Minneapolis Taxi Owners Coalition v. City of Mpls
| Citation | 572 F.3d 502 |
| Decision Date | 14 July 2009 |
| Docket Number | No. 08-1239.,08-1239. |
| Parties | MINNEAPOLIS TAXI OWNERS COALITION, INC., Plaintiff-Appellant, v. CITY OF MINNEAPOLIS, Defendant-Appellee, A New Star Limousine and Taxi Service, Intervenor-Appellee. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Lawrence H. Crosby, argued, Jay D. Olson, St. Paul, MN, on the brief, for appellant.
Scott G. Bullock argued, Arlington, VA, for New Star Limousine.
Sara Jeanne Lathrop, argued, Minneapolis, MN, for appellee.
Before MELLOY, BOWMAN, and SMITH, Circuit Judges.
In 2006, the City of Minneapolis (the "City") amended its taxicab ordinance to uncap the number of transferable taxicab licenses it issues, thereby opening a previously restricted market. The Minneapolis Taxi Owners Coalition (the "Coalition"), a group comprising holders of approximately seventy-five transferable taxicab licenses, sued the City, asserting federal and state constitutional violations, including violations of the Coalition's members' rights to just compensation and due process. Before trial, A New Star Limousine and Taxi Service ("New Star") intervened and filed a motion to dismiss for failure to state a claim. The district court1 granted the motion and dismissed the case. The Coalition appeals. We affirm.
The members of the Coalition hold transferable taxicab licenses issued by the City. Although originally purchased from the City for a relatively small fee (roughly $500), the transferable licenses sold on the secondary market for as much as $19,000 to $25,000. The City required administrative approval of all such license transfers, but it routinely granted the required approval.
Before the enactment of the ordinance amendments at issue, section 341.270(a) of the Minneapolis Code of Ordinances required that the city council conduct a hearing at least once every twenty-four months "to consider whether public convenience and necessity warrant additional licenses." Minneapolis, Minn., Code of Ordinances tit. 13, art. II, ch. 341, § 341.270 (1995) (repealed 2006). In determining whether additional licenses were warranted, section 341.270(a) required the city council to consider:
the level and quality of service being provided by existing taxicab operators; whether additional competition would improve the level and quality of service or the degree of innovation in delivery of services; the impact upon the safety of vehicular and pedestrian traffic; the impact on traffic congestion and pollution; the available taxicab stand capacity; the public need and demand for service; the impact on existing taxicab operators; and such other factors as the city council may deem relevant.
Id. A designated city council committee held open "public convenience and necessity" hearings on May 17, 2006, and June 7, 2006, to gather relevant information. Evidence presented at the hearings included general testimony both in favor of and against issuance of additional licenses; testimony that Coalition members would suffer an economic loss by such an increase; evidence that there was inadequate business for current taxicab operators; evidence of complaints regarding the level and quality of current service; economist testimony that removing the cap on licenses would increase jobs and the level of service provided; testimony that there was an untapped market for bilingual drivers, particularly for the Hispanic community; evidence that the number of wheelchair-accessible vehicles may have been insufficient; and evidence that a number of taxicabs were operating without licenses.
After the hearing, the City's Department of Licenses and Consumer Services Division submitted a "follow-up document" to the committee, stating that there was insufficient availability of taxicabs, especially wheelchair-accessible taxicabs and, during peak hours, taxicabs generally. The submission discussed two possible plans. "Plan A" did not increase the number of licenses, with the advantage that current license holders would retain substantial value in their licenses. "Plan B" increased the number of licenses by forty-five every year until 2010, when the cap would be completely lifted. This plan required that new "licensed service companies" dedicate at least 10% of their fleets to wheelchair-accessible vehicles and at least 10% to "alternative-fuel and/or fuel-efficient vehicles." Plan B also required that existing licensed service companies dedicate at least 5% of their fleets to wheelchair-accessible vehicles and at least 5% to alternative-fuel and/or fuel-efficient vehicles by 2007, with the minimums increased to 10% by 2008. Plan B's perceived advantages included spurring better-quality service through the use of increased numbers of wheelchair-accessible vehicles and fuel-efficient vehicles. Its acknowledged disadvantages included the likely diminishing of the "monetary value" of existing taxicab licenses "to zero."
