The class action filed by Diva Limousine blames Uber's predatory pricing strategies for hurting legitimate chauffeured services.
The bustling streets of New York City are used by more than a million vehicles every weekday. Caught in the crowd are an estimated twenty-five hundred limousines and nearly twelve thousand taxicabs. The New York Taxi and Limousine Commission (T&LC) is the agency charged with licensing, inspecting, and regulating the operation of these vehicles.
In July of 1986, Dr. Gorman Gilbert, a professor at the University of North Carolina, was named Commissioner of the T&LC. When Gilbert assumed office, the T&LC had been without a Commissioner since the departure of Jay Turoff in early spring. Commissioner Gilbert recently spoke with Limousine & Chauffeur Editor and Associate Publisher Scott Fletcher about the T&LC as well as about some of the problems concerning limousines in New York City.
Limousine & Chauffeur: I understand that your background is in academics.
Gilbert: That’s right. Before I came here, I was at the University of North Carolina for about 12 and a half years. Prior to that, I spent 2 and a half years at the University of New Hampshire.
Limousine & Chauffeur: Is this your first foray into government?
Gilbert: Yes. I’ve done a lot of consulting work, but this is different than anything I’ve done before.
Limousine & Chauffeur: You’ve tackled one of the largest limousine regulatory agencies in the country haven’t you?
Gilbert: Well, it’s the biggest regulatory body on a city level. This year, we’ll have 660 employees, and our annual budget right now is about 18 million dollars. There’s no other city that has anything comparable.
Limousine & Chauffeur: When you took over, what was the situation and what were you asked to do?
Gilbert: The situation involved a lot of concern about what the T&LC role was. There were allegations of corruption, and the T&LC was left under a cloud of suspicion. The T&LC did not command a lot of respect on the streets.
I think that the number one job was to instill respect for the regulatory agency that we had and to do things properly, carefully, and honestly. It takes a while to do that. It takes a while for people to realize that when you say you’re going to do something... that you really are going to follow it up with action.
Limousine & Chauffeur: What were the operational issues? Was you immediate goal to try and get everyone licensed, or was it to create certain changes in the regulations?
Gilbert: Where to start! There were, I suspect, at least three major issues that I can think of right now. One was that the yellow cab medallion operators had not had a fare increase for about seven years. They were striking about that three days after I came in. That was clearly one of the issues that needed to be resolved.
The second issue was the licensing of the for-hire vehicles (limousines and sedans). About two weeks before I came in, we had lost a court suit which said that we were unable to license and regulate non-medallion vehicles including limousines, black cars, and livery vehicles. We had to make a decision about whether to walk away from that... or go back and do it right.
And, thirdly, we had not had any more medallions in New York City for fifty years. We had never added a single medallion since they were first issued in 1937.
Limousine & Chauffeur: The medallions are strictly the yellow cabs?
Limousine & Chauffeur: That’s right. In addition to that, there were a lot of operational things. For example, within the agency we had enormous problems in completing fleet vehicle inspections for the taxicabs. Inspections are required three times a year, and there are almost 12,000 taxicabs, so we’re talking about 36,000 vehicle inspections.
There were a lot of allegations about payoffs and there were problems in that you had to wait in line for a long time. Then there were complaints that the inspection wasn’t done very well. We had to turn that around. Those were internal problems.
Limousine & Chauffeur: And where are you going with the regulation of the non-medallion vehicles?
Gilbert: First of all, we looked at what we had done to the yellow industry, and it’s necessary to talk about that for a moment. We decided that we had made some mistakes with the yellow industry.
The approach we took with the non-medallions was to reinforce the efforts of people who are working to organize and improve the industry. After all, what do we know about the limousine business? We shouldn’t be making rules for drivers, and so forth. On the yellows’ side, for example, we have rules such as how a driver should fill out their trip card, but we don’t want to do that with limousine operators.
What we did was adopt a “base approach” that required every vehicle to be affiliated with a base. They must comply with base managers. We have rules for base managers, for owners, and for drivers. To the extent possible, we’re trying to get the base manager to be responsible for meeting minimum standards so that we can stay in the background and leave them alone.
