NEWARK, N.J. (AP) - Ride-hailing companies like Uber and Lyft operate differently from traditional taxi companies and therefore don't have to be subject to the same regulations, a federal judge wrote this week in dismissing a lawsuit against the city of Newark filed by several taxi and limo companies.
U.S. District Judge William Walls' ruling Wednesday is the latest chapter in the dispute between taxi companies and New Jersey's largest city over how the ride-hailing companies are regulated - or not - and whether that illegally gives them an advantage.
It's a battle being fought in states and cities around the country as the ride-hailing companies gain a greater foothold among a younger demographic accustomed to using smartphones to meet many of their needs.
The taxi companies sued Newark last year, claiming Uber and Lyft should have to abide by the same rules as they do regarding background checks and insurance requirements.
Taxi drivers must pass a background check, submit to drug testing, pay application fees and obtain special commercial licenses, and have their vehicles inspected every six months, according to the lawsuit. The companies claim those conditions gave them exclusive rights to operate for-hire transportation in Newark.
Last year, Newark announced an agreement with Uber under which the company would pay the city $1 million a year for 10 years and would agree to some regulations including background checks by a third party and a liability insurance requirement. Those regulations didn't meet the regulations required of taxi and limo operators, the lawsuit contended.
Walls wrote that Uber and Lyft differ from traditional taxi companies in three important respects: They can't be hailed on the street; passengers have a pre-existing contractual relationship with the driver via the smartphone app; and the fares are not set by the city.
That eliminates the taxi companies' claim of equal protection violations, he wrote.
The taxi companies also say the value of their individual taxi medallions has dropped more than 50 percent since Uber began serving Newark in 2013. On Thursday, Walls wrote that doesn't constitute a violation.
"Because Plaintiffs remain in possession of the medallions and there is no property interest in their market value, Plaintiffs' Taking Clause and substantive due process claims fail," he wrote. "Property does not include a right to be free from competition."
An attorney representing the taxi companies didn't comment on the ruling when reached Friday.
Last month, New Jersey lawmakers approved a measure to make the ride-hailing services legal and to allow the state attorney general to decide whether the criminal background checks they use are sufficient or whether a different kind of check is needed. The measure still needs to be signed by Republican Gov. Chris Christie.
More than 30 states now have laws allowing for the ride-hailing companies.
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