Credit Unions Suffer Loss in Medallion Fight
Four credit unions that make loans involving New York City taxi medallions have lost round one in their attempt to protect the value of the medallions.
Those four cooperatives are the $179 million, 2,900-member Montauk Credit Union of New York City; the $271 million, 3,000-member LOMTO Federal Credit Union in Woodside; the $2.1 billion, 24,000-member Melrose Credit Union in Briarwood and the $692 million, 3,800-member Progressive Credit Union in New York City.
In a Sept. 9, 2015 decision, Queens Supreme Court Justice Allen Weiss sided with New York City Mayor Bill De Blasio’s administration when he ruled that for consumers, summoning a ride via an app-based ridesharing service is not the same thing as hailing a cab from the street.
Under New York law, taxis are only authorized to pick up passengers who hail a cab from the street, so the credit unions argued that ridesharing services such as Uber have been breaking the law. The suit is an attempt to prevent these app-based services from operating in New York City.
“Any expectation that the medallion would function as a shield against the rapid technological advances of the modern world would not have been reasonable,” media outlets quoted Weiss as writing. “In this day and age, even with public utilities, investors must always be wary of new forms of competition arising from technological developments.”
All four credit unions have seen their incomes drop and their loan loss allowances sharply rise since January 2015, and the New York taxi industry has been under an increasing amount of pressure from its app-based competition.
Todd Higgins, Melrose CU’s counsel and a partner at the New York City law firm Crosby & Higgins, said the credit unions would appeal the loss and castigated the De Blasio administration for what he called a catastrophe in the city’s taxi industry.
“We intend to immediately appeal today’s ruling to the Appellate Division, and are confident that the rule of law will eventually prevail, as it must,” Higgins said in a prepared statement after the court announced the decision. “In the meantime, however, a catastrophe is unfolding, as an entire industry continues to be illegally destroyed, while elected officials allow it to happen on their watch. It is a stunning abdication of leadership and responsibility that will haunt New York City for years to come.”