Portland Protects Passengers From Prompt Pickups and Popular Prices

Three years ago the city of Portland, Oregon, enacted regulations requiring car services to charge at least $50 for airport trips and at least 35 percent more than taxicabs for other trips. The city also requires that car services (limos and sedans) make customers wait at least an hour before picking them up. These consumer-unfriendly rules were expressly designed to shield taxicab companies from competition. In a federal lawsuit filed today, the Institute for Justice argues that such protectionism is not just unwise and unfair but also unconstitutional. The suit is part of I.J.'s effort to protect "the right to earn an honest living free from excessive government regulation." Toward that end, I.J. is trying to put some teeth into the "rational basis" test, the highly deferential standard by which courts assess the validity of economic regulations under the 14th Amendment's Due Process and Equal Protection clauses. I.J. argues that Portland's regulations do not have a legitimate public purpose, which is one requirement of the rational basis test:

Portland's car service regulations were designed to protect taxicabs' profits at everyone else's expense. They have nothing to do with protecting public safety and everything to do with economic protectionism....

The U.S. Constitution protects every American's right to economic liberty—the right to practice one's chosen occupation free from unreasonable government regulation. In Portland, the government is inflating transportation prices and destroying small businesses just to help taxicab companies drive their competitors off the road.

The plaintiffs in this case, Towncar.com and Fiesta Limousine, were both hit with whopping fines last fall because they dared to offer Groupon discounts that made their prices lower than than the legal minimum. The city assessed a fine of $500 for the first Groupon sold and $1,000 for each subsequent one, making the total $635,500 for Towncar.com and $259,500 for Fiesta. Both agreed to rescind their offers and refund their customers' money to avoid the fines.

I.J. says price controls like Portland's are rare. "Of all the cities and counties in this country," it says, "only nine others impose minimum fares on car services and their customers." (One of them is Hillsborough County, Florida, whose regulations I discussed in a 2003 column.) Last month a Portland official candidly explained the rationale for the regulations to Huffington Post reporter J.L. Greene: "You don't want the Town Cars to take all of the best fares, which are to the airport, and not leave any for the taxi industry. That's why there's a minimum fare and a one-hour wait requirement."

I.J. notes that two federal appeals courts have ruled that protectionism alone is not an adequate justification for economic regulations. In 2002 the U.S. Court of Appeals for the 6th Circuit overturned Tennessee's requirement that all casket sellers be licensed as funeral directors, saying it violated the Due Process and Equal Protection clauses because it served merely "to prevent economic competition." In 2008 the U.S. Court of Appeals for the 9th Circuit (which includes Oregon) ruled that California's licensing scheme for pest controllers violated the Equal Protection Clause because it irrationally exempted some nonchemical methods but not others. The plaintiff argued that the licensing requirements "have no legitimate purpose for persons engaged in structural pest control without pesticides, and simply inhibit competition in the marketplace." By contrast, in a 2004 case involving an Oklahoma casket regulation similar to Tennessee's, the U.S. Court of Appeals for the 10th Circuit rejected "the contention that intrastate economic protectionism...is an illegitimate state interest." In light of the circuit split, I.J.. says, "The question will one day have to be decided by the U.S. Supreme Court."

 

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  • Hugh Akston||

    You know, I can see why lefties lerve their regulatory state so much. I mean, how else are you going to prevent entrenched interests from muscling upstarts out of the market?

  • ||

    Intentions, Hugh. Intentions are all that matters. Consequences? What consequences?

  • ||

    In this case, the consequences were intended.

  • RPR2||

    So is the DOJ going to prosecute or crucify some council members for civil rights violations?

  • Paul.||

    Wow... the dream of the 90s is alive in Portland!

  • ||

    Portlandia is a documentary, after all.

  • Barfman||

  • ||

    *barf*

    Dammit I hate registration sometimes...

  • ||

    I'm surprised you don't have varices with all the upchucking you've been doing today. Are you sure you aren't bulimic?

  • Nicholas Card||

    This really makes me mad, but it's not really that surprising. I mean, this is Portland we're talking about, one of the most liberal cities in the US.

    I love how this is about "protecting" the little guys from the "evil fat-cat town cars operators," but the truth is that town cars are more likely to be independent, individually owned operations, whereas taxis are usually part of a larger corporation.

    govforliberty.blogspot.com

  • AlmightyJB||

    You know this would be a great place to start a free country.

  • Hugh Akston||

    You need a permit for that.

