A federal appeals panel says the city of Chicago may have not have made a good decision in selling the rights to its onstreet parking to a private organization, but that doesn’t mean the city or the company, Chicago Parking Meters LLC, violated federal antitrust laws by creating an illegal monopoly over onstreet parking.
On April 7, a three-judge panel of the U.S. Seventh Circuit Court of Appeals ruled the a federal district judge was correct in tossing a class action lawsuit brought by two men who claimed City Hall violated federal law when it granted CPM a 75-year lease for exclusive rights to operate and collect money from city parking meters.
“The deal itself might have been foolish, short-sighted, or worse, and if one is to believe news reports, it may have saddled Chicago with the most expensive street parking in the country,” the judges wrote. “But that is not enough to state a claim for a violation of the antitrust laws.”
The decision was authored by Seventh Circuit Judge Diane P. Wood. Judges David Hamilton and Amy J. St. Eve concurred.
Plaintiffs Michael Uetricht and Johan Kaderbek filed suit against the city in 2021.
In their complaint, the plaintiffs took aim at the city’s 2008 deal with CPM, under which CPM paid the city $1.1 billion in exchange for the rights to operate about 36,000 metered parking spaces in business zones in Chicago.
They asserted the deal granted CPM an illegal monopoly over portions of public city streets, because the deal blunts city control over the price of on-street parking, and blocks the city government’s ability to regulate city streets.
For instance, they argued the parking lease deal hinders the development of public transit or bike lanes, because the city would need to pay financial penalties if it were to eliminate metered spaces to clear the way for dedicated bus or bike lanes.
It also limits the city’s ability to “put in ‘drop off’ zones and eliminate safety hazards in high crash areas,” among other concerns.
The lawsuit seeks to include every resident of Chicago, asserting everyone has been harmed by the city’s high street parking rates, among the highest paid by residents and visitors to any U.S. city.
The lawsuit does not name the city of Chicago as a defendant, only CPM.
U.S. District Judge Matthew F. Kennelly sided with CPM in January 2022, granting CPM’s motion to dismiss. Kennelly ruled any fault for financial harm suffered by the plaintiffs or any other residents or visitors to the city of Chicago lies with the city for approving the lease.
And the judge said the city was within its power under the law to lease out the parking meters.
On appeal, the Seventh Circuit judges reached similar conclusions.
“The City does not share the authority to regulate the use of the streets with anyone,” Judge Wood wrote. “It thus may decide what to do with the streets: keep them open, carve out bike or bus lanes, establish zones exclusively for area residents, or provide metered parking.
“Illinois law gives the City a monopoly, to use plaintiffs’ word, over those spaces. And plaintiffs seem to concede that if they had sued Chicago under the antitrust laws for its part in the Concession, they would have failed.”
Because the city was acting under the authority granted to it by state law, City Hall was free to sign the lease, even if it may leave its residents and visitors with higher parking rates and limit the city’s ability to regulate its streets, without paying a costly penalty.
The judges noted the plaintiffs contend that the restrictions on the city’s power under the CPM lease should be read to improperly strip the city of control of its streets and to improperly hand CPM an illegal monopoly.
But the appellate judges found the ability of the city to pay money to compensate CPM for lost revenue from changes to metered parking spaces means City Hall still has sufficient control over the streets to undercut the antitrust claims.
“The fact that the City pays a price for certain actions cannot be enough to undermine the whole Concession,” Wood wrote. “No one would have wanted to sign an agreement that the City could gut the next day by (for example) cutting in half the number of covered parking spaces and trying at the same time to keep the full up-front payment.
“Regulation is possible even if the City must conduct a cost-benefit analysis before it takes a given step.”
The judges said antitrust claims in such a case as the CPM lease or any other long-term government supply contracts do not turn on whether the city or other local government made a deal that would ultimately benefit their constituents.
“All that matters is that it was one that was authorized by state law and that remains under the regulatory power of the City,” the judges said.
Plaintiffs were represented by attorneys Thomas H. Geoghegan, Michael P. Persoon and Will Bloom, of the firm of Despres, Schwartz & Geoghegan, of Chicago, and attorneys Stuart J. Chanen and Ariel Olstein, of Chanen & Olstein, of Lincolnwood.
CPM has been represented by attorneys Dan K. Webb, Robert Y. Sperling, Joseph L. Motto and Conor Reidy, of Winston & Strawn, of Chicago.