVICE;
ABBAS ABBAS; PETRO ABDELMESSIEH;
SAYEV KHELLAH;
MICHAEL W. SAMUEL;
GEORGE TAWFIK, individually, and by certain plaintiffs
on behalf of others similarly situated
Appellants
v.
CITY OF NEWARK
____________
Appeal from the United States District Court
for the District of New Jersey
(No. 2-16-cv-04681)
District Judge: Hon. William H. Walls
Argued: September 6, 2017
__________
Before: CHAGARES, JORDAN, and HARDIMAN, Circuit
Judges.
(Filed: August 20, 2018)
Richard W. Wedinger, Esq. [ARGUED]
Laurel A. Wedinger, Esq.
Barry McTiernan & Wedinger, P.C.
10 Franklin Avenue
Edison, New Jersey 08837
Counsel for Appellants
Eric S. Pennington, Esq.
James A. Lewis, Esq. [ARGUED]
Eric S. Pennington, P.C.
One Gateway Center, Suite 105
Newark, New Jersey 07102
Counsel for Appellee
____________
OPINION
____________
2
CHAGARES, Circuit Judge.
Newark Cab Association, Newark Taxi Owner
Association, Teterboro Airport Limousine Service, Abbas
Abbas, Petro Abdelmessieh, Sayev Khellah, Michael W.
Samuel, and George Tawfik (collectively, the “plaintiffs”)
filed a lawsuit under 42 U.S.C. § 1983 and New Jersey law
challenging an agreement the City of Newark (the “City”)
entered into with Uber Technologies Inc. (“Uber”). They
alleged, inter alia, that the City violated their rights under the
Takings Clause of the Fifth Amendment and the Due Process
and Equal Protection Clauses of the Fourteenth Amendment by
subjecting Uber and other Transportation Network Companies
(“TNCs”) to less onerous regulations than those imposed on
taxi and limousine operators. The City moved to dismiss
pursuant to Federal Rule of Civil Procedure 12(b)(6). The
District Court granted the motion, and dismissed the action
with prejudice. This appeal followed. The City’s decision to
permit TNCs to operate subject to limited regulations places
the plaintiffs in an undoubtedly difficult position. However,
the potentially unfair situation created by this decision cannot
be remedied through the plaintiffs’ constitutional and state law
claims. For the reasons that follow, we will affirm the order of
the District Court.
I.
The plaintiffs are entities and individuals engaged in
the licensed taxi and limousine industries in Newark, New
Jersey. The City has regulated all for-hire transportation
providers, such as the plaintiffs, under uniform regulations set
forth in the City’s municipal ordinances. Newark, N.J., Rev.
Gen. Ordinances (“Newark Ordinances”) §§ 34:1-1 to 34:2-24.
3
The regulations require taxi and limousine drivers, inter alia,
to meet certain job qualifications, pass a background check
conducted by the Newark Police Department, pay application
fees, and obtain special commercial licenses. Taxi and
limousine vehicles must be serviced and inspected every six
months by the Division of Taxicabs, taxi fares must be
measured and imposed by meters in accordance with City-
mandated rates, and all taxi and limousine operators must carry
primary commercial liability insurance. Taxi operators must
purchase and possess a taxi medallion to provide taxi services.
Taxi drivers are likewise prohibited from working at Newark
airport until one year after the issuance of their taxi driver’s
license. The City capped the number of taxi medallions in
circulation at 600.
In April 2016, Newark Mayor Ras Baraka announced
an agreement between the City and Uber, under which Uber
agreed to pay the City $1 million per year for 10 years and
provide $1.5 million in liability insurance for each of its drivers
in exchange for permission to operate in Newark (the
“Agreement”). Uber also agreed to have a nationally-
accredited third-party provider conduct background checks on
all of its drivers. Under the Agreement, Uber and its drivers
are not required to possess taxi medallions and Uber is
permitted to set its own rates and fares. Nor are its drivers
required to obtain commercial driver’s licenses.
In August 2016, the plaintiffs filed a complaint against
the City, bringing claims on behalf of a class of holders of taxi
medallions and on behalf of a class of holders of limousine
licenses who operate within Newark. The plaintiffs advanced
claims for: (1) violations of the Takings Clause of the Fifth
Amendment, as incorporated against the states by the
4
Fourteenth Amendment (Count 1); (2) violations of the Equal
Protection Clause of the Fourteenth Amendment (Counts 2 and
3); (3) violations of their substantive due process rights (Count
4); (4) breach of contract under New Jersey law (Count 5); (5)
promissory estoppel under New Jersey law (Count 6); and
(6) equitable estoppel under New Jersey law (Count 7). The
City moved to dismiss the complaint for failure to state a claim
under Rule 12(b)(6). The District Court dismissed the
complaint. The plaintiffs filed this timely appeal.
II.
The District Court had jurisdiction under 28 U.S.C.
§§ 1331 and 1367, and we have jurisdiction pursuant to 28
U.S.C. § 1291. We review a district court’s grant of a motion
to dismiss pursuant to Rule 12(b)(6) de novo. Fleisher v.
