Cab Companies Strike Out as Judge Refuses to Halt San Diego’s Taxi Permitting Process

Ruling Allows Drivers to Start Their Own Taxi Businesses; Drivers’ Voices Will Be Heard as the Case Moves Forward

San DiegoSuperior Court Judge Ronald S. Prager has officially denied a group of San Diego taxi companies’ request for a preliminary injunction in an important case with implications for taxi drivers and taxi riders. The cab companies asked the Court to bar San Diego’s Metropolitan Transit System (MTS) from issuing any new taxi permits, after taxi drivers last year persuaded the City of San Diego to lift its longstanding cap on the number of permits. Judge Prager also ruled that two independent taxi drivers represented by the Institute for Justice (IJ) had a right to intervene in the case to protect their interests.  The rulings confirm tentative opinions issued by Judge Prager earlier in the week.

“The cab companies lost the first round, and they will lose the fight,” said Wesley Hottot, an attorney at the Institute for Justice. “Their baseless lawsuit should be seen for what it is: an attempt to preserve their control over San Diego’s taxi market and to deny drivers the ability to go into business for themselves. No one has a right to keep out new competition.”

The cab companies filed suit in March, four months after the San Diego City Council voted 8-1 to lift its cap on the number of available taxi permits. The cap had been in place since 1984. Proponents hailed the vote as giving drivers the opportunity to become small business owners. Today, most drivers have to lease permits and cabs from the existing permit owners, or come up with over $100,000 to buy one of the existing permits.

Judge Prager granted IJ clients Abdikadir (Abdi) Abdisalan and Abdullahi Hassan’s request to intervene in the lawsuit. Both men are longtime taxi drivers who today lease permits and who are now set to own their own permits under the new ordinance. They are being represented pro bono by the Institute for Justice, a non-profit public interest law firm.

“This lawsuit is about more than just our clients,” said IJ attorney Keith Diggs. “Abdi and Abdullahi also speak for the many other drivers who have applied for permits and want to go forward with their own small taxi businesses.”

Abdi has been driving a cab in San Diego for nine years. He works seven days a week to support his five children and wife, who is attending nursing school. Abdi came to the United States in the 1990s as a refugee, after fleeing civil war in his native Somalia. Because of the limited number of taxi permits, he has been forced to pay $400 per week to lease a permit and cab. In March, he submitted a letter of intent to MTS to own his own taxi, and he’s shopping for a zero- or low-emission car that meets the ordinance’s new guidelines.

Like Abdi, Abdullahi is a Somali refugee. He works six days a week to support his wife and children, who live abroad. He hopes that by owning his own cab, rather than paying $300 a week to lease one, he will be able to finally bring his family to live with him in the United States.

“I’ve worked almost every day for the last nine years to start my own taxi business,” said Abdi. “The only thing that stands in my way is the cab companies and their control over the market. I am thankful that the judge has cleared the way and given me—and hundreds of others drivers— the green light to go into business for myself.”

California law is clear that taxi owners have no right to freeze the value of their permits. In a 2007 case, a California appeals court wrote: “California courts have consistently held that taxicab drivers do not obtain any vested right in the grant of permission to operate taxicabs on the public roadways.”

“The Institute for Justice has a long history of protecting transportation freedom in the courts,” concluded IJ President and General Counsel Chip Mellor. “We are no stranger to lawsuits like the one in San Diego; we defeated a similar lawsuit in Minneapolis years ago and are battling similar suits in both Chicago and Milwaukee. We will continue to fight until all taxicab entrepreneurs can achieve their dreams.”

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