Tuesday, April 17, 2012

Budget Limo's Lost the last round but ruling hints at future victory.

We who have been following the Metro limo price-fixing saga have reason to be encouraged, despite the Court's most recent ruling that failed to grant the plaintiffs an injunction against enforcement of the $45 minimum fare. The below article which appeared recently in City Paper explains why.

The reason Metro, the defendant, won the last round is that the bar for winning was very low. All Metro had to show was that the minimum fare had a "rational basis." When the actual merits of the price fixing scheme are litigated, Metro will have to meet a much more difficult standard to prevail. The plaintiff will use the 14th Amendment’s equal protection clause as a basis to convince the Court that the $45 minimum fare is unconstitutional. Metro will have to defend against that argument.

This article does a good job of explaining what happened in the last court ruling. Below are a couple excepts:

Budget limo companies hit snag in case against minimum fare, may be on right track

Sunday, April 15, 2012, By Pierce Greenberg, City Paper

And even though the ruling wasn’t in the liveries’ favor, Sharpe’s decision scoffs at the ordinance, points a finger at the Metro Council, and could lay out a path for the overturning of the bill. As part of the challenge, the defense will have to prove a “rational basis” for the ordinance. Rational basis is a broad term — and Sharp acknowledged that “even foolish and misdirected provisions are generally valid” under the rational basis standard of review.

Sharp also took a shot at the ordinance, noting that lower fares would “undoubtedly” benefit Nashville citizens and tourists, but that it’s up to the Metro Council to make those determinations.

“Judge Sharp emphasized that this is a preliminary ruling and indicated that if there were more evidence available to him that he might be willing to strike down the minimum fare,” Hottot said. Read the full article.

In 2010, to protect the well-connected, long-established luxury limo companies from competition and innovation,  the Council unanimously passed a price fixing bill that established a $45 minimum fee for non-taxi livery services. In addition to the minimum fare the bill did other things designed to make the business model of the new livery services unworkable. What prompted this was that a new service had appeared in Nashville that operated like a limousine but instead of using the stretched body type that is a limousine, they used black sedans and the typical fare was not much more than a taxi fare but considerable less than a limo fare.  Many people who had used taxis or limo's liked the new service. The ride was a nicer ride than a taxi but was less ostentatious than a limo. This new type of livery service was cutting into the limo business and the city responded with an ordinance and regulations designed to destroy the new competition. Not only did the city pass legislation and rules to drive the competition out of business, the Metro Transportation Licensing Commission used intimidation and harassment to try to drive the competitors out of business.

To learn more about this topic, follow this link.

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