United States District Court, District of Columbia
CHRISTOPHER R. COOPER UNITED STATES DISTRICT JUDGE.
District of Columbia's Department of For-Hire Vehicles
has been on a years-long campaign to modernize the
District's taxicab industry. Facing competitive pressure
from app-based ride-hailing services like Uber and Lyft, the
Department beginning in late 2016 adopted a series of rules
that require taxi operators to transition from traditional
analog metering systems to newer systems called
“digital taxicab solutions, ” or
“DTS.” Like those popular ride-hailing services,
the DTS systems are designed to run on mobile devices and
calculate fares using GPS technology.
Cab, Inc., a taxicab operator in the District, along with its
owner, brought this eleventh-hour suit on December 29, 2017,
seeking to halt the DTS requirement from going into effect on
the first day of the New Year. In their motion for a
temporary restraining order, they contend that the
Department's rulemaking violates several federal
constitutional provisions as well as the District of Columbia
Administrative Procedure Act, and that those violations have
caused them serious economic harm. For the reasons that
follow, the Court finds that the plaintiffs are not entitled
to preliminary relief, and it will therefore deny their
Department of For-Hire Vehicles has regulatory authority over
all taxicab operators in the District of Columbia. D.C. Code
§ 50-301.07. Among the Department's powers is the
ability to “[e]stablish standards and requirements
relating to the modernization of equipment and equipment
design.” Id. § 50-301.07(c)(5). It
exercises this power through administrative rulemaking,
subject to the requirements of the District of Columbia
Administrative Procedure Act (“D.C. APA”), D.C.
Code § 2-505. See id. § 50-301.07(d)(1)
(providing that D.C. APA applies to Department rulemaking).
D.C. APA generally requires agencies to issue notice and hold
a public comment period before implementing a rule.
See D.C. Code § 2-505(a)-(b). The
Department's DTS rules, however, were issued pursuant to
§ 2-505(c), which allows for “emergency
rulemaking” in certain circumstances. That section
[I]f, in an emergency, as determined by the Mayor or an
independent agency, the adoption of a rule is necessary for
the immediate preservation of the public peace, health,
safety, welfare, or morals, the Mayor or such independent
agency may adopt such rules as may be necessary in the
circumstances, and such rule may become effective
immediately. Any such emergency rule shall forthwith be
published and filed in the manner prescribed in subchapter
III of this chapter. No such rule shall remain in effect
longer than 120 days after the date of its adoption.
in September 2016, the District issued a string of seven
emergency rulemaking notices related to DTS. The first notice
provided that, beginning on September 13, 2016, the District
would no longer approve any non-DTS systems for use in
taxicabs. Def.'s Opp. Ex. B, at 9. Taxicabs would be
permitted to use either MTS or DTS systems for a year, but,
beginning in September 2017, taxicabs would be required to
use DTS systems or else face civil penalties. Id.
While not published in the D.C. Register, this first notice
was posted on the District's website along with
instructions for filing written comments. Def.'s Opp. Ex.
B, at 22. The Department also published notice in the D.C.
Register of a November 2016 hearing regarding that
rulemaking. 63 D.C. Reg. 13694.
provided by § 2-505(c), this first rulemaking expired on
January 11, 2017, 120 days after its effective date.
Following its expiration, the Department issued a second
notice that was substantially similar to the first and also
unpublished. Id. Ex. C. This process repeated four
more times, with notices issued on May 11 (id. Ex.
D), June 28 (id. Ex. E), and August 11, 2017
(id. Ex. G). Each of the rules stated that the DTS
requirement would become effective on September 1, 2017.
Then, on September 1, the Department issued a sixth emergency
notice, this time publishing it in the D.C. Register.
See 64 D.C. Reg. 8696. The notice, citing concerns
about implementation, pushed back the effective date of the
DTS requirement to October 31, 2017. See id. The
Department held a public hearing in late September,
see 64 D.C. Reg. 65396 (hearing notice), and
provided a 45-day comment period, see 64 D.C. Reg.
account for the comments submitted-particularly those related
to accessibility of the new systems-the Department published
a seventh notice on October 27 setting forth the DTS
requirement that is currently in force. Id. This
“Notice of Second Emergency and Proposed
Rulemaking” slightly modified the prior notice and
extended the effective date from October 31, 2017 to January
1, 2018. Id. Beginning on that date, no taxicab
would be able to operate in the District of Columbia unless
it used a DTS system. Id. The Department held a
hearing regarding this second notice on December 12, 2017, 64
D.C. Reg. 66538 (Dec. 8, 2017), and purports to be crafting a
final, non-emergency version of the rule that will be issued
shortly, see Defs.' Opp. at 6-7.
substantive content of the seven rulemaking notices was
fairly similar. The new rule requires taxicab companies in
the District to transition from traditional analog metering
systems-known as “modern taximeter systems” or
“MTS”-to DTS systems approved by the Department.