Standard Ins., 679 F.3d 116, 120 (3d Cir. 2012). In doing so,
we accept all factual allegations in the complaint as true and
construe those facts in the light most favorable to the plaintiffs.
Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009).
“To survive a motion to dismiss, a complaint must contain
sufficient factual allegations, taken as true, to ‘state a claim to
relief that is plausible on its face.’” Fleisher, 679 F.3d at 120
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)).
III.
The plaintiffs raise several issues on appeal. They first
argue that the District Court erred by concluding that they had
failed to allege a protectable property interest on which either
their Takings Clause or substantive due process claims could
be based. They next argue that the District Court erred by
5
concluding that they failed to state a claim under the Equal
Protection Clause. The plaintiffs finally argue that the District
Court erred in dismissing their state law breach of contract,
promissory estoppel, and equitable estoppel claims. We have
considered the plaintiffs’ arguments, and for the following
reasons, we will affirm the District Court’s order in all respects.
A.
The Fifth Amendment’s Takings Clause prohibits the
government from “taking private property for public use
without providing just compensation.” Am. Express Travel
Related Servs., Inc. v. Sidamon-Eristoff, 669 F.3d 359, 370 (3d
Cir. 2012). It applies to state and local governments through
the Fourteenth Amendment. Id. To succeed on a takings
claim, “the plaintiff[s] must first show that a legally cognizable
property interest is affected by the Government’s action in
question.” Prometheus Radio Project v. FCC, 373 F.3d 372,
428 (3d Cir. 2004); see also In re Trs. of Conneaut Lake Park,
Inc., 855 F.3d 519, 526 (3d Cir. 2017) (“Without a legally
cognizable property interest, [a plaintiff] has no cognizable
takings claim.”). Such property interests, in turn, “are created
and their dimensions are defined by existing rules or
understandings that stem from an independent source such as
state law.” Bd. of Regents of State Colls. v. Roth, 408 U.S.
564, 577 (1972). Accordingly, we look to New Jersey law to
determine the property interest at issue.
The plaintiffs argue that the District Court erred in
determining that they have not been deprived of a legally
cognizable property interest. They contend that, under New
Jersey law, they have a property interest in their taxi
medallions that has been affected by the Agreement with Uber.
6
The plaintiffs argue that they have a property interest in both
the value of the medallions as well as the “inherent value of the
exclusivity of the taxi medallion.” Plaintiffs’ Br. 30. They
maintain that they do not seek to exclude TNCs and other
operators from the market, but instead seek to subject TNCs to
the same regulations as taxi operators. They also argue that the
City created a tightly controlled market when it established the
regulations governing taxis and capped the number of taxi
medallions at 600. As a result, the plaintiffs assert that the
medallions have economic value that has been decreased by the
City’s action in subjecting TNCs to less stringent regulation.
The plaintiffs rely upon an unpublished state court
decision, Mohamed-Ali v. City of Newark, No. A-4035-11T4,
2013 WL 4859783 (N.J. Super. Ct. App. Div. Sept. 13, 2013),
in support of their position that they have a property interest in
the value of taxi medallions under New Jersey law. In
Mohamed-Ali, the Appellate Division of the Superior Court of
New Jersey held that a “plaintiff had a property interest in his
taxicab license.” Id. at *3. However, the court in Mohamed-
Ali did not hold that there was a property interest in the
economic value of a taxi license. There, the plaintiff was a taxi
driver whose taxi license was suspended. Id. at *1. He argued
that by suspending his license, the City deprived him of his
property interest in the license without due process. Id. at *2.
The Appellate Division of the Superior Court of New Jersey
held that the plaintiff had a property interest in his taxi license
such that he was entitled to due process before it was
suspended. Id. at *3. The court said nothing about whether
this interest included the economic value of the license. The
plaintiffs have identified no other New Jersey authority
indicating that the monetary value of a license constitutes a
cognizable property interest. As the Court of Appeals for the
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Eighth Circuit held in considering a similar challenge, “a
takings claim cannot be supported by asserting ownership in a
property interest that is different and more expansive than the
one actually possessed.” Minneapolis Taxi Owners Coal., Inc.
v. City of Minneapolis, 572 F.3d 502, 509 (8th Cir. 2009)
(quoting Rogers Truck Line, Inc. v. United States, 14 Cl. Ct.
108, 114 (1987)). The plaintiffs have not shown that, under
New Jersey law, their property interest in their taxi medallions
extends to the economic value of those medallions.
But even crediting the plaintiffs’ allegation that they
have a legally cognizable property interest in the medallions
themselves would not suffice to state a takings claim. The
plaintiffs remain in possession of their taxi medallions. They
remain able to use these medallions to conduct business. The
taxi medallions have not physically been taken from the
plaintiffs. Thus, the City’s actions have not deprived the
plaintiffs of the possession or use of their taxi medallions.
