Newark Cab Ass'n v. City of Newark

• Decision Date: 20 August 2018
• Docket Number: No. 17-1358,17-1358
• Citation: 901 F.3d 146
• Parties: NEWARK CAB ASSOCIATION ; Newark Taxi Owner Association; Teterboro Airport Limousine Service ; Abbas Abbas; Petro Abdelmessieh; Sayev Khellah; Michael W. Samuel; George Tawfik, individually, and by certain plaintiffs on behalf of others similarly situated, Appellants v. CITY OF NEWARK
• Court: U.S. Court of Appeals — Third Circuit

901 F.3d 146

NEWARK CAB ASSOCIATION ; Newark Taxi Owner Association; Teterboro Airport Limousine Service ; Abbas Abbas; Petro Abdelmessieh; Sayev Khellah; Michael W. Samuel; George Tawfik, individually, and by certain plaintiffs on behalf of others similarly situated, Appellants

v.CITY OF NEWARK

No. 17-1358

United States Court of Appeals, Third Circuit.

Argued: September 6, 2017

Filed: August 20, 2018

Richard W. Wedinger, Esq. [ARGUED], Laurel A. Wedinger, Esq., Barry McTiernan & Wedinger, P.C., 10 Franklin Avenue, Edison, New Jersey 08837, Counsel for Appellants

Eric S. Pennington, Esq., James A. Lewis, Esq. [ARGUED], Eric S. Pennington, P.C., One Gateway Center, Suite 105, Newark, New Jersey 07102, Counsel for Appellee

Before: CHAGARES, JORDAN, and HARDIMAN, Circuit Judges.

OPINION

CHAGARES, Circuit Judge.

Newark Cab Association, Newark Taxi Owner Association, Teterboro Airport Limousine Service, Abbas Abbas, Petro Abdelmessieh, Sayev Khellah, Michael W. Samuel, and George Tawfik (collectively, the "plaintiffs") filed a lawsuit under 42 U.S.C. § 1983 and New Jersey law challenging an agreement the City of Newark (the "City") entered into with Uber Technologies Inc. ("Uber"). They alleged, inter alia, that the City violated their rights under the Takings Clause of the Fifth Amendment and the Due Process and Equal Protection Clauses of the Fourteenth Amendment by subjecting Uber and other Transportation Network Companies ("TNCs") to less onerous regulations than those imposed on taxi and limousine operators. The City moved to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). The District Court granted the motion, and dismissed the action with prejudice. This appeal followed. The City's decision to permit TNCs to operate subject to limited regulations places the plaintiffs in an undoubtedly difficult position. However, the potentially unfair situation created by this decision cannot be remedied through the plaintiffs' constitutional and state law claims. For the reasons that follow, we will affirm the order of the District Court.

I.

The plaintiffs are entities and individuals engaged in the licensed taxi and limousine industries in Newark, New Jersey. The City has regulated all for-hire transportation providers, such as the plaintiffs, under uniform regulations set forth in the City's municipal ordinances. Newark, N.J., Rev. Gen. Ordinances ("Newark Ordinances") §§ 34:1-1 to 34:2-24. The regulations require taxi and limousine drivers, inter alia, to meet certain job qualifications, pass a background check conducted by the Newark Police Department, pay application fees, and obtain special commercial licenses. Taxi and limousine vehicles must be serviced and inspected every six months by the Division of Taxicabs, taxi fares must be measured and imposed by meters in accordance with City-mandated rates, and all taxi and limousine operators must carry primary commercial liability insurance. Taxi operators must purchase and possess a taxi medallion to provide taxi services. Taxi drivers are likewise prohibited from working at Newark airport until one year after the issuance of their taxi driver's license. The City capped the number of taxi medallions in circulation at 600.

In April 2016, Newark Mayor Ras Baraka announced an agreement between the City and Uber, under which Uber agreed to pay the City $1 million per year for 10 years and provide $1.5 million in liability insurance for each of its drivers in exchange for permission to operate in Newark (the "Agreement"). Uber also agreed to have a nationally-accredited third-party provider conduct background checks on all of its drivers. Under the Agreement, Uber and its drivers are not required to possess taxi medallions and Uber is permitted to set its own rates and fares. Nor are its drivers required to obtain commercial driver's licenses.

In August 2016, the plaintiffs filed a complaint against the City, bringing claims on behalf of a class of holders of taxi medallions and on behalf of a class of holders of limousine licenses who operate within Newark. The plaintiffs advanced claims for: (1) violations of the Takings Clause of the Fifth Amendment, as incorporated against the states by the Fourteenth Amendment (Count 1); (2) violations of the Equal Protection Clause of the Fourteenth Amendment (Counts 2 and 3); (3) violations of their substantive due process rights (Count 4); (4) breach of contract under New Jersey law (Count 5); (5) promissory estoppel under New Jersey law (Count 6); and (6) equitable estoppel under New Jersey law (Count 7). The City moved to dismiss the complaint for failure to state a claim under Rule 12(b)(6). The District Court dismissed the complaint. The plaintiffs filed this timely appeal.