See 64 D.C. Reg. 11950, 11954-55 (current rule).
There is not a single mandatory DTS system, nor is there a
requirement that each taxicab company design its own system
from the ground up. Rather, each taxicab in the District must
use a system supplied by an approved DTS
“provider.” Any taxicab company in the District
can apply to be approved by the Department as a
“provider-meaning that they can supply their DTS system
to other companies or use it in their vehicles. Id.
at 11955-56. To be a provider, the taxicab company must
verify that its system meets or exceeds the Department's
technological requirements: namely, that it contains (1) a
digital taximeter that calculates fares using GPS and
integrates with DC TaxiApp, the consumer taxicab application
that predates DTS; (2) a passenger console with a digital
display; and (3) a credit card processing device.
Id. at 11958-59. So long as it meets these
requirements, the DTS system can rely on third-party software
or may implement a digital taximeter application that the
Department has itself designed and made available to
providers. See id. at 11955. Companies can apply to
be approved as providers during the Department's annual
“open season” period, the first of which
concluded in August 2017. Defs.' Opp. Ex. A, at 3
(Department Administrative Issuance from Feb. 14, 2017).
notices also spelled out the Department's rationale for
imposing the DTS requirement, and for using emergency
rulemaking procedures to do so. Citing an uninterrupted
decline in taxicab rides for the past year and a commensurate
drop in revenues, the more recent, published notices
explained that the Department sought to immediately
“alleviate the rapidly-deteriorating competitive
position of taxicabs in the District's vehicle-for-hire
industry” caused by the rise of private-vehicle
services like Uber and Lyft. 64 D.C. Reg. 8696; id.
at 11950. The Department explained that the DTS requirement
would aid taxis' competitive position by mirroring the
features of those app-based services and by allowing for
future innovation through its open-ended design-results that
could not be achieved with the MTS. 64 D.C. Reg. 8696, 8698.
days before the DTS requirement was set to take effect, the
plaintiffs-Classic Cab and its owner, Mushtaq Gilani-filed
this suit against the District, its Mayor, the Department,
and the Department's director in his official capacity.
In their complaint and motion for a temporary restraining
order, they claim that the Department's emergency
rulemaking violates the U.S. Constitution-specifically, the
Due Process and the Takings Clauses of the Fifth Amendment,
and the Contract and Commerce Clauses of Article I-and runs
afoul of the D.C. APA.
plaintiffs contend that preliminary injunctive relief is
necessary because the rule, even before its implementation,
has caused them grave economic loss and that, when the rule
takes effect, it will likely force Classic Cab to shut down.
Pl.'s Mot. ¶ 37. They explain that, before the DTS
rule, a large portion of Classic Cab's revenue derived
from MTS. Specifically, for several years prior to August
2017, Classic Cab held an exclusive license from the
Department-subject to renewal each year-to provide and
maintain MTS. To capitalize on this license, Classic Cab in
2013 executed a seven-year contract with a private third
party, Creative Mobile Technologies, based in New York. Under
that agreement, Creative would install MTS in Classic
Cab's fleet of around 1, 700 vehicles-consisting mostly
of taxis owned by other taxicab operators. The contract
granted Classic Cab 0.25% of all credit card transactions,
$0.10 per credit card swipe, and a $5 monthly maintenance
fee-in total, about $300, 000 annually. The plaintiffs claim
that the new DTS requirement destroys the value of this
reviewing the plaintiffs' motion, the Court instructed
the parties to propose a schedule for expedited briefing and
a hearing. In response to the Court's request, the
District represented that “through January 31, 2018
[the Department] will not begin issuing fines or penalties
for violations of the regulations at issue.” Def.'s
Proposed Br. Sched. at 1 (ECF No. 7). The Court accordingly
set a briefing schedule that concluded on January 19 and held
a hearing on January 24.
Standard of Review
the Court having declined to grant the plaintiffs' motion
for a temporary restraining order ex parte-and
instead having directed briefing and held a hearing-the Court
will evaluate the plaintiffs' motion as one for a
preliminary injunction. See Fed.R.Civ.P. 65.
Plaintiffs seeking preliminary equitable relief bear the
burden of showing (1) that they are likely to succeed on the
merits of their claim; (2) that they are likely to suffer
irreparable harm in the absence of preliminary relief; (3)
that the balance of equities tips in their favor; and (4)
that an injunction is in the public interest. Winter v.
Nat. Resources Defense Council, Inc., 555 U.S. 7, 20
(2008). The D.C. Circuit has suggested that the failure to
establish a likelihood of success on the merits categorically
forecloses preliminary relief. Sherley v. Sebelius,
644 F.3d 388, 393 (D.C. Cir. 2011). Similarly, an absence of
irreparable injury is fatal to a plaintiff's motion.
See Chaplaincy of Full Gospel Churches v. England,
454 F.3d 290, 297 (D.C. Cir. 2006).