Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_07-cv-06171/USCOURTS-cand-5_07-cv-06171-2/pdf.json

Nature of Suit Code: 440
Nature of Suit: Other Civil Rights
Cause of Action: 42:1983 Civil Rights Act

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United States District Court

For the Northern District of California

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1

 As a preliminary matter, an application for a temporary restraining order or preliminary

injunction cannot be supported by an unverified complaint. Wright, Miller & Kane, Federal Practice

and Procedure § 2949, 214 & n. 12 (2d ed. 1995); K-2 Ski Co. v. Head Ski Co., 467 F.2d 1087, 1088-89

(9th Cir. 1972). In K-2 Ski Co., the Ninth Circuit noted that interlocutory injunctive relief must be based

on a verified complaint or supporting affidavits. 467 F.2d at 1088. In this case, the plaintiff Cab

ORDER DENYING CAB COMPANIES' APPLICATION FOR A TEMPORARY RESTRAINING ORDER—C-07-06171 RMW

TSF

United States District Court

For the Northern District of California

E-FILED on 12/31/2007 

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

U.S.A. EXPRESS CAB, LLC; ALPHA

TRANSPORTATION, INC. dba ALPHA CAB

COMPANY; DIAL DIALING, INC. dba

CALIFORNIA CAB; CITY CAB COMPANY;

MILPITAS CAB, LLC; NATIONAL CAB,

LLC; and NET CAB COMPANY

Plaintiffs,

v.

CITY OF SAN JOSE; SAN JOSE CITY

COUNCIL; and DOES 1 through 10

Defendants.

No. C-07-06171 RMW

ORDER DENYING CAB COMPANIES'

APPLICATION FOR A TEMPORARY

RESTRAINING ORDER

On December 19, 2007, plaintiffs ("plaintiff Cab Companies") filed an ex parte application

for a temporary restraining order to enjoin the City of San Jose ("San Jose" or "the City") from

reallocating taxicab permits, as the City plans to do on January 1, 2008. San Jose filed its opposition

on December 28, 2007. The court has read the papers and finds that the application can be decided

without oral argument. See Civil L.R. 7-1(b). For the reasons set forth below, the court denies the

application for a temporary restraining order.1

 A hearing on plaintiff Cab Companies' application

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Companies filed an unverified complaint, but also filed numerous declarations. The declarations,

however, are substantially similar to each other and do not declare many of the facts alleged in the

complaint and recited in the plaintiff Cab Companies' application.

San Jose's opposition was accompanied by three declarations which lay out much of the factual

background of this dispute. Where the Cab Companies have not introduced evidence (as opposed to

pleadings), the court relies on San Jose's declarations.

ORDER DENYING CAB COMPANIES' APPLICATION FOR A TEMPORARY RESTRAINING ORDER—C-07-06171 RMW

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for a preliminary injunction can be noticed for any Friday morning pursuant to the time requirements

of the Civil Local Rules. See Civil L.R. 6.2, 6.3 and 7.2. 

I. BACKGROUND

A. Taxi Service in San Jose Prior to 2005

Prior to 2005, taxi service at Mineta San Jose International Airport was exclusively supplied

by two cab companies. Docket No. 16, Decl. of Robert Lockhart, ¶ 5 & Ex. A at 7 (hereinafter

"Lockhart Decl."). Yellow Cab serviced Terminal A and Checker Cab serviced Terminal C. Id., Ex.

A at 7. Service quality was generally poor. Id., Ex. A at 8. The dispatch system worked poorly,

with a substantial number of calls picked up late or not at all. Id. A survey of downtown business

persons "expressed unhappiness." Id. Taxi fares were also among the highest in the United States. 

Id., Ex. A at 12.

In January 2001, the City created a Taxi Advisory Team to review the City's taxi industry

and recommend improvements. Id., Ex. A at 1. The City also authorized the hiring of consultants to

develop models for improving taxi service. Id. The San Jose Department of Transportation hired

Schaller Consulting, who produced its report in 2004. Id., Ex. A at 1-3. The report developed the

Taxicab Service Model ("Model"), which the City later approved on May 18, 2004 and implemented

in September 2005. Id. ¶¶ 2-3. This Model is currently in use, with changes set to be implemented

on January 1, 2008.

