Atlanta cabbies want compensation over Uber rules

Mohamed Hussein, an Atlanta taxi driver who has an economics degree, said he spent $53,000 ona taxi “medallion” that might only be worth about $10,000 now, due to the rise of ride-share services and the city’s approach to regulation. MATT KEMPNER / AJC

Credit: Matt Kempner

Credit: Matt Kempner

Mohamed Hussein, an Atlanta taxi driver who has an economics degree, said he spent $53,000 ona taxi “medallion” that might only be worth about $10,000 now, due to the rise of ride-share services and the city’s approach to regulation. MATT KEMPNER / AJC

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Atlanta taxi drivers are trying a funky tactic to survive damage from innovative ride-sharing rivals like Uber and Lyft.

They want the state of Georgia to compensate cabbies. They claim they’ve been burned by shifting government regulations that they spent lots of money to abide by.

State legislation passed in 2015 to regulate ride-sharing services took away a somewhat exclusive right that taxicab drivers had in the city of Atlanta, five drivers claim in a proposed class-action lawsuit. Their lawyers say the lessened restrictions essentially resulted in a taking of property by the government.

On Monday, the Georgia Supreme Court heard arguments in the appealed case.

UPDATE: Georgia high court rules, and it's unanimous

“I don’t know what the hell they’ve got to sue for,” State Rep. Alan Powell told me last week. “We didn’t take anything.”

The Republican from Hartwell sponsored the legislation in question, which he said was meant to put at least some regulations on ride-sharing companies. He told me his initial efforts on that front sparked complaints from Uber.

Sounds to me like now the state’s being squished between an Uber driver’s Prius and a cabby’s Grand Caravan.

Is regulation good or bad for a business? Answer: Sometimes.

One of the plaintiffs I spoke with is a cabby with a economics degree from Georgia State University and a minor in public policy.

Mohamed Hussein said he’s not complaining about market forces. He assured me he’s a big believer in capitalism. He’s owned a restaurant, a cell phone store and a phone-card business in the past. Recently, he started a tax service firm to make up for the diminished money in taxi driving.

“If I lose the business fair and square, I’m OK with that,” Hussein told me.

But Hussein and his fellow plaintiffs contend that by letting Uber and Lyft skirt costly regulations they slashed the market value of a government certificate, known as a medallion. Atlanta taxicab drivers are required to have them. Ride-sharing drivers are not.

Medallions are a weird creation. State law allows owners of medallions to buy and sell them. And the city of Atlanta limits the number of them to 1,600. Demand outstripped supply, so the price medallions could fetch kept rising.

For 11 years Hussein drove an Atlanta cab by renting other peoples’ medallions — sometimes for $600 a month — before saving and borrowing enough to buy one of his own in 2010. He told me he paid $53,000.

“It was an investment for me, for my kids,” he said. He stuffed it in a bank security box.

But like betting on stocks, it was always a gamble.

The taxicab business plummeted as ride-sharing services revved up.

Hussein told me he’d be lucky to get $10,000 for his government medallion now.

“They told us you need to buy this to work in the city. Now, let them keep their word or let them reduce our money.”

I feel for taxi drivers. Their work can be dangerous. Pay in Atlanta apparently wasn’t great, even before Uber. And they sit in ugly Downtown Connector traffic.

I doubt many would have predicted the shockingly fast shakeup in their industry or how quickly government controls would be upended, helping out companies like Uber that deliver everything from people to Krispy Kreme donuts. Ride-sharing companies recently got official clearance to operate at the world's busiest airport. 

Regulations can be a double-edged sword for business. They often add expense and time. (The president-elect said he wants to kill two federal regulations for every new one added.)

But in the case of some businesses — like taxis, new car dealerships, power companies and alcohol wholesalers — regulations also can be a government-backed barrier to competitors.

Often, that’s not a good thing. They shouldn’t stifle worthwhile innovation. And relying on regulations to protect a business from newcomers — whether a new tech startup or an overseas competitor — is risky. Sooner or later, the public will get fed up.

“This idea of medallions, to me that was an impediment to the free enterprise system,” Powell, the state legislator, told me. “If their medallions lost value, it is because of an outdated system.”