Cab community sues city over regulations that treat "ride-sharing" companies differently

By Andrew Thomason | Feb 10, 2014

The taxi and limousine community in Chicago has banded together to challenge personal transportation upstarts Uber, Lyft and Sidecar in a federal lawsuit alleging unfair treatment in city regulations.

Several taxi companies, taxi permit owners and limousine services filed a lawsuit against the City of Chicago Feb. 6 in Chicago’s federal court, claiming the city is violating the Constitution by treating Uber, Lyft and Sidecar differently than them.

The suit came one day after Mayor Rahm Emanuel's administration proposed an ordinance intended to create a more level playing field between traditional cab companies and so-called "ride-sharing" companies.

In the recently-filed suit, the plaintiffs ask the court to enjoin the city from continuing to allow Uber and the others to operate until they meet the same requirements as taxi and limousine services.

Uber, Lyft and Sidecar are relatively new companies that provide ride-sharing services, in which they connect private drivers with people seeking rides, usually through smart phone applications.

Because ride-sharing connects riders with private drivers, the drivers have been able to skirt regulations imposed on traditional cab and limo companies in Chicago.

The different treatment, the plaintiffs allege, gives ride-sharing providers an unfair advantage.

For example, Uber, Lyft and Sidecar are not required to purchase taxi operator permits, generally referred to as medallions, the cost of which starts at $350,000 per vehicle.

Under the ordinance submitted by Emanuel's administration, ride-sharing companies would be regulated and required to pay a $25,000 fee, plus $25 per driver.

“Although they are functioning in all material respects as taxi companies, they have not acquired or leased medallions and are operating in violation of the extensive City ordinances and rules and regulations that govern taxis and limousines,” the complaint states.

The suit further alleges that "the “limousine” or “livery” services they offer are actually de facto taxi services because their fare structure is apparently based on time and distance, as in the case of taxis.”

By not requiring Uber, Lyft and Sidecar to have medallions, the plaintiffs assert the city is violating the taxi business’s constitutional rights, specifically their Fifth and Fourteenth Amendment rights.

The heart of the suit relies on past case law that determined taxi medallions in Illinois are not just permits, but property as well as contracts between their holder(s) and the city.

The plaintiffs contend that because the medallions are property and investments, and because Uber and other similar companies are allowed to act as taxis without having to purchase medallions, the city is illegally taking “exclusive property and contract rights from medallion owners without any compensation, let alone the just compensation that” the Fifth Amendment requires.

They also allege the city is violating the Equal Protection Clause of the Fourteenth Amendment by allowing ride-sharing providers to operate as de facto taxis without being held to the same set of rules and regulations.

“The City’s actions and inaction are intentional," the suit asserts. "The City and the Commissioner are fully aware that the (Uber and others) are operating in violation of the City Taxi Regulations."

In their suit, the plaintiffs ask the federal court to enjoin the city from failing to enforce taxi regulations against Uber, Lyft and Sidecar. They also want damages resulting from the city not enforcing taxi regulations against these companies.

Beyond violating the Constitution, the suit alleges the city’s differential treatment of transportation services amounts to a breach of contract, as well as promissory and equitable estoppel.

The plaintiffs are seeking damages for each of the proceeding allegations for failure of the city to enforce its taxi regulations with equity, as well as an injunction forcing the city to subject Uber and others to same regulations as taxi services.

Attorney Edward Feldman of the Miller Shakman & Beem in Chicago filed the suit. He is representing the plaintiffs along with his colleagues, Michael L. Shakman, Stuart M. Widman and Melissa B. Pryor.


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