B. Taxi Operations Under the Model

As mentioned, the City adopted the consultants' Model and ended the airport cab duopoly in

September 2005. The Model allocates airport access permits to qualified taxicab companies. Id. ¶

3. An airport access permit allows a taxicab to provide on-demand pickup service at Mineta San

Jose International Airport. Id. "On-demand" service refers to the practice of arriving passengers

hailing a cab from the airport. Id. ¶ 4. It is distinct from pre-arranged reservation service, where the

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passenger arranges to be picked up or dropped off in advance. Id. An airport access permit is not

required for reservation service; airport access permits are only required for making "on-demand"

pickups. Id.

The Model divides 300 airport access permits between taxicab companies (who received 105

permits) and individual drivers (who received 195 permits). Id. ¶ 6. Individual drivers with airport

access permits are free to associate with any taxicab company. Id. This case concerns only the

permits issued to companies.

The 105 company permits were initially split among fourteen taxicab companies, each

receiving a minimum of seven permits. Id. ¶ 7. This initial distribution of permits was to last for

two years. Id. ¶ 8. After two years, the City intended to evaluate whether the Model improved taxi

service and to update allocations. Id.

At the end of the two-year initial period, the airport access permits were to be reallocated to

taxicab companies meeting a variety of requirements. Id. ¶ 10. Taxicab companies had to conduct

at least 25% of their airport trips with alternative fuel vehicles and maintain a minimum fleet of 15

vehicles and 15 drivers to ensure "24/7" dispatch service. Id. This minimum fleet size for airport

access permits is greater than the five vehicles necessary for a company to be a licensed taxicab

company in the City. See id. ¶ 33. To be clear, a taxicab company had to meet these requirements

to be eligible to receive airport access permits in the planned reallocation. Id. ¶ 11.

The reallocation of permits was to based on the number of "off-Airport" trips completed by

the taxicab companies. Id. ¶¶ 9, 11. The City hoped that the incentive of receiving airport access

permits would motivate taxicab companies to improve taxi service in downtown San Jose and other

neighborhoods. Id. ¶ 13; see also id., Ex. A at 38 (recommending tying reallocation of airport

access permits to off-Airport trips to provide an incentive to taxicab companies to increase dispatch

coverage in the City). As the reallocation of airport access permits has resulted in the present

dispute, it requires more detailed examination.

C. Counting "Off-Airport" Trips

The taxicab company operating contract required taxicab companies with airport access

permits to provide monthly activity reports. See id., Ex. E § 7b. The monthly activity report had to

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ORDER DENYING CAB COMPANIES' APPLICATION FOR A TEMPORARY RESTRAINING ORDER—C-07-06171 RMW

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contain information regarding "the number of passenger pickups made by Contractor's Airport

permitted drivers at locations in Santa Clara County, other than the airport during the previous

month." Id. The information was to be provided by permit number and the monthly activity report's

form and details were subject to requirements developed by "the Director." Id.

Pamela McAnally is an analyst in San Jose's Department of Transportation. Docket No. 18,

Declaration of Pamela McAnally ¶ 1 (hereinafter "McAnally Decl."). She attended a September 23,

2005 meeting of the Taxicab Advisory Team that described the off-Airport trip reporting

requirements to the taxicab companies in attendance. Id. ¶ 7. She also led two mandatory meetings

for taxicab companies on September 28 and 30 that described the reporting methodology. Id. On

October 4, 2005, she sent a letter to all licensed taxicab companies following up on the meetings and

detailing "specific instructions" for off-Airport trip reporting. Id. ¶ 2. The letter distributed a

sample spreadsheet showing how the City wished the taxicab companies to submit their trip data. 

