Tuesday, July 22, 2014

Milwaukee Ends the Taxicab Cap

By Lisa Kaiser
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It was a long time coming, but the Milwaukee Common Council voted unanimously this morning to eliminate its cap on taxicab permits and allow ridesharing services such as Uber and Lyft to operate with its blessing. 

The vote was a long time coming and, really, the only path that the city could have taken.

Taxicab drivers had sued the city and won when a Milwaukee County judge declared the restrictive cap and punitive secondary market unconstitutional.

In response, the city decided not to eliminate the cap, but to allow 100 more permits to be released via a lottery.

The overwhelming response to the lottery—as well as the unregulated Uber and Lyft drivers operating under the radar—pushed the city to rethink its half-measures.

Despite heavy lobbying by the taxicab industry, the council passed the new ordinance today with a unanimous vote. (I’ll assume Mayor Tom Barrett will sign it.)

And thus a new era begins.

This has always been a fascinating story to cover. Not only does the taxicab industry touch so many of our daily lives—or not, because taxi service in this city is so horrible—but because of the politics of the matter.

The most permits under the old system were held by Sanfelippo-owned businesses. The owner’s brother, Joe, is a conservative legislator who advocates for free-market policies.

Yet his own family’s businesses acted otherwise, trying to protect their cartel.

On the other side were the drivers represented by the Institute for Justice, a libertarian law firm that’s trying to bust taxicab cartels around the country. The Institute called Milwaukee’s taxicab drivers “urban sharecroppers,” and they weren’t exaggerating. The cost of a permit under the old system ran as high as $150,000 and rarely came up for sale, shutting out the majority of cab drivers from being able to work for themselves or form their own company.

And then there are Uber and Lyft, two technology-based companies that have completely upended the traditional taxicab industry. These companies, too, are libertarian in nature. It’s pretty safe to say that they fought the city’s attempt to regulate their services every step of the way.

I’m sure the old taxicab owners will file suit, since the permits they hold are now not worth the millions they once had. I don’t know if they have much of a case, since the court judgment declaring the old system to be unconstitutional seems to be pretty solid and today’s unanimous vote shows just where the city stands on the issue. But, of course, stay tuned for more details as they appear.

Here’s a statement from the Institute for Justice on today’s vote:

 

City of Milwaukee Completely Repeals Taxi Cap

 

- Council’s unanimous vote implements 2013 court order that found cap unconstitutional

- IJ stands ready to intervene if existing cab owners file suit to bring back their monopoly

 

MILWAUKEE—Last year Judge Jane Carroll of the Milwaukee County Circuit Court declared unconstitutional the city of Milwaukee’s law imposing a cap on the number of taxicabs in the city. This morning the city finally complied with that order when the Common Council voted unanimously to completely lift the cap on how many taxicabs may operate in the city. In lifting its cap, Milwaukee becomes one of the freest cities in the nation for drivers looking to enter the taxicab market.

 

The new law requires taxis to comply with basic health and safety requirements such as inspections and minimum insurance coverage. Long-time cab drivers like Ghaleb Ibrahim and Jatinder Cheema have been waiting for this day for years. In 2011, Ibrahim and Cheema joined a coalition of other cab drivers and the Institute for Justice, a public-interest law firm, in filing the lawsuit that resulted in today’s Common Council vote.

 

“This is the culmination of a long struggle against an oppressive and unconstitutional system” said Institute for Justice Attorney Anthony Sanders. “It used to be that because of the government-imposed cap, a Milwaukee taxicab cost more than a house. Taxi entrepreneurs can now afford to keep their house and open a business, too.”

 

The law also offers a path for services such as Uber and Lyft to be recognized and licensed, increasing transportation options in Milwaukee.

 

The former cap, implemented by the city in 1991, caused the price of a taxi permit to rise from $85 to over $150,000 on the secondary market. Under the law, the number of cab permits was fixed at about 320. However, in response to the cabbies’ court victory, the city voted last November to lift the cap on the number of cabs by 100. Then, this morning, the city moved to lift the cap altogether.

 

“The unconstitutional cap is no more,” said Cheema. “Now, after driving in the city for more than a decade, I finally have the right to open my own cab company without having to buy permission from someone else.”

 

Despite today’s victory for aspiring cab operators, the struggle for taxi freedom in Milwaukee is not over. The existing taxi owners, who have enjoyed the protectionism offered by the city’s cap for over 20 years, are not going away without a fight. They have vowed to sue to prevent the cap from being repealed. The Institute for Justice and its clients stand ready to intervene in any lawsuit that seeks to prevent the city from lifting the cap and to have the lawsuit dismissed.

 

The Institute for Justice has helped open taxi markets in Denver, Indianapolis, Cincinnati and Minneapolis, and for more than 20 years has been the nation’s leading legal advocate for the rights of entrepreneurs.  

 

For more information on the lawsuit to open Milwaukee’s taxi market, visit www.ij.org/milwaukee-taxis.



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