SACRAMENTO (CN) - Nevada's unconstitutional licensing rules give transportation and moving companies the right to veto permits for competitors, owners of two companies claim in Federal Court.
Frustrated by their inability to expand their transportation businesses in Reno, a moving company and a limousine company sued the Nevada Transportation Authority on Feb. 19 in Reno.
Plaintiffs Danell Wilson-Perlman and Ron Perlman have run Reno Tahoe Limousine for more than eight years, and want to add eight more limos to their fleet. The Perlmans say they have bought the expensive limos, which are parked because of a Nevada law that forbids them from adding more vehicles without permission from their competitors.
The Perlmans say they are the only company in the Reno-Tahoe area that operates on a restricted certificate and that other limo companies can grow freely without legislative procedures. They say their business is so busy that they have had to reject work because all of their limos are on the road.
To expand their fleet, they must apply for a modification of their restricted certificate - and demonstrate that they will not compete with existing limousine companies.
They claim that Nevada law requires them to "prove, among other things, that: The granting of the certificate or modification will not unreasonably and adversely affect other carriers operating in the territory for which the certificate or modification is sought."
They applied for a modification in 2012 the Nevada Transportation Authority denied the application in 2014, saying it would not foster healthy competition.
Nevada is widely viewed as a business- friendly environment, recently wooing Tesla to Reno to open a billion-dollar battery facility. But the red tape hurts in-state and out-of state businesses, the Perlmans' co-plaintiffs say.
Steve and Patrick Saxon, owners of Sacramento-based Affordable Moving and Storage, say the state also turned down their request to expand into Nevada, again citing the competitors' veto.
"These statues provide a special privilege for established companies by allowing them to prohibit or impose burdens on their own potential competition, without regard for the applicant's fitness or capacity to practice the trade, or any other legitimate government interest," the Saxons say in the lawsuit.
Geography gives Nevada a stranglehold on truckers and movers. Interstate 80 is the second-longest freeway in the country, and a 100-mile stretch from Sacramento to Reno is heavily traveled by some of the largest transportation companies in the world. They too can be stalled by the Nevada Transportation Authority if they don't have the right permits, according to Penske Truck Leasing, one of the largest leasing and fleet management companies in the world.
"Some of our biggest customers are Starbucks, Toyota and FedEx, and when there is a storm over Donner Pass and their trucks get stuck, we are their back up plan," a Penske official told Courthouse News. "Sometimes we can't get permits overnight and we have to use California-plated tractors anyway."
Commercial vehicles licensed in California must have fuel and trip permits before they enter Nevada. The cost of the permit is calculated by the number of miles they expect to travel in Nevada. Fines can range from $500 to $2,500 for truckers without the right stickers.
Nevada passed the bill in 2009. Transportation companies say it targets California businesses.
"Most Northern California trucking companies have routes in Reno and the permit law hurts when there are breakdowns or weather events and they have to use back-up trucks that don't have the right permits," the Penske official said.
While the Nevada Department of Transportation lists several vendors that can issue fuel permits, not all of them are open 24 hours. Sometimes companies have no choice but to take the risk and head to Reno without the permits.
"They can't keep their loads in the yard; that's expensive cargo," said the Penske official.
In a tangentially related case, Nevada sued the ridesharing company Uber in October last year, for trying to operate in Nevada without permits. Uber drivers claim the state laws hurt consumers and prospective drivers.
"I mean, every state has its own rules and regulations, but it's not all about the state," said David Minchuk, who drives for Uber in Sacramento. "It's about the people, and if people find Uber more convenient than a taxi, then why not do it?"
Saxon says that Nevada law is hurting legitimate businesses and the people who own and work for them.
The result of Nevada's competition veto, Saxon says in the lawsuit, stops him from "earning a living in the occupation of their choice, for the sole and explicit purpose of protecting a discrete economic group - established transportation companies - against legitimate economic competition."
Saxon and the Perlmans seek an injunction and declaratory judgment that the laws violate rights to due process, equal protection of the law and privileges or immunities.
They are represented by Patrick McDonnell of Las Vegas, and Timothy Sandefur with the Pacific Legal Foundation in Sacramento.Follow @@NickCahill_5
Read the Top 8
Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.