SAN FRANCISCO—San Francisco Federal Credit Union has lost a lawsuit it filed against the San Francisco Municipal Transportation Agency (SFMTA) related to loans made on taxi medallions. Hailing the decision, the city attorney described the lawsuit as being about a “bank bailout.”
The $1.3-billion credit union made loans to more than 700 cabdrivers for the medallions that each cost $250,000. But many of the loans were made in the period when the ridesharing services Uber and Lyft began to emerge, causing the values of taxi medallions to crash. Many drivers struggled to make payments, with scores going into default, noted local media.
The issue isn’t unique to San Francisco, as values also plummeted in other major cities, especially New York. The failure of a half-dozen taxi medallion-lending credit unions led to a $750 million financial loss by the NCUSIF>
As CUToday.info reported, SFFCU sued the SFMTA in March 2018, alleging the agency had promised to buy back the medallions if the program collapsed and blaming it for letting Uber and Lyft kill the taxi market. The case originally sought $28 million in damages plus $125 million to repurchase all the loans.
What Jurors Said
In its decision, however, jurors found the SFMTA did not renege on its deal with the SFFCU to make loans to taxi drivers so they could buy medallions, the San Francisco Chronicle reported.
The verdict by the 12-member jury was handed down after less than a full day of deliberation.
The decision follows a multiyear quest by the credit union to get compensation for the medallion loans, as both the San Francisco Chronicle and CUToday.info have reported. .
The three-week trial was presided over by Judge Harold Kahn.
The jury ruled that both sides had abided by the contract. It rejected the credit union’s claims that SFMTA was obliged to reduce the medallion loans’ price, that SFMTA had failed to try hard enough to resell foreclosed medallions, and that SFMTA should have formally declared an end to the medallion sales program, the Chronicle said.
About a ‘Bank Bailout’
“This case was always about a bank bailout, plain and simple,” said City Attorney Dennis Herrera in a statement. “The city and the credit union have a contract. The city has not broken that contract, so taxpayers should not have been forced to bail out this bank.”
SSFCU did not respond to CUToday.info’s request for comment by press time.