It is the economic value of the medallions that has
changed as a result of the City’s actions. The plaintiffs allege
that before Uber began operating in Newark in 2013, the
market value of a taxi medallion exceeded $500,000.
Appendix (“App.”) 50. They allege that by 2016, the market
value of a taxi medallion had fallen below $220,000. Id. While
unfortunate for the plaintiffs, the Supreme Court has “long
established that mere diminution in the value of property,
however serious, is insufficient to demonstrate a taking.”
Concrete Pipe & Prods. of Cal., Inc. v. Constr. Laborers
Pension Tr. for S. Cal., 508 U.S. 602, 645 (1993); see generally
Midnight Sessions, Ltd. v. City of Philadelphia, 945 F.2d 667,
677 (3d Cir. 1991) (holding that a takings claim cannot succeed
unless the government “deprived [the plaintiffs] of all
8
economically viable uses of the property”), abrogated on other
grounds by United Artists Theater Circuit, Inc. v. Township of
Warrington, 316 F.3d 392 (3d Cir. 2003). 1
That the market value of the taxi medallions derives
from the City’s regulations does not change the analysis. As
the Court of Appeals for the Eighth Circuit has held, “[t]he
general expectation of regulatory change is no less present
where the value of the property interest is derived from the
regulation itself.” Minneapolis Taxi Owners Coal., 572 F.3d
at 509; see also Lucas v. S.C. Coastal Council, 505 U.S. 1003,
1027-28 (1992) (“[I]n the case of personal property, by reason
of the State’s traditionally high degree of control over
commercial dealings, [a property owner] ought to be aware of
the possibility that new regulation might even render his
property economically worthless.”). Therefore, the decrease in
the market value of the taxi medallions is not sufficient to
constitute a cognizable property interest necessary to state a
claim under the Takings Clause.
This conclusion finds further support in the fact that the
City controls the number of taxi medallions in circulation and
maintains the ability to flood the market with taxi medallions.
According to the plaintiffs, the market value of the taxi
medallions is derived from the fact that the number of taxi
1
Relatedly, we have noted that a taking cannot be
“established simply by showing the denial of ‘the ability to
exploit a property interest that [the plaintiffs] heretofore had
believed was available.’” Keystone Bituminous Coal Ass’n v.
Duncan, 771 F.2d 707, 713 (3d Cir. 1985) (alteration in
original) (quoting Penn Cent. Transp. Co. v. City of New York,
438 U.S. 104, 130 (1978)).
9
medallions in circulation is capped at 600. Even in the absence
of the Agreement with Uber and other TNCs, if the City were
to increase the supply of medallions by raising or removing the
cap, the value of each individual medallion would decrease due
to the increased supply of medallions.
The Court of Appeals for the Eighth Circuit reached this
conclusion when confronted with a challenge to a Minneapolis
ordinance that removed the limit on the number of transferable
taxi licenses that were distributed by the city. Minneapolis
Taxi Owners Coal., 572 F.3d at 508. There, because the
ordinance neither revoked the existing licenses nor destroyed
the ability of the license holders to use their licenses to do
business, the court determined that “[t]he elimination of the
market value of the taxicab licenses, however, can be
considered a taking under the Fifth Amendment only if there is
a protected property interest in that market value.” Id. at 507.
Looking to Minnesota law, the court determined that “[t]he
taxicab licenses themselves do not carry an inherent property
interest guaranteeing the economic benefits of using the
taxicab license.” Id. at 508.
The court rejected the plaintiffs’ argument that because
the market value of the licenses was created by the city when
it initially capped the number of licenses made available, the
property interest in the license extended to the value of using
that license in the limited market. It held that the plaintiffs’
claims failed because “any property interest that the taxicab-
license holders’ may possess does not extend to the market
value of the taxicab licenses derived through the closed nature
of the City’s taxicab market.” Id. at 509. It further observed
that the Minneapolis taxicab market was highly regulated,
which came with an “understanding that the license to participate
10
in the highly regulated taxicab market is subject to regulatory
change.” Id. The court based this determination in part on the
fact that “the City retained the discretion to alter the number of
licenses.” Id. This reasoning also supports our holding here.
Finally, the plaintiffs have provided no authority in
support of their position that their taxi medallions include a
right to be the exclusive providers of transportation services in
Newark, or that this right constitutes a separate cognizable
property interest that can be the subject of a Takings Clause
claim. Indeed, the Supreme Court has acknowledged that “a
mere unilateral expectation . . . is not a property interest entitled
to protection.” Webb’s Fabulous Pharmacies, Inc. v.
