Federal Judge Predictably Rules that Increased Competition is not a Taking

At the new home of The Volokh Conspiracy at Reason.com, Ilya Somin analyzes the holding in Checker Cab Philadelphia v. The Philadelphia Parking Authority, C.A. No. 16-4669 (E.D. Pa. Jan. 29, 2018). The plaintiffs, taxi cab operators in the City of Philadelphia, challenged a decision by the city that would open them to increased competition from ride-sharing services like Uber and Lyft. The challenge was grounded in both the Takings Clause of the Fifth Amendment and in the protections codified in the Fourteenth Amendment to the U.S. Constitution. Plaintiffs contended that the City's practice of awarding taxi medallions, thus restricting the taxi business to the holders of such medallions, had in effect created a government-protected property right that was infringed by subsequent decisions to allow alternative transit methods.

As Somin notes, 

The key flaw in the taxis' position is well summarized by an earlier opinion in a similar case decided by the Seventh Circuit Court of Appeals in 2016. It was written by Judge Richard Posner, probably the most distinguished federal lower court judge of the last several decades. Baylson quotes part of the following telling passage from Posner's ruling:

[T]he City [of Chicago] is not confiscating any taxi medallions; it is merely exposing the taxicab companies to new competition —competition from Uber and the other TNPs [Transportation Network Providers].

"Property" does not include a right to be free from competition. A license to operate a coffee shop doesn't authorize the licensee to enjoin a tea shop from opening. When property consists of a license to operate in a market in a particular way, it does not carry with it a right to be free from competition in that market... Indeed when new technologies, or new business methods, appear, a common result is the decline or even disappearance of the old. Were the old deemed to have a constitutional right to preclude the entry of the new into the markets of the old, economic progress might grind to a halt. Instead of taxis we might have horse and buggies; instead of the telephone, the telegraph; instead of computers, slide rules.....

Taxi medallions authorize the owners to own and operate taxis, not to exclude competing transportation services. The plaintiffs in this case cannot exclude competition from buses or trains or bicycles or liveries or chartered sightseeing vehicles or jitney buses or walking; indeed they cannot exclude competition from taxicab newcomers, for the City has reserved the right... to issue additional taxi medallions. Why then should the plaintiffs be allowed to exclude competition from Uber?


This ruling is the latest in a series of federal court decisions rejecting similar takings claims by taxi companies. He does an excellent job of summarizing the earlier decisions on the subject, and notes that he could find "no legal precedent in which a medallion-holding taxi company survived a motion to dismiss on a comparable takings theory, much less received a damage award." Hopefully, taxi companies will see the writing on the wall, and stop trying to use constitutional litigation to suppress their rivals. As Baylson puts it, "[a] court is not suited to protect market participants from competition, or from changing consumer preferences... the resolution of competitive combatants must take place in the marketplace, rather than in a courtroom."