$2B Taxi Lawsuit Says TLC Conspired to Inflate Medallion Prices

By: Hellen Zaboulani

The Taxi industry is ailing in a distinctive way. Cab drivers often put their lifesavings into buying yellow taxi medallions, or a permit from the city to operate a taxi. In their peak in 2014, the medallions went for an average auction price of $1.1 million. Now they are worth below $150,000. The crash came even before the pandemic, when Uber and Lyft drivers were permitted to operate in competition, but with no medallions required. This has been a devastating loss to those small business owners who poured all their retirement funds into the medallions as an investment.

“My father told me that it’s a city promise, an investment, and he believed in it,” said Galina Kaminker, who in 1992 along with her sister each invested $140,000 of their savings into purchasing two medallions, at the insistence of their father. “He said, ‘This is something the city sells. It’s a guaranteed investment. It might not have a high ROI, but I’m more than sure you’ll be able to retire on this money.’

In 1971, the TLC charter was written, with a mandate for “promise and protection” of public transportation policy governing taxi service. As per the state, the city made over $855 million in revenue selling medallions between 2002 and 2014.

As reported by Crain’s NY, Kaminker has turned to lawyers Jon Norinsberg and Joshua Fitch and filed a $2.5 billion class-action lawsuit together with another plaintiff. The suit, filed this month, is against the city Taxi and Limousine Commission, three former commissioners, former Mayor Michael Bloomberg, the city and others. “This lawsuit became absolutely necessary because, without the attorney general’s lawsuit, there’d be nothing,” Norinsberg said, noting that AG Letitia James’ office dropped the case. “We are finishing the job that Attorney General James started.”

The suit alleges a conspiracy to artificially inflate the price of medallions so that the city could maximize its profits. The case claims fraud on the part of the TLC for promoting the medallion as a safe investment vehicle, knowing that the value would likely drop. The suit also claims that immigrants in particular were targeted for the sales. “We’re not gamblers. We’re people who put money in something, and we wanted to be secure,” Kaminker said. “The city promised an investment and promised the medallion is worth a million dollars. Keep your promise.”

“It hasn’t been settled that a governmental entity can be sued under RICO,” said transportation lawyer Wayne Badin. “The plaintiffs have a very difficult case ahead of them.”