Taxi companies sue San Francisco over rule barring some cabs from SFO

The local taxi industry is suing to block rules barring some cabbies from the San Francisco International Airport.

The San Francisco Municipal Transportation Agency put rules into effect February 1 giving priority for airport pickups to taxi drivers who have taxi permits — called medallions — that cost $250,000, which the agency began selling in 2012.

Those 560 or so taxi drivers tend to be newer to the industry. Other medallion holders tend to be older, often over 70 years old, and lease the use of their medallions to other drivers to help supplement their retirements.

Taxi companies aren’t fans of the new plan, which they say plainly chooses winners and losers in the taxi industry.

SEE RELATED: SF to ban most of taxi fleet from SFO to help struggling cabbies

On Wednesday, various taxi companies working together under an umbrella called the Taxi Coalition sued SFMTA and The City in San Francisco Superior Court.

The allegations are wide ranging and include age discrimination, constitutional violations of due process and equal protection — for splitting the priority for medallions — and for violating the California Environmental Quality Act by exempting the plan from environmental study.

“They have a strong case because the SFMTA has discriminated against a good half of the industry for no good reason,” said the Taxi Coalition’s attorney, Phil Ward.

“They have cannabalized the taxi industry, sacrificing people who’ve been involved with that industry for decades on the altar of other medallion holders,” he said.

City Attorney’s Office spokesperson John Cote said San Francisco had not yet been served with the lawsuit, and would not comment on specifics until the office has completed a thorough review.

“That being said, the SFMTA has been taking numerous proactive steps to support the taxi industry in San Francisco, including reducing or eliminating fees and creating incentives for drivers of wheelchair-accessible taxis,” Cote said. “Litigation doesn’t seem like the answer here.”

But litigation may have set this whole ball rolling.

The San Francisco Federal Credit Union sued SFMTA and San Francisco in April last year, seeking $28 million in damages due to the large number of defaulted loans taken out by taxi drivers.

Those taxi drivers took out credit union loans to lease $250,000 medallions from SFMTA, which they expected to pay off over time. But coincidentally, and unfortunately, 2012 was around the time when Uber began its meteoric rise, a historic happenstance SFMTA did not anticipate when it created the paid medallion program.

The Taxi Coalition alleges the controversial SFO rules are meant to appease the credit union at the expense of cabbies. The credit union did not respond to requests for comment by press time.

Ward put the Taxi Coalition’s opinion on the rules barring some taxi drivers from SFO bluntly: “This is the SFMTA covering its tail with respect to the credit union.”

In the meantime, business at taxi companies across San Francisco has changed dramatically under the new SFO rules. Chris Sweis, owner of SF Yellow Cab and Luxor Cab Company, among the largest taxi fleets in San Francisco, said he has older medallions in a drawer at his desk.

“Because of the airport rules MTA put in place, drivers don’t want to drive anymore,” he said. “We’ve taken the medallions out of service because drivers can’t earn money with them.”

SEE RELATED: Controversial taxi rules have not reduced SFO trips, but may be driving cabbies away

Out of the 550 medallions used by drivers at his cab companies, Sweis said 100 are out of service, though he was able to replace 75 of the older medallions with the newer paid medallions from the credit union. That leaves 25 fewer active medallions used by drivers on the street for his companies.

And it’s not just Yellow Cab. Sweis said “other fleets are telling us they’re losing shifts and they’re having to shut down medallions.”

SFMTA officials argued that taxi drivers who no longer have access to SFO could supplement their income by picking up passengers in San Francisco. But Sweis said that’s a hard ask, considering Uber and Lyft are their competition.

That’s one frustration all parties involved share — from the SFMTA to the credit union and taxi companies alike.

Taxis are regulated by SFMTA, but Uber and Lyft are regulated by the state of California, out of the jurisdiction of any Californian city. Their rules are far more lax than those that govern taxis, with looser requirements for criminal background checks and inspections, among other things.

That reduces that ride-hail industry’s overall costs while leaving riders with hidden dangers, city regulators argue.

It also leaves the taxi industry, SFMTA, and credit union fighting for scraps.

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