The City of New York has agreed to pay $140 million to a class of 19,000 taxi drivers in settlement of a decades-long class action lawsuit in which a federal appeals court ultimately found that the City's Taxi and Limousine Commission systemically violated the cabbies' rights to due process of law. The settlement is one of the largest, if not the largest, on record in the City's history for due process violations.

The case, titled Nnebe v. Daus, was filed in 2006. It involves the TLC's practice of summarily suspending the hack license of any driver who was arrested—not convicted, just arrested—on any felony charge or for a long list of misdemeanor offenses even if the allegations had nothing to do with driving a taxi. The TLC's practice—which is unusual, perhaps unique and whose origins remain unknown—was to suspend the driver immediately upon arrest, no questions asked, and without regard for the driver's prior record.

The TLC would then afford the cabbie a post-suspension hearing, ostensibly to determine whether a license should remain suspended while the charges were pending. The catch was these hearings were futile—as a federal appeals court would later hold— and no taxi driver was ever reinstated through the hearing process. 

It took 13 years of litigation, however, for a federal appeals court to recognize the TLC practice as a systemic violation. The court also stated why: Not only did the TLC judges (and certainly the TLC chairman, who had the final say) assume that that the driver was guilty of the arrest charge, they did not consider the driver's prior record or the underlying circumstances of the alleged offense. It did not matter, for instance, whether the driver had never been arrested before and had never received a passenger complaint. Also, the administrative law judges (ALJs) who presided over post-suspension hearings were hired by the TLC and could be reprimanded or even fired by the TLC.

The TLC's suspension-and-sham-hearing regime had been in effect for years, putting more than 1,000 drivers per year out of work, even though few of the arrests involved a taxi passenger and few drivers were ultimately convicted. In 2006, several drivers sued in federal court, alleging that both the summary hearings and the agency's hearing process were unconstitutional and illegal under state law.

The drivers were represented initially by Daniel L. Ackman, a solo practitioner who had won several cases against the TLC previously; he was later joined by David T. Goldberg, a distinguished appellate specialist, and more recently, by Shannon Liss-Riordan, a prominent Boston labor lawyer.

Initially U.S. District Court Judge Richard J. Sullivan ruled in favor of the City, dismissing the complaint on summary judgment. But between 2011 and 2019 the cabbies won two appeals, largely reversing Judge Sullivan's rulings, and a bench trial where Sullivan presided. 

After the 2014 trial, Judge Sullivan issued findings supporting the drivers, concluding that both the TLC judges and the chairperson considered only a charge was still pending, and whether there was a “philosophical nexus between the charged crime and public health or safety.” The hearings limited in this way, Judge Sullivan noted, “resulted in a nearly unbroken record of recommendations that the suspension be continued.” He also found that Meera Joshi, who was the TLC chair at the time and is now a deputy mayor had testified in a way that was “contradicted by the documentary record.” 

Based on Judge Sullivan's factual findings, a unanimous Second Circuit Court of Appeals held in 2019 that the TLC's practices denied the cabbies their constitutional right to a fair hearing. While the litigation continued, the number of drivers who had been suspended and denied fair post-suspension hearings continued to rise.

Even after the appeals court ruled, the case dragged on, with not a single driver receiving damages. The holdup this time was because while Judge Sullivan— who stayed on the case as trial judge even after being elevated to the Court of Appeals by President Trump in 2018—certified a plaintiff class, he also determined that each driver would have to prove his or her damages at separate trials.

Such trials proved hard to come by. Between 2022 and 2024, Judge Sullivan held just one damages trial for only 10 drivers. At that trial, held in November 2023, all 10 drivers, who had been selected at random from the more than 19,000 class members, were awarded substantial damages by a jury. The drivers' lawyers believed the case would be a bellwether, but after the first trial, Judge Sullivan never proceeded with a second trial.

The cabbies' convincing victory did make it clear, however, that a large financial class judgment --or thousands of individual judgments--was likely and possibly imminent, the drivers' lawyers say. Ultimately, the City agreed to settlement negotiations. Those negotiations resulted in the City and the drivers' lawyers submitting to Judge Sullivan a signed agreement to pay the drivers a total of as much as $140 million.