Saturday, December 8, 2012

District Court denies Metro’s Motion for Summary Judgment in Limo price-fixing case

by Daniel Horwitz

The District Court’s order denying Metro’s Motion for Summary Judgment is obviously great news for Mr. Bokhari, since it allows his lawsuit to continue moving forward.  It’s also great news for anyone in Nashville who believes that the government shouldn’t be able to mandate a $45 minimum fare for limo rides when several companies in town are ready and willing to charge customers $25 per ride instead.  That said, however, this case is far from over, and Mr. Bokhari still has to overcome a heavy burden before he can celebrate the demise of Metro’s price-fixing ordinance. 

For anyone who hasn’t followed the case in detail, lead plaintiff Syed Bokhari – the sole owner of Metro Livery, Inc. – and two other plaintiffs who are in the “affordable limousine and sedan business” have alleged that the following four provisions of Metro’s recently-amended livery ordinance (No. BL2010–685) are unconstitutional:

(1) The “minimum fare” provision that requires that limousine and sedan service operators charge a minimum of $45.00 per trip;

(2) The “prohibition on leasing” provision that requires that limousine and sedan service operators hold title to their vehicles;

(3) The “dispatch restriction” that requires that operators dispatch vehicles only from their place of business; and

(4) The “vehicle age requirement” that requires that operators take sedans and SUVs out of service if they are more than seven years old, take limos out of service if they are more than ten years old, and refrain from placing any new vehicle in service if it is more than five years old. 

Represented by the libertarian public interest firm The Institute for Justice, the plaintiffs in this case are arguing that each of the above provisions violates their constitutional rights under the Due Process clause of the 14th Amendment, the Equal Protection clause of the 14th Amendment, and the Privileges or Immunities clause of the 14th Amendment.  This latter claim concerning the Privileges or Immunities clause is, unfortunately, foreclosed by a Supreme Court decision handed down in the late 1800s, but the Institute for Justice and other proponents of economic liberty remain hopeful that the current court will eventually decide to reexamine the issue.

After a year of cross-motions between the parties, last week District Court Judge Kevin Sharp issued an order denying – in somewhat terse language – Metro’s Motion for Summary Judgment on each of the plaintiffs’ claims.  Thus, unless an unlikely settlement is reached sometime in the next few weeks, Mr. Bokhari’s case against Metro Nashville will proceed to trial on January 22, 2013, where both sides are expected to call several witnesses to testify about various aspects of Nashville’s transportation industry.  Though the case is likely to be appealed to the Sixth Circuit no matter the outcome, the purpose of this trial is to get sufficient facts on the record to allow Judge Sharp to answer the following deceptively simple question: do any of the four challenged provisions of Ordinance No. BL2010–685 bear a rational relation to a conceivably legitimate government interest?

Though it’s obvious to just about everyone (including Judge Sharp, as he made clear in an April memorandum) that a legally-mandated price-fixing scheme like this one is terrible from a public policy standpoint, many people following this case have been surprised to learn that that fact is actually irrelevant for present purposes.  As the Supreme Court has repeatedly proclaimed since disavowing its infamous holding in Lochner v. New York back in 1937, it is simply not the role of courts “to judge the wisdom, fairness, or logic of legislative choices.”  Instead, “the Constitution presumes that even improvident decisions will eventually be rectified by the democratic processes.”  Thus, the reason why Mr. Bokhari still has such a long way to go before he’ll be permitted to charge his customers $25 per limo ride boils down to the frustrating fact that all industrial regulations are subject to what is known as “rational basis” review: a highly-deferential form of scrutiny that renders judicial invalidation of laws like Ordinance No. BL2010–685 virtually unheard of. 

As the Sixth Circuit has often described the “rational basis” standard, the government’s proffered justifications for a law must strike a court “with the force of a five-week-old, unrefrigerated dead fish” before the law can be invalidated under rational basis review.  Indeed, even the actual reasons why a law was enacted are wholly irrelevant under this form of scrutiny— according to the Supreme Court, for a law to survive rational basis review the government need only prove that there is a “conceivable state of facts that could provide a rational basis” for the law in question.  This legal nuance is particularly irksome in the case at bar, of course, since both parties are in agreement that Ordinance No. BL2010–685 was enacted, at least in part, to appease the trade lobbying group TennLA— a partnership of expensive limo companies that have since claimed credit for legislating more affordable competition like Metro Livery, Inc. out of business.

Because the government has asserted several conceivably legitimate interests in the instant case that it contends are advanced by its protectionist regulations, Mr. Bokhari’s path to victory remains daunting.  With respect to the price-fixing component of the livery ordinance, for example, Metro argues that having a minimum fare of $45 for limo rides (1) helps consumers differentiate between taxi companies and limousine services, (2) helps diminish confusion as to those services, (3) reduces poaching, (4) offers the city several economic benefits, and (5) may improve the ground transportation industry as a whole.  Again, the government need not prove that any of these interests will actually be furthered by the livery ordinance in order for the law to be upheld as constitutional.  It merely has to prove that one of them could be. 

Fortunately for Mr. Bokhari, and extremely helpful to his case is the Sixth Circuit’s decision in Craigmiles v. Giles, 312 F.3d 220, 224 (6th Cir. 2002): a lawsuit involving similarly absurd regulations that Tennessee had imposed upon funeral merchandise retailers in an effort to shield funeral directors from competition in the casket market.  Finding in that case that the only conceivable basis for the law in question was unfettered economic protectionism, the Sixth Circuit held that the Tennessee Funeral Directors and Embalmers Act violated the Craigmiles plaintiffs’ constitutional rights under the Due Process and Equal Protection clauses of the 14th Amendment, and it enjoined the state from enforcing the law as a result.  Mr. Bokhari has asked for precisely the same relief here, and as a District Court judge within the Sixth Circuit, Judge Sharp is bound by this holding.  Since Judge Sharp has also held on several occasions that “Craigmiles is controlling” in the instant case, it is not unreasonable to expect that Mr. Bokhari will prevail at the trial level. 

Unfortunately for Mr. Bokhari, however, Judge Sharp has also properly observed that the Sixth Circuit’s holding in Craigmiles is constitutionally suspect.  As the Tenth Circuit has protested, for example, “the [Supreme Court] cases collectively cited by Craigmiles . . . do not [actually] stand for the proposition that intrastate economic protectionism, absent a violation of a specific constitutional provision or federal statute, is an illegitimate state interest.”  As such, even if he wins at the District Court level, Mr. Bokhari’s case could potentially result in the reversal of Craigmiles if it reaches the Court of Appeals.  However, cutting against this possibility, perhaps, is the fact that the Institute for Justice has been uncannily successful in litigating economic liberty cases, winning both the Craigmiles decision discussed above and a very recent case in the U.S. District Court of Utah involving the economic liberty of hairbraiders. 

In sum, although the District Court’s order denying Metro’s Motion for Summary Judgment is welcome news for those of us who oppose the kind of blatant economic protectionism that is at issue in Mr. Bokhari’s case, it remains true that the best possible result would be for Metro to acknowledge its error and repeal Ordinance No. BL2010–685 of its own accord.  Unfortunately, however – at least for the time being – that option does not appear to be on the table.  Nonetheless, as the Supreme Court has explained, the democratic process is really the proper mechanism for doing away with atrocious laws like this one, so if your Metro Councilmember is among those local legislators who supports price-fixing, you really ought to consider voting him or her out of office.  

Daniel Horwitz is a third year law student at Vanderbilt University Law School, where he is the Vice President of Law Students for Social Justice. He can be contacted at daniel.a.horwitz@vanderbilt.edu. 

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