By: Bennett Loudon//July 12, 2023
By: Bennett Loudon//July 12, 2023//
New York State Court of Appeals
Breach of implied covenant of good faith
Municipal enforcement of regulations – General Business Law
Background: The plaintiffs are entities that purchased yellow cab medallions from the defendant Taxi and Limousine Commission at a 2013 auction. They allege that the defendants breached the implied covenant of good faith and fair dealing by failing to enforce certain licensing requirements against popular smartphone application-based competitors like Uber and Lyft.
Ruling: The Court of Appeals held that the plaintiffs failed to state a claim and dismissal was appropriate. No reasonable person would have understood the contracts for purchase of the medallions would include a promise that the defendants would enforce existing black car licensing requirements against app-based companies following the auction to protect the value of the plaintiffs’ investment. Furthermore, the plaintiffs did not plead the type of conduct covered by Section 349 of the General Business Law.
Mark C. Rifkin for the appellants; Jesse A. Townsend for the respondents.