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Victory for Minneapolis Taxi Entrepreneurs

Judge Upholds Competition in Taxi Market by Dismissing Cartel Lawsuit

Minneapolis, Minn.—Can an entrenched cartel of Minneapolis taxi drivers violate the civil rights of entrepreneurs and consumers?

No, according to U.S. Magistrate Judge Franklin L. Noel. In an opinion released today, the judge recommended that a lawsuit brought by members of the taxi cartel to overturn the city’s free-market reforms be dismissed.

“This is a victory for both aspiring taxi entrepreneurs and for Minneapolis consumers,” said Scott Bullock, a senior attorney at the Institute for Justice who argued the case. “Established businesses should not be able to use the law to quash competition and close the marketplace. Today’s ruling ensures that does not happen.”

The Institute for Justice Minnesota Chapter (IJ-MN) intervened in the case on the side of the city of Minneapolis to defend its free-market reforms that removed a cap on the number of taxis allowed to operate within city limits. The reforms, finalized on March 30, 2007, will open the market to entrepreneurs who are fit, willing and able to serve the public, increase the number of cabs by 180 in the coming years, and eliminate completely the cap on the number of cabs in Minneapolis by 2010.

In response to the free-market and consumer-friendly reforms, the established taxicab cartel sued the city, demanding the reversal of reforms and proclaiming its owners should be able to keep the spoils of the old law that excluded new competitors from the taxi market in Minneapolis for more than 10 years.

The Institute represents taxi entrepreneur Luis Paucar, who had tried for nearly four years to provide service in Minneapolis. He has received 22 licenses under the new law.

“I am thrilled!” said Paucar. “All I ever asked for was the ability to enter the market and to compete.”
“The cartel violated the civil rights of entrepreneurs like Luis,” said Nick Dranias, an IJ-MN staff attorney. “We got involved in this case to defend the city’s free-market reforms because taxicab entrepreneurs have the right to earn an honest living in the occupation of their choice free from the anti-competitive barriers to entry that the taxi cartel wants to preserve.”

In his opinion, Judge Noel determined: “The [established] taxi vehicle license holders do not have a constitutionally protected freedom from competition.”

In just two years, IJ-MN already has four economic liberty victories. Chip Mellor, president and general counsel of the Institute for Justice, concluded, “We will not rest until the fundamental right of economic liberty is vindicated for all Americans.”

The cartel has until November 16 to appeal the magistrate’s ruling to the district court.

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