Court Breaks Open Milwaukee’s Taxi Cartel

Milwaukee, WI—In a resounding victory for economic liberty, today Judge Jane Carroll of the Milwaukee Circuit Court struck down the city’s taxicab law that outlawed competition in the taxi market. The law, implemented by the city in 1991, caused the price of a taxi permit to rise from $85 to over $150,000. Judge Carroll ruled from the bench shortly after listening to arguments in a lawsuit brought by three local taxi drivers and the Institute for Justice (IJ), the national law firm for liberty.

“Thanks to today’s victory, the city’s 20-year taxi monopoly is broken,” said IJ Attorney Anthony Sanders. IJ filed suit against the city in September 2011 on behalf of three local taxi drivers. “The court found that in 1991 the city purposely created an unconstitutional taxi system where only the privileged few would benefit and competition would be outlawed.”

Judge Carroll found that both of the arguments the city provided for the law were illegitimate. The city argued that officials did not want to hold an annual meeting on the issue of taxicabs. But the judge ruled that public servants cannot write laws that simply save themselves from the trouble of going to a meeting. The city also argued that limited competition would make taxi owners more professional. Judge Carroll rejected that argument as well, saying that all the city did was provide a windfall for those who happened to have cabs in 1991.

One of the taxi owners who testified in support of the law in 1991 said his business would be worth more without having to face competition, and with the law in place he could profit enough to retire some place warm. But today Judge Carroll said that the government cannot pass laws simply to help politically favored businessmen retire to Florida.

“Today’s ruling is a textbook example of judicial engagement,” said IJ attorney Katelynn McBride. “The judge looked at the facts of this case and rejected the city’s bogus arguments, revealing the real reason this law was passed: to protect the politically powerful at the expense of everyone else. The judge ruled that economic protectionism is not a constitutional use of government power.”

The Milwaukee Journal Sentinel already declared today’s ruling a “significant legal victory.” The paper has editorialized that “Milwaukee’s cap on taxicab permits makes little sense. The city needs more transportation options, and cabs should be one of them. . . . Lift the cap, and let the market decide.” Likewise, the Financial Times of London featured the Milwaukee taxi system in an article on economic protectionism, calling it a “visible and easy-to-measure example” of a “minor evil” that allows “some to grow rich at the expense of others.”

“I now believe in the American judicial system,” said Milwaukee taxi driver and IJ client Ghaleb Ibrahim. “During the course of this lawsuit, I was fired because the owner of my cab did not like me standing up for my rights. Thanks to today’s ruling, I now have the freedom to own my own taxicab. That’s exactly what I’m going to do.”

The Institute for Justice has helped open taxi markets in Denver, Indianapolis, Cincinnati and Minneapolis and for more than 20 years has been the nation’s leading legal advocate for the rights of entrepreneurs. For more on the lawsuit to open Milwaukee’s taxi market, visit www.ij.org/MKETaxis.