II.

The District Court had jurisdiction under 28 U.S.C. §§ 1331 and 1367, and we have jurisdiction pursuant to 28 U.S.C. § 1291. We review a district court's grant of a motion to dismiss pursuant to Rule 12(b)(6) de novo. Fleisher v. Standard Ins., 679 F.3d 116, 120 (3d Cir. 2012). In doing so, we accept all factual allegations in the complaint as true and construe those facts in the light most favorable to the plaintiffs. Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). "To survive a motion to dismiss, a complaint must contain sufficient factual allegations, taken as true, to ‘state a claim to relief that is plausible on its face.’ " Fleisher, 679 F.3d at 120 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ).

III.

The plaintiffs raise several issues on appeal. They first argue that the District Court erred by concluding that they had failed to allege a protectable property interest on which either their Takings Clause or substantive due process claims could be based. They next argue that the District Court erred by concluding that they failed to state a claim under the Equal Protection Clause. The plaintiffs finally argue that the District Court erred in dismissing their state law breach of contract, promissory estoppel, and equitable estoppel claims. We have considered the plaintiffs' arguments, and for the following reasons, we will affirm the District Court's order in all respects.

A.

The Fifth Amendment's Takings Clause prohibits the government from "taking private property for public use without providing just compensation." Am. Express Travel Related Servs., Inc. v. Sidamon-Eristoff, 669 F.3d 359, 370 (3d Cir. 2012). It applies to state and local governments through the Fourteenth Amendment. Id. To succeed on a takings claim, "the plaintiff[s] must first show that a legally cognizable property interest is affected by the Government's action in question." Prometheus Radio Project v. FCC, 373 F.3d 372, 428 (3d Cir. 2004) ; see also In re Trs. of Conneaut Lake Park, Inc., 855 F.3d 519, 526 (3d Cir. 2017) ("Without a legally cognizable property interest, [a plaintiff] has no cognizable takings claim."). Such property interests, in turn, "are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law." Bd. of Regents of State Colls. v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972). Accordingly, we look to New Jersey law to determine the property interest at issue.

The plaintiffs argue that the District Court erred in determining that they have not been deprived of a legally cognizable property interest. They contend that, under New Jersey law, they have a property interest in their taxi medallions that has been affected by the Agreement with Uber. The plaintiffs argue that they have a property interest in both the value of the medallions as well as the "inherent value of the exclusivity of the taxi medallion." Plaintiffs' Br. 30. They maintain that they do not seek to exclude TNCs and other operators from the market, but instead seek to subject TNCs to the same regulations as taxi operators. They also argue that the City created a tightly controlled market when it established the regulations governing taxis and capped the number of taxi medallions at 600. As a result, the plaintiffs assert that the medallions have economic value that has been decreased by the City's action in subjecting TNCs to less stringent regulation.

The plaintiffs rely upon an unpublished state court decision, Mohamed-Ali v. City of Newark, No. A-4035-11T4, 2013 WL 4859783 (N.J. Super. Ct. App. Div. Sept. 13, 2013), in support of their position that they have a property interest in the value of taxi medallions under New Jersey law. In Mohamed-Ali, the Appellate Division of the Superior Court of New Jersey held that a "plaintiff had a property interest in his taxicab license." Id. at *3. However, the court in Mohamed-Ali did not hold that there was a property interest in the economic value of a taxi license. There, the plaintiff was a taxi driver whose taxi license was suspended. Id. at *1. He argued that by suspending his license, the City deprived him of his property interest in the license without due process. Id. at *2. The Appellate Division of the Superior Court of New Jersey held that the plaintiff had a property interest in his taxi license such that he was entitled to due process before it was suspended. Id. at *3. The court said nothing about whether this interest included the economic value of the license. The plaintiffs have identified no other New Jersey authority indicating that the monetary value of a license constitutes a cognizable property interest. As the Court of Appeals for the Eighth Circuit held in considering a similar challenge, "a takings claim cannot be supported by asserting ownership in a property interest that is different and more expansive than the one actually possessed." Minneapolis Taxi Owners Coal., Inc. v. City of Minneapolis, 572 F.3d 502, 509 (8th Cir. 2009) (quoting Rogers Truck Line, Inc. v. United States, 14 Cl. Ct. 108, 114 (1987) ). The plaintiffs have not shown that, under New Jersey law,...