Regulation

Federal Court Nullifies Kentucky Law Permitting Firms to "Veto" Licensing Applications of New Competitors

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In a ruling issued on Monday, the U.S. District Court for the Eastern District of Kentucky struck down a state law requiring would-be entrepreneurs in the moving company business to receive permission to compete from their established rivals.

At issue in Bruner v. Zawacki was a Kentucky statute forcing anyone interested in entering the moving business to first convince state officials "that the existing transportation service is inadequate." How? By surviving a government hearing where existing moving companies were invited to "file a protest to the granting, in whole or in part, of the application." In the words of yesterday's ruling by Judge Danny Reeves, the Kentucky agency charged with issuing those licenses "has never issued a Certificate to a new applicant when a protest from a competing mover was made."

That monopolistic state of affairs prompted Raleigh Bruner, owner of the unlicensed Wildcat Moving company in Lexington, to file suit. Represented in federal court by the Pacific Legal Foundation, a national public interest law firm, Bruner argued that the Kentucky law violated his right to earn a living under the Fourteenth Amendment.

The U.S. district court agreed. The "notice, protest, and hearing procedures" amount to "an act of simple economic protectionism," Judge Reeves declared, and therefore "offend and violate the Fourteenth Amendment of the United States Constitution." Henceforth, the judge ruled, "prospective moving companies…will not be subject to a 'veto' from their competition before they may lawfully act as a moving company."