Institute for Justice · November 18, 2015

San Diego—In a major victory for taxi drivers and riders, Superior Court Judge Gregory Pollack has ruled against a group of San Diego cab companies who sought to stop the Metropolitan Transit System (MTS) from issuing any new taxi permits. The ruling rejects all of the cab companies’ legal arguments and brings the case to an end, barring an appeal.

The case was filed in March, after the city of San Diego removed its cap on the number of taxi permits, previously set at 993. Under the new policy, the city allows an unlimited number of permits and requires zero- or low-emission cabs. MTS issues permits on the city’s behalf, under a longstanding contract.

The cab companies’ lawsuit alleged that California environmental quality laws prevent MTS from issuing new taxi permits without first studying the effect that taxi businesses have on the environment. But in his ruling released today, Judge Pollack wrote: “Neither the city nor MTS was required to prepare an Environmental Impact Report.”

“This lawsuit was baseless from the start,” said Wesley Hottot, an attorney with the Institute for Justice (IJ) representing two taxi drivers who intervened in the case to protect their new permits. “There is absolutely no law that prevents a city from allowing the free market to decide the number of taxis. If this ruling is appealed, it will be affirmed.”

“This is a great day for taxi drivers,” said IJ client Abdi Abdisalan, a lease driver for nine years before he obtained a permit under the new law and started his own company, Adam Cab. “With this permit, I work for myself and choose my own destiny.”

In November 2014, the San Diego City Council voted 8-1 to lift its cap on the number of taxi permits that MTS could issue. In place since 1984, the cap drove the value of existing permits so high that cab companies were requiring drivers to pay hundreds of dollars a week in lease payments. The city’s reform measure passed after months of contentious public hearings in which lease drivers squared off against the companies and their lobbyists. Drivers hailed the reforms as ending a policy that only served to protect existing companies.

After losing the public debate, the cab companies took their case to court and argued that MTS violated state environmental laws because it did not perform a study prior to allowing new taxis on the road.

“This lawsuit had nothing to do with the environment,” said IJ Attorney Keith Diggs. “It had everything to do with economic protectionism. Taxis are a vital part of any city’s transportation system because they put people to work and take people to work. Taxis don’t harm the environment. They make it possible for people to get around without using their personal cars.”

Abdi and another former lease driver, Abdullahi Hassan (who now owns and operates Kisima Cab), joined MTS and successfully defended the lawsuit in court. In April, the two men were granted the right to intervene in the lawsuit. They were represented in the case pro bono by the Institute for Justice, a nonprofit public interest law firm.

“This ruling is the latest in an unbroken string of victories for transportation freedom,” concluded IJ President and General Counsel Chip Mellor. “The Institute for Justice defeated a similar lawsuit in Minneapolis and has recently overturned protectionist taxi rules in Denver, Milwaukee and Bowling Green, Ohio. We will continue to fight for taxi drivers—and all Americans—when their constitutional right to economic liberty is threatened.”