Beckwith, 449 U.S. 155, 161 (1980). The Court of Appeals for
the Seventh Circuit has observed in considering a similar
challenge to the one before us, “[t]axi medallions authorize the
owners to own and operate taxis, not to exclude competing
transportation services.” Ill. Transp. Trade Ass’n v. City of
Chicago, 839 F.3d 594, 597 (7th Cir. 2016), cert. denied 137
S. Ct. 1829 (2017). That court determined that such a right to
exclusivity was not a core property right that existed in the
medallions absent a state law explicitly creating a property
interest in that right. Id. We agree. Although the holder of a
taxi medallion has the right to exclude others from the use of
that medallion, he or she cannot prevent others from possessing
their own medallions, acquiring additional medallions, or
creating a competing business. See Checker Cab Operators,
Inc. v. Miami-Dade County, No. 17-11955, ___ F.3d ___, 2018
WL 3721227, at *7 (11th Cir. Aug. 6, 2018) (“The [taxicab
m]edallion [h]olders may exclude others from possessing,
using, or disposing of their medallions. But the ‘right to
exclude’ does not sanction the creation of a market
stranglehold.”); Bos. Taxi Owners Ass’n v. City of Boston, 180
11
F. Supp. 3d 108, 121 (D. Mass. 2016) (“[W]hatever property
rights plaintiffs may possess in their medallions, those rights
do not encompass a right to exclude others from the
transportation-for-hire marketplace. For that reason, plaintiffs
have failed to allege a taking of their property.”). A right to
exclude others from competition is not found in the City
regulations governing taxis. For example, the holders of taxi
medallions have no right to take legal action against someone
who operates a taxi without possessing a medallion. The City’s
taxi regulations make it unlawful for those without a license to
operate a taxi business, but do not give taxi medallion holders
a private right to enforce these provisions. See Newark
Ordinances §§ 34:1-3 & 34:1-21. Under the City’s ordinances,
only the City has that power.
The Court of Appeals for the Seventh Circuit’s decision
in Illinois Transportation Trade Ass’n, further supports our
conclusion. There, the court analyzed the constitutionality of
Chicago’s ordinance regulating TNCs. The court observed that
“[a] variant of such a claim would have merit had the City
confiscated taxi medallions, which are the licenses that
authorize the use of an automobile as a taxi. Confiscation of
the medallions would amount to confiscation of the taxis: no
medallion, no right to own a taxi.” 839 F.3d at 596. However,
the court held that because the plaintiffs remained in
possession of their taxi medallions, their Takings Clause claim
failed as they had not identified a property interest that had
been taken. Id. at 597. The court held that Chicago had
“created a property right in taxi medallions; [but] it ha[d] not
created a property right in all commercial transportation of
persons by automobile in Chicago.” Id.
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The plaintiffs do not have a legally cognizable property
interest in the value of their taxi medallions or in the right to
be the exclusive provider of ride-for-hire services in Newark.
Therefore, the District Court properly dismissed their claim
under the Takings Clause.
B.
The plaintiffs’ substantive due process claim fails for
the similar reason that they have not identified a protected
property interest that meets a threshold for such a claim. The
Fourteenth Amendment provides that “[n]o State shall . . .
deprive any person of life, liberty, or property, without due
process of law.” U.S. Const. amend XIV, § 1. Substantive due
process is a “component of the [Fourteenth Amendment] that
protects individual liberty against ‘certain government actions
regardless of the fairness of the procedures used to implement
them.’” Collins v. City of Harker Heights, 503 U.S. 115, 125
(1992) (quoting Daniels v. Williams, 474 U.S. 327, 331
(1986)). We have recognized that “two very different threads”
make up “the fabric of substantive due process”: substantive
due process relating to legislative action and substantive due
process relating to non-legislative action. Nicholas v. Pa. State
Univ., 227 F.3d 133, 139 (3d Cir. 2000). The plaintiffs’
substantive due process claim is of the second variety.
The “threshold” to establishing a non-legislative
substantive due process claim is that a plaintiff “has a protected
property interest to which the Fourteenth Amendment’s due
process protection applies.” Id. at 140 (quoting Woodwind
Estates, Ltd. v. Gretkowski, 205 F.3d 118, 123 (3d Cir. 2000),
abrogated on other grounds by United Artists, 316 F.3d 392).
This requires a showing that the property interest is of a
13
“particular quality” that is not determined by state law. Id.
(quoting DeBlasio v. Zoning Bd. of Adjustment, 53 F.3d 592,
600 (3d Cir. 1995), abrogated on other grounds by United
Artists, 316 F.3d 392). Instead, this particular quality “depends
on whether that interest is ‘fundamental’ under the United
States Constitution.” Id. Courts have been generally reluctant
to expand the scope of substantive due process protection. See
Collins, 503 U.S. at 125. Accordingly, the only protected
property interests we have thus far deemed fundamental
involved ownership of real property. Nicholas, 227 F.3d at 141.
