Hailing Taxi Freedom in San Diego

June 5, 2015

Taxicab lawsuits are special at IJ because they perfectly illustrate how entrenched interests use government power to keep entry-level entrepreneurs from taking their first step up the economic ladder. And IJ’s latest lawsuit defending two San Diego drivers is no exception.

Last year, long before the case was filed, a group of San Diego taxi drivers reached out to IJ for help. The city’s cap on the number of taxi permits—in place since 1984—allowed for just 993 cabs in a growing city of 1.3 million people. Taxi drivers wanted to own their own permits and go into business for themselves. But the city’s policy of artificial scarcity made taxi permits expensive: Permits sold for around $120,000. All of the available permits were (and still are) owned by just 499 people, most of whom do not drive cabs themselves. Instead, drivers lease permits for between $300 and $800 per week.

Enter IJ’s legislative counsel, Lee McGrath, who answered the drivers’ call and worked with their organization to persuade the San Diego City Council to open the taxi market to new competition. Months of hard work paid off last November, when the city council lifted the permit cap!

San Diego’s new permitting reforms are among the best in the nation. Drivers who meet basic licensing, safety and insurance requirements can get their own permits for around $3,000.

But San Diego’s cab companies are not letting go so easily. In March, they sued to stop the city from issuing new permits. Their lawsuit demands that the court stop taxi permitting and that the city pay money damages for the supposed devaluation of their permits. IJ’s litigation team has moved quickly to defend the new law alongside the city.

Our clients are two longtime cab drivers, Abdi Abdisalan and Abdullahi Hassan. They both came to this country as refugees from Somalia’s civil war in the 1990s. Today, they are U.S. citizens seeking their own American Dream. For years, Abdi and Abdullahi have leased their taxi permits from other people. When the new law passed in November, Abdi immediately began plans to start his own company, Adam Cab, and Abdullahi began plans to start his own company, Kisima Cab. Both men just want an opportunity to compete on fair terms. The cab companies’ lawsuit threatens these would-be entrepreneurs’ ability to go to work for themselves. That is why IJ has taken their case.

On April 30, the court granted IJ’s motion to intervene in the case on behalf of Abdi and Abdullahi. IJ also helped defeat an “emergency petition” filed by the cab companies to halt the new permitting process, a process that will now proceed while the case is pending. IJ is in full swing officially defending San Diego’s free-market taxi reforms.

This is not IJ’s first rodeo, either. The day before we filed our motion to intervene in San Diego, we were granted intervention in a similar case in Milwaukee, where cab companies have also sued to stop the city from lifting its cap on the number of taxi permits. The decision in Milwaukee helped persuade the judge to let us intervene in San Diego.

For too long, cities have enforced 19th-century transportation regulations in a 21st-century world. By intervening in cases like the ones now pending in San Diego and Milwaukee, IJ will help change the course of history and help guys like Abdi and Abdullahi take control of their own destinies.

Wesley Hottot is an IJ attorney.

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