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YELLOW CAB CO. v. CITY OF CHICAGO

March 11, 1996

YELLOW CAB COMPANY, Plaintiff,
v.
CITY OF CHICAGO and CAROLINE O. SHOENBERGER, Commissioner of Consumer Services, Defendants.



The opinion of the court was delivered by: BUCKLO

 On June 7, 1995, plaintiff, Yellow Cab Company ("Yellow Cab"), filed its complaint against defendants, City of Chicago and Caroline O. Shoenberger, the Commissioner of Consumer Services (the "Commissioner"). Yellow Cab owns taxicabs that it leases to drivers who pay Yellow Cab under the leases and keep the amounts earned from driving the taxicabs.

 Yellow Cab's complaint alleges that on December 15, 1993, the Chicago City Council passed an ordinance, Chicago Municipal Code ("Code"), chapter 9-112-145, instructing the Commissioner to set maximum rates that taxicab owners may charge to lease their taxicabs ("Ordinance"). The Ordinance also provided that through March 15, 1994, taxicab owners could not charge a rate to lease their taxicabs higher than the rate in effect on December 15, 1993 and could increase rates by 2.8 percent during that time period. On March 15, 1994, the Commissioner promulgated final rules and regulations establishing maximum allowable lease rates for taxicabs ("Lease Rate Regulations"). In setting the rates, the Commissioner assumed a 14 percent rate of return for the taxicab industry.

 The Lease Rate Regulations provide that a taxicab owner may seek permission to charge a lease rate higher than the maximum lease rates by submitting an appeal to the Department of Consumer Services. Yellow Cab filed its appeal on May 2, 1994 along with its Financial Reporting Package and Lease Rate Survey Form, as required by the rules and regulations. An administrative hearing on Yellow Cab's appeal was held during August, 1995; the hearing officer issued a report and recommendation on October 24, 1995, finding that the maximum rates "are sufficient to pay Yellow Cab its reasonable operating costs and afford it a just and reasonable return on its investment;" and on October 27, 1995, the Commissioner adopted the hearing officer's report and recommendation.

 Yellow Cab claims that the defendants' actions violate its constitutional rights to procedural due process, to substantive due process, to equal protection, and amount to an unlawful taking without just compensation. The defendants have filed a motion to dismiss. For the reasons stated below, the motion is granted in part and denied in part.

 Standard of Review To survive a motion to dismiss, a plaintiff must allege sufficient facts to outline a cause of action. Davis v. Frapolly, 747 F. Supp. 451, 452 (N.D. Ill. 1989). In deciding a motion to dismiss, a court is to assume the truth of all facts alleged in the complaint and construe the allegations liberally, viewing them in the light most favorable to the plaintiff. Wilson v. Formigoni, 42 F.3d 1060, 1062 (7th Cir. 1994); McMath v. City of Gary, 976 F.2d 1026, 1031 (7th Cir. 1992). I need not, however, accept as true conclusory legal allegations. Vaden v. Village of Maywood, Illinois, 809 F.2d 361, 363 (7th Cir. 1987), cert. denied, 482 U.S. 908, 96 L. Ed. 2d 381, 107 S. Ct. 2489 (1987). A defendant's motion to dismiss is to be granted only if "it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Cushing v. City of Chicago, 3 F.3d 1156, 1159 (7th Cir. 1993) (quoting Hishon v. King & Spalding, 467 U.S. 69, 73, 81 L. Ed. 2d 59, 104 S. Ct. 2229 (1984)).

 Counts I and II: Procedural Due Process

 In its complaint, Yellow Cab alleges that its right to procedural due process has been violated because "the Commissioner has failed and refused to act on Yellow Cab's application for permission to charge rates in excess of the maximum lease rates" and "neither the Ordinance nor the Lease Rate Regulations prescribe a time period within which the Commissioner must act on petitions to charge lease rates in excess of the maximum rates set by the Commissioner." Complaint PP 59-61, 61, pp. 12-13, 14-15. The defendants argue that Yellow Cab's procedural due process claim is moot.

