Government Outlaws Discounts?
Portland, Ore.—Can the government protect you from cheap fares and innovative service merely to shield politically connected businesses from competition?
That is the question the Institute for Justice and its clients want answered in a federal lawsuit filed today in Portland, Ore, in the U.S. District Court for the District of Oregon. Their lawsuit challenges the constitutionality of Portland’s limousine and sedan regulations, which punish small limo and sedan companies that offer discounted rides through online deal sites like Groupon.com.
In 2009, the city passed a law requiring a $50 minimum fare for limousine and sedan rides to or from Portland International Airport. The law imposes a city-wide minimum fare that requires limos and sedans to charge at least 35 percent more than what taxis would charge for the same route and imposes a minimum wait time of at least one hour before customers can be picked up.
“These laws amount to nothing more than naked economic protectionism; they are designed to protect the profits of Portland’s taxicab companies, and now they are being enforced at everyone else’s expense,” said Institute for Justice Attorney Wesley Hottot, which represents the plaintiffs. “Portland’s minimum-fare law and minimum wait time have nothing to do with protecting the riding public. They have everything to do with protecting the city’s taxicab companies from competition and driving up prices for consumers.”
Portland’s Revenue Bureau recently targeted two limo and sedan companies—Towncar.com and Fiesta Limousine, both of which joined IJ to file suit against the city—for offering promotional fares on the daily deal website Groupon.com. When the companies offered their customers $32 one-way trips to the airport, city enforcers immediately threatened them with a combined $895,000 in fines and suspension of their operating permits. The companies canceled the promotions and refunded their customers.
“Nationwide, minimum fares are being pushed by politically powerful taxicab companies at the expense of both limousine companies and the riding public,” explained IJ attorney Jeanette Petersen, who also represents the plaintiffs in the case. “Unfortunately, Portland gave in to special interests and passed these laws just to make the city’s taxicab companies richer. That is not only wrong, it is unconstitutional.”
Nine other jurisdictions nationwide have adopted minimum fares for limo and sedan service, including Nashville, Tenn., where the Institute for Justice is currently suing the city in federal court over its new $45 minimum fare. Like the law in Nashville, Portland’s minimum fare and minimum wait time were pushed into law by transportation businesses that sought to squeeze more money out of consumers.
“We had 630 Portlanders who bought our Groupon deal,” explained Mike Porter, who runs Towncar.com. “They wanted to experience our service at an affordable price, and that should be their choice. The city responded by threatening to put me out of business for charging my customers too little. How is that good for consumers?”
Hottot said, “This case is about protecting our clients’ economic liberty—the constitutional right to earn an honest living free from unreasonable government interference.”
Hottot concluded, “All our clients want is to be left alone to attract new customers with competitive pricing, online discounts and prompt service. No government should stand in the way of that.”