In court documents, the credit unions argued the medallion taxicab industry is required to comply with state regulations, which drives up costs. Uber, however, allegedly operates without being required to comply with the same regulations, the credit unions claimed in the lawsuit.  Such disparate treatment violates the equal protection clause under the Fourteenth Amendment of the U.S. Constitution.

In the New York lawsuit, the credit unions are asking for an unspecified amount of compensatory damages.

Progressive CU CEO/President Robert Familant and LOMTO FCU CEO/President Richard Kay said they are confident they have a strong case.

"Obviously, we filed the suit because we felt we have strong grounds, and like all lawsuits, there is also potentially a starting point for negotiations, and we felt there were issues that needed to be pressed, so we filed the lawsuit," Familant told CU Times Thursday.

Because of Uber and Lyft, revenues for medallion taxicab owners have decreased substantially. As a result, some taxicab owners have had difficulty making payments on the credit union loans they used to invest in medallions that are required to operate a taxicab in New York City.

What's more, the problem eroded the value of medallions, which forced 22 taxicab companies to file for bankruptcy protection because of their inability to repay medallion loans. Until recently, medallions were priced at more than $1 million each, but their value plummeted by more than 40%, leading to stagnant medallion sales, according to court records.

The bankruptcies led the New York State Department of Financial Services to take possession of the $178 million Montauk Credit Union in in New York City. The state regulator appointed the NCUA as the conservator on Sept. 18.

The NCUA said a substantial portion of Montauk CU's 136 participated business loans, worth $90.5 million, involved taxi medallions. 

Though not specifically commenting on the lawsuit, New York's TLC spokesperson Allan Fromberg made a general statement about the commission's regulatory approach and its efforts to create a level playing field.

"As a regulator, the TLC has taken numerous actions to ensure consistency across its regulated industries, from requiring additional consumer protections for app-dispatched rides, to enacting broad new education requirements for for-hire drivers, just to name a few," Fromberg told CU Times.

According to court documents, Melrose had more than $422 million in delinquencies and troubled debt restructures as of Aug. 31. That contrasted wildly with only $32,000 in medallion loan delinquencies the credit union reported in January 2014. Moreover, Melrose had no medallions loans classified as troubled debt restructures in January 2014.

"Worse, every indication is that the industry shows no sign of stabilization and recovery," court documents read. "Plaintiff Melrose Credit Union alone has hundreds of medallion loans maturing between now and February 2016, virtually assuring that foreclosures will grow even more widespread. In December alone, Melrose has 190 medallion loans maturing with almost $83 million in balloon payments becoming due."

Melrose manages a medallion loan portfolio with 3,055 totaling $1.56 billion, while Progressive holds 928 medallion loans amounting to $722 million and LOMTO manages 628 medallion loans totaling $138 million.

When contacted for comment, Melrose President/CEO Alan Kaufman referred questions to Todd Andrew Higgins, a New York attorney, who is representing the credit unions and other plaintiffs. Higgins was not available for comment Thursday.

Though Melrose's net worth was 17% as of September 2015, it slipped from 19% in September 2014, according to NCUA financial performance reports. Melrose posted an ROAA of -1.36% as of September 2015 compared to an ROAA of 1.51% in September 2014.

"Progressive has not been affected in the same way Melrose has been affected. We haven't had any losses yet," Familant said. "But what we are actively doing, as the value of medallions goes down as you would do with any kind of collateral, is that we are increasing our reserves against potential losses and we are doing that aggressively and in line with accounting regulations. We're monitoring it appropriately."

Progressive's net worth was 41% as of September 2015 as it was in September 2014.  Its ROAA, however, declined from 2.51% in September 2014 to 1.08% in September 2015, according to NCUA financial performance reports.

To make up for potential losses in its medallion portfolio, Progressive is diversifying into the commercial loan market in New York City and its tristate area.

"We hired some very talented people to help us do that," Familant said. "Clearly that is something the board of directors wants management and the staff to concentrate on."

LOMTO FCU also said it is looking at diversifying its loan portfolio but no decisions have been made yet.

LOMTO's net worth was 16% as of September 2015 as it was in September 2014.  Its ROAA, however, declined from 1.47% in September 2014 to 0.01% in September 2015, according to NCUA financial performance reports.