We hold that the plaintiffs’ alleged protected property
interests — the loss of value of their medallions and the right
to be the exclusive provider of ride-for-hire services in Newark
— do not meet the standard of fundamental property interests
under the Constitution. This conclusion is unsurprising
because the plaintiffs similarly failed to establish a protected
property interest under the less-exacting standard of the
Takings Clause. The property interest proffered to meet the
substantive due process threshold here is akin to those we have
previously rejected, such as the “ability to earn a living” and
being terminated from a public job, Hill v. Borough of
Kutztown, 455 F.3d 225, 234 n.12 (3d Cir. 2006), being
actively prevented from winning city contracts in violation of
a consent decree with the city, Indep. Enters. v. Pittsburgh
Water & Sewer Auth., 103 F.3d 1165, 1179-80 (3d Cir. 1997),
and losing contracts because a plaintiff was termed a “crook”
by a government employee, Boyanowski v. Capital Area
Intermediate Unit, 215 F.3d 396, 401-04 (3d Cir. 2000). As a
result, the District Court did not err in dismissing the plaintiffs’
substantive due process claim.
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C.
The plaintiffs next argue that the District Court erred in
dismissing their Equal Protection claims. We do not agree.
The Fourteenth Amendment’s Equal Protection Clause
admonishes that “[n]o State shall . . . deny to any person within
its jurisdiction the equal protection of the laws.” U.S. Const.
amend XIV, § 1. The plaintiffs press a “class of one” theory
of equal protection jurisprudence. See Village of Willowbrook
v. Olech, 528 U.S. 562, 564-65 (2000) (per curiam). To state
a claim under a class of one theory, “a plaintiff must allege that
(1) the defendant treated him differently from others similarly
situated, (2) the defendant did so intentionally, and (3) there
was no rational basis for the difference in treatment.” Hill, 455
F.3d at 239.
Rational basis review is a very deferential standard. It
is met “if there is any reasonably conceivable state of facts that
could provide a rational basis” for the differing treatment.
United States v. Walker, 473 F.3d 71, 77 (3d Cir. 2007)
(quoting Heller v. Doe, 509 U.S. 312, 320 (1993)). We have
held that “the principles of equal protection are satisfied ‘so
long as there is a plausible policy reason for the classification,
the legislative facts on which the classification is apparently
based rationally may have been considered to be true by the
governmental decisionmaker, and the relationship of the
classification to its goal is not so attenuated as to render the
distinction arbitrary or irrational.’” Id. (quoting Fitzgerald v.
Racing Ass’n of Cent. Iowa, 539 U.S. 103, 107 (2003)). The
Supreme Court has emphasized that “rational-basis review in
equal protection analysis ‘is not a license for courts to judge
the wisdom, fairness, or logic of legislative choices.’” Heller,
15
509 U.S. at 319 (quoting FCC v. Beach Commc’ns, Inc., 508
U.S. 307, 313 (1993)).
The plaintiffs argue that the City’s justifications for
permitting TNCs to operate in Newark under a different set of
regulations than those that apply to taxi companies are arbitrary
and irrational. They insist that there are no real differences
between taxis and TNCs, and that the differences identified by
the City and articulated by other courts are illusory. The City
responds that it has legitimate reasons for treating taxi
operators and TNCs differently that are sufficient to survive
rational basis review. The City contends that the salient
differences between taxis and TNCs are that: (1) users enter
into a contract with TNCs before using the service and have
access to significant information about their driver before
stepping into the car; (2) taxis can be hailed on the street
whereas a TNC must be summoned using a digital application;
and (3) taxi fares are prescribed by City regulations.
The most significant difference between taxis and TNCs
is that customers can arrange a ride with a taxi by hailing one
on the street, whereas to arrange a ride with a TNC, a customer
must request one through a digital application. After being
matched with a driver, the customer is provided with
information about that driver, including the driver’s name and
photograph, the make and model of the car, and its license plate
number. App. 60-62, 96. The customer also receives the fare
rate and an estimation of the total fare. App. 60-62. This
information is provided to the customer pursuant to the
contractual relationship that he or she entered into with the
TNC when setting up an account with the TNC. See App. 96.
A customer obtains all of this information before he or she
enters a vehicle. In contrast, a customer who hails a taxi on the
16
street may be able to observe the make and model of the
vehicle, but does not know the driver’s identity before he or
she enters the vehicle. A customer who hails a taxi on the street
knows what the fare rate will be because the metered fare is set
by City regulation. In the absence of a set fare rate, the
customer would have no way of knowing the fare rate until he
or she entered the vehicle.
It is rational for the City to determine that customers
require greater protections before accepting a ride from a taxi
that they hail on the street than before accepting a ride from a
TNC where they are given the relevant information in advance.
A customer can immediately obtain a fare estimate from various
TNC companies through the digital applications on his or her
phone, and comparison shop among those companies before
requesting a ride to ensure that he or she receives a fair price.
In contrast, customers do not have this same level of information
available to them before hailing a taxi ride. In the absence of
City regulation setting the fare rate, it would not be practical
for a customer hailing a ride on the street to comparison shop
among several taxi companies, as that would entail hailing
multiple taxis and inquiring about the price. Therefore, it is
reasonable for the City to set the fare rate for taxis, but not for
TNCs, to ensure that customers receive consistent pricing.
