MILWAUKEE (CN) - Despite paying as much as $150,000 for taxi permits, cab companies have no property rights to them, a Wisconsin federal judge ruled Wednesday.
Judge Lynn Adelman found in favor of the City of Milwaukee and two independent cab drivers when he ruled that the city had the right to remove a long-standing cap on the number of taxi permits it issues.
"[Cab companies] must show more than an abstract need or desire or a unilateral expectation; rather, they must have a legitimate claim of entitlement," Adelman wrote in his nine-page opinion.
The companies, Joe Sanfelippo Cabs Inc. and four others, sued in August 2014, claiming new laws made their combined 162 permits virtually worthless.
The new laws, which lifted the cap and included app-based rideshare services such as Uber and Lyft in the city's regulatory scheme, unfairly favored the rideshare services and unconstitutionally took the companies' property, according to their lawsuit.
The laws were passed to thwart an appeal in a 2011 lawsuit in which a state court found the cap unconstitutional.
When the cab companies' plea for an injunction against the new law failed, they asked for compensation: $24.3 million for the lost value of their permits.
But the companies knew they were entering a heavily regulated industry when they bought the permits, Adelman wrote, and that local government has the right to change the rules.
"Thus, because the city has always maintained control over the permits, plaintiffs at best had a unilateral expectation that the city would not diminish the market value of the permits," the judge wrote.
And neither the passage of the 1992 ordinance establishing the cap nor the statements of city alders constitute an enforceable contract, he ruled. Deciding to dismiss the lawsuit Tuesday, the judge also said the permits are not technically worthless
"Contrary to plaintiffs' assertion, the ordinance did not completely destroy all beneficial economic use of their permits," Adelman wrote. "While it eliminated the commercial value of the permits, it did not interfere with plaintiffs' right to use the permits to operate taxis or to transfer the permits."
The Virginia-based Institute for Justice, a public interest law firm that represented the individual cab drivers, Jatinder Cheema and Saad Malik, issued a press release commending Adelman's decision.
"This is hopefully the final victory for Milwaukee taxi drivers," Anthony Sanders, a member of the firm's Minnesota office, said in the statement. "The cab companies' lawsuit was a desperate attempt to derail a hard-fought victory. Now, all taxi entrepreneurs can enjoy the freedom to own and operate their own cabs in Milwaukee."
A voicemail left on Wednesday afternoon with the cab companies' lead counsel, Dean Laing with O'Neill Cannon Hollman DeJong & Laing, was not immediately returned. Nothing on the firm's website indicates whether they intend to appeal the decision.
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