Id., Ex. A. The spreadsheet included columns for date, permit number, whether the trip involved

airport access, whether the trip was a dispatch or flagged trip, the time of the trip, where the trip

originated (using numerical codes assigned to various San Jose neighborhoods), and where the trip

ended. Id., Ex. A. The methodology for reporting off-Airport trips and their requirements did not

change between September 2005 and the reallocation. Lockhart Decl., ¶ 17.

The plaintiff Cab Companies' four owners have all submitted declarations. See Docket No.

8, entries 1-4 (declarations of Mekonnen Woldegebrial, Lakbor Singh Pooni, Jasrah Bhatia, and

Kulwant Lasher). Each declaration contains identical averments that:

After I signed the 2005 contract, there was great confusion on how or what to report how or

what to report [sic] as "off-Airport" trip. [sic] Initially, City representatives informed me that

only trips for cabs and drivers working at the Airport would be counted. Without any formal

notice from the City, I then learned that the City would count all off-Airport trips be [sic]

every cab of the company toward the reallocation in 2007. I was also told by city

representatives that "flagged" [trips; footnote omitted] would not be counted by the City. In

addition, it was unclear if a cab company was to report only trips, which originated in the

City of San Jose, the County of Santa Clara, or elsewhere.

Woldegebrial Decl., ¶ 9; Pooni Decl., ¶ 13; Bhatia Decl., ¶ 13; Lasher Decl., ¶ 13. Each plaintiff

Cab Company owner avers that he later understood that "other taxicab companies [were] reporting

information for all trips, including company wide off-Airport trips, flag trips, or trips occurring

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2

 Each declaration states that each plaintiff Cab Company owner would have submitted a higher

number of trips "had he been allowed." See Woldegebrial Decl., ¶ 11; Pooni Decl., ¶ 15; Bhatia Decl.,

¶ 15; Lasher Decl., ¶ 17. The declarations contain no sworn statement that the City prevented the Cab

Companies from amending their data. The Cab Companies' application, however, states that "[w]hen

Plaintiff taxicab companies attempted to submit similar data, the City refused to consider this

information." App. at 16. This statement is not supported by the Cab Companies' owners' declarations.

Accordingly, there is no evidence in the record that the City intentionally prevented Cab Companies

from correctly reporting their trip data.

ORDER DENYING CAB COMPANIES' APPLICATION FOR A TEMPORARY RESTRAINING ORDER—C-07-06171 RMW

TSF 5

outside San Jose City limits and the County of Santa Clara." Woldegebrial Decl., ¶ 10; Pooni Decl.,

¶ 14; Bhatia Decl., ¶ 14; Lasher Decl., ¶ 16. Each owner additionally declares that had he been

allowed2

 to submit such information, he would have submitted more information and demonstrated a

higher volume of off-Airport trips for the purpose of the reallocation. Woldegebrial Decl., ¶ 11;

Pooni Decl., ¶ 15; Bhatia Decl., ¶ 15; Lasher Decl., ¶ 17.

Upon receiving the monthly activity reports, the San Jose Department of Transportation

audited the taxicab companies' data by random sampling. McAnally Decl. ¶ 4. Where the data

seemed questionable, for example, where a company reported trips by the same driver on opposite

sides of town in very close time windows, the City attempted to verify the data against driver and

outreach trip logs. Id.

D. Calculating the Reallocation of Permits

Having used the methods described above, the City staff presented plans regarding the

reallocation of airport access permits based on each company's number of off-Airport trips to the

taxicab companies on September 28, 2007. Lockhart Decl., ¶ 14 & Ex. B, 6. "Many small taxicab

companies voiced their objections to the methodology stating it favored larger established taxicab

companies." Id., Ex. B at 6. The City staff maintained that the established methodology for

counting off-Airport trips was proper, in part because the method was "previously established and

well communicated." Id. 

Two events influenced the reallocation decision. Prior to the reallocation, two companies'

data – plaintiff Net Cab and non-plaintiff Golden Star – appeared suspect. McAnally Decl., ¶ 5. 

