Friday, January 20, 2012

Federal Court Denies Nashville’s Motion to Dismiss Transportation Case

Rejects Economic Protectionism as a Legitimate Governmental Interest 

FROM INSTITUTE FOR JUSTICE,  Arlington, VA.—Today, the U.S. District Court for the Middle District of Tennessee denied the city of Nashville’s motion to dismiss a major federal lawsuit challenging the constitutionality of its limousine and sedan regulations.

The ruling by Judge Kevin Sharp is part of a civil rights lawsuit filed in April 2011 by the Institute for Justice on behalf of a group of independent limousine and sedan operators. The lawsuit argues that Nashville’s new limousine and sedan regulations, including a $45 fare minimum for car service, were passed into law to protect the city’s expensive limousine companies from more affordable competitors.

The city’s rules also prohibit limo and sedan companies from using leased vehicles, require them to dispatch only from their place of business and to take all vehicles off the road if they are more than seven years old for a sedan or SUV or more than ten years old for a limousine.

Today’s ruling emphasized that “Courts have repeatedly recognized that protecting a discrete interest group from economic competition is not a legitimate governmental purpose,” quoting Craigmiles v. Giles, a 2002 case that the Institute for Justice won on behalf of casket retailers in Tennessee. The casket retailers in that case, like the affordable car services in this case, were being locked out of the marketplace by a cartel of well-connected individuals. The casket retailers won their case. And the Court today recognized that precedent in holding that legislating for no other purpose than protecting industry insiders is illegitimate.

“This case is about protecting our clients’ right to engage in business free from unreasonable government interference,” said Wesley Hottot, an attorney with the Institute for Justice who is representing the plaintiffs. “That is a basic right of citizenship under the U.S. Constitution and the government must respect it in good economic times and in bad. Today’s ruling correctly recognizes the principle that the government can’t deny your right to be in business, just so your competitors can get richer.” 

“If my customers prefer to take a sedan over a taxi and to pay for that choice, that is their business, not the city’s,” said Ali Bokhari, owner of Metro Livery and a plaintiff in the case. “Limos and sedans have served the people of this city for decades without Nashville’s help. All we want is to be left alone to continue doing that.” Today’s ruling puts the case on track for a trial in January 2013, in which the plaintiffs will demonstrate that there is no health or safety justification for Nashville’s limo and sedan rules.

My Comment:  This a great victory, not only for the independent limousine companies, but for all citizens who believe in free enterprise, the constitution, and that the power of government should not be used to protect the well-connected from competition. There is a long way to go in this case, but this ruling was a major victory.  The Council could still do the right thing and repeal price-fixing, however the majority of the Council are not yet ready to make that move.

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