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Speed's Auto Services Group, Inc. v. City of Portland

United States District Court, D. Oregon, Portland Division

June 20, 2014

SPEED'S AUTO SERVICES GROUP, INC., d/b/a Towncar.com, an Oregon Corporation, and FIESTA ENTERPRISES, LLC, d/b/a Fiesta Limousine, an Oregon Limited Liability Company, Plaintiffs,
v.
CITY OF PORTLAND, OREGON, CITY OF PORTLAND REVENUE BUREAU, PRIVATE FOR-HIRE TRANSPORTATION BOARD OF REVIEW, and THOMAS W. LANNOM, in his official capacity as Revenue Bureau Director, Defendants.

OPINION AND ORDER

JOHN V. ACOSTA, Magistrate Judge.

Introduction

The sole remaining defendant in this action, City of Portland ("City"), seeks summary judgment on the sole remaining claim[1] for violation of the Substantive Due Process Clause of the Fourteenth Amendment ("Substantive Due Process Clause") asserted by plaintiffs Speed's Auto Services Group, Inc., doing business as Towncar.com ("Speeds"), and Fiesta Enterprises, LLC, doing business as Fiesta Limousine ("Fiesta)(collectively referred to as "Plaintiffs") in the complaint filed in this court on April 26, 2012 (the "Complaint"). Plaintiffs assert that City regulations governing provision of private for-hire transportation services constitute economic protectionism of taxicab companies in violation of the Substantive Due Process Clause.

The court finds Plaintiffs have failed to present evidence supporting their allegations that the Regulations resulted in a complete bar to Plaintiffs' pursuit of a chosen occupation or deprived Plaintiffs of business goodwill. Accordingly, Plaintiffs have failed to support their claim under the Substantive Due Process Clause and the City's motion for summary judgment on this sole remaining claim is granted.[2]

Background

Plaintiffs are Oregon businesses that transport customers in and around Portland, Oregon, in luxury vehicles, such as town cars, limousines, and party buses (collectively "Executive Sedans"). Both are subject to City regulations setting minimum fares and wait times applicable to private for-hire transport companies using Executive Sedans that are not applicable to taxicab companies. The City's Revenue Bureau ("Bureau"), which is part of the City's Office of Management and Finance, issues permits to private for-hire transportation companies and vehicles, and enforces the City's transportation policies. (Lannon' Dep. 10:11-23.) The ultimate authority for regulation of private for-hire transportation companies and vehicles rests in the City Council. (Hottot Decl. Ex. 17 at 40.)

The regulations governing private for-hire transportation are found in Chapter 16.40 of the City Code.[3] The purpose of Chapter 16.40 is to provide for the "safe, fair and efficient operation of taxicabs" while allowing the industry "to operate without unnecessary restraint." (McGair Aff. Ex. 8 at 1.) Chapter 16.40 is intended to provide "industry separation to protect order, public safety, public convenience, Land] basic transportation services." (Butler Dep. 79:22-24.)

Speed's has been in the private for-hire transportation business since 2005 and currently has a fleet of eleven Executive Sedans ten town cars and one minibus. (Coe Dep. 14: 2-18; 16:11-17.) Speed's provides transportation services on a daily basis that comply with the City's regulations. (Coe Dep. 26:4-7.) Fiesta currently has a fleet of five Executive Sedans - three party buses, one Cadillac limousine, and one town car. (White Dep. 11:19-22; 13:13-16.) Fiesta is also currently providing regular transportation services, primarily between downtown and the Portland International Airport ("Airport"), in accordance with the City's regulations. (White Decl. ¶¶ 11, 22.)

This lawsuit was generated by the City's response to Plaintiffs' reduced-fare promotions on Groupon.com in the fall of 2011. Speed's offered Executive Sedan service for a one-way trip not exceeding thirty miles at a flat rate of $32.00, while Fiesta offered one-way trips in an Executive Sedan to or from the Airport at the same flat rate. (McGair Aff. Ex. 16 at 1; Ex. 17 at 1.)

