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Monday, October 10, 2016

7th Circuit Rejects Taxi Company Constitutional Claims They Were Treated Less Favorably Than Ridesharing Services

In two recent cases decided by the Seventh Circuit Court of Appeals, the court addressed (and rejected) a variety of constitutional claims by taxi companies that the Cities of Chicago and Milwaukee treated taxi companies and businesses less favorably than ridesharing services.Illinois Transportation Trade Association v. City of Chicago (7th Cir. October 7, 2016) and Joe Sanfelippo Cabs, Inc. v. City of Milwaukee (7th Cir. October 7, 2016).

The first case addressed a challenge to Chicago's ordinance that establishes taxi rates throughout the City. Taxi companies claim this ordinance violated their equal protection rights, as well as other constitutional protections, because the City does not apply the established rate schedule to ridesharing companies, such as Uber and Lyft. The taxi companies also claimed that the City had taken their property without just compensation, in violation of the Fifth Amendment to the U.S. Constitution. The court rejected all of the taxi companies' arguments, and ruled against the taxi companies. First, the court held that the Fifth Amendment property right does not include a right to be free from competition. Second, the court held that Chicago's different treatment of taxi companies and ridesharing services was not discriminatory because there were sufficient differences between the two types of services to support different regulatory treatment. The court likened it to a municipality's licensing scheme that requires licenses for dogs, but not cats. 

The second case (decided the same day) challenged Milwaukee's increase in the number of taxi permits, which plaintiffs argued had taken away their property rights in violation of the Fifth Amendment because the value of their permits was substantially decreased. Plaintiffs also claimed that the increase in the number of taxi permits allowed ridesharing companies to substitute for conventional taxicab services, thus diminishing the profitability of existing taxi companies. 

The Seventh Circuit rejected the taxi companies' argument, finding that it "borders on the absurd." First, the court determined that a taxi permit confers only a right to operate a taxicab, not a right to exclude others from operating taxis. Second, the court held that the City had the right to modify its permit ordinance at any time, so companies were on notice that they could face new competition in the future. Third, the court did not find the taxi companies' argument that ridesharing services would destroy the taxi business very persuasive, noting that buses and subways had not destroyed the taxi business. 

Post Authored by Julie Tappendorf


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