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Taxi Companies Drive By Some Antitrust Claims But Get Flagged By Others

Posted  December 20, 2012

A federal judge in Texas has dismissed several claims but denied defendants full summary judgment in Association of Taxicab Operators USA et al. v. Yellow Checker Cab Co. of Dallas/Fort Worth Inc. et al., an ongoing antitrust case in which plaintiffs allege a group of Dallas Fort-Worth area cab companies created a monopoly to fix taxi stand rates.

Judge David Godbey of the U.S. District Court for the Northern District of Texas granted partial summary judgment in favor of defendants Yellow Checker Cab Company of Dallas/Fort Worth, Inc., Jet Taxi, Inc., Irving Holdings, Inc., and MSS Transportation, Inc. doing business as Freedom Cab Company.

Citing lack of evidence, the court dismissed Sherman Act claims against Yellow Checker Cab and Jet Taxi that alleged predatory pricing and price fixing.  Not only did the plaintiffs fail to provide sufficient evidence of the antitrust violations, they also failed to rebut witnesses that testified that Jet Taxi did not set prices below their operating costs.

In its argument for summary judgment, Yellow Checker Cab also argued that plaintiffs could not prove the “conspiracy” element of a Sherman Act violation.  The court agreed, citing Computer Identics Corp. v. S. Pac. Co., 756 F.2d 200, 205 (1st Cir. 1985), which held there can be no conspiracy among companies that are so closely related that they are in fact one entity.

Irving Holdings’ request for partial summary judgment was also granted because plaintiffs lacked sufficient evidence of an antitrust injury under the Clayton Act.

The court did, however, uphold a substantial portion of the case.  The plaintiffs’ price-fixing claims against Jet Taxi and their claims against Yellow Cab and Jet Taxi alleging illegal mergers survived the summary judgment motions.  All of plaintiff’s Sherman Act claims against Irving Holdings survive, as do all of their claims against Freedom Cab and four other cab companies.

Notably, the court held that Freedom Cab failed to prove it is protected from liability for alleged antitrust violations under the state-action immunity doctrine.  Freedom Cab argued it is exempt from federal antitrust regulation because Texas grants Dallas-Fort Worth municipalities the ability to issue licenses, taxi permits, insurance, and vehicle inspections.

However, none of the municipal policies Freedom Cab cited allows the anticompetitive activity, and local governments never monitored the defendants’ mergers or pricing practices.  Thus, Freedom Cab failed to satisfy the two-part test for the application of the state-action immunity doctrine that the Supreme Court developed in California Retail Liquor Dealers Assn. v. Midcal Aluminum, Inc., 445 U.S. 97 (1980).

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