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Little Rock's taxi-permitting process violates the Arkansas Constitution, a circuit judge ruled Wednesday in a victory for a cab company owner who wanted to license his three-car fleet to operate in the city limits.

Ken Leininger of Ken's Cabs LLC said the city's permitting process created a monopoly for its cab company.

He sued Little Rock in March after all 125 Little Rock permits were sold to the company that's been Little Rock's sole taxi provider since 2001, Greater Little Rock Transportation Service LLC, which operates as Yellow Cab.

Special Circuit Judge David Laser struck down the provision of Ordinance 34-38 that Leininger and his lawyers called the "monopoly rule."

They described it as a blatantly illegal infringement of Section 19 of Article Two of the constitution that reads in part: "monopolies are contrary to the genius of a republic, and shall not be allowed."

Leininger was awarded $1 in damages, a nominal amount that he requested to satisfy procedural requirements to file the lawsuit.

Taxi companies must have the $60 per car permits, which are awarded annually, in order to legally pick up customers within the city limits.

Yellow Cab officials told city regulators last year that they needed 120 permits for their active fleet and five permits for replacement vehicles.

Leininger's attorney, Justin Pearson of Florida, said all Leininger wanted was a chance to apply for the permits without being hindered by an illegal process that favored the older and larger company.

"My client just wants to compete," Pearson told the judge. "My client wants to reapply without this rule standing in his way."

Pearson and co-counsel Allison Daniel work for the libertarian Institute of Justice, a Virginia-based public-interest law firm, that took up Leininger's cause.

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Pearson said the permitting process is illegal because it requires the city to take into consideration how permitting a competitor would affect the established company's business.

Leininger's company met every other standard required by the city, he said.

But the Little Rock Board of Directors rejected his application solely on the basis of the impact it would have on Yellow Cab, Pearson said. He told the judge that the board was advised that permitting Ken's Cabs would violate the ordinance on those grounds.

Pearson argued that Leininger's case against the city was so strong that Little Rock had no real defense.

The Arkansas Supreme Court has continuously upheld the constitutional ban on monopolies since a 1944 decision involving taxi permitting in North Little Rock, he said.

Deputy City Attorney S̶h̶e̶r̶r̶y̶ Sherri* Latimer disputed the argument that the permitting process violated the constitutional ban on monopolies.

She said the Little Rock permitting process was different from the procedure struck down 72 years ago.

The current process is legal because it requires city officials in awarding permits to take into consideration whether Little Rock needs more taxis, she said.

The law requires city directors to make that determination based on the effect on traffic congestion that would be caused by having more cabs working and how well the current permit-holder is providing taxi service, Latimer said.

She declined to comment on whether the city will appeal Wednesday's ruling. The city can wait until the ruling is officially filed before deciding on an appeal.

Metro on 12/08/2016

*CORRECTION: Sherri Latimer is a deputy city attorney for the city of Little Rock. Her name was misspelled in this article.

Print Headline: LR cab-permitting illegal, judge finds

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Archived Comments

  • jonix
    December 8, 2016 at 7:46 a.m.

    Thanks to the Libertarian Institute for Justice, we can chalk up another win for the free market economy. When are city officials going to realize their job is not to pick winners or losers, but to establish ground rules for all players operating within their city? For them to limit the number of taxis is as absurd as limiting the number of people who can be allowed in the city.

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