The Yellow Cab Association on Thursday filed a lawsuit in federal court against the City of Chicago, contending a new cabbie ordinance illegally forced the company to sell 640 of its medallions at discounted prices.
The company alleges the Dec. 10 ordinance, which says that no single cab company in the city can own more than 25 percent of all medallions, cost it more than $18 million. Yellow is seeking damages to recover that loss.
Susan Getzendanner, attorney for Yellow Cab, called the suit a simple contract dispute with only one issue: “Money.”
The dispute centers on the interpretation of the cab company’s contract with the city. The cab company believed it was entitled to keep all 2,017 of its licenses, out of a total of 5,700.
But Caroline Shoenberger, the city’s commissioner of consumer services, informed Yellow Cab in November that it had 14 days to pare its medallions down to 25 percent of the city’s total, Getzendanner said.
“To our astonishment, the city took the position we had to reduce by 640 medallions,” Getzendanner said. “We had to hold a fire sale to reduce by that number by the end of the year.”
City officials stood by their ordinance Thursday, saying they were confident that the new regulations would hold up in court.
“The city’s goal with this ordinance was to increase competition,” said John Camper, the mayor’s deputy press secretary. “We believe this will lead to better service for all taxicab customers.”
The suit contends the cab company lost $18 million when it was forced to sell the medallions at almost half price. Yellow Cab says it could have gotten $60,000 for each of the medallions had it been able to sell them under “orderly circumstances.”
Instead, the medallions were sold to Klondike Resources Inc. for approximately $31,000 apiece.