Cook County Record

Thursday, December 5, 2019

Chicago taxi surcharge fee class actions end in settlement deal for refunds, $48K attorney fees

By Scott Holland | Sep 14, 2016

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Lawsuits targeting Chicago taxi companies for adding a 50-cent surcharge to nearly 410,000 credit card payments over three-plus months this spring have been garaged, according to a settlement agreement filed Sept. 9 in Cook County Circuit Court. 

On Feb. 22, Chicago resident James Freeman-Hargis filed a class action complaint against Taxi Affiliation Services, a Chicago-based company affiliated with Yellow Group that “provides numerous services, including credit card processing, to four Chicago taxi affiliations,” including Yellow Cab, American United Cab, Checker Taxi and Blue Diamond Taxi. 

Freeman-Hargis’ complaint said the surcharge, which he noticed Jan. 1, coincided with the city’s decision to reduce the amount of money credit card processors, like Taxi Affiliation Services, could claim from a taxi driver’s fare, from 5 percent of the amount charged to only 4 percent. He further argued the companies provided no notice to customers of the surcharge aside from payment receipts after the fact. 

The City Council on March 16 approved an ordinance allowing cab companies to charge a 50-cent credit card processing fee and made it effective April 13. In his complaint, Freeman-Hargis said the city notified the companies they could not levy the surcharge without council approval. The fact the companies were using the charge despite it not being allowed via city ordinance, he argued, constituted a violation of state consumer fraud protection laws. He also alleged a claim of unjust enrichment. 

On April 14, Aviva Patt filed a separate putative class-action complaint against Taxi Affiliation Services, adding a federal civil racketeering count to the consumer fraud and unjust enrichment claims, and also including as defendants the four cab operators Taxi Affiliation Services serves as clients. 

On May 3, the two complaints were consolidated and assigned to Cook County Circuit Judge Diane Larsen. 

On June 9, the companies began refunding disputed charges assessed from Jan. 1 through April 13, completing 99 percent of refunds — $204,565.50 on top of $245.50 refunded before the lawsuits — by June 23. All that remained was $1,941, which the companies attributed to circumstances beyond their control “such as closed credit card accounts or expired cards,” per the settlement agreement. 

While processing those refunds, on June 13 the defendant companies filed a motion to dismiss and stay proceedings and conduct a settlement conference. That pretrial conference took place July 29 in front of Larsen, with the only remaining issue being the legal fees plaintiffs could request under federal racketeering laws, and what to do with the remaining $1,941. 

The agreement notes the parties could not agree on the legal fees on July 29, though per the agreement filed Sept. 9, they ultimately settled on $48,000. The $1,941 in remaining disputed charges that couldn’t be refunded will be split among the IIT Chicago-Kent College of Law Consumer Law Program and Life Span Center for Legal Services and Advocacy. The settlement also provides for service awards of $1,000 each to Freeman-Hargis and Patt. 

Also as part of the agreement the parties mutually released each other from all claims and counterclaims. There was no admission of liability. 

Freeman-Hargis was represented in the action by attorneys with the firm of Wolf Haldenstein Adler Freeman & Herz, of Chicago. 

Patt was represented by the firm of Krislov and Associates, of Chicago. 

Taxi Affiliation Services was defended by the firm of Michael Best & Friedrich, of Chicago.

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Organizations in this Story

Krislov and Associates, Ltd.Michael Best and Friedrich LLPWolf Haldenstein Adler Freeman and Herz LLC