Philadelphia Taxis Don’t Get Bailout, Must Compete With Uber, Federal Judge Rules

A federal judge on Monday ruled against Philadelphia’s taxi industry, which had demanded a bailout because they faced greater competition.  So Philadelphia Eagles fans looking for a safe and sober ride home Sunday night can still use Uber and Lyft.

In Philadelphia, the number of taxi medallions was initially capped at 1,600. Thanks to this regulatory bottleneck, taxi owners profited from a surging revenue stream. As recently as 2014, a medallion to own or lease a taxicab in Philadelphia topped $545,000.

But when Uber and Lyft entered the market, many consumers greatly preferred these ridehailing alternatives to traditional cabs. With the bottleneck burst open, medallion values plunged. In a public bidding last summer, taxi medallions fetched as little as $10,000. Demand was so low, the Philadelphia Parking Authority even had to cancel the sale of nearly half of the medallions slated for auction in July “due to lack of participation.”

With enormous chutzpah, Checker Cab Philadelphia and hundreds of medallions owners sued the Philadelphia Parking Authority, demanding “just compensation” for the loss in medallion value.  In a meticulous ruling, Judge Michael Baylson slammed their claims as “without foundation under settled legal principles.”

To reach his decision, Judge Baylson mainly relied on a case litigated by the Institute for Justice in the 7th U.S. Circuit Court of Appeals.  In that decision, Judge Richard Posner ruled that the medallion owners were not entitled to “just compensation” because the government had not taken their property. “[T]he City is not confiscating any taxi medallions; it is merely exposing the taxicab companies to new competition,” he wrote. “‘Property’ does not include a right to be free from competition.”

Bolstered by strong legal precedent, Baylson swatted away the arguments made by Philadelphia’s cab cartel. “A court is not suited to protect market participants from competition, or from changing consumer preferences,” he wrote. “The marketplace still speaks loudly, probably louder than a court can, and the resolution of competitive combatants must take place in the marketplace, rather than in a courtroom.”

JOIN THE FIGHT!   Sign up for newsletters: