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Taxi owners competing against Uber, Lyft want state to pay up

Atlanta taxi owners say the state Legislature cost them big money when it allowed Uber and other ride-sharing services to compete for their customers.

Now they want the state to pay up.

The taxi companies told the Georgia Supreme Court Monday they spent tens of thousands of dollars to buy exclusive certificates needed to offer rides in the city, only to see lawmakers undermine that investment when they opened the door to ride-sharing services last year. The state said the taxi owners should have known the regulations could change.

The case isn’t likely to jeopardize your ability to catch an Uber or Lyft to the airport. But it could determine whether taxpayers must compensate taxi owners. And it shows just how quickly new technology can upend traditional industries.

Taxi companies have long operated under regulations that protect the public (by, for example, regulating fares) but also limit competition in the industry. The new ride-share companies have shredded that model, enabling customers to hail drivers through their smart phones and bypassing many of the traditional regulations.

The result has been a flurry of new laws and lawsuits across the country.

In 2015 Georgia lawmakers approved House Bill 225 to regulate ride-sharing services. Among other things, HB 225 required drivers to pass background checks and said the companies must pay taxes and fees and carry insurance on their drivers.

Taxi owners say the bill also opened them up to less-regulated competition and undermined their business.

Under state law, taxicab drivers have long had to buy a special certificate – dubbed a “medallion” – to operate in Atlanta. The city capped the number of medallions at 1,600.

State law also allows drivers to sell or lease the medallions, to give them as gifts and even use them as collateral to secure a loan. On Monday attorney William Pannell told the Supreme Court his clients paid up to $80,000 for medallions.

But after HB 225 allowed the new ride-share services to compete, Pannell said the value of medallions plummeted to as little as $2,000.

In a lawsuit against the state filed last year in Fulton County Superior Court, five taxi drivers said HB 225 was an unconstitutional taking of their property – the value of a medallion – without compensation. They want the state to pay up.

The Superior Court dismissed the claim, and the taxi owners appealed to the Supreme Court.

At Monday’s hearing, Deputy Attorney General Robin Leigh argued the medallions aren’t property. She said lawmakers are free to change regulations, and HB 225 simply regulated companies like Uber that were already operating in the state.

Leigh said that the taxi owners are “asking this court to stymie innovation.”

Taxi companies across the country have brought similar litigation as the ride-sharing services have encroached on their business. None of the cases cited at Monday’s hearing was decided in favor of the taxi owners, though Pannell argued they were not decided on Georgia law.

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