Dennis Melancon, Inc. v. City of New Orleans, Civil Action No. 12–1337.

• Decision Date: 20 August 2012
• Docket Number: Civil Action No. 12–1337.
• Citation: 889 F.Supp.2d 808
• Parties: DENNIS MELANCON, INC., et al. v. CITY OF NEW ORLEANS.
• Court: U.S. District Court — Eastern District of Louisiana

889 F.Supp.2d 808

DENNIS MELANCON, INC., et al.

v.CITY OF NEW ORLEANS.

Civil Action No. 12–1337.

United States District Court, E.D. Louisiana.

Aug. 20, 2012.

John Tilghman Culotta, Benjamin Franklin Davis, David M. McDonald, Bernard, Cassisa, Elliott & Davis, APLC, Metairie, LA, Ike Spears, Spears & Spears, New Orleans, LA, for Dennis Melancon, Inc., et al.

James M. Garner, Debra J. Fischman, Howard Taney Boyd, III, Sher, Garner, Cahill, Richter, Klein & Hilbert, LLC, Bobby Marzine Harges, Bobby Marzine Harges, Attorney at Law, Churita H. Hansell, Richard Felipe Cortizas, Sharonda R. Williams, City Attorney's Office, New Orleans, LA, for City of New Orleans.

ORDER & REASONS

ELDON E. FALLON, District Judge.

Before the Court are a Motion for Declaratory Relief (Rec. Doc. No. 18), filed by Defendant City of New Orleans, and Motions for Preliminary Injunction (Rec. Doc. No. 31) filed by Plaintiffs. The Court, having reviewed the submitted memoranda and the applicable law and having heard testimony from a number of witnesses, is ready to rule. For the following reasons, the Defendant's Motion for Declaratory Relief is granted in part and denied in part, and Plaintiffs' Motion for Preliminary Injunction is granted in part and denied in part.

I. BACKGROUND OF LITIGATION

This case consists of three separate lawsuits— Dennis Melancon, Inc. et al. v. City of New Orleans, Monroe Coleman, et al. v. City of New Orleans, and Cedric Richard, et al v. City of New Orleans—consolidated under the name Dennis Melancon, Inc. et al. v. City of New Orleans. This dispute arises out of city ordinances affecting taxicabs passed by the New Orleans City Council on April 19, 2012. These ordinances target the following areas: Section 162–58 bans the use of law enforcement vehicles, vehicles previously used as taxis in other jurisdictions, and “salvaged,” “reconditioned,” or “rebuilt” vehicles as taxicabs; ¹ Section 162–59 declares that driver's permits and Certificates of Public Necessity and Convenience (“CPNCs”) “are privileges and not rights”; ² Section 162–321 was amended to make transfers discretionary and to prohibit the transfer of a CPNC when a suspension or revocation is pending against a CPNC owner; ³ Section 162–380 was re-ordained to establish the standards for the inspection of for-hire vehicles; ⁴ Section 162–609 requires all taxicabs to maintain two years of trip sheets and other company records; ⁵ Section 162–657 requires taxicabs to have a taximeter with Passenger Information Monitor (PIM) device, which generates detailed printed receipts and prohibits the use of handwritten receipts; ⁶ Section 162–659 requires all taxicabs have credit/debit card acceptance machines; ⁷ Section 162–660 requires all taxicabs to be equipped with security systems; ⁸ Section 162–661 requires all taxicabs to be fitted with global positions systems (GPS); ⁹ and Section 162–613 places an age limit of eleven model years on vehicles used as taxicabs beginning August 1, 2012, and seven model years beginning January 1, 2014.¹⁰

The plaintiffs in each of the three consolidated suits, all owners or possessors of CPNCs, contest the validity and legality of these ordinances. The Melancon Plaintiffs filed suit in this Court against the City of New Orleans, alleging that several of these ordinances violate the takings clause of the Fifth Amendment of the United States Constitution, and seek a declaratory judgment recognizing CPNCs as property rights and declaring Sections 162–59 and 162–321 of the Code of New Orleans unconstitutional and unenforceable. In the alternative, Plaintiffs seek damages as compensation for the loss of value of their CPNCs or as compensation for the amount required to comply with relevant sections of the Code of the City of New Orleans.

The Coleman Plaintiffs filed suit in the Civil District Court for Orleans Parish against the City of New Orleans. The Coleman Plaintiffs allege Fifth Amendment takings, but have also asserted claims for violation of the 14th Amendment Equal Protection Clause, invasion of privacy, unreasonable financial burden, and excessive government regulations.

The Richard Plaintiffs also filed suit in the Civil District Court for Orleans Parish against the City of New Orleans. The Richard Plaintiffs have asserted claims for Fifth Amendment takings, breach of contract, and Equal Protection Clause violations.