Instead of disqualifying the two companies from participating in the reallocation, the City estimated

the companies could only verify 50% of their trips, and reduced both companies' off-Airport trip

numbers accordingly. Id. Furthermore, three companies – plaintiffs Alpha Cab, National Cab, and

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 The City also excluded All Star Cab and American Cab for not meeting the minimum

eligibility requirements. All Star and American are not parties to this action.

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Net Cab – did not meet the fifteen vehicle fleet minimum to qualify for reallocation. Lockhart Decl.,

¶ 27. National Cab also failed to meet the alternative energy requirement. Id. The City therefore

excluded Alpha Cab, National Cab, and Net Cab from receiving any airport access permits in the

reallocation. Id.

The San Jose City Council approved reallocation of airport access permits on November 20,

2007. Lockhart Decl., ¶ 19. The city council modified the reallocation by requiring that only trips

originating in San Jose be counted as "off-Airport" trips. Id., ¶ 21. This reduced every taxicab

companies' number of trips. Id. The city council also provided for a minimum number of four

airport access permits for each qualifying company, regardless of its share of off-Airport trips. Id. ¶

24 & Ex. G, at 19 (city council minutes). Taking into account the exclusion of plaintiffs Alpha Cab,

National Cab and Net Cab,3

 the reduction of Golden Star's reported trips by 50%, and the exclusion

of all trips originating outside of San Jose, the City produced the following reallocation of airport

access permits:

Company San Jose

trips

% of total Minimum

permits

% of 462,398

trips for

companies

earning over 4

permits 

Additional

permits

Total

permits

California 19,167 3.7% 4 0 4

City 7,998 1.5% 4 0 4

Executive 11,209 2.1% 4 0 4

Golden Star 36,938 7.1% 4 7.9% 5 9

Milpitas 7,894 1.5% 4 0 4

Rainbow 58,269 11.1% 4 12.6% 8 12

SV Checker 74,014 14.1% 4 16.0% 10 14

United 32,154 6.1% 4 6.9% 5 9

USA

Express

14,922 2.8% 4 0 4

Yellow 261,023 49.9% 4 56.4% 37 41

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 The above table is a reproduction of the table emailed to the taxicab companies on December

12, 2007 by the City, except the format of the percentages has been changed.

ORDER DENYING CAB COMPANIES' APPLICATION FOR A TEMPORARY RESTRAINING ORDER—C-07-06171 RMW

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Totals 523,588 40 65 105

Id. ¶ 24 & Ex. H.4

 By virtue of the four-permit minimum, plaintiff Cab Companies received more

airport access permits than they would have based on percentage of off-Airport trips alone. Id. ¶ 31.

It is relevant to note that plaintiff Cab Companies are not the only taxicab companies owned

by members of protected classes. Golden Star is a cooperative owned by drivers of Indian and

African descent. Lockhart Decl., ¶ 26. United is owned by a woman. Id. Executive and Rainbow

are both owned by a Russian immigrant. Id.

E. Evidence Suggesting the Gravity of Harm

Some of the plaintiff Cab Companies will receive four airport access permits under the

January 1 reallocation (Alpha, National and Net will receive none). The Cab Companies' owners

declare that they cannot maintain a fleet of fifteen cabs with only four airport access permits. 

Woldegebrial Decl., ¶ 13; Pooni Decl., ¶ 19; Bhatia Decl., ¶ 19; Lasher Decl., ¶ 21. Thirty-seven

declarations of cab drivers indicate that many cab drivers associated with the Cab Companies will

quit if the Cab Companies receive four (or zero) airport access permits. See generally Docket Nos.

8-9 (driver declarations). If these drivers quit, the Cab Companies currently qualifying for four

permits will no longer meet the fleet minimum of fifteen drivers and have their allocation reduced to

zero permits. Woldegebrial Decl., ¶ 13; Pooni Decl., ¶ 19; Bhatia Decl., ¶ 19; Lasher Decl., ¶ 21. 

The Cab Company owners state that this will force them to close operations. Id.

On the other hand, Golden Star currently has no airport access permits. Lockhart Decl., ¶ 39. 

