Let's say that you didn't know much about regulatory takings, or municipal employment and Fair Labor Standards law (in our case, the latter would most certainly be correct). And let's say you were asked to predict how the plaintiff would fare with a claim that the city's regulatory regime for taxicabs was so oppressive that it resulted in taxi drivers effectively working for less than minimum wage, and thus the city must make up the difference, on either of two theories: (1) the regulatory scheme is a taking, or (2) taxi drivers are city employees and the city must pay the difference between minimum wage and the amounts actually earned.Any guesses whether she succeeds?
We don't think it would be too hard to predict that the plaintiff got nowhere, on either theory.
In Callahan v. City of Chicago, No. 15-1318 (Feb. 17, 2016), the U.S. Court of Appeals for the Seventh Circuit held that the cabbie's takings claims failed because she did not own "property" that was subject to regulation by the City of Chicago:
We agree with his rationale and result, which rest on the fact that Callahan does not own any asset whose market value has been reduced by the City’s regulation of taxi fares. Persons who own cabs or medallions are (potentially) adversely affected by caps on what owners can charge to customers—or to drivers (the City sets maximum lease rates). But none of Callahan’s property is subject to rate regulation. She owns her own time, but Chicago does not require her to devote any of that time to taxi driving. Callahan and others similarly situated will not drive a taxi unless they believe that they are apt to obtain more income (or other satisfactions) from that occupation than from the next best alternative. Competition in the labor market tells Callahan what an hour of her time is worth, and she cannot recover from the City if she now rues devoting as much time as she did to driving other people’s taxis.
Slip op. at 3. For more on such claims, see James S. Burling, Novel Takings Theories: Testing the Boundaries of Property Rights Claims, 4 Brigham-Kanner Prop. Rts. Conf. J. 39 (2015).
In dicta, the opinion also noted that even medallion and cab owners "would have a hard time showing a regulatory taking, because Chicago's rate regulation has not driven the price of those asserts anywhere near zero," citing Lucas and Horne. Id. While we don't disagree, we think that to be complete, this passage should also have cited Penn Central, since a property owner can prove a taking if the circumstances add up, even if there hasn't been a near-total wipeout of value, and there hasn't been a physical confiscation. But that's why they call it dicta, folks.
The most interesting part of the opinion in our opinion actually came right before the court dealt with the merits, where it addressed the question that must be on your mind, if you are a takings maven: how is this claim even in federal court in light of Williamson County's state procedures requirement? Here, the City conceded that Illinois law does not allow for compensation for regulatory takings, only physical. "Compensation therefore is unavailable in Illinois court, and this permits federal litigation." Slip op. at 2. Keep that in your quiver, Illinois lawyers.
And what about the Fair Labor Standards claim? Not hard to guess the outcome there, either. The City isn't the cabbie's employer, even though the City regulates the heck out of the cab industry, and thus there's no claim for minimum wage. Taxis are "vital" to the City and are public accommodations for sure, but "so are restaurants and retail shops and hotels and hospitals and ... Well the list is endless." Slip op. at 4. Being vital doesn't turn a private enterprise into a publicly-employed enterprise. And besides, the City isn't regulating the driver's return, only the rates that can be charged by medallion and cab owners.
Callahan v. City of Chicago, No. 15-1318 (7th Cir. Feb. 17, 2016)
