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Checker Cab Operators, Inc. v. Miami-Dade County

United States Court of Appeals, Eleventh Circuit

August 6, 2018

CHECKER CAB OPERATORS, INC., a Florida Corporation, individually and on behalf of others similarly situated, B&S TAXI CORP., a Florida Corporation, MIADECO CORP., a Florida Corporation, Plaintiffs - Appellants,
MIAMI-DADE COUNTY, a political subdivision of the State of Florida, Defendant-Appellee.

          Appeal from the United States District Court for the Southern District of Florida D.C. Docket No. 1:16-cv-21976-DPG

          Before MARCUS and WILSON, Circuit Judges, and HOWARD, [*] District Judge.


         The emergence of Transportation Network Entities such as Uber and Lyft ("TNEs") has threatened the viability of traditional taxicab companies worldwide. Amid that competitive struggle, this appeal arises. For years, taxicab, livery, limousine, and other for-hire transportation services in Miami-Dade County ("the County") could be offered only by those who possessed a "medallion" -- that is, a license to supply those services. In May 2016, the County enacted an ordinance authorizing the TNEs to operate in the for-hire transportation market ("the TNE Ordinance"). Certain medallion holders filed suit ("the Medallion Holders"), attacking the TNE Ordinance's constitutionality. They claimed that, by disrupting their market exclusivity, the TNE Ordinance effected a "taking" of their medallions without just compensation in violation of the Takings Clause of the Fifth Amendment to the United States Constitution and Article X § 6 of the Florida Constitution. They also claimed that, because it subjected them to more stringent regulations than those governing TNEs, the TNE Ordinance discriminated against medallion holders in violation of the Equal Protection Clause. The district court held that the Medallion Holders failed to state either a takings or an equal protection claim.

         After the district court dismissed this case, the Florida legislature passed a new body of laws that preempted the TNE Ordinance, thereby mooting the Medallion Holders' claims for declaratory and injunctive relief. However, we affirm the judgment of the district court dismissing their claims for monetary damages arising under the Takings and Equal Protection Clauses, which were not moot. The medallions conferred by the County created a license to offer for-hire taxicab services in Miami-Dade County; the County did not afford the Medallion Holders the right to exclude competition in the marketplace. Moreover, the regulatory scheme was rationally related to improving the quality and safety of for-hire transportation service and was wholly consonant with the Equal Protection Clause of the Fourteenth Amendment.



         The Medallion Holders -- Checker Cab Operators, Inc., B&S Taxi Corp., and Miadeco Corp. -- are for-hire taxicab license holders operating in the County. Since 1981, the County has extensively regulated its for-hire transportation market through the Miami-Dade County Code of Ordinances ("the Code"). It has imposed licensing requirements, fixed the overall number of licenses, restricted the licenses' alienability, promulgated rules of operation, capped fares and rates, and prescribed insurance requirements, vehicle standards, and penalties for Code violations. In 1998, the County adopted Ordinance No. 98-105 (the "1998 Ordinance") in order to improve the quality, reliability, and safety of for-hire transportation services. The 1998 Ordinance established the "medallion system," which renamed for-hire transportation licenses "medallions," deemed them "intangible property," and converted all 1, 824 existing for-hire licenses into medallions for a fee. Id. §§ 31-81(z), (aa), 31-82(c). It also comprehensively conditioned the medallions' use and alienability. Id. § 31-82(j)-(k), (r). It decreed that the medallions may be transferred, sold, or assigned only to County-registered taxicab chauffeurs, and required medallion holders to keep records pertaining to vehicle operations, to register their vehicles with the County, and to make those vehicles available for inspection. Id. § 31-82(j), (r). Failure to abide by those rules could result in the suspension or revocation of a medallion. Id. § 31-82(k).

         Since 1998, the County has amended its for-hire transportation regulations at least 33 times, while issuing almost 300 additional medallions, thereby increasing the total number of medallions by over 16 percent. Miami-Dade County, Fla., Ordinance Nos. 98-105 (Aug. 7, 1998); 01-67 (Apr. 20, 2001); 04-103 (Jun. 28, 2004); 06-111 (Apr. 20, 2006); 08-139 (Apr. 16, 2009); 11-53 (Dec. 13, 2011); 11-54 (Dec. 13, 2011); 12-51 (Jun. 26, 2012). Still, the County generally limited the total number of medallions in circulation. By maintaining their scarcity and permitting their alienability, the County nurtured a secondary market in medallions. In 2012, the County profited handsomely from that market after auctioning off medallions for more than $400, 000 each. By 2014, the medallions traded for approximately $340, 000.

         That same year, TNEs began operating in the County. They enabled customers to use smartphone applications to locate, schedule, and summon drivers, who transported them to their destination in exchange for a prearranged fee made by credit card payment through the application. Since TNEs provided for-hire transportation services in the County without medallions, those services were unlawful, and the County responded by ticketing TNE drivers and impounding TNE vehicles.

