Viva Las Vegas Litigation

June 2000

Viva Las Vegas Litigation

By Dana Berliner

Litigation requires perseverance. Case in point-IJ’s challenge to Nevada’s ridiculous limousine licensing laws. We filed the case in May 1998 and thought our readers would appreciate an insider’s account of its progress and a report on the lives of our clients.

To drive a limousine in Nevada, would-be entrepreneurs must show that their proposed business will not have an “adverse” effect on existing business (i.e., that they won’t force existing businesses to compete). They must also show their “financial fitness” to operate a business by presenting their most confidential financial information for Transportation Services Authority (TSA) inspection. Existing companies then can “intervene” in these applications and make discovery requests, question witnesses, and present their own evidence that the proposed business should be shot down. Not surprisingly, many small companies feel less than sanguine about entering into a process that could cost tens of thousands of dollars with little likelihood that they will even get the license if they spend the money. Then, when the TSA enforces the prohibition against unlicensed limousine drivers, the same agency issues the tickets, decides if the person is guilty, and gets to keep the money. Our lawsuit challenges the constitutionality of all of these features of the limousine legal regime in Nevada.

In the past two years, IJ’s lawyers have been very busy. We amended our complaint to add more causes of action. We also filed and responded to a wide variety of motions, secured expert witnesses who produced extensive reports, sifted through the disorganized files of the TSA for documents to support our case, conducted legal research, and took depositions of eight TSA witnesses. During months of discovery, lead attorney Deborah Simpson gave birth to her daughter, Kate, and Dana Berliner and Clark Neily stepped in to continue litigating the case. We just filed briefs on cross-motions for summary judgment for a July 25 hearing. And, at this late date, several existing limousine companies intervened in the lawsuit in order to protect their turf. Such last-minute ganging-up is typical of what these companies do to challenge would-be competitors.

Earlier in the litigation, we also tried, unsuccessfully, to suspend enforcement of these unconstitutional laws while we were in litigation. To get an injunction, one must show not just that one has a good case, but that one is actually likely to prevail. This is a very difficult standard to meet, particularly in most economic liberty cases, because we always face an uphill battle on the law.

After the court denied the injunction motions, our clients needed to start looking for other work. For each violation, the TSA can impose fines of up to $20,000. None of the independent limousine companies could survive those fines, and for many, the mere threat was enough to force them to close. Many limousine drivers went to work for other people, putting on hold their entrepreneurial dreams until the lawsuit is over. Bil Clutter’s limousine has been impounded for the past two years. He cannot afford to pay the impound fees necessary to recover it. So instead of driving for himself, he drives a limousine for another company.

John West fought through the application process for a limousine license for more than two years, including an appeal of one denial, before finally receiving his rejection in April 2000. The TSA found that he did not prove to its bureaucratic satisfaction that he had enough money to go into business. The fact that one has to offer such proof is part of what our lawsuit challenges. Other types of businesses, of course, do not need to submit their business plans to be allowed to open. John and his wife Larissa were so disgusted with the application process that they decided they did not want to live in Las Vegas any more if they couldn’t have the limousine business they had planned. They left John’s home state of Nevada and moved to Albuquerque. Instead of running his own successful limousine charter business, John works for others as a car mechanic.

Rich Lowre used to run two luxury limousines. He had so much business that he regularly sent would-be clients to other companies. He formed the Independent Limousine Owners/Operators Association as a way for the more than 50 independent limousine companies to network. Today, Rich has no limousine business and delivers newspapers to make ends meet. After two years of TSA enforcement of the prohibition against unlicensed limousines, many ILOA members have disappeared after their businesses were destroyed. Others, like Ed Wheeler, left the transportation business but would open a limousine business again if they could.

Rey Vinole held on as an independent company longer than almost anyone else. But after paying more than $10,000 in fines to the TSA, he’s finally been forced to close his highly successful limousine company. He, too, works for another company. Now, ever the entrepreneur, he plans to try to open a bus service. Due to a new federal law, the TSA can only regulate buses in order to guarantee safe vehicles and insurance. It cannot impose financial fitness prerequisites or require proof that the new business won’t compete with existing ones. What a novel idea!

Perseverance pays. Our case is entering the home stretch in the trial court. There will be a hearing on the motions for summary judgment on July 25. Trial is currently scheduled for September 25. Until then, we here at IJ are working tirelessly to strike down these outrageous laws. But we have the easier job. Would-be limousine entrepreneurs like Bil, John, Rich, Ed, and Rey must make do with other, less desirable, jobs and keep their dreams on hold.

We will never give up in our fight for economic liberty to be recognized as a fundamental right so petty government agencies will not be able to keep honest people out of business.

Dana Berliner is a senior attorney for the Institute for Justice.