Victory For Las Vegas Limo Operators

John Kramer
John Kramer · May 17, 2001

Washington, D.C.-More than three years after filing suit to vindicate their right to “economic liberty,” Las Vegas limousine operators and the Institute for Justice, the public interest law firm that took on their fight, have scored a major legal victory. A Nevada court has ruled that that state’s Transportation Services Authority (TSA) violated the constitutional rights of three independent limousine operators who were unable to get limousine licenses due to the action of regulators and established limousine companies seeking to limit competition.

Clark County District Court Judge Ron Parraguirre ruled on May 16 that, “The Court finds the combined actions of Defendants TSA, Ambassador, Bell Trans and Star . . . violated Plaintiffs Rey Vinole, John West and Ed Wheeler’s Due Process rights under the 14th Amendment and the Nevada Constitution . . . . The right to earn a living in one’s chosen profession is a liberty interest protected by the due process clauses of both the U.S. and Nevada constitutions.”

While free will and the free market dictate for most Americans which occupations they pursue, to start a limousine company in Nevada one must convince three government officials–TSA commissioners–that an application is worthy of a state-required “certificate of public convenience and necessity.” (This is the government telling the public what services are convenient and necessary, rather than letting the public decide for itself.)

The TSA then effectively hands the process over to existing companies who “intervene” against an application. These existing limousine companies use the process to keep new competitors out and transform it into more of an inquisition than an administrative hearing. Nearly all companies not already connected in some way to the Las Vegas transportation network are rejected or find the licensing fight so stacked against them they drop out in despair. From 1979 to 1998–the year the Institute for Justice filed suit against the agency to break up its state-enforced cartel–only four new companies were admitted to the market. In a transparent attempt to provide itself with cover since then, the TSA has approved about a dozen new companies to provide limousine service. All of those applicants, however, were either affiliated with existing transportation companies or were forced by existing companies who intervened in their applications to accept operating restrictions that rendered them totally noncompetitive.

In his decision, Judge Parraguirre wrote, “[T]he intervention process amounted to an onerous and unduly burdensome process by which the applicants were forced to either withdraw their applications, agree to limit the operational scope of their proposed [Certificates of Public Convenience and Necessity], or incur increasing litigation fees and costs in order to comply with the numerous financial information and disclosure demands made by the TSA as well as the intervening carriers. Accordingly, the Court finds that the Due Process Rights of Rey Vinole, John West and Ed Wheeler under both the 14th Amendment and the Nevada Constitution were violated in the application of the statutory licensing scheme and its requirements under the aforementioned statutes and its corresponding administrative code provisions.”

Taking the agency to task, Judge Parraguirre wrote, “The Court finds that despite its authority under the Nevada Administrative Code, the TSA has failed to adequately regulate the number of intervenors in the process, or the scope of the intervenors’ involvement in the application process after the Petition for Leave to Intervene had been granted. Ultimately, the only alternative for many applicants who do not wish to make such a deal with the intervenors is to be ‘run to death in the paper mill’ of a contested application proceeding.”

Chip Mellor, president of the Washington, D.C.-based Institute for Justice, which litigates on behalf of entrepreneurs nationwide, called the victory, “A major step forward in the fight to restore constitutional protections for the right to economic liberty–the right to earn an honest living free from excessive government regulation.”

Although the court’s ruling only discusses the three limousine applicants who actually participated in the lawsuit, TSA representatives testified that all applicants are treated exactly the same way by the agency. According to Institute for Justice attorney Clark Neily, who along with IJ attorneys Dana Berliner and Deborah Simpson litigated the case, this means the TSA has been systematically violating the rights of independent limousine entrepreneurs in Las Vegas. Neily explained, “There is a long-standing pattern of abuse. This is the end of business as usual for the TSA and the existing limousine companies who, up until now, have been allowed to run the show. Judge Parraguirre’s ruling sends a clear message to the TSA and to the big limousine companies that those practices will no longer be tolerated.”

Ed Wheeler, one of the plaintiffs whose civil rights were violated by the TSA and the established limousine companies when he applied for a license in 1998, has already filed a new application with the agency. Wheeler said, “If there had been a fair process, I would have had a license three years ago. I’ve just put in a new application and I’m looking forward to a process that is fair and accountable to the public.”

Berliner noted, “Would-be limo drivers once had two choices: cut a deal with existing companies or get run to death in the paper mill. Not any more. And we’ll be watching closely to make sure the TSA follows Judge Parraguirre’s ruling.”

“The core of good business is competition,” said Simpson. “The alternative is government-created cartels, which translate into higher prices, fewer choices, and worse service. That aptly describes the Las Vegas limousine market these days, and it is a direct result of the government acting in an arbitrary and unconstitutional manner.”

Lead plaintiff in the case, Bill Clutter, said, “The court found what every independent limo driver has known for years–the system was rigged. The TSA looked out for existing companies not for what will best serve the riding public. Hopefully that will change now.”

Plaintiff John West, who fought unsuccessfully for years for a license and had to move out of state to support his family, said, “I gave up three years of my life and my whole savings to this process. It is great to know it wasn’t for nothing. At least no one else will have to go through this again. Without the help of the Institute for Justice, I would have been just another failed application.”

The Institute for Justice has opened up taxi markets in Denver, Indianapolis and Cincinnati, van services in Houston and New York, deregulated African-hairbraiding in Washington, D.C. and California, and broke up Tennessee’s government-imposed casket cartel.