DOWNTOWN — Taxi companies and drivers sued the city Thursday saying rival services like Uber undercut their business while not complying with city laws.
Attorney Michael Shakman filed the federal suit in U.S. District Court on behalf of taxi firms including Yellow Cab and taxi drivers such as Francis Koblah, a day after the City Council received competing proposals on the burgeoning ride-sharing industry.
The suit accuses the city of not enforcing its own laws on taxi services and says rivals like Uber, Lyft and Sidecar are undercutting the conventional cab industry as they are not compelled to operate under the same rules.
Brad Saul, founder of Chicago Disability Transit, also joined as a plaintiff in the suit, and said the upstart services are discriminatory, both to competitors and to riders, in that they are not compelled to meet the same demands to serve those with disabilities.
Yet the main point of the suit, Shakman said Thursday in a news conference at the Hotel Monaco Downtown, is that the city is "discriminating against taxi owners" by sanctioning "unregulated companies providing identical services." He accused the city of "really shooting yourself in the foot" by allowing unregulated taxis alongside heavily regulated and revenue-generating taxis.
"The Emanuel administration has tolerated an unlawful taxi caste system created by Uber, Lyft and Sidecar," Shakman added.
Shakman also branded those companies as an "exclusionary, elitist taxi system," in that they accept clients by smartphones and payment by credit cards, while setting their own shifting rates and declining to go to some city neighborhoods — an illegal practice for licensed taxis.
"It's bad public policy to create a second taxi system designed for the elite and affluent," Shakman said.
The suit was filed a day after Mayor Rahm Emanuel submitted an ordinance that would establish a separate license for what he called "transportation network providers" or "ride-share companies."
Emanuel insisted that his proposal, which would establish minimum standards for insurance coverage and driver oversight, while setting an annual fee of $25,000 per company and $25 per driver, was the proper compromise between conventional and upstart taxi services.
"We have it just about right, as both are upset," he said, promising "a good healthy discussion" on the issue to arrive at a system where "both are safe, both are under regulatory oversight."
Yet, the same day, Aldermen Edward Burke (14th) and Anthony Beale (9th), chairman of the Transportation Committee, submitted a rival resolution calling for "a crackdown on unregulated livery operators."
"These shared-ride companies are both unregulated and unlicensed," Beale said. "There are very legitimate reasons why these regulations were put on the books in the first place. And I see no reason why we should look the other way and ignore them so that these companies can operate free of them."
"A big issue is what the City Council is going to do," Shakman said Thursday. "The administration has introduced an ordinance that would ratify and bless this poor public policy."
Shakman had additional ammunition in a statement Burke issued on his resolution: "This proposal calls for the city to strictly enforce the municipal code with which these companies clearly do not comply. The law is already on the books. It simply has to be enforced."
"I think Ald. Burke saw the world the way we described it," Shakman added. "I think he gets it."
Shakman pointed to Koblah, a cabbie from Ghana who invested $370,000 in a Chicago taxi medallion and a new Toyota Rav4 only to see his business undercut.
According to Shakman, the city offered 50 taxi medallions for auction in October at a minimum bid of $360,000 and had no takers. He added that it threatened to undercut the $24 million a year the city receives from the taxi industry, echoing the concerns of both Burke and Beale.
"For a city with fiscal problems, this is really shooting yourself in the foot," Shakman said.
Emanuel countered that he was simply trying to provide "common-sense rules of the road" for a "growing, burgeoning industry" city residents find cheap and convenient.
Corporation Counsel Stephen Patton said the city will move to dismiss the suit "on the ground that it does not state any legally viable claim and should be dismissed as a matter of law.
"At bottom, plaintiffs' various complaints raise questions of public policy that are properly addressed through the legislative process, not legal claims that should be litigated in court," Patton added.
"Hundreds of thousands of Chicagoans rely on UberX precisely because it is a faster, safer and cheaper way of getting around their city," added Uber Chicago General Manager Andrew MacDonald. "After years of neglecting Chicago drivers and passengers alike, the taxi industry has resorted to name-calling and frivolous lawsuits. While they spend time in court, we'll be working with Mayor Emanuel to design a forward-looking regulatory regime that creates economic opportunity, prioritizes safety and ensures access to the best, cheapest rides ever available in the city."
The suit claims breach of contract and demands that the city enforce its own laws while seeking damages.
Uber has tried to break into the Chicago market by offering free rides to vote and, most recently, to new restaurants.
Shakman, who is most famous for the long-running patronage suit against the city that bears his name, also took issue with describing the rival taxis as "ride-share services."
"That's a misnomer that's being hung on this industry by the industry. This is not ride sharing," he added. "These are taxi services. They walk like a duck, and they quack like a duck, and they're a duck."