A three-judge panel of the appeals court ruled that the 20-year-old prohibition was consistent with the city's interest in improving the experience of passengers, who had complained that electronic advertisements in their rides were “extremely annoying.”

The ban includes an exception for Taxi TV, which allows digital ads to offset the cost of mandatory equipment that allows passengers to track their route and pay with a debit or credit card.

Chief Judge Robert A. Katzmann said the city had a “substantial interest” in protecting its passengers for the “annoying sight of and sound of in-ride advertisements,” and the ban had not gone too far in achieving its goals.

“This is as true in publicly regulated transportation as it is anywhere else in the city,” he wrote in a 43-page opinion.

A spokesman for the city's law department praised the ruling.

“We are pleased that the circuit upheld the TLC's rules restricting advertising in for-hire vehicles, which directly advance the city's strong interest in promoting passenger comfort for its residents,” the spokesman said.

An attorney for Vugo, a Minnesota-based digital marketing firm that sued over the ban in 2015, did not return a call seeking comment on the ruling.

Katzmann's ruling on Tuesday reversed a 2018 ruling from a Manhattan district court judge, which sided with Vugo.

Vugo sued after the city's Taxi and Limousine Commission blocked the company's bid to outfit ride-sharing vehicles with tablets that automatically play video ads. The company said the ban was designed to suppress speech that some people found objectionable, and argued that the city cannot ban ads just because it finds their content to be “uniquely annoying.”

Katzmann, however, said officials had a “clearly substantial” interest in cultivating the aesthetics of the city, and protecting its citizens and visitors from undue annoyance. He also differentiated between Vugo's advertisement structure and the current regime allowed under the Taxi TV exception.

Unlike Taxi TV ads, Vugo's ads could not be switched on and off, and the screens were not necessary for payments or to monitor rates, since both are done separately through ride-sharing apps, Katzmann said.

The ruling cited rider feedback from a 2011 survey that found nearly a third of passengers found Taxi TV to be “annoying,” saying that the screens are difficult to turn off and cause motion sickness. The city recently completed a pilot program to keep the benefits of easy payment and route-tracking, without the ads and annoyance of Taxi TV.

Last year, the city eliminated its mandate that taxicab systems contain monitors to display advertisements. Owners instead are mandated to install technology for data collection and credit-card payment, but those systems are no longer required to feature a screen.

Vugo was represented by Ronald J. Riccio, Steven J. Shanker and Eliott Berman of McElroy, Deutsch, Mulvaney & Carpenter.

The city was represented by Kathy Chang Park, Richard Dearing and Claude S. Platton of the law department.

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