Judge Helps Clear the Road for Ridesharing in Chicago

Federal Judge Dismisses Several Taxi Owners’ Claims to Millions of Dollars Following Legalization of Ridesharing

Chicago—Yesterday afternoon, Judge Sharon Coleman threw out most of the claims brought in a federal lawsuit that threatened to end transportation innovation in Chicago. The city’s taxicab companies filed the lawsuit in an attempt to invalidate a 2014 ordinance officially sanctioning ridesharing. A coalition of Chicago ridesharing drivers partnered with the Institute for Justice (IJ) to intervene in the case and argued, along with the city itself, that the case should be thrown out.

“Today’s decision is a victory for entrepreneurs everywhere,” said Anthony Sanders, an attorney with IJ, a nonprofit public interest law firm. “There is nothing in the Constitution that protects taxicab companies from competition. By rejecting the taxicab owners’ takings claim we move a step closer to throwing this case out of court.”

The taxicab owners’ primary argument was that Chicago had “taken” their property by expanding transportation options in the city—something that would likely put the city on the hook for millions, if not billions, of dollars. Relying on a Minneapolis case IJ won in 2009, Judge Coleman dismissed that argument, pointing out that the city has not taken any of the owners’ licenses away; it has merely given consumers additional transportation options.

The taxi companies’ only remaining argument is that by treating ridesharing companies differently from taxicabs, the city is violating the Constitution. While the court allowed that claim to go forward, it did not address the proper remedy for unequal treatment—which, as IJ has argued in the case, would be to give more freedom to all kinds of transportation providers.

In 2014, Chicago reformed its long-outdated transportation regulations to allow ridesharing services such as Uber, Lyft and Sidecar to operate in the city. Their drivers provide desperately needed competition to the city’s transportation market where, because of an artificial limit on the number of cabs, consumers often endured long waits, poor service and—in many neighborhoods—a complete inability to call or hail a cab.

“We’re not going to take this sitting down, unless it ends with us sitting down in our cars picking up riders,” said Dan Burgess, a ridesharing driver represented by IJ. “Smartphone-based ridesharing technology offers drivers a way to make ends meet using resources they already have. At the same time, it gives riders new, cost-effective modes of transportation.”

Burgess, along with Ted Liu and Dustin Morby, who also joined up with IJ, want to preserve Chicago drivers’ freedom to earn money by giving people rides. They also do not want drivers to be arrested for doing so— relief the taxi companies requested from the court.

“Customers aren’t property, and competition isn’t theft,” said Renée Flaherty, an IJ attorney on the case. “Consumers and entrepreneurs, not lawyers and city officials, should be deciding which transportation options are available in Chicago. Today’s decision sets that partly straight. We look forward to intervening in the case and continuing the fight for the right to earn a living.”

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