Lawsuit alleges town's car rental system is anticompetitive

(May 17, 2024) The owners of Becky’s Broncos have sued the town in federal court claiming that the island’s long-time car rental system is anticompetitive and discriminatory.

James Broad and Rebecca McCrensky are challenging the island’s medallion system for car rentals which went into effect in 1988, saying it violates the Sherman Act, the state’s Antitrust Act and equal rights law. There is a cap of 700 medallions issued by the town, each equating to the right to rent one car. Those medallions do not expire and have been cached by a handful of car rental companies for decades.

“(This) discriminatory Nantucket bylaw (was) amended nearly thirty years ago to protect five local White-male-owned businesses from outside competition -and still does -to the exclusion of James Broad, a first generation Black American, and his wife, Rebecca McCrensky, and their business, Becky’s Broncos, LLC,” the suit states.

Becky’s Broncos was denied a license and medallions for its two vehicles, the suit states, but they operated anyway.

Last summer a lawyer representing Nantucket Rent-A-Car and Affordable Rentals, who combined hold 163 rental medallions, sent a letter to the Select Board asking it to address the growing problem of unlicensed car rentals.

“Both (companies) pay thousands of dollars annually for rental medallions and for excise tax on vehicles garaged in Nantucket,” their lawyer John Perten wrote. “Both companies employ local residents, generate revenue for the town and are good corporate citizens.”

Following up on that complaint, the Nantucket Police Department contacted at least four rental companies that were renting cars without medallions and told them to stop operating illegally, take down their websites or be subject to fines upwards of $300 a day.

“The police ordered Plaintiffs and three other businesses to cease operations, one of which is also Black and female owned, but have let alone residents renting their cars on Turo, including dozens of Town employees,” the couple’s lawsuit states.

The lawsuit asks the court to order a temporary restraining order, preliminary injunction and permanent injunction preventing the town from enforcing the car-rental bylaw against Becky’s Broncos, as well as covering the cost of damages and lawyer fees.

At town meeting last week, voters held for further study a proposal to subject peer-to-peer car-rental services like Touro to the town's rental-car regulations. The article would also have given the Select Board the authority to "claw back" medallions from existing rental companies.

McCrensky submitted her own citizen warrant article that would have been a restructuring of the town’s vehicle rental medallion program. That article received a negative recommendation from the Finance Committee and was never called on the floor of town meeting.

Ray Conlon of Nantucket Windmill Auto Rental, said the medallion system is in place to prevent even greater traffic congestion in the summer and it’s unfair for businesses like his to have to compete with people who aren’t following the system.

“I pay the town almost $400,000 a year in through airport fees, licensing fees, surcharges. And we’re competing against people that pay the town nothing,” he said.

There are problems with the current system, town licensing administrator Amy Baxter said at a Select Board meeting last year, based on the fact that one business, Hertz, is able to corner the market by paying for over 100 medallions every year that they don’t use. Companies are incentivized to hold onto medallions that cost just $100 a year, even if they are not needed in the short term, in part because of how difficult they are to obtain.

In 2021, Hertz, which owns over 300 medallions, provided data to the Select Board showing that in 2019 they had a peak season fleet of 240 vehicles, and that roughly 70 of its medallions were going unused.

During the debate on rental medallions on the floor of town meeting, Broad alleges in his lawsuit that a member of the finance committee whispered derogatory comments at him.

“When it came time for Ms. McCrensky to speak. Town Finance Committee member Peter Schaeffer stood within feet of Mr. Broad, a first generation Black American, stared at him, and repeated so that it would not be caught by the mic: ‘Illegals, illegals, illegals’,” the complaint read.

But Shaeffer said that is a complete misrepresentation of what happened.

"I was sitting in my seat many feet away from the mic, and reacted to their statement that the Steamship should reduce the number of cars coming to Nantucket, which is illegal," Shaeffer said. "It was not aimed at them but at Select Board members, sitting in front of me. I was not standing in front of Broad, as I wasn't standing at all."