Since 2005, Golden Star has successfully operated in San Jose without airport access permits,

receiving enough business that it has qualified for nine airport access permits in the reallocation. Id.

Additionally, each of plaintiff Cab Companies operated prior to September 2005. Lockhart Decl., ¶

38. Prior to September 2005, no taxicab company other than Yellow and Checker could pick up at

the airport. Id. Despite this inability to service the airport, plaintiff Cab Companies apparently were

able to operate. Id. Finally, evidence suggests that airport on-demand trips account for 42.5% of all

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 The court notes that the Cab Companies' complaint sets forth seven claims for relief. The

application for a temporary restraining order addresses only two. See App. at 13 ("Plaintiffs have

asserted two causes of action upon which they are likely to succeed.").

ORDER DENYING CAB COMPANIES' APPLICATION FOR A TEMPORARY RESTRAINING ORDER—C-07-06171 RMW

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San Jose taxicab trips. Id. Accordingly, a taxicab company lacking airport access permits would

still be able to compete for 57.5% of taxicab trips.

II. ANALYSIS

A. Legal Standard Governing Temporary Restraining Orders

"Where the opposing party actually receives notice of the application for a restraining order,

the procedure that is followed does not differ functionally from that on an application for a

preliminary injunction and the proceeding is not subject to any special requirements." Wright,

Miller & Kane, Federal Practice and Procedure § 2951, at 254 & n. 7 (2d ed. 1995). In this case,

San Jose has received notice and opposed the motion for a temporary restraining order. 

Accordingly, a temporary restraining order may issue if the conditions for a preliminary injunction

are met. Namely, the Cab Companies must demonstrate "either (1) a combination of probable

success on the merits and the possibility of irreparable injury or (2) that serious questions are raised

and the balance of hardships tips sharply in [their] favor." Los Angeles Memorial Coliseum Comm'n

v. National Football League, 634 F.2d 1197, 1201 (9th Cir. 1980). These are not separate tests, but

extreme points along a spectrum of two variables: likelihood of success and injury. Id. At one

extreme, a plaintiff must make a strong showing of likely success and a lesser showing of harm. At

the other, a plaintiff must make a showing of possible success and a strong showing of imminent

harm. The outer limit of a showing of "possible success" has been described as a "fair chance of

success on the merits." See Glider v. PGA Tour, Inc., 936 F.2d 417, 422 (9th Cir. 1991).

As discussed below, the court does not find on the evidence presented that plaintiff Cab

Companies have a "fair chance of success on the merits." Furthermore, the court does not find that

the balance of hardships "tips sharply in [the Cab Companies'] favor."

B. Likelihood of Success on the Merits

The Cab Companies argue that they are likely to succeed on the merits of their equal

protection claim and their substantive due process claim.5

 Each is addressed in turn below.

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 Because the city regulations at issue do not facially discriminate on the basis of race, the Cab

Companies' reliance on strict scrutiny case law is misplaced. Strict scrutiny is reserved for laws that

facially discriminate on the basis of race. See, e.g., Parents Involved in Community Schools v. Seattle

School Dist. No. 1, __ U.S. __, 127 S.Ct. 2738, 2751-52 (2007) (opinion of Roberts, C.J.).

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1. The Equal Protection Claim

The Cab Companies concede that "the regulation at issue does not blatantly discriminate on

the basis of race on its face." App. at 14. A racially-neutral6

 statute may, however, be applied in

violation of the equal protection clause if the law's application purposefully discriminates on the

basis of race. Washington v. Davis, 426 U.S. 229, 239 (1976). An equal protection violation must

"reflect[] a racially discriminatory purpose." Id.; see also Vieth v. Jubelirer, 541 U.S. 267, 333

(2004) (Stevens, J., dissenting) ("In evaluating a claim that a governmental decision violates the

Equal Protection Clause, we have long required a showing of discriminatory purpose."). A racially

disproportionate impact does not alone reflect such a purpose and does not violate the equal

protection clause. Id.