We’re not here to tell you how much to charge or how to run your business. Just make sure your vehicles are inspected and that you have insurance.
Limousine & Chauffeur: What was the purpose of the base concept?
Gilbert: It was to make sure that companies are managed day by day. We wanted to be able to hold the base manager responsible. For example, we get calls from the public saying that they have gotten ripped off or abused, and we want to be able to call the base manager, explain the problem, and find out what they are going to do about it. We want the base manager to be there to screen drivers, to manage the vehicles, to manage the drivers, and to resolve problems as they come up.
Limousine & Chauffeur: Isn’t there also a minimum size requirement?
Gilbert: Yes. That has probably been the most controversial thing that we’ve done. When we looked at the industry, which is unregulated, we knew that we did not want to create a medallion system. As I said, it took us fifty years to add more medallions and we really didn’t want to create that situation again.
So we looked around at alternative ways of controlling the size of the industry and what we tried to do in this case was use a minimum standards approach whereby we say to the industry, “You can compete and grow according to the quality of the service that you provide. If you are good... you will prosper. If not... you won’t.”
But at the same time we don’t want people with no capitalization and no financial responsibility to go into this industry. So, we set a minimum standard which includes a minimum of capital and wherewithal to get in... and then you can compete freely.
The industry told us that the minimum number of vehicles should be as high as two hundred. Many people thought it should be 50 or 25, but we made it five for this year. And ten starting next year. Anybody who comes in after this year will have to have ten vehicles.
And that has caused a lot of controversy, especially in the luxury limousine part of the industry, because there are some very good operators who wouldn’t be able to get five cars. We knew that this would cause some problems, but it was something we needed to do in order to accomplish the overall goal of financial responsibility.
Limousine & Chauffeur: I would think that five vehicles is a high number to a lot of people in the industry. In many parts of the country, it is a one and two car industry.
Gilbert: That’s right, but I think in New York it’s a little different. We provide a couple of different options. One is to form a base. The base requirements are really not that rigorous. A group of operators can get together, pool their vehicles, and meet our requirements for a base and yet still maintain their own accounts.
Maintaining their own business seems to be the real sticky point. A lot of people thought that by combining in some sort of association they would give up their own customers... but that wouldn’t be the case.
A second option is that they could join another base. Third... they could post a bond. And fourth, there’s sort of an out in the rules that says somebody can come into us with some other type of financial arrangement. They can come into us and propose putting some amount in escrow or something like that. What we want is financial responsibility.
Limousine & Chauffeur: Do you have a major problem with irresponsible operators?
Gilbert: I can’t say if there’s a problem in the luxury limousine part of the business, although there may be. I have heard some stories about gypsies in the limousine industry but, on the livery side, there are about 10,000 vehicles that are either running partly or entirely illegally.
There’s no assurance that they have any insurance at all. You don’t know because they are operating with straight passenger plates. Nobody’s responsible for them. It’s those vehicles that we’re concerned with and those are the ones we want to do something about.
Limousine & Chauffeur: Are those black cars and limousines?
Gilbert: The overall category is “for-hire vehicles.” These are guesses... but there are somewhere around 6,000 black cars and several thousand limousines. Altogether there are around 35,000 livery vehicles in New York including taxicabs from other cities.
Limousine & Chauffeur: Compared to how many medallions?
Gilbert: There are 11,787 medallions.
Limousine & Chauffeur: What does the T&LC require from limousine operators, and what benefits does it provide for operators in return? Is there an incentive for an operator to be based in New York City rather than work from an office in the suburbs beyond the jurisdiction of the T&LC?
Gilbert: Let me make a couple brief comments... One is that almost every operator asks, “What do I get for my $250?” To some extent I think it is a legitimate question, but I have to preface it with the fact that we don’t work for the industry.
The T&LC is a regulatory agency. We work for the general public. If we do anything, we are doing it so the people riding in taxicabs and limousines get a safer and better ride. My belief is that, having said that we work for the general public, there are some things that will benefit the industry too.