The committee recommended to the City that it increase the number of taxicab licenses pursuant to Plan B:
The Committee, upon weighing the received evidence and while recognizing that the issuance of additional licenses could likely produce a negative initial impact on existing operators, finds that such prospective impact is outweighed by the potential to (1) improve the level and quality of taxicab service to citizens and visitors in Minneapolis through a more open and free market structure as has been accomplished in other jurisdictions, thereby positioning Minneapolis as a more viable destination for entertainment, business, convention and other beneficial economic pursuits, and (2) pursue innovations in delivery of taxicab service in the areas of environmental sustainability while addressing underserved communities including the disabled, bilingual and non-English speaking populations.
In October 2006, the City revised the city ordinance code to lift the cap on licenses per Plan B. See Minneapolis, Minn., Code of Ordinances tit. 13, art. II, ch. 341 (2006).
In March 2007, the Coalition sued the City in Minnesota state court, arguing that the new ordinance reduced the value of the existing licenses to zero. Relying on the U.S. and Minnesota Constitutions, the Coalition claimed that (1) the City deprived Coalition members of their property interests without just compensation; (2) the City deprived Coalition members of their business licenses without due process; (3) the wheelchair-accessibility and fuel-efficiency requirements constituted an unconstitutional exaction; and (4) Coalition members were denied equal protection because the ordinance was amended, in part, to better serve the Hispanic community.
The City removed the case to the district court because the complaint asserted federal constitutional claims. See 28 U.S.C. § 1441(c). In May 2007, New Star moved to intervene, and the district court granted the motion. In June 2007, New Star moved to dismiss the Coalition's complaint under Federal Rule of Civil Procedure Rule 12(b)(6) for failure to state a claim.
In October 2007, a magistrate judge recommended granting the motion to dismiss, concluding that (1) Coalition members did not have a protectable property interest in the secondary-market value of their licenses and that therefore the Coalition had no takings claim; (2) the Coalition's due process claim similarly failed because the City did not deprive Coalition members of any property; (3) the Coalition did not have standing to bring an unconstitutional-exaction claim based on the taxicab fleet requirements because the requirements applied to licensed service companies, not taxicab license holders; and (4) the equal protection claim failed because the ordinance survived "rational basis" scrutiny. In December 2007, the district court adopted the magistrate judge's recommendation and granted New Star's motion to dismiss. The Coalition appeals and repeats its takings, due process, and unconstitutional-exaction arguments before this court.2
We review de novo the grant of a motion to dismiss for failure to state a claim under Rule 12(b)(6), accepting the facts as alleged in the complaint and granting all reasonable inferences in favor of the Coalition as the non-moving party. Neighborhood Enters., Inc. v. City of St. Louis, 540 F.3d 882, 884-85 (8th Cir.2008).
The Coalition argues that removing the cap on the number of taxicab licenses is a taking of private property requiring just compensation under the Fifth Amendment to the U.S. Constitution. See U.S. Const. amend V.3 The Coalition does not contend that the City revoked or somehow vitiated existing licenses or that opening the market destroyed the ability of the license holders to use their licenses to do business. The Coalition only contends— and the City does not contest—that removing the cap on the number of licenses destroyed the market value of the licenses. The elimination of the market value of the taxicab licenses, however, can be considered a taking under the Fifth Amendment only if there is a protected property interest in that market value. See Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1030, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992). Property interests "are created and their dimensions are defined by existing rules or understandings." Bd. of Regents of State Colls. v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972).
Those "existing rules" include relevant state law, id., and the Coalition relies on several Minnesota cases to argue that the holder of a license does have a property interest in that license. See State v. Saugen, 283 Minn. 402, 169 N.W.2d 37, 41 (1969) (); CUP Foods, Inc. v. City of Minneapolis, 633 N.W.2d 557, 562-63 (Minn.Ct.App.2001) (); Bird v. Dep't of Pub. Safety, 375...
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