 Under Article III of the U.S. Constitution, a federal court has jurisdiction only over cases and controversies. Holstein v. City of Chicago, 29 F.3d 1145, 1147 (7th Cir. 1994). A case exists when both litigants have a personal stake in the case from the start which continues until its conclusion. Id. A claim is moot, and dismissal is required, "when the dispute between the parties no longer rages, or when one of the parties loses his personal interest in the [claim]." Id. (citations omitted).

 Yellow Cab's demand that the Commissioner act on its petition to charge lease rates exceeding the maximum allowable rates in the Lease Rate Regulations has been satisfied. Since the time that Yellow Cab filed its complaint, the Commissioner designated a hearing officer who conducted an administrative hearing on Yellow Cab's petition and issued a report and recommendation, which the Commissioner adopted as her final decision. Thus, Yellow Cab no longer has a stake in its procedural due process claim. See id. (holding that once defendant offers to satisfy plaintiff's demand, there is not a dispute to litigate because plaintiff has no remaining stake). Yellow Cab's claim is moot.

 However, the fact that the defendants voluntarily conducted the administrative hearing on Yellow Cab's appeal does not in itself render Yellow Cab's procedural due process claim non-justiciable. See City of Mesquite v. Aladdin's Castle, Inc., 455 U.S. 283, 289-90, 71 L. Ed. 2d 152, 102 S. Ct. 1070 (1982) (stating that city's repeal of ordinance does not necessarily terminate a case or controversy, as repeal "would not preclude it from reenacting precisely the same provision," and, in fact, the city had declared just such an intention). As Yellow Cab contends, dismissal due to mootness is not warranted if Yellow Cab shows that its claim, although no longer live, is "capable of repetition, yet evading review." See Holstein v. City of Chicago, supra, 29 F.3d at 1147. To make this demonstration, Yellow Cab must prove that "[it] will again be subject to the alleged illegality. " See id. (citations omitted).

 
There must be a 'reasonable expectation' or a 'demonstrable probability' that the same controversy will recur involving the same parties.

 Id. at 1148 (citation omitted). A "mere physical or theoretical possibility" of such a recurrence is not sufficient. Id. Although Yellow Cab may in the future appeal maximum rates set forth in the Lease Rate Regulations, it would be no more than conjecture to find that Yellow Cab will again suffer the delay about which it complains here. Therefore, Yellow Cab cannot "do more than merely speculate that [it] again will experience injury as a result of a particular practice." Magnuson v. City of Hickory Hills, 933 F.2d 562, 565 (7th Cir. 1991). Such speculation is not the equivalent of "reasonable expectation" or "demonstrable probability," and therefore, Yellow Cab cannot save its procedural due process claim under the "capable of repetition yet evading review" principle. See id., 933 F.2d 562, 565 (7th Cir. 1991) (holding that city's voluntary cessation of its allegedly illegal actions did not necessarily moot the case, but the case was moot because plaintiffs did not have a reasonable expectation that city would again engage in the activity about which they complained).

 Yellow Cab additionally argues that I should refrain from dismissing its procedural due process claim because the hearing on its appeal was not conducted "at a meaningful time and in a meaningful matter." Yellow Cab relies on Armstrong v. Manzo, 380 U.S. 545, 552, 14 L. Ed. 2d 62, 85 S. Ct. 1187 (1965), and Fusari v. Steinberg, 419 U.S. 379, 389, 42 L. Ed. 2d 521, 95 S. Ct. 533 (1975), as grounds for its argument. In Armstrong, the petitioner claimed that his due process rights were violated because he was not notified of proceedings in which his former wife's husband sought to become the legal father of the petitioner's daughter. 380 U.S. at 549-50. The petitioner first appeared in court after a judge had already entered an adoption decree based on another judge's finding of non-support. Id. at 551. Consequently, the petitioner was required to shoulder "the burden of affirmatively showing that he had contributed to the support of his daughter to the limit of his financial ability over the period involved." Id. Following the petitioner's appearance, the court affirmed the adoption decree. ...


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