The City’s regulations setting more stringent driver
qualification standards and requiring certain vehicle safety
features for taxis also function to provide greater protections to
customers hailing a taxi on the street than when accepting a
pre-arranged ride with a TNC. Although customers might
benefit if TNCs were also subject to these same regulations,
the City could rationally conclude that these requirements are
necessary to protect customers who hail a taxi on the street and
17
have no other protections, but not for customers of TNCs, since
they have some degree of protection due to their preexisting
contractual relationship with the TNC. Accordingly, “it makes
sense therefore for the City to try to protect passengers by
screening the taxi drivers to assure that they’re competent and
by imposing a uniform system of rates based on time or
distance or both.” Ill. Transp. Trade Ass’n, 839 F.3d at 598.
Thus, the City’s position that stricter regulations are required
to protect taxi customers is at least rationally related to the
City’s interest in providing safe access to transportation.
The plaintiffs contend that these justifications do not
constitute a rational basis for different treatment because there
is no real difference between hailing a cab and requesting a TNC
through a digital application. When requesting a ride on a digital
application, a customer does not select between drivers, but
instead is matched with a driver by the application. In this
situation the customer has the same degree of choice about the
identity of the driver and vehicle as he or she does when hailing
a cab on the street with a raise of the hand. At the moment the
ride is requested, the same information is available to the customer.
Even so, there are still differences between the two
processes. When requesting a ride from a TNC, the customer
is matched with a driver a few minutes before the vehicle
arrives, whereas a taxi customer immediately is matched with
a taxi when that taxi pulls over. These few minutes give the
customer time to consider the available information before
entering a vehicle, which is time that a taxi customer might not
have. A customer can use this extra time to cancel a requested
ride. Although a customer who hails a taxi can cancel that
request by not entering the taxi, that customer has less time to
make that decision than does a TNC customer. Under the
18
highly deferential standard of rational basis review, the City
could reasonably conclude that this is a sufficient distinction in
customer experience to warrant stricter regulation of taxis.
Finally, relying on the opinion of the district court in
Boston Taxi Owners Ass’n, the plaintiffs contend that because
the identified differences between taxis and TNCs result from
the City’s regulation of taxis and not TNCs, the City cannot rely
on those differences as its rational basis for the disparate
regulatory schemes. See 180 F. Supp. 3d at 118 (“The City may
not treat the two groups unequally and then argue that the results
of that unequal treatment render the two groups dissimilarly
situated and, consequently, not subject to equal protection analysis.
Such circular logic is unavailing.”). The plaintiffs point out the
fact that taxis’ fares are set by the City’s regulations, while the
TNCs’ fares are not. Similarly, they contend that the City
regulates the qualifications of taxi drivers and the background
checks that they must undergo, while TNCs are responsible for
handling these and similar matters on their own.
The Equal Protection Clause does not prevent the City
from setting up a multi-tiered regulatory regime, as long as it
has a rational basis for the distinctions it creates. That is what
the City has done here. Taxi companies and TNCs each provide
for-hire transportation services. Each is subject to some degree
of regulation. A customer can pre-arrange a ride with either
service, through the use of a digital application for TNCs or a
telephone call for taxis. However, taxis are permitted an
additional privilege that is not available to TNCs: the power
to accept customers by way of street hails. As a result, taxis
are subject to stricter regulatory control. These heightened
regulations, as previously discussed, relate to the exclusive
ability of a taxi to accept a street hail.
19
It is not irrational for a city to create a system in which a
more tightly regulated service (here, taxis) enjoys additional
privileges — the ability to obtain customers by way of street
hails — that are not available to the less regulated alternative
(here, TNCs). To be sure, because the City here did not create
this tiered system from its inception but instead permitted TNCs
to operate at a much later time than the less-regulated
alternative, its justification for not subjecting them to the same
regulatory requirements as taxis may appear to be unfair.
Street hails are not part of the business model of TNCs.
Thus, by setting street hails as the benchmark for heightened
regulation, it gives the impression that the City has permitted
TNCs to escape the regulations imposed on taxis, and to
provide a very similar service, without a substantial impact on
their business operations. The City’s actions in permitting
TNCs to operate essentially comparable services with lower
regulatory compliance costs may appear unfair to those who
operate taxis and have relied on the existence of the regulatory
framework in investing in their taxi businesses. Although we
recognize the difficult position in which the plaintiffs are
placed by the City’s decision to permit TNCs to operate subject
to limited regulations, an Equal Protection Clause claim is not
the proper avenue to address this unfairness. And while
protecting reliance interests can be considered a rational basis
behind government action, the plaintiffs have provided no
authority for the position that a choice not to protect reliance
interests would be irrational and constitute a violation of the
Equal Protection Clause. Cf. Nordlinger v. Hahn, 505 U.S. 1,
13 (1992) (“This Court previously has acknowledged that
classifications serving to protect legitimate expectation and
reliance interests do not deny equal protection of the laws.”).
