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Let slip the drivers of Uber? Sure, if we're willing to cough up $20 million

  • Author: Jim Brennan
  • Updated: June 29, 2016
  • Published November 13, 2014

I am an attorney assisting the Anchorage Taxicab Permit Owners Association (ATPOA) in opposing the efforts of Uber to circumvent Anchorage's laws regulating on-demand for-hire transportation services. These laws were developed by the city, not the taxicab industry, for the benefit of both transportation industry customers and the rest of us who share the roads with taxicabs.

In his recent commentary, attorney Ken Jacobus accurately assumed that wide-open entry into Anchorage of largely unregulated, Uber-contracted personal vehicles to directly compete with taxicabs would "catastrophically devalue" the taxicab permits for which some of our Anchorage neighbors have paid $140,000 and more. They paid these prices in reliance on a "public convenience and necessity" system for regulating the number of permits, which has existed in Anchorage for over 50 years, and exists in most other American cities of any size.

Mr. Jacobus sees no problem with destroying these folks' investments. He blames the municipal system on the cab permit owners. He suggests they are unreasonable in expecting that a well-funded California corporation that would provide the same transportation services in Anchorage as taxicabs (including direct customer smartphone app connections with drivers) should be held to the same standards under city laws, including the requirement that they also purchase their permits.

For an attorney who, to his credit, has staunchly stood up for the constitutional rights of others, Mr. Jacobus has a blind spot for the rights of Anchorage taxicab permit owners, under state and federal constitutions, to "just compensation" where the government takes away property values. If Anchorage can change its laws to suddenly open entry to direct Uber competition with regulated taxicabs, and this drastically devalues the taxicab permits, the municipality and its citizens must pay for it.

This is because Anchorage taxicab permits are "property." Courts in other states have held that taxicab permits, like liquor licenses and other transferable special rights, are property, such that where the government changes its laws to take away their value, the government must compensate.

Mr. Jacobus implies that the Alaska Supreme Court rejected this principle in the lawsuit arising from the 2008 ballot initiative to open entry to Anchorage taxicabs. This is not true. The court actually decided to let the election proceed before deciding the question, stating "We therefore do not decide here whether taxicab permits are private property the taking of which requires just compensation." In the resulting election, Anchorage voters rejected open entry by a 65 percent majority, mooting the court case.

Mr. Jacobus presents several additional faulty rationales for denying constitutional compensation. He says that to be compensable, "property" must be something physical, like real property or a car. Not true. Many cases have found that non-physical rights or entitlements, including licenses, are property requiring compensation. Alaska cases have held that a "cause of action" is a property right protected by the constitutional takings clause, including a recent case where a change in law which destroyed pilots' overtime claims resulted in a compensable taking of property.

Nor does a "taking" require either the physical confiscation of property or taking away of taxicab permitees' ability to operate. A "regulatory taking," requiring governmental compensation, exists where the government so changes its laws that it deprives an owner of substantially all of his property's value. As Mr. Jacobus concedes, this is what would become of taxicab permit values if the market were opened to unlimited Uber cars.

Anchorage's current laws do provide for issuance of more taxicab permits, but only upon proof, in a hearing, that the "public convenience and necessity" requires more permits. This is a far cry from simply opening the floodgates to an unlimited number of minimally regulated Uber cars. This would be a radical change in Anchorage law, requiring compensation.

Mr. Jacobus' statement that the existing permits "were issued for nominal fees" is at best a half-truth. Whatever there initial values were, 50 years ago, they had gained substantial value by the time present owners purchased them. Most of them have had to pay over $100,000 for a permit, in reliance on the market system created and administered by the city, not by some fictional taxicab "cartel."

Mr. Jacobus finally turns to blame the city, suggesting that its public convenience and necessity system limiting the number of taxicabs violates federal antitrust laws. If this were the case, wouldn't the federal government, or a private party, have long ago successfully sued the hundreds of other American cities that use such a system?

The bottom line is this: Anchorage can kowtow to Uber and its blitzkrieg of lawyers and lobbyists, and throw open the local transportation for-hire system to Uber's unrestricted, unregulated and inadequately insured vehicles. But in doing so, it is likely that the city will be constitutionally required to pay the owners of 188 taxicab permits sums neighboring $20 million. At a time where there are large municipal budget shortfalls looming, should Anchorage expose itself to such a large liability, for the benefit of a wealthy and aggressive outside corporation?

Jim Brennan has been an Anchorage attorney since 1977.

The views expressed here are the writer's own and are not necessarily endorsed by Alaska Dispatch News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary(at)alaskadispatch.com

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