         By 2016, however, the County reconsidered its TNE policy. It enacted the TNE Ordinance in order to authorize the TNEs' market entry and "promote the free market, enhance the availability, efficiency and safety of transportation systems as well as encourage innovation and enhance residents' and consumers' transportation options." Ordinance No. 16-42, Body. Although TNEs were required to bear TNE licenses, they were not obliged to carry medallions. Id. § 31-702(a). As a result of the TNE Ordinance, TNE operators entered the County en masse, substantially diluting the medallions' value. Also in 2016, the County modified taxicab regulations (the "2016 Ordinance") in order to "level the playing field [between taxicabs and TNEs] notwithstanding the unique aspects of each form of transportation, and encourage competition under a responsible and fair regulatory regime." Id., Body. Following the promulgation of the TNE and 2016 Ordinances, regulations of taxicabs diverged in some ways from those imposed on TNEs.

         In July 2017, the Florida legislature enacted a new law regulating TNEs at the state level. Act effective July 1, 2017, ch. 2017-12, Laws of Fla. (codified at Fla. Stat. § 627.748 (2018)). That law preempted the TNE Ordinance, declaring: "It is the intent of the Legislature to provide for the uniformity of laws governing [TNEs], [TNE] drivers, and [TNE] vehicles throughout the state. [TNEs], [TNE] drivers, and [TNE] vehicles are governed exclusively by state law, including in any locality or other jurisdiction that enacted a law or created rules governing [TNEs], [TNE] drivers, or [TNE] vehicles before July 1, 2017." Fla. Stat. § 627.748(15)(a). It did not however preempt local laws covering airports and seaports. Id. § 627.748(15)(b).

         In addition to preempting local laws, the new state law regulated TNE insurance coverage and driver eligibility, and required TNEs to, inter alia, disclose fares before commencing rides, display photographs of TNE drivers and license plate numbers of TNE vehicles, and transmit electronic receipts listing the ride's origin and destination, the total time and distance traveled, and the total fare paid. Id. § 627.748(4)-(6). The law also prescribed insurance and driver-eligibility requirements. Id. § 627.748(7), (11). As a result, the County's TNE industry is now comprehensively governed by state law.


         In June 2016, the Medallion Holders filed an amended class action complaint on behalf of all medallion holders in the Eleventh Judicial Circuit in Miami-Dade County. They alleged that the TNE Ordinance effected a "taking" of their medallions without just compensation in violation of the United States and Florida Constitutions. Specifically, "[t]hrough the [TNE] Ordinance, the County has substantially interfered with the private property held by the [Medallion Holders] in that their [medallions] will be, and are, significantly devalued as a result of the legalization and/or regulation of the [TNEs]." They requested just compensation for the diminution of the medallions' value.

         The Medallion Holders also claimed that the TNE Ordinance subjected similarly situated service providers -- taxicabs and TNEs -- to disparate regulatory frameworks, which competitively disadvantaged the Medallion Holders and violated their right to the equal protection of the laws. They cited six particular discrepancies between taxicab and TNE regulations: (1) while the Code required taxicabs to secure chauffeur's agreements with each taxicab driver, it granted TNEs broader latitude in hiring drivers; (2) the Code imposed more stringent insurance coverage requirements on taxicabs; (3) the Code subjected taxicabs to background checks by the Department of Regulatory and Economic Resources ("the Department"), while permitting TNEs to conduct independent background checks; (4) while taxicabs were required to undergo Department vehicle inspections, TNEs were permitted to perform independent inspections; (5) taxicabs were bound by more onerous vehicle-appearance standards; and (6) the County established maximum fare rates for taxicabs, but not for TNEs. The Medallion Holders argued that those regulatory disparities were "not rationally related to legitimate government interests," but rather were "irrational and wholly arbitrary." They sought monetary damages, a declaration that the TNE Ordinance violated their right to equal protection, and an injunction against its enforcement.

         The County removed the case to the United States District Court for the Southern District of Florida and moved to dismiss the complaint for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6). The district court agreed. First, the court held that the Medallion Holders failed to state a takings claim. Although the medallions enabled their holders to provide for-hire transportation services, they conferred no right to block competition in the relevant market. Since the diminution of the medallions' value derived solely from exposure to new competition, their takings claims could not succeed. The trial court also rejected their equal protection claims, explaining that the regulatory distinctions identified by the Medallion Holders simply reflected the important differences found in the taxicabs' and TNEs' respective business models. Thus, for example, while taxicabs operate primarily through street hails and flat fare rates, TNEs are summoned through smartphone applications and calibrate fares according to fluctuations in supply and demand. The district court further denied the Medallion Holders' request for leave to amend their complaint, holding that any amendment would be futile.

         This timely appeal ensued.


         "We review the district court's grant of a motion to dismiss for failure to state a claim de novo, accepting the allegations in the complaint as true and construing them in the light most favorable to the plaintiff. To withstand a motion to dismiss under Rule 12(b)(6), a complaint must include enough facts to state a claim to relief that is plausible on its face. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable ...

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