Campbell v. City of Chicago

• Decision Date: 28 July 1986
• Docket Number: No. 83 C 3884.,83 C 3884.
• Citation: 639 F. Supp. 1501
• Parties: John H. CAMPBELL, Isadore Head and Cornelius E. Scott, individually and on behalf of all others similarly situated, Plaintiffs, v. The CITY OF CHICAGO, Yellow Cab Company and Checker Taxi Company, Inc., Defendants.
• Court: U.S. District Court — Northern District of Illinois

639 F. Supp. 1501

John H. CAMPBELL, Isadore Head and Cornelius E. Scott, individually and on behalf of all others similarly situated, Plaintiffs, v. The CITY OF CHICAGO, Yellow Cab Company and Checker Taxi Company, Inc., Defendants.

No. 83 C 3884.

United States District Court, N.D. Illinois, E.D.

July 28, 1986.

Michael T. Hannafan, Janet M. Koran and Steven P. Handler, Hannafan & Handler, Ltd., Chicago, Ill., for plaintiffs.

Robert W. Fioretti, Arthur N. Christie and James D. Montgomery, City of Chicago, Jeremiah Marsh, Michael Schneiderman and William Carlisle Herbert, Hopkins & Utter, Chicago, Ill., for City of Chicago.

Harold C. Hirshman, Kenneth H. Hoch and Stuart Altschuler, Sonnenschein, Carlin, Nath & Rosenthal, Chicago, Ill., for Yellow Cab Co. and Checker Taxi Co., Inc.

ORDER

NORGLE, District Judge.

This antitrust case is before the court on cross motions for summary judgment. Plaintiffs, cab drivers in the City of Chicago, have brought this action against defendants, the City of Chicago ("City"), Yellow Cab Company ("Yellow"), and Checker Taxi Company, Inc. ("Checker") claiming violations of sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2. The action is brought by several individual plaintiffs and on behalf of a class consisting of all persons who have held Public Vehicle Chauffeur's Licenses issued by the City and who have leased or subleased taxicabs of licenses/medallions during the relevant period of this action.¹ Defendants advance a number of theories in support of their motions but rest primarily on the "state action" and Noerr-Pennington doctrines in defense of this action. Plaintiffs urge judgment in their favor on the liability issue in their section 1 count. For the following reasons, defendants' motions are granted and plaintiffs' motion is denied.

The central focus of this litigation is the City's enactment in 1963 of an ordinance regulating the manner of acquiring and holding taxicab licenses and their number. Chicago Municipal Code, Public Passenger Vehicles § 28-22.1(a) et seq. This ordinance arose out of a settlement among the City and Yellow and Checker over damage claims in 1963. The ordinance has been amended several times since then,² but those amendments do not alter the allegedly offending aspects of the ordinance.

City argues primarily the state action immunity from antitrust liability. Cf. Parker v. Brown, 317 U.S. 341, 350-52, 63 S.Ct. 307, 313-14, 87 L.Ed. 315 (1943). In Parker, the Supreme Court held that the federal antitrust laws were never intended to encompass the individual states' regulatory actions. Underlying this conclusion are the traditional concerns of federalism and state sovereignity. The Sherman Act was intended to prohibit private restraints on trade, and the court refused to extend that prohibition to the acts of a state legislature. Parker, 317 U.S. at 350-51, 63 S.Ct. at 313-14. It was long-assumed that Parker immunity applied to municipalities and local governments as well. Metro Cable Co. v. CATV of Rockford, Inc., 516 F.2d 220, 228-29 (7th Cir.1975) (extending Parker to a municipality prior to City of Lafayette). See generally Report to the Senate Committee on the Judiciary on the Local Government Antitrust Act, S.Rep. No. 593, 98th Cong., 2d. Sess. 1 (1984) (concluding that "it was generally assumed that the `state action' doctrine applied not only to States, but to local units of government as well"); see also H.R. 6027, 98th Cong., 2d. Sess 130 Cong. Rec. H8471 (daily ed. August 6, 1984) (same), U.S.Code Cong. & Admin.News 1984, p. 4602.

The Supreme Court's decisions in City of Lafayette, Louisiana v. Louisiana Power & Light Co., 435 U.S. 389, 408, 98 S.Ct. 1123, 1134, 55 L.Ed.2d 364 (1978) and Community Communications Co. v. City of Boulder, Colorado, 455 U.S. 40, 51, 102 S.Ct. 835, 840, 70 L.Ed.2d 810 (1982), however, made clear that municipalities as such do not share the state's immunity from antitrust laws. Only where the state legislature has granted specific, affirmative authority to the local government to regulate in a defined area, does the state's antitrust immunity extend to municipalities. City of Lafayette, 435 U.S. at 413-14, 98 S.Ct. at 1136-38 (anticompetitive conduct of municipality must be performed pursuant to state policy to displace competition with regulation or monopoly public service); Boulder, 455 U.S. at 51, 102 S.Ct. at 840 (home rule authority insufficient; local government's action must be pursuant to "clearly articulated and affirmatively expressed" state policy).

