August 1, 2016

Courts shouldn't throw out our claims before we have the chance to prove them

By Anastasia P. Boden Attorney

Over half of states have laws that require entrepreneurs to get permission from existing businesses to open up shop.  We call these laws “Competitor’s Veto” laws, and we’ve challenged them successfully in Oregon, Missouri, Kentucky, and Montana.  Now we’re challenging them in West Virginia on behalf of Arty Vogt.  But the government is trying to get our case thrown out of court before we even have an opportunity to prove our claims.

Arty owns a moving company located in Virginia, just miles from the West Virginia border. He has all the necessary legal authority to operate within Virginia, and to provide moving services between any two states. But if he wants to operate within West Virginia, he has to face the state’s Competitor’s Veto law.  That law allows existing businesses to protest any new application for a license to run a moving company.  A protest subjects the applicant to a government hearing where she must prove to a government bureaucrat that a new company is “necessary.”  In other words, entrepreneurs have to prove that they won’t take away business from existing companies.  Unsurprisingly, not one applicant that has been protested has been granted a license in the past 15 years.  Arty himself applied for permission and was swiftly denied on the basis that he would take away business from the existing moving companies.  We sued in early 2016 to defend Arty’s right to earn a living.

The defendants (members of the state’s Public Service Commission) argue that the case must be dismissed—even before Arty gets to ask them for documents that would prove his claim—because they say the law is “rational.”  Of course, the law is anything but.  It stifles competition, reduces the availability of services, eliminates consumer choice, and drives up prices.  It’s certainly not related to protecting public health and safety; even the best businesses can be denied a license regardless of their quality—simply because they’d take away business from existing companies. As we argue in our brief, the court should not throw out Arty’s case based on the state’s unsupported assertions that the law is rational.

Our previous cases show exactly why.  In a case challenging a Competitor’s Veto law in Missouri, evidence we obtained from the government showed that between 2005-2010, whenever a moving company application was filed, it was protested by an existing firm. All 106 of these protests were based on the argument that the applicant would compete with an existing business; not one alleged that the applicant was unskilled or would be dangerous to the public, nor was there any evidence that the state denied an application out of concerns for public safety during that time.  Where applicants amended their application to request permission to operate in a small, rural area—meaning they would present less competition—the protestant invariably withdrew its protest, which undermines any argument that the protesting firm was concerned about public safety.

As the Missouri case shows, when plaintiffs can get the necessary information, they can easily demonstrate that Competitor’s Veto laws exist for no other purpose than to protect existing businesses from competition, and are therefore unconstitutional.  Arty should be allowed to uncover how often and under what circumstances moving licenses are granted or denied in West Virginia.

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