PLF challenges America’s most anti-competitive licensing law

October 04, 2012 | By TIMOTHY SANDEFUR

Today, we filed a new lawsuit challenging the constitutionality of Nevada’s licensing law for moving companies—a law which is probably the most restrictive licensing requirement in the nation. Unlike the several other licensing laws PLF has challenged—and is currently challenging—the Silver State’s law declares explicitly that it is the purpose of the licensing requirements to discourage free enterprise, and it accomplishes this by depriving people like Reno entrepreneur Maurice Underwood of his right to earn an honest living.

Underwood moved to Reno a few years ago, and started a small business that cleans people’s houses. He quickly discovered that the Biggest Little City in The World was getting a lot bigger—and people moving in had need of moving services. So he decided to start Man With Van Moving. What he didn’t know at the time was that moving companies must first get a Certificate of Public Convenience and Necessity from the Nevada Transportation Authority. And getting a Certificate is no easy task. The statute declares that anyone who applies for permission to run a moving company must prove not only that he’s licensed and qualified, but also that

  • “the provision of [moving] services by the applicant as a common motor carrier will foster sound economic conditions within the [moving] industry
  • “The granting of the certificate or modification will not unreasonably and adversely affect other carriers operating in the territory”
  • “The proposed operation…will benefit and protect the…convenience of…the motor carrier business
  • And that the proposed operation will not conflict with the state policy of “discourag[ing] any practices which would tend to increase or create competition that may be detrimental to…the motor carrier business within this state.”

As we know, many other states have anti-competition “Certificate of Necessity” laws on the books, but none is this explicitly devoted to protecting established companies against hard-working entrepreneurs. Maybe that’s why Nevada, with a population of more than 2.7 million, has only about 40 licensed movers.

Nevada’s law is unconstitutional. States have the power to regulate businesses in order to protect individuals from fraudulent or dangerous practices, no doubt—but they have no authority to restrict the rights of entrepreneurs like Maurice Underwood for the sole purpose of protecting established businesses against fair competition. If someone like Mr. Underwood wants to provide moving services to the people of Nevada for prices they’re willing to pay, he has that right—and the state has no right to choose winners and losers in the marketplace.

That fact should have been brought home to Nevada lawmakers by PLF’s victory in the case of Merrifield v. Lockyer, when the Ninth Circuit Court of Appeals declared that government has no constitutional power to restrict economic opportunity simply to block competition and provide private benefits to politically influential businesses.

If you’d like to learn more about this case, or about PLF’s other lawsuits challenging restrictions on Americans’ economic liberty, check out this litigation backgrounder and the complaint in the case. And you can click to learn more about our challenges to Certificate of Necessity laws in Oregon, Missouri, and Kentucky.