Portland Repeals Groupon Ban

City’s Sedan and Limo Operators No Longer Face Crippling Fines for Offering Online Discounts

Portland, Ore.—2016 will be off to a great start for Portland’s transportation entrepreneurs and their customers when the city’s repeal of three controversial laws takes effect on January 2.

Faced with an ongoing lawsuit brought by the Institute for Justice and two local businesses, the Portland City Council repealed its minimum fare laws, which banned limo and sedan services from offering discounted rides through online deal sites, and another law that required customers to wait at least one hour for service. As a result, Saturday will mark the end of Portland’s controversial $50 minimum fare for limousine and sedan rides to or from Portland International Airport and its citywide minimum fare that required limos and sedans to charge at least 35 percent more than whatever taxis charge for the same route, both of which passed in 2009.

The City Council voted 3–2 to repeal the two minimum fares and the minimum wait time earlier this month as part of new rules that will allow app-based services—like Uber—to operate in Portland.

“These laws were designed to protect the profits of Portland’s taxicab companies, and they were enforced for six years at everyone else’s expense,” said Institute for Justice Attorney Wesley Hottot, who represents the plaintiffs in the case. “Repeal was long overdue. You cannot grow a 21st-century transportation economy with 19th-century laws.”

The Institute for Justice teamed up with Portland businesses Towncar.com and Fiesta Limousine to challenge the laws in 2012, after the two companies were threatened with a combined $895,000 in fines for running Groupon.com promotions for $32 rides to the airport. City regulators immediately ordered the companies to cancel their promotions or shut down their businesses. The companies complied, refunded their customers and then sued in federal court. Their lawsuit argues that the city violated their right to economic liberty under the U.S. Constitution because the three laws had no public purpose, only the illegitimate purpose of protecting Portland’s taxi companies from new competition.

“We are thrilled with the change,” said Mike Porter, who runs Towncar.com. “We had 630 Portlanders who bought our Groupon deal in one day, before the city ordered us to shut it down. We can’t wait to go back online and tap into that unmet demand. The city was wrong to make sedans and limos more expensive in the first place.”

U.S. Magistrate Judge John V. Acosta ruled for the city in June 2014, holding that the two companies were required to go out of business before they could even challenge the laws in court. The companies’ appeal of that decision remains pending before the 9th U.S. Circuit Court of Appeals. Their case will continue, despite the law changes, because the companies are seeking $1 in damages from the city.

“For decades, minimum fares have been pushed by politically powerful taxicab companies at the expense of other services and the riding public,” explained IJ Attorney Justin Pearson, who also represents the companies in the case. “But now cities across the country are repealing their minimum fares as Americans demand more transportation options at more affordable prices.”

In the last two years alone, minimum limo and sedan fares have been repealed in Houston (formerly $70) and Atlanta (formerly $40), while minimum fares have been slashed in Nashville (now $9), Orlando (now $20) and New Orleans (now $15 for sedans, $25 for SUVs and $45 for limos, with a $75 minimum for trips to the airport). Just 13 cities nationwide still have minimum fares for limo and sedan service, including Hillsborough County (Tampa), Florida, where the Institute for Justice is suing in state court to strike down the $30 minimum fare.

Hottot concluded, “Cities can no longer put the interests of private taxi companies ahead of the interests of free competition and the riding public. Transportation businesses are a vital part of our economy because they take people to work and put people to work. Minimum fares and minimum wait times have no place in a free-market system.”

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