Issues and Cases

Moving roadblocks to competition and free enterprise in Nevada

Underwood v. Mackay

Contact: Timothy M. Sandefur

Status: The Ninth Circuit Court of Appeals issued an adverse decision on June 11, 2015.

Summary:
TMaurice Underwood, PLF clienthis is the latest in a series of PLF lawsuits challenging state laws that create cartels prohibiting free competition in the moving business. If fact, of all the states, Nevada has the most anti-competitive licensing law for movers — a law written for the express purpose of blocking free enterprise. Nevada’s licensing law for moving companies, NRS 706.391.

In challenging this law, we represent Maurice Underwood, an entrepreneur in Reno, Nevada, owner of Reno Movers, LLC (dba “Man With Van”).

Underwood got into the business in 2004 after running a small house-cleaning company, when he discovered that many of his customers were in need of moving services. Only after operating for some time did he learn that state law requires him to get a Certificate of Public Convenience and Necessity (CPCN) before Man With Van can operate as a full-service company. (Without a CPCN, he and his six employees may load and unload trucks, but not drive them.) Yet the rules governing CPCNs in Nevada are so severely anticompetitive that there are only 40 licensed moving companies in the entire state, including only two in Reno.

Among other things, the law requires an applicant to must prove to the government that (1) “the operation of, and the provision of [moving] services by the applicant . . . will foster sound economic conditions within the applicable industry”; (2) “granting of the certificate or modification will not unreasonably and adversely affect other carriers operating in the territory”; (3) “the proposed operation . . . will benefit and protect . . . the motor carrier business in this State”; (4) “[t]he market identified by the applicant as the market which the applicant intends to serve will support the proposed operation”; (5) the new company will be consistent with legislative policies such as “foster sound economic conditions in motor transportation”; (6) and, perhaps most remarkably, the entrepreneur must prove that granting the license will not “increase or create competition that may be detrimental to . . . the motor carrier business within this state”!

PLF attorneys argue that the Nevada law is unconstitutional under the Fourteenth Amendment because it arbitrarily protects established companies against legitimate competition, without protecting the general public in any way. This case is a follow up to PLF’s victory in Merrifield v. Lockyer, in which the Ninth Circuit declared that the government may not use its licensing laws simply to benefit the private interests of established companies.

 

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