A new class action lawsuit that intends to blame plummeting yellow taxi medallions values on “a decade of negligence and corruption by New York City officials” is asking for $2.5 billion in restitution. The suit alleges a years-long scheme by the city to “artificially” inflate yellow cab medallion prices it sold at auction by lying about their value. From 2004 to 2014, medallion sales netted city coffers $855 million, the suit says.
The city is being blamed for allowing Uber and Lyft to add tens of thousands of new For-Hire Vehicles, crowding city streets and creating supply and demand issues that caused medallion prices to tank.
The city’s taxi medallion program was launched in 1937 to rein in the growing number of cabs on city streets. The number of yellow cabs was fixed at 11,787 for decades – although, in 1996, the city began auctioning new medallions, allowing that number to grow to 13,500 over the course of years.
The suit, as filed, names two medallion owners as plaintiffs, although lawyers are hoping that more cabbies will join the case. It alleges that city officials were warned in 2011 that the medallion market would collapse by TLC staffer Gary Roth, who wrote a memo made public in 2019 warning that “if the price of medallions dropped significantly, it could force recent medallion buyers underwater.”
Despite Roth’s findings, the TLC continued to auction off new medallions for sky-high prices, the suit says. It also claims that city officials deliberately lied when they advertised medallions as airtight investments and did nothing to stop bid-rigging by taxi medallion owner Evgeny Friedman.
Source: New York Daily News