A racially disproportionate impact is relevant to the inquiry, however. Arlington Heights v.

Metropolitan Housing Development Corp., 429 U.S. 252, 264-67 (1977). A court must make a

"sensitive inquiry" into whatever "circumstantial and direct evidence of intent as may be available." 

Id. at 266. The non-exclusive factors a court may consider in addition to disparate impact in finding

a discriminatory purpose behind a regulation include: the historical background, particularly if it

reveals past invidious discrimination; the specific sequence of events leading up to the challenged

decision; departures from normal procedures; and substantively unusual outcomes. See id. at 267.

The evidence submitted by the plaintiff Cab Companies with their application does not

demonstrate that there is a "fair chance" the Cab Companies will succeed on their claim. The only

relevant evidence submitted is the numerical impact the permit reallocation will have on minority

owned taxicab companies, namely, that the plaintiff Cab Companies will have their permits reduced

to four, and possibly zero. Militating against this disparate impact, however, is the increase in

permits being allocated to Golden Star, a minority-owned cooperative. Nevertheless, as Washington

and Arlington Heights make clear, a disparate impact alone cannot support a finding of an equal

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 To be clear, such evidence could be highly relevant to proving a discriminatory purpose. By

this opinion, the court only points out that the Cab Companies have not sufficiently supported these

allegations with evidence.

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protection violation.

The plaintiff Cab Companies set forth a variety of arguments to augment the "disparate

impact" that they argue demonstrate a discriminatory purpose on the part of the City. First, the Cab

Companies point to the City's refusal to consider additional off-Airport trip information. As

discussed previously in footnote two, the Cab Companies have provided no evidence that the City

ever rejected an attempt to supplement data. Arguments in briefing and allegations in unverified

complaints cannot serve as the basis for injunctive relief. Accordingly, the court does not consider

these allegations.7

 The Cab Companies next argue that the City arbitrarily reduced Net Cab's reported trip data

and refused to acknowledge National Cab's data. The Cab Companies argue that these refusals were

not explained, and therefore indicate a discriminatory purpose. On the contrary, the City has

introduced strong evidence that it reduced Net Cab's data because it was unreliable, and that instead

of disqualifying Net Cab entirely, it merely penalized Net Cab's reported figures by fifty percent. 

This reduction, however, was irrelevant because neither Net Cab nor National Cab met the fifteen

vehicle requirement for eligibility for permits. Far from being "unexplained," the City's actions in

this respect cannot reasonably be understood to be discriminatory. The Cab Companies contrast this

with the reduction in Yellow Cab and SV Checker's "unverified" trip reports. There is no evidence

to support the assertion that Yellow and SV Checker had unverified trips other than the Cab

Companies' allegation in their complaint. On the contrary, the documents submitted by the City

suggest that only Golden Star and Net Cab provided suspect data.

The plaintiff Cab Companies also argue that the fifteen vehicle requirement is

"discriminatory as applied" because it is intended to drive minority companies out of business. 

There is no evidence to suggest such intent. On the contrary, the City has submitted evidence that

the fifteen vehicle requirement is necessary to provide effective dispatch service. The City has

rationally decided to reward airport access permits to taxicab companies that develop effective

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dispatch service. Moreover, the fifteen vehicle requirement does not appear to have adversely

affected Golden Star, Executive, Rainbow, or United, the non-plaintiff taxicab companies that would

arguably be drawn in by a purpose of driving "minority companies out of business."

Finally, the plaintiff Cab Companies argue that the exclusion of the plaintiff Cab Companies

from the award of additional airport access permits beyond four evinces discriminatory intent. Far

from being "incomprehensible," the City demonstrated that had the rules been implemented as

planned, plaintiff Cab Companies would have received less than four permits. After awarding the

minimum of four permits to every qualified taxicab company, the City excluded the plaintiff Cab

Companies (who would not have been entitled to four) in distributing the remainder. The City did

not have to dole out the additional permits this way. It could have included the plaintiff Cab

Companies. Its failure may be probative of a discriminatory purpose, but only weakly so.