The City advised Plaintiffs in separate letters that the promotions violated § 16.40.480(B), [4] and that unless Plaintiffs cancelled the promotions, they would be assessed civil penalties in the amount of $635, 500 for Speeds and $259, 500 for Fiesta, and their company and vehicle permits would be suspended. (McGair Aff. Ex. 16 at 1; Ex. 17 at 1.) Plaintiffs cancelled the promotions, returned the amounts collected, were not fined, and continued their businesses uninterrupted.[5]

Plaintiffs object to three regulations: 1) the required one-hour wait time found in § 16.40.460 ("Wait-Time Regulation"); 2) the minimum flat rate for trips between the Airport and downtown found in § 16.40.480(A) ("Airport-Fare Regulation"); and 3) the minimum rate of at least thirty-five percent more than prevailing taxicab rates found in § 16.40.480(B) ("Minimum-Fare Regulation") (collectively, the "Regulations"). The Wait-Time Regulation requires that "[a]ll limousine and executive sedan service be provided on a prearranged basis." PORTLAND, OR., CITY CODE § 16.40.460(A). "[P]rearranged' means that the reservation for services was made and documented with the validly permitted drive or transportation company at least 60 minutes prior to the transportation of the customer." CITY ADMIN. RULE 16.40.460-01.[6] The Airport-Fare Regulation provides that "[m]inimum flat rates apply for limousine and executive sedans that provide for-hire transportation service between the airport and Portland's Downtown Core and/or the AMTRAK station (in either direction) whether paid by the passenger or a third party." PORTLAND, OR., CITY CODE § 16.40.480(A). The current minimum flat rate, which is prescribed in the administrative rules, is $50.00 per trip. CITY ADMIN. RULE. Rule 16.40.480-01. The Minimum-Fare Regulation requires that "[dates charged for limousine and executive sedan services must be at least 35 per cent higher than the prevailing taxicab rates for the same route.[7] PORTLAND, OR., CITY CODE § 16.40.480(B)[8].

Gary Coe, majority owner and president of Speed's ("Coe"), complains that the Wait-Time Regulation prevents Speed's from providing Airport-to-downtown customers rides to a restaurant immediately after dropping them off at their original destination, and the Airport-Fare Regulation and Minimum-Fare Regulations (collectively the "Fare Regulations) restrict Speed's ability to offer promotional offers based on a reduced price. (Coe Dep. 9:23-24;10:13-16; 26:8-21.) Coe explained that Speed's does not make a net profit on a trip from the Airport to downtown at the current minimum rate of fifty dollars but believes that with enough trips, the rate would be profitable. (Coe Dep. 28:11-17; 43:7-11.) Coe has no problem with Executive Sedans charging more than taxicabs, wants to be able to charge more than taxicabs, and feels Executive Sedan service is worth more than taxicab service. (Coe Dep. 41:22-42:3.) In fact, Coe would like to be the "high-price guy" and would not charge less than fifty dollars for a ride to the Airport even if the Airport-Fare Regulation was not in place. (Coe Dep. 78:3-10.) Similarly, Speed's would never charge less than the 35% premium required by the Minimum-Fare Regulation unless it was offering a special deal to encourage new customers to take a ride with them. (Porter Dep. 60:25-61:5.)

Coe feels the inability to give customers immediate rides to a restaurant and to offer discounted rates in a promotional offer have detrimentally affected Speed's ability to maintain goodwill with existing customers or develop goodwill with prospective customers. (Coe Dep. 50:6-51:15.) Coe estimated that Speed's Groupon.com promotion resulted in nearly six hundred and fifty purchases, one hundred of which he expected would be return customers. (Coe Dep. 27:11-17.)

The main complaint voiced by Thomas White, majority owner and chief executive officer of Fiesta ("White"), relates to the Airport-Fare Regulation which prevents Fiesta from offering a promotion with a discounted rate to obtain future customers. (White Dep. 18:25-19:16.) Fiesta has offered wine tours for $50 minimum on Groupon.com, which the City has allowed. (White Dep. 24:18-25:8.) Fiesta also objects to the Wait-Time Regulation which prevents it from servicing customers who need transportation within an hour. (White Dep. 6:2-4; 50:11-22.)

Legal Standard

Summary judgment is appropriate where the "movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. Civ. P. 56(a) (2012). Summary judgment is not proper if material factual' issues exist for trial. Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir. 1995).

The moving party has the burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party shows the absence of a genuine issue of material fact, the nonmoving party must go beyond the pleadings and identify facts which show a genuine issue for trial. Id, at 324. A nonmoving party cannot defeat summary judgment by relying on the allegations in the complaint, or with unsupported conjecture or conclusory statements. Hernandez v. Spacelabs Medical, Inc., 343 F.3d 1107, 1112 (9th Cir. 2003). Thus, summary judgment should be entered against "a party who fails to make a showing ...


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