Limousine & Chauffeur: Isn’t the public served by having an industry that can function profitably?
Gilbert: I’m just making the point that our first responsibility is to the general public. And, having said that, I think the benefits for the livery industry will be more apparent as time goes on. One thing that has been requested by livery operators is access to cross streets such as 49th and 50th streets which is currently denied to them. As time goes on in Manhattan, I’m sure there will be more and more restricted areas.
What the Department of Transportation has done recently is allow a certain amount of time (ninety seconds) for licensed vehicles to wait for passengers. What we are trying to do is establish a pattern where a licensed vehicle can get whatever benefits there are, and the unlicensed vehicles can’t.
Beyond that, we are working extensively with the Health and Hospitals Corporation. This is a city system of seventeen hospitals. We want to make sure that they only allow licensed vehicles to pick up in front of the hospitals, and makes sure that public contracts are only available to licensed vehicles.
We are doing the same thing with the convention center here. We are trying to establish a pattern throughout the city that we will only do business with people who are licensed. I think that as time goes on, good operators will realize that there is money to be made by being licensed and competing for these contracts.
Limousine & Chauffeur: What is the situation now with operators who are based outside New York but operate in the city without a T&LC license?
Gilbert: We were approached by a Long Island taxi service who brought that issue to us. The company said they don’t want to be in New York and they don’t want to pick up in New York but, occasionally, someone from Nassau comes into Kennedy Airport and they want to pick that person up. Others say that what these people really want to do is come in and hang out on the streets of New York City and get customers. There are probably examples of both.
In 1984, we had a brief time when we gave exemption letters in those cases. Those exemption letters were xeroxed and passed around. My staff was very concerned about all this and what we finally decided to do was issue exemption letters in a much more restricted fashion.
We had a set of six criteria that we used as a test. An operator from outside the city would come to us and say, “I don’t do business in New York, and I don’t want to be licensed, but I don’t want to be hassled.” So we applied the test. We looked at their advertising, for example. If there was evidence of any advertising inside the city, they would fail.
We allow them to come in and pick up their own passengers. We make sure they are licensed in their own territory. If there is no licensing agency in their area, we ask for a local elected official to certify that they were properly a business. We think it’s a reasonable approach. We don’t want there to be any incentive for somebody to move outside the city and then do business inside.
Limousine & Chauffeur: What is the inspection procedure for licensing a vehicle?
Gilbert: The law requires us to inspect taxicabs three times a year. It requires us to be present... so we license garages to do the work and we have our inspectors there. For the for-hire vehicle industry, we have to work under the same three-times-a-year requirement but our interpretation is that we don’t have to be present. What we are saying is that the requirement is for them to get licensed and inspected at a Department of Motor Vehicles station. There are a great number of those in New York City and they can choose any one they want.
Limousine & Chauffeur: Is it basically a safety inspection?
Gilbert: That’s right. It’s a safety inspection. For the taxicabs there is also an emissions inspection which is why we’re involved.
Limousine & Chauffeur: How does the T&LC enforcement program work?
Gilbert: We have about 170 uniformed inspectors and during this fiscal year we will increase that to 255 uniformed inspectors. Those people go around and give summonses for a variety of infractions. Until October 1, we plan to focus on unlicensed vehicles and unlicensed businesses.
Limousine & Chauffeur: What is the relationship between the T&LC and the New York Department of Transportation?
Gilbert: We are a separate agency from the Department of Transportation. We cooperate on the issues very well, and we have a good working relationship although they have a different set of objectives.
Limousine & Chauffeur: What about the possibility of opening 49th and 50th streets to for-hire vehicles? Is that a Department of Transportation issue?
Gilbert: Yes. They have the authority to make those kinds of changes.
Limousine & Chauffeur: Some limousine operators feel that the T&LC has done more for cabs in the past than it has for luxury limousines. Would it be an objective for the TL&C for limousines to have rest stops, access to restricted streets, and other benefits provided for cabs?
Gilbert: I think there has been a bias in the following way: We have, in the history of the T&LC, been almost exclusively concerned with taxicabs. Now, we have a legislative mandate to deal with the limousine industry.