20
Because there are rational reasons for the City’s choice to draw
the regulatory line at the ability to accept a street hail, this
distinction is sufficient to satisfy the principles of equal
protection. Walker, 473 F.3d at 77. 2
Other courts that have considered similar challenges
under the Equal Protection Clause are in accord with our
conclusion. In Illinois Transportation Trade Ass’n, the Court of
Appeals for the Seventh Circuit examined what it viewed as the
differences between TNCs and taxis and concluded that these
2
The City also argues that the plaintiffs’ claims are
“precluded” by the Transportation Network Company Safety and
Regulatory Act (the “TNCSRA”), N.J. Stat. Ann. § 39:5H-1, et
seq. City Br. 19 n.2. The City contends that the TNCSRA
precludes the plaintiffs from obtaining the relief they seek
through their complaint, as it prevents the City from subjecting
TNCs to additional regulations. Id. The TNCSRA, which
became effective on May 1, 2017, regulates TNCs within New
Jersey. N.J. Stat. Ann. § 39:5H-1-3. The TNCSRA gives the
state the power to issue permits to TNCs, which allows them
to operate within the state, provided that they meet certain
requirements laid out in the statute. Id. § 39:5H-4.
Through this action, the plaintiffs have not brought a
challenge to the TNCSRA. The effect, if any, that the
TNCSRA has on this case has not been fully briefed. The
parties at oral argument each took the position that the
TNCSRA does not prevent this Court from reaching the merits
of the issues raised on this appeal. Because the plaintiffs’
claims fail for the aforementioned reasons, we need not
determine what effect, if any, the TNCSRA has on the
plaintiffs’ requested relief.
21
differences justified the City’s disparate treatment of the two.
839 F.3d at 598. The court identified the following differences:
(1) customers can hail a cab, but must create a contractual
relationship with a TNC before requesting a driver via a digital
application; (2) TNCs “assume[] primary responsibility for
screening potential drivers” before hiring them, taxi services do
not; (3) customers “receive more information in advance about
their prospective rides” from TNCs, including “not only the
driver’s name but also pictures of him (or her) and of the car”;
and (4) TNCs employ part time drivers who are believed to “drive
their cars fewer miles on average than taxicab drivers, who are
constantly patrolling the streets in hope of being hailed,” which
means that their vehicles are “less likely . . . to experience wear
and tear that may impair the comfort of a ride in [them] and even
increase the risk of an accident or a breakdown.” Id. The court
reasoned that these differences were rational because
[t]axis but not [TNCs] are permitted to take on as
passengers persons who hail them on the street.
Rarely will the passenger have a prior relationship
with the driver, and often not with the taxicab
company either; and it makes sense therefore for
the City to try to protect passengers by screening
the taxi drivers to assure that they’re competent
and by imposing a uniform system of rates based
on time or distance or both.
Id.; 3 see also Checker Cab Operators, ___ F.3d ___, 2018 WL
3721227, at *12 (“[T]he[] equal protection claims fail because
3
Numerous district courts have found that these
differences constitute a rational basis sufficient to overcome
similar Equal Protection Clause challenges brought by taxi
22
any disparate regulatory treatment that the County afforded
taxicabs and [TNCs] was amply supported by legitimate
government interests.”).
In sum, the City had a rational basis for treating TNCs and
taxi operators differently. These differences also demonstrate
that TNCs and taxi operators are not similarly situated for purposes
of their “class of one” claims. See Progressive Credit Union v.
City of New York, 889 F.3d 40, 51 (2d Cir. 2018) (“We conclude
these differences mean that medallion taxicabs and [for-hire
vehicles] are not prima facie identical for ‘class of one’ purposes
and that they provide a rational basis for the different regulatory
treatment applied to each group.”). The plaintiffs, therefore,
cannot succeed on their class of one equal protection claims and
the District Court did not err in dismissing these claims.
D.
Finally, the plaintiffs contend that the District Court
erred in dismissing their claims for breach of contract,
promissory estoppel, and equitable estoppel under New Jersey
law on the grounds that City regulations making taxi drivers
the exclusive providers of ride-for-hire services in Newark
constituted a contract or a promise to them that the City
breached when it entered the Agreement with Uber. We do not
agree and will affirm dismissal of the plaintiffs’ state law claims.
companies. See, e.g., Miadeco Corp. v. Miami-Dade County,
249 F. Supp. 3d 1296, 1303-04 (S.D. Fla. 2017); Melrose Credit
Union v. City of New York, 247 F. Supp. 3d 356, 368-69
(S.D.N.Y. 2017); Desoto Cab Co. v. Picker, 228 F. Supp. 3d
950, 960 (N.D. Cal. 2017); Gebresalassie v. District of
Columbia, 170 F. Supp. 3d 52, 61-62 (D.D.C. 2016).
23
1.
