Brew City Taxi Wars: The Fight for Transportation Freedom in Milwaukee

The Institute for Justice (IJ), the nation’s leading libertarian
law firm, sealed its victory last week in a hard-fought case
that will crack open Milwaukee’s cab industry. Twenty-two-years
ago, Brew City capped the number of cabs permitted to pick up
passengers off the street at 321, which works out to about one taxi
for every 1850 residents. (Washington, D.C., by comparison, has about
one cab for every 80 residents.) These permits—which aren’t
technically medallions but function the same way—sell for about
$150,000 a piece.
Taxi magnates Joe and Mike Sanfelippo own about half the total,
which have a combined value of more than $20 million.

In its case, IJ represented three immigrant cab drivers suing
for an opportunity to acquire their own cab permits on the grounds
that the cap violuates the equal protection clause in the Wisconsin
Constitution. Their win means the city will award 100 new
permits to cabbies in a lottery next month.

Taxi cartels often thwart political reform efforts, but IJ’s
victory demonstrates yet again how the fight can be won in the
courthouse. Over the years, IJ has scored wins to liberalize
transportation poilcy in Denver, Las Vegas, and
New York
City. It’s currently fighting cases in Portland and Tampa.

But there’s an even more powerful tool for battling
transportation cartels: technology. On Thursday, Uber, the
high-tech car service that’s upending taxi markets in cities all
over the world,
opened for business in Milwaukee. If the company’s service
proves as popular in Milwaukee as it has in other cities, an extra
100—or 100,000—cab permits won’t matter much.

I’m reminded of the horse-railway operators that bribed their
way into obtaining exclusive operating franchises in
nineteenth-century cities. How much are those franchises worth
today?

Milwaukee’s cab
wars are just getting started. There are
rumblings that the city may sue Uber, and the Sanfelippo
brothers are considering legal action. In a phone interview, Red
Christensen, a vice president in the Sanfelippo brothers’ taxi
company, told me that “there’s no need for additional taxicabs
in this market,” and that Uber is operating “in violation of city
law.”

“As a company that operates in the public trust,” Christensen
said, “our concern is for passengers getting into a car that
doesn’t have proper insurance, such as what happened with
a six-year-old child in San Francisco.” Christensen
was referring to Sofia Liu, who was killed by an Uber driver
on New Year’s Eve. Taxi cartels in cities all over the country are
shamelessly using this tragedy in an effort to undermine Uber and
protect their own interests. (I recently
wrote about this issiue in The Daily Beast.)

IJ’s Anthony Sanders, the lead attorney in the Milwaukee cab
case, hasn’t done a formal analysis of the issue, but says he
doesn’t think Uber is violating any laws because the company is
only working with drivers already licensed to operate a car service
in the city. Since Uber drivers don’t pick up passengers that hail
them on the street, they’re not required to have one of the city’s
321 cab permits.

In a statement, Uber said the service it’s providing in
Milwaukee “connects riders with commercially licensed and insured
drivers.”

Sanders says Uber’s entrance into the city “presents all kinds
of opportunities for entrepreneurs including my clients, and
it should be very welcome for everyone except the existing permit
holders.”

Rob Montz recently covered D.C.’s Uber Wars for Reason TV:

Nick Gillespie and I covered a 2011 fight over a proposed
medallion system in the district—a story that briefly landed me in
jail.