On the other hand, consideration of the Arlington Heights factors undermines a finding of

discriminatory purpose. The record reflects no history of invidious discrimination. Indeed, the

history of taxi service in San Jose before the court suggests a new opportunity for minority-owned

businesses once the City scrapped its airport service duopoly. The procedures and events leading up

to the reallocation also do not suggest a discriminatory purpose on the part of the City. Indeed, the

city council altered the implementation of the reallocation to award more permits to plaintiff Cab

Companies.

Weighing these considerations, the court cannot find that the Cab Companies have a "fair

chance of success on the merits" of their equal protection claim.

2. The Substantive Due Process Claim

The Constitution's substantive due process guarantee protects the individual from arbitrary

government action. See County of Sacramento v. Lewis, 523 U.S. 833, 845-46 (1998). Substantive

due process is violated by "executive abuse of power . . . which shocks the conscience." Id. at 846. 

Legislative action violates substantive due process where it lacks a rational basis. See Lawrence v.

Texas, 539 U.S. 558, 580 (2003). The Cab Companies argue that the City has violated the plaintiff

Cab Companies' substantive due process rights in nine ways:

The City has acted in a number of arbitrary ways: (1) Requiring a taxicab company to own

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and operate fifteen (15) taxicabs in order to qualify for taxicab Airport permits while the City

Ordinances only require a taxicab company to own and operate five (5) taxicabs to be

considered a taxicab company for licensing purposes; (2) Only allocating a minimum of four

(4) Airport permits to each taxicab company despite the fifteen (15)-cab requirement; (3)

Failing to provide clear or consistent information to the taxicab companies regarding what

"off-Airport" trip information was required; (4) Failing to provide oversight of what

information should be reported to the City regarding "off-Airport" trips; (5) Reducing, by

fifty percent (50%), the number of reported trips of Net; (6) Arbitrarily reducing Yellow's

reported trip numbers by Eighty Thousand (80,000) trips; (7) By failing to actually reallocate

permits based on the number of "off Airport" trips; (8) By arbitrarily excluding Plaintiff Cab

Companies from consideration of additional permits without notice or justification; and (9)

By creating a system where at least fifty-two percent (52%) of the Airport permits are

allocated to a single non-minority concessionaire.

App. at 21-22.

As a preliminary matter, regulation of taxicabs is a traditional exercise of a city's police

power. See Cotta v. City and County of San Francisco, 2007 WL 4395647, at *6 (Cal. Ct. App. Dec.

18, 2007). The fifteen taxicab requirement to receive airport access permits is rationally related to

the City's desire to stimulate effective dispatch service across the City. The Cab Companies suggest

that the fifteen cab requirement is irrational in light of the five-cab requirement for being a licensed

taxicab company. The Cab Companies overlook the city's legitimate use of airport access permits to

encourage effective citywide taxi dispatch service. This is not irrational.

The Cab Companies next suggest that the City acted irrationally by requiring fifteen vehicles

but setting the minimum number of permits at four, presumably because the owners have declared

that they cannot maintain a fifteen vehicle fleet with only four permits. Ample evidence contradicts

the owners self-serving declarations that a taxicab company needs at least one permit for every two

vehicles to survive. The plaintiff Cab Companies survived when they had no airport access permits,

and Golden Star has flourished despite lacking airport access permits.

The Cab Companies also argue that they have a fair chance of prevailing because the City

failed to provide clear information regarding "off-Airport" trip requirements. Other than the owners'

professed "confusion" in their declarations, the evidence in the record suggests the requirements

were not so unclear as to "shock the conscience" and violate substantive due process. The Cab

Comapnies' assertion that the City failed to provide oversight also does not have a fair chance of

succeeding as a substantive due process claim.

The City's reduction of Net Cab's reported trips likely does not violate substantive due

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8

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standing. San Jose does not argue, however, that all of the Cab Companies lack standing. Because at

least one of the Cab Companies has standing to bring their application, the court does not reach the issue

of standing here. Such issues may be raised later in a motion to dismiss.

