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Chirikos v. Yellow Cab Co.





APPEAL from the Circuit Court of Cook County; the Hon. NATHAN M. COHEN, Judge, presiding.


Rehearing denied September 15, 1980.

Anthony N. Chirikos (plaintiff) filed a class action for restitution from various taxicab companies (defendants), licensed by the city of Chicago (City), on the theory that the city ordinance dealing with taxicab rates, as amended on July 13, 1977, was illegal and should be rescinded. Plaintiff sought refunds from defendants of various alleged overcharges collected by them. Motions to dismiss plaintiff's amended complaint were filed by defendants and by the City. Extensive memoranda of law were filed by the parties. The trial judge filed an opinion granting the motions to dismiss and entered such an order. The order also denied plaintiff's leave to file a further and amended complaint. Plaintiff has appealed.

In this court plaintiff contends the fare increase amendment was illegally enacted in violation of the Chicago Taxicab Ordinance and in adopting this amendment the city council exercised an administrative function; the amendment violates the Illinois Consumer Fraud and Deceptive Practices Act; and the concerted efforts of defendants in seeking the fare increase amendment violated the Illinois Anti-Trust Act.

Plaintiff's amended complaint contains four counts. Count I alleged the status of plaintiff as a taxicab rider and defined the class as all persons who have paid taxicab fares to any City licensee after July 13, 1977. Plaintiff alleged, on information and belief, in obtaining a fare increase the taxicab companies submitted statements of gross revenues and expenses which "contained irrelevant, erroneous, unreasonable and unjust information" in violation of the requirements of the ordinance. The City has failed or refused to require defendants to submit a sworn statement of all gross fares collected. Count I prayed the amendment be declared unlawful, its operation enjoined and all unlawful fares be refunded.

Count II alleged the City and defendants had deceived plaintiff and other members of the class in contravention of the Illinois Consumer Fraud and Deceptive Business Practices Act. Ill. Rev. Stat. 1977, ch. 121 1/2, par. 261 et seq.

Count III alleged two of the defendants acted in concert to obtain an unjustified and illegal rate increase. This count has not been briefed or argued by plaintiff.

Count IV alleged the matters pleaded in counts I and II were a violation of the Illinois Antitrust Act. Ill. Rev. Stat. 1977, ch. 38, par. 60-1 et seq.

• 1 The pertinent facts alleged in plaintiff's complaint and contained in exhibits attached thereto are accepted as true in ruling upon a motion to dismiss. (Soules v. General Motors Corp. (1980), 79 Ill.2d 282, 284, 402 N.E.2d 599.) For some time prior to July 13, 1977, the applicable City ordinance provided specific rates of fare for taxicabs. The ordinance declared these rates to be "just and reasonable."

The ordinance provided when the combined total of all operating expenses of the licensees for a period of 12 consecutive months would approximate 86 percent of their combined gross fares for the period, the rates were to be "deemed just and reasonable." The ordinance provided for revision of the rates upon application to the council by the holders of not less than a majority of the taxicab licenses. The committee on local transportation of the city council was then to hold a hearing to determine the need for a fare adjustment. Each licensee was to submit "a sworn statement of all gross fares collected and of all such expenses incurred during the immediately preceding period of 12 full calendar months."

This information was to be reported by the committee to the city council. Using the same guideline, the council was then, where increase of fares was indicated, to increase the rates by 5 cents per trip for each one and one-half percent portion of such excess of expense over 86 percent. In addition, if the combined total of such expenses was less than 86 percent of the combined gross fares, the council was to decrease the rates of fare by the same proportion or could allow the fares to remain unchanged and authorize additional taxicab licenses at the same percentage per portion.

By letter dated June 6, 1977, the licensees applied for a fare increase. The council referred the matter to its committee on local transportation. Conferences and meetings were held and defendants Yellow and Checker submitted statements of their gross revenues and expenses during the preceding 12-month period. Plaintiff alleged, by way of conclusion, this statement "contained irrelevant, erroneous, unreasonable and unjust information." Plaintiff alleged the statement of gross revenues thus submitted was a "direct violation" of the ordinance requirements. Plaintiff alleged these defendants failed, or refused, to submit a sworn statement of gross fares and the City had failed, or refused, to require this compliance with the ordinance.

The committee voted 11 to 1 to recommend a proposed increase to the council. On July 7, 1977, the council received this report. On July 13, 1977, the city council enacted an amendment to the taxicab ordinance. This amendment increased rates of fare for the first one-tenth of a mile or fraction thereof from 50 cents to 85 cents without changing other existing fare requirements.

• 2 On November 22, 1977, the city council by resolution directed the chairman of the committee on finance to appoint a special committee to conduct a review of the financial data presented to the committee on local transportation in support of the ordinance of July 13, 1977. Pursuant to that resolution the special committee retained the services of special legal counsel. A copy of the report of counsel to the special committee, dated March 15, 1978, was presented to this court as an appendix to plaintiff's brief. We take judicial notice of this report and of other public records involved here. Finish Line Express, Inc. v. City of Chicago (1978), 72 Ill.2d 131, 136, 379 N.E.2d 290.

The attorney concluded the data originally submitted to the committee on local transportation did not comply with the then existing ordinance. The report found not all licensees had submitted data. The statements submitted were not sworn and all expenses were not identified. The counsel also found that the expenses incurred by defendants were shown in the aggregate whereas the ordinance provided only for a showing of operating expenses. Proper data as to gross fares was not submitted because a significant number of taxicabs are leased and, as to these cabs, the figures presented reflected gross income from lease rentals and not gross fare revenues from meters. The special counsel also concluded supplemental data submitted to the council were not consistent with the original data since changes were made by the defendants "in depreciation policies and in the reserves for insurance losses which do not appear in the original data."

Another appendix to plaintiff's brief in this court is a report from a firm of certified accountants engaged by the special committee on taxicabs of the city council pursuant to the council's resolution. This report, dated April 18, 1978, reflects the result of a review of the financial records of defendants Checker and Yellow by the accountants. The report considered a detailed audit made by another prominent firm of certified accountants relating to the financial statements of defendants Checker and Yellow and other associated companies. The report concluded, "while the city council, being a legislative body, may have construed gross revenues to be the same as gross fares, the fact remains that the taxicab companies did not provide the gross fare data for the leased cab segment of their operations." However, the report also stated defendants, Yellow and Checker, did operate at a loss during the 12-month period ending May 31, 1977. This loss was actually greater than that reflected by the data they submitted. This report illustrated graphically the complications resulting from the new system of leasing taxicabs to drivers. The report stated, "Therefore, it appears to us that a fare increase of some measure was economically justified."

The able trial judge supported his order dismissing the amended complaint with a lengthy and well-reasoned ...

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