Business & Tech

Chicago court’s Uber decision may hurt Boston taxi companies

A federal appeals court in Chicago last week ruled that the city can subject ride-hailing services such as Uber and Lyft to different regulations than taxis.

Jack Atley/The New York Times/File 2012

A federal appeals court in Chicago last week ruled that the city can subject ride-hailing services such as Uber and Lyft to different regulations than taxis.

As cab companies in Boston and Cambridge push a legal effort to have Uber drivers held to the same rules as taxis, a similar case in Chicago has run into a judicial roadblock.

A federal appeals court in Illinois ruled last week that Chicago can subject ride-hailing services such as Uber and Lyft to different regulations than taxis. Even though the services look similar, Judge Richard Posner of the US Court of Appeals for the Seventh Circuit wrote there are enough differences to warrant different rules. For explanation, Posner used the example of pet licenses that municipalities issue.

Advertisement

“Most cities and towns require dogs but not cats to be licensed,” Posner wrote in his decision. “There are differences between the animals. . . . Just as some people prefer cats to dogs, some people prefer Uber to Yellow Cab, Flash Cab, Checker Cab, et al. They prefer one business model to another.”

Posner sent the case back to a lower court judge with instructions to dismiss a lawsuit brought by cab owners against the City of Chicago. The ruling struck a blow to the taxi owners, who had argued that Chicago was violating their equal-protection rights by subjecting cabs to different and more stringent rules than Uber and Lyft.

Get Talking Points in your inbox:
An afternoon recap of the day’s most important business news, delivered weekdays.
Thank you for signing up! Sign up for more newsletters here

Though Posner’s ruling affects only the Chicago case, it may influence several similar suits that have been pressed by cab companies and industry groups across the country.

In the last half-decade, taxi companies nationwide have tried to stem the rise of Uber and Lyft. But as city and state lawmakers have mostly allowed the popular services to operate outside cab rules, taxi owners have taken their fight to the federal courts in Boston, Chicago, Miami, and elsewhere.

Three cases are pending in US District Court in Boston: a Cambridge industry group is suing the city for not enforcing taxi laws on Uber and Lyft, and a Boston cab group is making a similar challenge against Mayor Martin J. Walsh. The Boston group is also suing Governor Charlie Baker for signing a separate set of rules to oversee the ride-hailing firms into law this summer.

Advertisement

Jenifer Pinkham, the attorney representing the Boston and Cambridge cab owners in all three cases, did not respond to a request for comment on the Chicago ruling.

The judge in all three Massachusetts cases is US District Court Judge Nathaniel Gorton. In the lawsuit against the City of Boston, Gorton seemed partial to the equal-protection argument. He refused to dismiss it because, he said, Uber and taxicabs offer such similar services: transportation on city streets in exchange for money.

The lower court in Chicago had been similarly sympathetic before the case went to appeal. But Posner said Uber and taxis are distinct enough to warrant separate regulations. For example, taxicabs can be hailed from the street, and their prices are set by city regulations, Posner wrote.

“There are enough differences between taxi services and [Uber] to justify different regulatory schemes, and the existence of such justification dissolves the plaintiffs’ equal-protection claim,” Posner wrote.

The Chicago decision doesn’t set a precedent for the Massachusetts cases, but it could influence their outcome, according to legal experts. For example, without precedent from their own First Circuit Court of Appeals, judges in Boston may naturally look to the Chicago decision for guidance, said Harvard Law School professor Bruce Hay.

“The Seventh Circuit is an indicator, not a conclusive indicator but a persuasive indicator,” of how judges here “would view the case,” he said.

Adding to the weight of the Chicago decision is the reputation of the judge himself: Posner is well respected among his peers on issues related to business, according to Jack Beermann, a Boston University law professor.

Moreover, Beermann said the equal-protection claims of the taxi owners are probably a stretch for most judges anyway. Courts usually take a hands-off approach to economic regulations, and tend to reserve equal-protection arguments for issues such as racial or gender-based discrimination, he said.

“It’s a constant complaint of people who are subject to regulation, that what you’re doing to me is so unfair that it puts me at a disadvantage,” Beermann said. “And those kinds of arguments don’t typically prevail.”

Still, the Chicago taxi group is holding out hope and is considering its options for appeal. A different finding on the equal-protection claim in another court, like in Boston, would give the taxi industry a better chance of eventually bringing one of its challenges to Uber and Lyft to the Supreme Court, said Michael Shakman, who represents the Chicago taxi owners.

Adam Vaccaro can be reached at adam.vaccaro@globe.com. Follow him on Twitter at @adamtvaccaro.
Loading comments...
Real journalists. Real journalism. Subscribe to The Boston Globe today.