Taxis reversed: Appeals court rules in favor of Uber

A federal appeals court on Friday ruled that Uber drivers and traditional taxis can continue to operate under different sets of rules in Chicago, throwing out a lawsuit by cab companies who say ride-hailing services are driving them out of business.

The difference in the business models between cab companies and the services — including Uber and Lyft — is great enough that they don’t have to follow the same requirements, wrote U.S. Circuit Judge Richard Posner for a three-judge panel of the U.S. 7th Circuit Court. “Here’s an analogy,” the judge wrote, “Most cities and towns require dogs but not cats to be licensed.”

The ruling validates a 2014 City Council ordinance that let Uber and Lyft operate in the city without taxi medallions or other standards set for cab companies.

Treating Uber drivers like cabbies would effectively protect the taxi business from competition fueled by new technology, Posner wrote.

The ruling reverses U.S. District Judge Sharon Johnson Coleman, who earlier his year ruled that a lawsuit filed by the cab industry could move forward.

“Indeed, when new technologies, or new business methods, appear, a common result is the decline or even the disappearance of the old,” Posner wrote. “Were the old deemed to have a constitutional right to preclude the entry of the new into the markets of the old, economic progress might grind to a halt.

“Instead of taxis we might have horse and buggies; instead of the telephone, the telegraph; instead of computers, slide rules. Obsolescence would equal entitlement.”

Edward Feldman, attorney for cab industry group Illinois Transportation Trade Association, said Friday he disappointed with the ruling and that the group is considering a further appeal.

“We don’t find those analogies persuasive,” Feldman said.

City spokesman Bill McCaffrey lauded Posner’s “sharply worded” opinion.

“We are extremely pleased with the court’s ruling, which confirms what we have maintained from the outset: the taxi industry’s legal challenges to the City’s ride share ordinance are completely baseless,” McCaffrey said.