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Judge hears arguments, continues ride-share drivers' motion to intervene in taxi community's suit against city

By Andrew Thomason | Apr 14, 2014

Three drivers from popular ride-share services operating in Chicago will have to wait until May to find out if they can interject themselves into a legal battle between the city and established taxi industry.

Dan Burgess, Ted Liu and Dustin Morby-- drivers for the ride-share services Uber, Sidecar and Lyft, respectively-- filed a motion last month seeking to intervene in the lawsuit Chicago's taxi and limousine community brought against the city in February.

The federal suit accuses the city of having regulations that treat taxi and limo companies differently than ride-share services. The three men seeking to join the city as defendants claim the suit could threaten their services and limit the choices of Chicago commuters.

U.S. District Judge Sharon Johnson Coleman last week heard arguments over the trio' motion, but continued the hearing until May 19, according to electronic court records.

In not immediately issuing a decision over the drivers' request to intervene, Coleman pointed to a city ordinance proposed shortly before the suit was filed that intends to regulate ride-sharing services, as well as an amended complaint addressing that proposal.

"It appears premature at this juncture to evaluate how the proposed ordinance and potential amended complaint will impact the prospective intervenors," Coleman said in an April 8 docket entry.

The underlying suit Burgess, Liu and Morby contend they have the right to intervene in claims the city is violating the Constitution by treating ride-share services like Uber, Sidecar and Lyft differently than traditional taxi services.

These companies connect private drivers with people looking for rides, usually through smart phone or web applications, a model that has allowed them and their drivers to avoid most of the regulations the city imposes on the traditional cab and limo industry.

The plaintiffs in the suit, about three dozen taxi companies, taxi permit owners and limousine services, claim this difference in treatment gives ride-sharing providers an unfair advantage in the marketplace.

For example, the suit alleges that Uber, Lyft and Sidecar don't have to buy taxi operator permits, otherwise known as medallions, which start off at about $325,000 per vehicle and can go up quickly at auctions. 

Burgess, Liu and Morby argue in their motion to intervene that the underlying complaint could affect the proposed city ordinance, which could cause them "to lose their liberty and their livelihoods" depending on how the federal court rules.

Mayor Rahm Emanuel’s administration in February proposed an ordinance that would require ride-share companies to pay up $25,000 a year, plus $25 per driver in order to create more level playing field between traditional cab companies and the so-called ride-sharing companies.

The plaintiffs allege in their amended complaint, filed in late February, that the ordinance would not change the difference in treatment and only codifies their issues into law.

The “proposed ordinance, when combined with the influx of hundreds or thousands of drivers who would pay virtually nothing to the City to operate as de facto taxis, would destroy the $2.4 billion investment of persons and firms that have expended large sums to purchase and operate under the City’s long-standing, exclusive medallion system,” the plaintiffs assert in their amended complaint.

They claim that not forcing ride-sharing services to purchase taxi medallions violates their rights under the Fifth and Fourteenth amendments of the Constitution.

The plaintiffs argue that previous case law determined that taxi medallions are not simply permits, but property as well as contracts between their holder(s) and the city. Because of that precedent, they assert that allowing ride-share services to operate as taxis without having to purchase medallions is tantamount to the city illegally taking exclusive property and contract rights from the medallion owners.

They also claim the city is violating the Equal Protection Clause of the Fourteenth Amendment by allowing ride-sharing providers to operate as de facto taxis while not being forced to follow the same set of rules and regulations.

The federal suit asks the court to enjoin the city from not enforcing taxi regulations against Uber, Lyft and Sidecar, as well as to award damages resulting from the differential treatment. 

The plaintiffs are being represented by attorneys Edward Feldman, Michael L. Shakman, Stuart M. Widman and Melissa B. Pryor of the Miller Shakman & Beem in Chicago.

Burgess, Liu and Morby are being represented by Anthony Brian Sanders and Renee D. Flaherty from the Institute for Justice, a non-profit libertarian public interest law firm, as well as James William Joseph of Eimer Stahal LLP in Chicago.

William Macy Aguiar, David Michael Baron and Andrew W. Worseck with the City of Chicago's Law Department are representing the city in the suit.


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