As Ronald Reagan famously quipped, “The nine most terrifying words in the English language are: ‘I’m from the government and I'm here to help.’” Portland, Oregon, though, really is here to help. The problem is that the city hasn’t created laws to benefit Portlanders—it’s created them to benefit one specific industry, at the expense of every consumer in the area.
The Portland city council two years ago put in place regulations that force limousine and sedan services to charge a $50 minimum for rides to and from the airport, and at least 35 percent more than taxis for trips to any other destination. And these transportation companies cannot pick up customers until at least an hour after the customer calls for a ride.
And it gets worse. Daily deal companies such as Groupon and LivingSocial partner with local businesses looking for new customers and offer limited-time specials that allow people to buy goods and services at a discounted price.
But when two companies offered their chauffeur services at a cut-rate through Groupon in separate months last year, Portland responded each time by assessing fines on every Groupon sold: a total of $635,500 for Towncar.com and $259,500 for Fiesta Limousine. The firms refunded their would-be customers rather than risk going bankrupt.
Portland officials have been surprisingly frank in discussing the rationale for the rules. The Huffington Post reports,
Frank Dufray, administrator for Portland's Private-for-Hire Transportation Program, which regulates both taxi and livery services, said the laws aren't intended to help consumers or the city, but to protect market share for the taxi industry.
"The main thing is that you don't want the Town cars to take all of the best fares, which are to the airport, and not leave any for the taxi industry," he said. "That's why there's a minimum fare and a one-hour wait requirement."
The Institute for Justice, the libertarian public-interest law firm, has just filed suit in federal court against the city. They succinctly summarize the issue at stake:
Can the government bar entrepreneurs from offering competitive prices, online discounts and prompt service merely to protect politically powerful insiders from competition?
That is the question the Institute for Justice (IJ) and its clients seek to answer though a federal lawsuit they have filed challenging Portland, Oregon’s anticompetitive limousine and sedan regulations.
As IJ attorney Wesley Hottot says in the nonprofit's YouTube video outlining the case, “That isn’t just wrong; it’s unconstitutional.”
IJ’s complaint filed today with the U.S. District Court for the District of Oregon, which will be put online shortly, is based on the Constitution’s Fourteenth Amendment and its Equal Protection and Due Process Clauses. The law firm expects the more general legal question at issue here eventually to reach the U.S. Supreme Court.