The court found that the exception was rationally related to funding the pro-consumer services of Taxi TV and thus permissible under the third prong. On the second prong, it held that the government has a substantial interest in “protect passengers from the annoying sight and sound of in-ride advertisements.” On the third prong, it rejected Vugo’s argument that the ban was constitutionally underinclusive because it excepted ads for Taxi TV, thereby undermining its purported rationale. The Second Circuit rejected arguments concerning the second through fourth prongs. the speech restriction is no “more extensive than is necessary to serve that interest.”.the speech restriction “directly advances the governmental interest asserted” and.
the government asserts a “substantial” interest. the speech at issue is lawful and non-misleading. 1 The seminal Supreme Court case holds that government restrictions on commercial speech may be upheld only where: Vugo argued that New York City’s law was unconstitutional under Central Hudson v. District Court for the Southern District of New York, and the city appealed. Because Vugo’s business is illegal under New York’s advertising ban, it brought a First Amendment challenge. Passengers are unable to turn off the ads, but they would be able to use on-screen controls to reduce the volume to a “near-mute” level. Advertisers pay Vugo, which splits the proceeds with the for-hire vehicle drivers. Vugo-a technology company-runs a business wherein it sells Internet-connected tablets to for-hire vehicle drivers, who then mount the tablet on the front seat’s headrest and have it run ads. At the same time, New York City also banned advertisements in taxicabs with one exception: taxicabs are allowed to run advertisements on “Taxi TV.” Taxi TV is a screen that (1) displays passenger information, such as their route and fare as it accumulates (2) allows payment via credit cards and (3) runs ads to help taxi owners cover the costs of installing the Taxi TV system. In Vugo, New York City banned all advertisements in for-hire vehicles. In doing so, the court applied an outdated, severely watered-down version of Central Hudson’s intermediate scrutiny and opened the door to restrictive government speech regulations moving forward. 
Recently, the Second Circuit upheld a New York City ban on advertising in “for-hire vehicles”-companies like Uber and Lyft-against a First Amendment challenge in Vugo v. Boyd Garriott, an Associate with the firm. Brown is a Partner with Wiley Rein LLP in Washington, DC, and the WLF Legal Pulse’s Featured Expert Contributor, First Amendment.
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