In the past, the T&LC has heard a lot from the medallion side of the industry. When we have our Commission meeting every month, the audience is almost entirely medallion drivers, owners, and brokers. Whenever we do anything, and we look for advice, we see medallion people. Now, though, we are starting to see a different set of faces and that is very good for everyone concerned. We are starting to get a more balanced audience.
We still do not see the general public, though. They do not come to the meetings in sizeable numbers so we have the danger of being too close to the industry. We are trying to distance ourselves, to some extent, whenever we can.
Let me give you an example: We are going to consider whether to raise the liability insurance requirements for the medallion taxicabs, so we have taken pains to invite the insurance companies and the State Insurance Department. Otherwise, when we bring an issue like that up, all we hear are the medallion owners telling us that it’s the worst thing in the world to do. We need to get both sides of the story.
L&C: Has the new insurance minimum of $1 million for luxury limousines been under attack?
Gilbert: That was controversial for a while and then it seemed to die down.
Limousine & Chauffeur: Would you like to have more contact with luxury limousine operators?
Gilbert: We have had an open door. We talk to the operators, and we have written letters to the operators that we have tax files on.
It’s very different for the medallion operators because we have a mailing list for them, and we have been in on-going communication with them in various ways. We don’t know as much about the for-hire vehicles and we’re still developing communications with them. They are very difficult to find because there are so many of them and they are not as organized as the medallion people.
Many limousine operators out there are complying with the law and doing a good job. Those are the ones who need to come in here and talk to us. I think that we’ve been responding to this a good deal, and we honestly have a very open door so people can come in, sit down, and talk.
There are a couple of things I want to mention to limousine operators here in New York. In the next year, you are going to see a lot of changes in the T&LC. We are adding to our staff in ways that will make us more effective. We are thinking of this as a new day at the T&LC. We have made a lot of improvements and we know that we still have a long way to go. We want to discuss a lot of things with the limousine industry, and we want to implement vehicle laws that make sense.’’
New York DOT Commissioner Ross Sandler
Manhattan is a thriving business and residential area of some 25 square miles. On weekdays, 900,000 drivers enter Manhattan from neighboring areas causing the car, bus, taxi, limousine, etc. population to reach an estimated 1.1 million vehicles. The New York City Department of Transportation faces the challenge of regulating the operation and parking of these vehicles DOT Commissioner Ross Sandler spoke with Limousine & Chauffeur about the need to regulate limousines in Manhattan.
Limousine & Chauffeur: How do limousines fit into New York City traffic problems?
Sandler: They are an increasing problem. The yellow cabs are a fixed number, but voucher cabs, black cars, and limousines have increased by about 300 percent since 1980. They are effectively like taxicabs only they don’t do street hails, which means that they stand on the streets and block the lanes. They do it both in truck loading zones and no standing zones when they are picking up or dropping off.
They are causing a significant change in the traffic patterns in midtown and downtown. It is something we will have to deal with.
Limousine & Chauffeur: Your goal is to limit their numbers?
Sandler: Our goat would be to facilitate traffic, and you can’t allow every vehicle that wants to be on the street at the same time. There’s a need for private cars. There’s a need for trucks and commercial vehicles. There’s a need for taxis. There’s a need for motorcycles and bicycles. And there’s a need for limousines and voucher cabs. But there’s only so much street space.
The city wasn’t built for, nor can it sustain, the millions of people who travel by surface mode every day no matter what kind of vehicle they use.
You get no argument from us that limousines and voucher cabs should be here. But they are going to have to be regulated. While there were few of them regulations were few. But when there are as many limousines as there are yellow cabs, then the regulations will become more difficult because the problem becomes more intense.
Limousine & Chauffeur: Do you have an advisory council of limousine operators?
Sandler: There is certainly an informal advisory council, and it’s recognized, and we meet with them regularly. The people who represent the livery vehicles are both organized and articulate both in the press and with us. We met just two weeks ago.
It wouldn’t bother me if this council was more formalized... and yet I think we would do what we do anyway. If the industry feels a formal advisory council is really necessary, we should have one.
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