The Supreme Court has recently reaffirmed the Boulder articulation as the proper test. In Town of Hallie v. City of Eau Claire, 471 U.S. 34, 105 S.Ct. 1713, 1717, 85 L.Ed.2d 24 (1985) the Court identified the two-part inquiry local government entities must satisfy to claim immunity from antitrust laws:

It is therefore clear from our cases that before a municipality will be entitled to the protection of the state action exemption from the antitrust laws, it must demonstrate that it is engaging in the challenged activity pursuant to a clearly expressed state policy.

Moreover, the local government's conduct must be a "forseeable result of empowering" the local entity to regulate in the field; the anticompetitive effects and regulatory action of the municipality must have been "contemplated" by the legislature. Town of Hallie, 105 S.Ct. at 1719. As the Seventh Circuit recently stated:

In considering the ... alleged anticompetitive conspiratorial acts we will first determine whether any legislative act(s) authorizes the challenged conduct and then determine whether anticompetitive effects are a forseeable result of the authorization. An affirmative determination to both questions will lead us to conclude that the state intended the localities' challenged conduct to be exempt from federal antitrust laws.

LaSalle National Bank of Chicago v. County of DuPage, 777 F.2d 377, 381 (7th Cir.1985), cert. denied, ___ U.S. ___, 106 S.Ct. 2892, 90 L.Ed.2d 979 (1986).

It is not seriously disputed that the City was authorized to enact the challenged ordinance. The City points to Ill.Rev.Stat. ch. 24, § 11-42-6 (1983) as authorizing the enactment of the ordinance. Section 11-42-6 states in its entirety:

The corporate authorities of each municipality may license, tax, and regulate hackmen, draymen, ominibus drivers, carters, cabmen, porters, expressmen, and all others pursuing like occupations, and may prescribe their compensation.

This provision was enacted as part of a general grant to municipalities of the power to regulate certain, defined areas of commerce in the exercise of their police powers to protect the health and safety of its residents. See generally Ill.Rev.Stat. ch. 24 §§ 11-42-1 to 11-42-10 (including regulation of auctioneers, brokers, barbers, ice-cream parlors, detective agencies, bowling alleys, junk yards, pawnbrokers, packing houses, tanneries, blacksmiths and other "unwholesome" businesses).³

Section 11-42-6 has been interpreted to permit a municipality to regulate the use of its streets and to impose conditions and restrictions on their use. Allerton v. City of Chicago, 6 F. 555 (Cir.Ct.N.D.Ill.1880); Atchison, T. & S.F. Ry. Co. v. City of Chicago, 136 F.Supp. 476 (N.D.Ill.1956), rev'd on other grounds, 240 F.2d 930 (7th Cir.1957), aff'd, 357 U.S. 77, 78 S.Ct. 1063, 2 L.Ed.2d 1174 (1958). The powers granted under the Act have been held to include the regulation of safety measures used in taxis, City of Chicago v. Dorband, 297 Ill. App. 617, 18 N.E.2d 107 (1938), the method of issuing new licenses, Yellow Cab Co. v. City of Chicago, 23 Ill.2d 453, 178 N.E.2d 330 (1961); People v. Thompson, 341 Ill. 166, 173 N.E. 137 (1930), and the total number of licenses that may be issued. Yellow Cab Co. v. City of Chicago, 396 Ill. 388, 71 N.E.2d 652 (1947) (right to regulate traffic includes right to restrict number of taxicabs operating on City streets). All of this is well-established law.

Pursuant to these broad powers, the City enacted the first comprehensive taxicab ordinance in 1934. Under the terms of that ordinance the total number of licenses was limited to 4,108 with 2,166 going to Yellow and 1,500 going to Checker. In 1937, the total number of licenses was voluntarily reduced and in 1945, the 1937 ordinance was extended to 1950. In 1946, the City increased the total number of licenses without regard to a priority provision agreed upon at the time of the voluntary surrender of licenses. The Illinois Supreme Court declared the increase invalid stating the priority provision had to be honored. Yellow Cab Co. v. City of Chicago, 396 Ill. 388, 71 N.E.2d 652 (1947). Between 1952 and 1957, both Yellow and Checker pursued damage actions for violations of the priority provision upheld in the 1946 suit. As part of the settlement negotiations, the ordinance now in question was enacted in 1963.⁴

Plaintiffs object to four aspects of the ordinance: first, they object to the limit on the number of licenses available under the ordinance (§ 28.22.1(a)) (4,600 total, 2,666 to Yellow, 1,500 to Checker); second, the provision in the act which permits the calling of a hearing (to decide whether new, additional licenses are necessary) to be made by a majority of current license holders (§ 28-22.1(c)); third, the provision which requires new licenses to be awarded in proportion to the numbers currently held (assuring Yellow and Checker an allegedly perpetual right to 80% of the licenses (§ 28-22.2(d)(I)); and four, the provision permitting new licenses to be awarded only in the manner prescribed above (§ 28-31.1). These provisions have been in effect since 1963. The number of licenses has never been increased from the 4,600 awarded in 1963.

Plaintiffs initially argue that while the statute may permit regulation, licensing, and taxation of the taxicab industry, the act does not authorize the particular scheme of monopoly, resulting from a privately...