Milwaukee Taxi Drivers Defeat Monopoly

Monopolists do not like giving up their monopolies—and that has been especially true in IJ’s four-year battle against Milwaukee’s taxi cartel.

IJ first challenged the city’s rigid cap on taxi permits in 2011. Two years later, we won when a federal court ruled the cap unconstitutional. In response to this ruling, Milwaukee lifted the cap completely and became one of the freest cities in the U.S. for drivers looking to enter the cab market. Drivers who had waited years for this were finally able to start their own businesses.

But the monopolists did not give up. The taxi cartel, unhappy about losing its protectionist system, sued to halt the reforms just a few months after the cap was lifted. The already-established cab companies wanted a permanent monopoly to charge above-market prices and to pay their drivers below-market wages. They claimed they were entitled to tens of millions of dollars lost after the city lifted the permit cap.

So IJ intervened in the cartel’s case on the side of freedom and on behalf of new entrants into the market. We represented Jatinder Cheema—our client from IJ’s earlier lawsuit—and Saad Malik, two taxi drivers who were only recently able to start their own cab businesses. Before IJ challenged the cap in 2011, Milwaukee only allowed 321 cabs to operate. This caused the price of a taxi permit to rise from $85 to over $150,000—more than an average Milwaukee house.

In December 2015, a federal judge wholly rejected the claims of the cartel and ruled that just because you own a legally protected monopoly today does not mean you can expect it to continue indefinitely. 

The judge relied heavily on a similar IJ case in Minneapolis, where that city lifted its cap on the number of taxis. IJ represented taxi entrepreneur Luis Paucar in that case, intervening on the same side as the city, as we did in Milwaukee. The case was dismissed and the taxi cartel appealed to the 8th U.S. Circuit Court of Appeals, which agreed that there is no constitutional right to have the government protect a monopoly. That case has also been cited in other recent unsuccessful challenges to deregulation, including in IJ’s case in Chicago, where we represent drivers for ridesharing services such as Uber and Lyft.

Milwaukee is now a vibrant transportation market. And spurred by IJ’s success, Saad took it one step further and led a successful effort to deregulate the taxi system at Milwaukee’s airport in the fall of 2015.

But the Milwaukee taxi cartel has still not given up. It has appealed to the 7th U.S. Circuit Court of Appeals, which covers not only Milwaukee but also Chicago. A victory in the court of appeals could help our clients in our ridesharing lawsuit in Chicago as well as preserve a robust taxi market in Milwaukee. We will continue to be there to defeat economic protectionism—in Milwaukee, Chicago and wherever transportation freedom is threatened.

Anthony Sanders is an IJ senior attorney.