PLF urges court to end Kentucky’s unconstitutional mover cartel

August 15, 2013 | By TIMOTHY SANDEFUR

Today, PLF attorneys filed a motion in Kentucky Federal District Court asking Judge Danny Reeves to strike down the Bluegrass States’ anti-competition law for moving companies. Representing entrepreneur Raleigh Bruner and his company, Wildcat Moving, we’ve argued that the state’s licensing law for movers violates the Fourteenth Amendment, which forbids government from arbitrarily depriving people of their right to earn a living.

Like many states, Kentucky requires anyone who wants to run a moving business to essentially get permission first from established moving companies. To get the required license, an applicant must first notify the state’s existing movers and allow them to object to the application. Applicants are also required to go to a hearing where they must prove that existing moving services in the state are “inadequate” and that a new moving company will serve the “present or future public convenience and necessity.” It’s hard to prove such things, since no law defines or explains what these terms mean. And it’s expensive and time-consuming to try, since businesses like Wildcat Moving are required to hire a lawyer to go to a hearing—and it can take more than a year to go through this whole process and get a license.

Under these vague and burdensome rules, existing moving companies are empowered to block newcomers from competing against them, simply because they don’t want the competition. Even perfectly safe and competent moving companies can be barred from operating simply because customers might choose them instead of the established firms. And evidence uncovered by PLF attorneys shows that that’s exactly what has happened.

Since 2007, there have been about 39 applications for new moving licenses. Nineteen of those were protested by one or more existing companies—for a total of 114 “protests” filed since 2007. Of those protests, not a single one even so much as claimed that the applicant would operate a dangerous or incompetent or dishonest company. Instead, every single company that has “protested” has done so on the explicit grounds that a new company would compete economically against them. Here’s an example of one of these protests. As you can see, it doesn’t claim the applicant is unqualified—just that the would-be moving company would “directly compet[e] with” the established firm and “result in a diminution of [its] revenues.”

Most applicants give up trying to get a license as soon as a “protest” is filed. Many then apply instead for permission to buy a license from an existing company—and those applications are never protested, and never denied. Those entrepreneurs who do insist on going through the whole hearing process and try to get a new license always lose—since 2007, no protested application for a license has been granted.

This law is so arbitrary that the only consistent rule appears to be—no competition allowed. In one case, an applicant who had been in the moving business for 35 years was denied a license even though the Kentucky Motor Carriers Division found him fully qualified—simply because it said that existing moving services were “adequate.” In another, a business was denied a license because existing services were “adequate” and because the business had operated without a license for some time, which is illegal. Only 17 months later, that same business turned around and asked for permission to buy a license from an existing company—one that had protested against its original application!—and that was granted without protest. This time around, the Division even remarked favorably that the company had 10 years of experience in the moving business, ignoring the fact that this was earlier held against them! In no case in over 5 years has the Division even so much as considered public safety, or danger to the environment, or other public matters when evaluating an application for a moving license. Instead, the sole concern of the law is whether a new company would compete against the state-created mover cartel.

The Sixth Circuit Court of Appeals, which includes Kentucky, has explicitly declared that every citizen has “the right to compete,” and that “protecting a discrete interest group from economic competition is not a legitimate governmental purpose.” In today’s motion, we’ve asked the court to rule that these licensing restrictions, which have nothing to do with protecting the general public, but only protect the established companies against competition, are unconstitutional. (Last month, the court issued a temporary injunction barring the state from enforcing these laws until the judge can rule on their constitutionality.)

It ought to be so easy to start a moving company. It should be as simple as getting a truck and painting the word MOVER on the side of it—and then working hard to satisfy customers and do a good job. Instead, Kentucky law bars hardworking entrepreneurs like Raleigh Bruner from making a living for himself and his family—not in order to protect the public, but simply to protect established companies against fair competition from entrepreneurs who want to run an honest business.

You can read our briefs here and here. This litigation backgrounder explains the case and its wider ramifications in more detail. The state has until September 16 to reply, and the judge may schedule a hearing in October or November.