On July 20, 2012, the Civil District Court for Orleans Parish issued a Temporary Restraining Order in the Coleman case, preventing Defendant from enforcing the ordinances at issue for ten days. The CDC also scheduled a preliminary injunction hearing for July 30, 2012, when the TRO was due to expire. On July 23, 2012, however, Defendant removed the case to this Court. On July 27, 2012, Defendant filed a Motion for Declaratory Relief, seeking a declaration that the TRO ordered on July 20, 2012, would expire on July 30, 2012. This Court consolidated these cases and extended the TRO until Friday, August 3, 2012, and set a hearing on the motions for that date. On July 31, 2012, all parties agreed to continue the hearing until August 14, 2012, to allow them to conduct some limited discovery. The TRO was extended until the Court rules on the motions.

II. HISTORY OF TAXICAB INDUSTRY

In order to fully understand the context of the ordinances at issue, it is helpful to first briefly review the history of the taxicab industry in this country. At the end of the 19th century, automobiles began to appear on city streets throughout the country. It was not long before a number of these cars were hiring themselves out in competition with horse-drawn carriages. By 1899, there were nearly one hundred taxicabs on the streets of New York City. By the 1910s, New York had half a dozen large fleets, and thousands of independent owner/drivers.

As business grew, however, so did the need for enforceable regulations. The taxicab industry was plagued by problems, including unfair labor practices, price gouging, and unsafe conditions. In 1937, the mayor of New York City, Fiorello H. La Guardia signed the Haas Act, which introduced New York's first official taxi licenses and the medallion system that remains in place today. Medallions are small plates attached to the hood of a taxi, certifying it for passenger pick-up. By providing a limited number of medallions, the government could keep a closer watch on the quality of the taxicabs in the city. Over the ensuing decades, medallion-type regulatory systems were introduced in cities across the country.

In New Orleans, there has been an operating taxicab industry within the city limits for over one hundred years. During the 1950s, the City took steps to codify its practices and create a regulatory framework within which the taxis could operate. These regulations are set forth in the Orleans Parish Code of Ordinances (the “Municipal Code”) at Chapter 162, “Vehicles for Hire,” sections one through 1669. Section 162–181, passed in 1956, created the requirement that a vehicle must be registered to a CPNC in order to operate it as a taxicab, and, until April 23, 2009, section 162–186 limited the number of CPNCs to be issued to 1600. As a result, since the 1950s, owners of CPNCs have traded, alienated, conveyed, encumbered, mortgaged, and liened their interest in CPNCs.

On the state level, the Public Passenger Motor Vehicle Responsibility Law (La.Rev.Stat. Ann. § 45:200.1, et seq.) was enacted by the Louisiana legislature in 1962. According to the statute, the findings and declaration of policy by the legislature recognized that there had been a substantial increase in the number of public carrier vehicles (defined as motor vehicles seating less than ten passengers and used to transport passengers for hire over any streets by a route or to a destination controlled by the passenger), and that there had been a consequent increase in the hazards from which the general public needed to be protected. The legislature further found that it was “imperative that effective, uniform, reasonable, and just supervision, regulation, and control be exercised over the operation of such vehicles....” La.Rev.Stat. Ann. § 45:200.1 (1962).

In 1984, the Louisiana state legislature also passed Act No. 518, which addressed “[r]egulation by municipalities or other local governing authorities of private for hire vehicles, however propelled, providing passenger transportation services.” The statute contains provisions that empower a municipality to regulate various aspects of the taxicab industry, including the entry into the business of providing taxicab service and “[a]ny other requirement adopted to ensure safe and reliable passenger transportation service even if it is anticompetitive in effect.” La.Rev.Stat. 33:4792 (1984).

On April 19, 2012, the New Orleans City Council passed the above-described series of ordinances that are at issue in this case. The ordinances add new regulations and amend certain ordinances already in force. The ordinances raise the issue of whether the regulations are consistent with the authority created by the Public Passenger Motor Vehicle Responsibility Law and Act No. 518, and whether they are allowable as a legal exercise of the City's inherent police power, or whether they overstep these boundaries such that federal and state laws or constitutions have been violated.

III. PRESENT MOTION: PLAINTIFFS' MOTION FOR PRELIMINARY INJUNCTION

In the Coleman case, the TRO granted by the state court has been allowed to remain in effect after the case was removed to this Court. On July 27, 2012, Defendant City of New Orleans filed a Motion for Declaratory Relief, asking the Court to dissolve the TRO pursuant to Federal Rule of Civil Procedure 65(b)(4). The Court reasoned that a hearing on the TRO would be functionally the same as a hearing on a motion for preliminary injunction, and set a hearing on the issue for August 14, 2012. On August 13, 2012, Plaintiffs filed a formal Motion for...