Little Rock named in suit filed over permits to cab companies

A Virginia-based public-interest law firm is suing the city of Little Rock on behalf of a central Arkansas taxi company owner to challenge the legality of an ordinance that has allowed only one cab company to operate in the city.

Little Rock has been selling all of the available taxi permits to a single company, Greater Little Rock Transportation Service LLC, which operates as Yellow Cab, since 2001. Cab companies need permits for each car to legally pick up passengers within the city limits.

Attorneys for the libertarian Institute of Justice petitioned Pulaski County Circuit Judge Alice Gray on Wednesday to strike down a provision of the city's Transportation Code that the group claims has been wrongly used to deny permits to its client, Ken Leininger, and his three-car Ken's Cab company.

The effect of the code provision is that Little Rock has made starting a competing taxi company "illegal," an Institute for Justice attorney Justin Pearson said in a news release.

"The government should not be Yellow Cab's henchman, doing what's best for Yellow Cab rather than what's best for the citizens of Little Rock," Pearson said.

The portion of Ordinance 34-38 in dispute requires taxi-licensing officials to consider the effect on traffic congestion of allowing more taxis by determining "whether the requirements of public convenience and necessity can be met and complied with only by the issuance of additional permits" and "the resulting effect upon the business of existing permit holders and upon existing agencies of mass transportation in the city."

That consideration is one of 10 factors regulators must review. The suit does not dispute the legitimacy of the other provisions, which include financial responsibility and stability of the applicant, moral character of the applicant, how many cars the applicant will operate and how the applicant plans to maintain that number through ownership and leasing.

The nonprofit legal group, represented locally by attorney Chris Burks, calls the disputed provision the "monopoly rule," arguing in the 12-page lawsuit that it violates Article 2 of the Arkansas Constitution, which protects the public from monopolies and guarantees its residents due process.

The city has no good reason for the provision, it doesn't protect the public and all it really does is ensure that Yellow Cab has a monopoly, the lawsuit states, accusing the city of protectionism.

Leininger wants the judge to strike down the ordinance provision, award him a symbolic $1 in damages and order the city to pay the cost of filing the lawsuit.

According to the lawsuit, Leininger established his company, which is permitted to serve North Little Rock and elsewhere in Pulaski County, in April after eight years as a Yellow Cab driver.

He applied for the necessary Little Rock permits that same month, but his application was rejected solely because of the provision at issue, his suit argues.

The lawsuit states that Yellow Cab asked the city's permitting agency, Fleet Services, to turn him down.

"It doesn't seem right that the government can tell me that I can't have a taxi service when I know I've fulfilled all of the requirements and more," Leininger said in a news release Wednesday.

He appealed the decision to the city Board of Directors in October. Although some members expressed concern about potentially creating a monopoly, they turned him down after hearing from Yellow Cab.

City Attorney Tom Carpenter told directors then that the city's permitting rules were written in the 1980s based on similar ordinances in Atlanta. When the potential for a lawsuit was raised, Carpenter said similar practices have been upheld by courts across the nation. Reached by email Wednesday, Carpenter did not comment.

Yellow Cab President Ellis Houston told directors then that he wasn't afraid of the competition but that it would be unfair that he pay to keep up maintenance on his 117 cars, when Ken's Cab wouldn't have the same expenses with a smaller operation.

Houston said in December that Yellow Cab has 125 vehicles and permits 120 of them per year so it can switch out vehicles when one needs repairs or maintenance. Permit fees are set at $60 per car, and Yellow Cab paid $7,700, city records show.

One director recommended that Leininger return in December when the board traditionally issues the next taxi permits and reviews its policies.

Leininger did not do so, stating in the lawsuit that he was told repeatedly by Fleet Services not to go because the directors' October decision was final and could not be reconsidered unless there was additional evidence to present, which he did not have.

In the suit, Leininger states that his company has some financial advantages over Yellow Cab. Ken's Cab uses only hybrid cars to provide "fuel-efficient environmentally friendly" service, and drivers who lease the cars from the company are independent contractors.

The Ken's Cab lease is lower than Yellow Cab's, the lawsuit states, and its drivers, who pay their own fuel costs, spend less on gas than Yellow Cab drivers do. That means Ken's Cab drivers make more money than the competitor, according to the lawsuit.

City directors have eased some of the regulations on taxi services in the past few years.

In December 2014, after decades of regulating ride charges by ordinance, directors gave cab companies the ability to set their own fares within the city limits, provided they give notice of rate changes to city officials two days in advance.

The change was explained as allowing traditional drive-for-hire companies to be more competitive with ride-sharing services like Uber that increase their rates during peak hours.

In 2013, city directors eased restrictions on who is allowed to drive cabs, allowing felons with nonviolent convictions -- like drug possession, theft and vandalism -- after barring all felons for 10 years.

The Yellow Cab company was formed out of four cab companies, Yellow, Black & White, Capitol and Veterans, although Greater Little Rock Transportation Service operated under those four names for at least two years after the consolidation.

Metro on 03/03/2016

Upcoming Events