  • ||

    You haven't filled out the proper forms. Back to the end of the line, Hugh.

  • AlmightyJB||

    Lack of regulation is clearly a serious problem.

  • Paul.||

    Those limo drivers and their Austerity plans!

  • ChrisO||

    If there's a bad idea out there, you can pretty much guarantee it will find a home in Portland. I grew up there, and I get a little more disgusted with what it's become every time I go back for a visit.

  • Old Mexican||

    These consumer-unfriendly rules were expressly designed to shield taxicab companies from competition.


    "What part of 'Fuck You, We Protect Our Own!' don't you get?"

  • Old Mexican||

    I see the "50 character word" problem has been fixed at last. Thank you!

  • Old Mexican||

    Last month a Portland official candidly explained the rationale for the regulations: "You don't want the Town Cars to take all of the best fares, which are to the airport, and not leave any for the taxi industry.[...]


    It's all about fairness... and cupidity, it would seem.

  • rts||

    Worst. Alliteration. Ever.

  • Hugh Akston||

    Don't listen to him Jacob. I thought your headline was excellent.

  • sloopyinca||

    It's like they think limo drivers are the 1% since they drive big, fancy cars. Nevermind that most "limos" in these services are no more than Towne Cars and Minivans that cost less than the Prius cabs all over that shithole of a city.

    "Portland, Oregon. You will never find a more wretched hive of scum and protectionism. We should be cautious."

  • Auric Demonocles||

    You don't want the Town Cars to take all of the best fares, which are to the airport, and not leave any for the taxi industry. That's why there's a minimum fare and a one-hour wait requirement.

    Don't tell me what I want. Fuck off slaver.

  • ||

    Re. car services, while I haven't used it yet, it just seems very top-hat-and-monocle worthy: private car service on demand.

  • ||

    Our practice utilizes a similar service, since limos are a bit impractical. Very monocle and top hat worthy. Very economical too, since pricing is all-inclusive.

    I will miss that little perk.

  • ||

    limos are a bit impractical

    And a bit ostentatious, bordering on tacky. Much better to be sleek, discreet, slip into the black car and zoom away. I like.

  • ||

    And a bit ostentatious, bordering on tacky.

    Very, IMO. Whenever I see those super stretch limos and novelty limos, I immediately think of a bunch of drunken high schoolers going to prom or some overly self-important dick head with phallus envy.

    Tasteful discretion in elegant comfort is its own reward.

  • CE||

    I like the stretch pickup truck limos, and the stretch Hummer limos. Now THOSE are tacky.

  • Marty Feldman's Eyes||

    I would also like to see I.J. take aim at Oregon's absurd masseuse licensing scheme.

  • Death Rock and Skull||

    "Portland, Oregon, enacted regulations"

    Federalism works fine!

  • CE||

    Maybe next they'll extend that thinking and toss out Oregon's law preventing motorists from pumping their own gasoline. It's hard to argue it's a public safety issue when 49 other states manage it without widespread devastation.

  • Vashirl||

    Actually, it's 48 other states - NJ also doesn't let motorists pump gas.

  • HTuttle||

    Government always knows BEST!
    Back to reeducation camp for all you terrorist doubters!

  • sweatyfederalist||

    Mr. Sullum is absolutely right to shine the spotlight on the legalized racketeering that is fleecing Portland consumers. The solution, however, is not to stretch the already tattered 14th Amendment so that the feds can arrive at the scene guns a'blazing. The Constitution prohibits very few state police powers. States and their municipal progeny are free to make bad, anti-market decisions subject only to each states' constitution and laws. Conceding that the National Government has jurisdiction in this arena pretty much throws up the white flag on 10th amendment arguments to overturn Obamacare. Leave that fight in Oregon where it belongs.

  • sweatyfederalist||

    Mr. Sullum is absolutely right to shine the spotlight on the legalized racketeering that is fleecing Portland consumers. The solution, however, is not to stretch the already tattered 14th Amendment so that the feds can arrive at the scene guns a'blazing. The Constitution prohibits very few state police powers. States and their municipal progeny are free to make bad, anti-market decisions subject only to each states' constitution and laws. Conceding that the National Government has jurisdiction in this arena pretty much throws up the white flag on 10th amendment arguments to overturn Obamacare. Leave that fight in Oregon where it belongs.

  • stout77||

    What is it about competition that makes liberals wet the bed? It can be fun once you decide to take your thumb out of your mouth and give it a try.

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