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process based on the record. The only evidence submitted by the Cab Companies is that this was

"unexplained." On the contrary, the City has introduced evidence that this reduction was imposed

because Net Cab's data appeared fraudulent. This is not conscience-shocking behavior; on the

contrary, it appears reasonable.

The Cab Companies' next complain that the City's reduction of Yellow's reported claims was

done by not counting its unverified trips as opposed to arbitrarily reducing its figure by 50%, as was

done with Net Cab and Golden Star. What little evidence there is regarding Yellow's reduction

suggests it was done to filter out Yellow's non-San Jose trips, not because Yellow's trip data

appeared suspicious. Moreover, the Cab Companies make no explanation for how they would have

standing to enforce a violation of Yellow's substantive due process rights.8

The Cab Companies then argue that the City acted arbitrarily by failing to "actually

reallocate" on the basis of off-Airport trips and by not including plaintiff Cab Companies in the

distribution of permits beyond the four-permit minimum. The Cab Companies introduce no

evidence to support the first contention, and the court can glean none from the City's submissions. 

As to the second, the City's decision to allocate the minimum of four permits to all qualified

companies and then allocate the excess permits to qualified companies that would have been entitled

to more than four permits prior to the imposition of the minimum is not irrational given the desire to

reward effective provision of dispatch service.

Finally, the Cab Companies argue that the City of San Jose violates substantive due process

by creating a system that allocates 52% of the available airport access permits to a single nonminority owned company. This argument is without merit, as indicated by the Cab Companies'

failure to supply any authority for the proposition.

In short, none of the Cab Companies' nine substantive due process arguments stands a "fair

chance of success on the merits" given the record before the court.

C. Balance of Hardships

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The plaintiff Cab Companies argue that the balance of hardships tips sharply in their favor

for two reasons. First, the Cab Companies contend that they have suffered irreparable injuries from

the City's violation of their constitutional rights. As discussed above, the Cab Companies have not

demonstrated a fair chance of demonstrating a constitutional violation. Second, the Cab Companies

argue that the substantial loss of business they face from losing their airport access permits when

their drivers defect also justifies injunctive relief.

A substantial loss of business might suffice to justify a preliminary injunction. See Doran v.

Salem Inn, Inc., 422 U.S. 922, 932 (1975). The Cab Companies' owners' averments of the doom

facing them belies the fact that they all apparently operated successfully before ever receiving an

airport access permit and that Golden Star continues to operate successfully without airport access

permits. While the reallocation may work a hardship on the Cab Companies, the possibility of an

unwarranted injunction of the City's operations works a hardship against the City. On the record

before the court, the court does not find that the hardships "tip sharply" in the Cab Companies' favor.

III. ORDER

For the foregoing reasons, the Cab Companies have not demonstrated even a fair chance of

success on the merits, nor have they demonstrated that the equities tip sharply in their favor. 

Accordingly, the Cab Companies' application for a temporary restraining order is DENIED.

If the Cab Companies wish to move for a preliminary injunction, they may notice a motion

for one pursuant to the Civil Local Rules. See Civil L.R. 6.2, 6.3 and 7.2. If such a motion is filed,

the plaintiff Cab Companies should offer any evidence they have showing any arbitrary refusal to

accept data, any historical discriminatory animus, any facts showing that a fleet of fifteen cabs

cannot be sustained with only four airport access permits, and any other actions by the City evincing

a discriminatory purpose.

DATED: 12/31/2007 

RONALD M. WHYTE

United States District Judge

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Notice of this document has been electronically sent to:

Counsel for Plaintiffs:

Patrick Toole ptoole@sjhattorneys.com

Counsel for Defendants:

Daisy M. Nishigaya Daisy.Nishigaya@sanjoseca.gov

Richard D. North cao.main@sanjoseca.gov 

Counsel are responsible for distributing copies of this document to co-counsel that have not

registered for e-filing under the court's CM/ECF program.

Dated: 12/31/07 TSF

Chambers of Judge Whyte

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