Skadden Successfully Challenges NYC Ride-Hailing Rule on Behalf of Lyft

Skadden secured victory for Lyft, Inc. in a lawsuit seeking to vacate and annul a new “cruising cap” rule recently passed by the New York City Taxi and Limousine Commission (TLC). The new rule, which was set to go into effect on February 1, 2020, would have imposed severe limitations on the amount of time that for-hire vehicle (FHV) drivers could spend in Manhattan without a passenger. On October 11, 2019, Lyft instituted an Article 78 proceeding in New York state court seeking to invalidate the rule on numerous grounds.

On December 23, 2019, Justice Lyle E. Frank of the New York Supreme Court agreed with Skadden that the rule was arbitrary and capricious, and ordered that it be annulled. The court concluded that the TLC’s definition of cruising time was “problematic” and that the TLC had “not shown any rational basis” for such a formulation. The court also stated that it was “of concern” that the TLC failed to produce the economic model and failed to address objections from numerous community groups opposing the rule. Additionally, the court explained that the TLC’s actions left the court with “an incomplete picture” and that the “scant rationale” for TLC’s determinations “call[ed] into question the methodology relied upon.”