Under New Jersey law, “[t]o state a claim for breach of
contract, [a plaintiff] must allege (1) a contract between the
parties; (2) a breach of that contract; (3) damages flowing
therefrom; and (4) that the party stating the claim performed its
own contractual obligations.” Frederico v. Home Depot, 507
F.3d 188, 203 (3d Cir. 2007). In New Jersey, “a statute may
be construed as creating a contract when the Legislature’s
intent to create a contractual commitment is ‘so plainly
expressed that one cannot doubt the individual legislator
understood and intended it.’” Burgos v. State, 118 A.3d 270,
282 (N.J. 2015) (quoting Spina v. Consol. Police & Firemen’s
Pension Fund Comm’n, 197 A.2d 169, 176 (N.J. 1964)). In
such a situation, “clarity of language is necessary if a statute is
to be regarded as having been intended to create contractual
rights.” Id.
We are not convinced that the City intended to create
contractual rights through its regulation of taxi services. The
plaintiffs argue that the City’s intent to create a contract can be
found in the Newark Ordinances (1) requiring taxi operators to be
licensed,4 (2) outlawing taxis licensed in other municipalities
4
Newark Ordinances § 34:1-3 provides:
No person shall operate or permit a taxicab
owned or controlled by him/her to operate as a
taxicab upon the streets of the City of Newark
without first having obtained a taxicab license
and/or a license renewal from the Manager, after
review by the Taxicab Commission.
24
from operating within Newark without a license, 5 (3) placing
It shall be unlawful or a violation of this
chapter for taxicabs licensed in other
municipalities or states to receive passengers in
the City of Newark and regularly discharging
passengers originating in other municipalities or
states in the City of Newark without obtaining a
licensed from the Manager, Office of Taxicabs.
5
Newark Ordinances § 34:1-7 provides:
No taxicab license may be sold, assigned or
otherwise transferred without the consent of the
Manager upon recommendation of the Taxicab
Commission. A license may be transferred to
another person to be used in a bona fide operation
of a taxicab business, with the consent of the
Manager upon recommendation of the Taxicab
Commission upon the filing of an application, as
provided in Section 34:1-4 of these Revised
General Ordinances, and upon payment of a
transfer fee of five hundred ($500.00) dollars and
in the case of a transfer to a corporation, a copy
of the certificate of incorporation issued by the
State of New Jersey and the name of its
registered agent shall also be filed; provided that
if a corporation wishes to transfer a taxicab
license to another corporation to be used in a
bona fide operation of a taxicab business, and not
less than seventy-five (75%) ownership of each
corporation rests with the same person or group
of persons, then upon application and upon filing
25
restrictions on the transfer of licenses, 6 and (4) limiting the
number of licenses issued to 600.7 The plaintiffs argue that these
provisions constitute a promise of exclusivity to taxi operators
that the City breached by permitting TNCs to operate within
Newark. But these provisions do not “use[] terminology that
plainly expresse[s] [the City’s] intent to create contractual
rights.” Id. In the absence of such express language creating
contractual rights, the Newark Ordinances do not create a
contract under New Jersey law. Id.
2.
We turn to the plaintiff’s claims for promissory and
equitable estoppel. The elements of promissory estoppel under
New Jersey law are: “1) a clear and definite promise, 2) made
with the expectation that the promisee will rely upon it,
3) reasonable reliance upon the promise, 4) which results in
definite and substantial detriment.” E. Orange Bd. of Educ. v.
of a certificate of incorporation issued by the
State of New Jersey and the name of its
registered agent, and the consent of the Manager
upon recommendation of the Commission, and
upon payment of an administrative fee of one
hundred ($100.00) dollars, the license shall be
transferred. No transfer may be made during the
month of November.
6
See id.
7
Newark Ordinances § 34:1-5(c) provides that “[t]he
number of licenses issued and in use in the City at any one
time shall not exceed six hundred (600).”
26
N.J. Sch. Const. Corp., 963 A.2d 865, 875 (N.J. Super. Ct.
App. Div. 2009) (quoting Lobiondo v. O’Callaghan, 815 A.2d
1013, 1020 (N.J. Super. Ct. App. Div. 2003)). The New Jersey
Supreme Court has held that “to establish equitable estoppel,
plaintiffs must show that defendant engaged in conduct, either
intentionally or under circumstances that induced reliance, and
that plaintiffs acted or changed their position to their
detriment.” Id. at 873 (quoting Knorr v. Smeal, 836 A.2d 794,
799 (N.J. 2003)).
We are not persuaded that the plaintiffs’ have stated
promissory or equitable estoppel claims. The plaintiffs argue
that the City’s regulations promised taxi license holders that if
they complied with the regulations then the City would provide
them with certain rights including exclusivity, market support,
and enforcement of the regulations. The Newark Ordinances,
however, do not contain a “clear and definite promise” by the
City that it would guarantee the plaintiffs any of these rights.
Cumberland Farms, Inc. v. N.J. Dep’t of Envtl. Prot., 148 A.3d
767, 778 (N.J. Super. Ct. App. Div. 2016). The plaintiffs have thus
failed to meet this essential element of a promissory estoppel
claim. This absence of any clear promise on the part of the City
also dooms the equitable estoppel claim.
IV.
For the foregoing reasons, we will affirm the order of
the District Court.
27