February 27, 2015

How business friendly is Nevada, really?

By How business friendly is Nevada, really?

The Sacramento Bee‘s Dale Kasler has an in-depth article about our latest Competitor’s Veto lawsuit, challenging Nevada’s laws that bar people from starting moving businesses, limo companies, or taxi businesses, if they would compete with existing companies. As he points out, Nevada has tried hard to persuade California business owners to cross the state line and do business in the Silver State. But it’s hard to say that Nevada’s business friendly when its state laws say that you can’t start a new company without permission from your own competitors:

According to the lawsuit, filed last week in U.S. District Court in Las Vegas, the state denies licenses to companies that would pose a competitive threat to existing businesses. The law says licenses won’t be granted to companies that will “unreasonably and adversely affect other carriers.”

[PLF client Steve] Saxon says the law protects “the good old boys” who are already doing business in Nevada. “It’s basically protecting the ones that are already in place, and preventing new ones from coming in,” Saxon said in an interview at his office in south Sacramento, where he runs a fleet of 10 trucks. “There’s a very few companies in Reno; they’ve got a monopoly….”

The lawsuit comes as states such as California struggle to devise regulatory schemes for new ridesharing services such as Uber and Lyft. Uber shut down in Nevada in November, two months after beginning operations, after a Washoe County judge issued a preliminary injunction preventing the service from operating statewide. The San Francisco company, which connects customers with drivers using their personal cars, declined to seek a Nevada business license, arguing that it’s a technology company, not a transportation operator. State authorities impounded more than a dozen cars operated by Uber drivers.

(Read the rest here.)

Incidentally, Nevada bureaucrats claim in the article that they’ve licensed tons of new businesses, so that there’s no problem. Of course, we’ll learn the real facts once we get to discovery in our lawsuit. But the state’s website lists only 45 licensed limo companies in the entire state of Nevada, which has a population of 2.8 million people. That’s one limo company for every 62,000 residents. By comparison, there are over 2,300 licensed limo companies in Georgia, which is one for every 4,200 people.

Fortunately, it does look like change might be on the horizon. Nevada State Senator Don Gustavson has introduced a bill, SB 183, which would repeal the anti-competitive portions of the Nevada law, while leaving in place all the protections for public safety. We’ll keep an eye on that bill as it goes forward.

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