Federal judge strikes down Kentucky’s
Lexington, KY, February 03, 2014: U.S. District Court Judge Danny Reeves struck down Kentucky’s cartel scheme that limits entry into the moving industry, today, in a lawsuit brought by Pacific Legal Foundation (PLF) on behalf of Lexington-based Wildcat Moving Company. Judge Reeves ordered the state to stop enforcing its anti-competition law against new moving businesses.
The anti-competition law essentially gave existing moving companies a veto over new firms. PLF attorneys challenged it on behalf of businessman Raleigh Bruner, who was the target of complaints to the government by existing companies — and state citations for violating the restriction against start-ups — after he opened his business in 2010.
In ruling against the anti-competition law and regulations, Judge Reeves today held that it is unconstitutional for government to favor some companies over others merely for the purpose of protecting existing businesses from competition.
“Today’s historic ruling is a victory for entrepreneurs, for consumers, and for the free enterprise principles embodied in the Constitution,” said Timothy Sandefur, the Pacific Legal Foundation Principal Attorney who argued the case. “An outrageous roadblock to economic liberty and job creation has been taken down. While regulating for health and safety is permissible, regulating merely to benefit insiders over outsiders is illegitimate and downright wrong. Government can’t build a wall around an industry and hang a ‘keep out’ sign on it, simply to exclude aspiring entrepreneurs and job-creators. As Judge Reeves recognized, the Constitution does not permit restrictions on business activity that are aimed purely at economic protectionism, limiting competition, and curtailing consumer choice.”
Kentucky’s cartel law allowed existing businesses to veto new competitors
The law at issue — called a Certificate of Necessity law (Kentucky Revised Statutes, section 281.615, et seq.) — essentially prohibited any person from going into the moving business without permission from existing moving companies. Any person who wanted to run a moving company had to obtain a certificate from the state’s Division of Motor Carriers. But applicants were required to notify the state’s existing moving companies and give them an opportunity to file a protest. Whenever a protest was filed, the start-up business owner was required to attend a public hearing and “prove” to the government that existing moving services were “inadequate,” that a new moving company would serve the “present or future public convenience and necessity,” and that the new license would be “consistent with the public interest.”
Pursuing the American Dream: Raleigh Bruner, owner of Wildcat Moving
Raleigh Bruner entered the moving business in 2010 after working as a waiter to put himself through the MBA program at the University of Kentucky. He started by advertising on craigslist.org, and now Wildcat Moving employs 36 people.
When he started the business, Bruner was not aware that Kentucky law gave existing moving businesses the power to block his entry into the field. He learned of the law only when Lexington police officers cited him for operating without a Certificate of Necessity.
“It was a shock to learn that Kentucky required new moving businesses like mine to be approved by other moving companies in order to serve the public,” said Bruner. “This isn’t the American way, and that’s why I went to court — to defend my rights, and freedom for all entrepreneurs. I’m grateful that Pacific Legal Foundation has successfully defended my constitutional rights — and the right of all entrepreneurs to provide honest services and choices for consumers.”
PLF’s track record against moving-business cartels
PLF’s victory over Kentucky’s Certificate of Necessity law follows its successful challenges to similar cartel rules for the moving business in Oregon and Missouri. In both those states, PLF’s lawsuits prompted state lawmakers to repeal the restrictions on new moving businesses. PLF is also currently challenging Nevada’s anti-competition law for the moving business.
About Pacific Legal Foundation
Donor-supported Pacific Legal Foundation (www.pacificlegal.org) is a legal watchdog organization that litigates for limited government, property rights, and free enterprise in courts nationwide. PLF represents all its clients without charge.