Taxi oligarchy declared unconstitutional


Last month, the U.S. Court of Appeals for the Fifth Circuit found certain state regulations in Louisiana regarding caskets unconstitutional. The reasoning was simple: the regulations were designed to protect existing companies from competition, not enhance public safety or anything else positive for society.

Over in Milwaukee County, a judge has made a similar ruling:

After years of fighting to loosen the ironclad grip taxicab companies have over their drivers, cabbies won a significant legal victory on Tuesday when a Milwaukee County judge said the city’s taxicab ordinance is unconstitutional.

Moments after Circuit Judge Jane Carroll issued her decision, cabbies hugged and shook hands with each other.

“There is a God,” said Ghaleb Ibrahim, one of the plaintiffs in the lawsuit against the city. “I believe in the American justice system.”

“What happened here today was a tremendous victory for economic liberty,” Anthony Sanders, one of two attorneys who represented the taxi drivers for the Institute for Justice, a free-market, libertarian law center based in Arlington, Va., told jubilant drivers.

The judge declared the city’s ordinance, which has been in place for over 21 years, was unconstitutional because the state’s constitution provides for “equal protection and due process.”

At issue is the city’s ordinance, which took effect Jan. 1, 1992, that imposed a hard cap on the number of taxicab permits allowed in the city. Under the ordinance, the only way to get a taxi permit was to purchase one from an existing permit holder. There are 321 permits, fewer than the number of permits in 1991. Documents in the case indicated there is just one taxi for every 1,850 residents in the city, fewer than in other large cities.

When the ordinance was enacted, Milwaukee aldermen argued that they did not want to hold annual hearings on taxicab permits. And they reasoned that the system they created would provide an incentive among permit holders to improve their business.

In her decision, Carroll said the ordinance violated the state constitution’s equal protection and due process clauses. She said the actions of the city’s Common Council in 1991, in effect, handed a valuable commodity to taxicab company owners.

A permit is now valued as high as $150,000.

This is a very good decision. As explained in the article, the city does not have a free market system for its taxicab industry. It has an oligarchy.

Meanwhile, of course, the city cites safety as the motivation behind the draconian regulations. Apparently, the city’s council thinks a lack of competition will create a better system.

Where I live in Arlington, Virginia , the system is clearly designed to protect existing companies. Like Milwaukee, Arlington County, the District of Columbia, and Alexandria County have asinine regulations that do little to nothing to protect consumers – and everything to protect company owners. The taxicab regulations (including the index) take 28 pages to read through, and include rules on insurance of cabs and drivers as well as rules on when applications for taxis can be submitted. How many taxicabs are allowed to be certified is dictated not by demand, but by a “County Manager.”

If this decision gets appealed, it would be great for it to serve as an example of how local and county bureaucracies and business interests can be overcome. Thanks to the cab drivers, and thanks to the Institute for Justice, for taking this case head-on.