Justices to Settle Suit by Defunct L.A. Taxi Firm

The Supreme Court today agreed to decide whether Los Angeles must pay damages to a taxi company that went out of business after the city intervened in a dispute between the company and its drivers.

The court will review a ruling that barred Golden State Transit Corp. from winning any money from the city.

The Los Angeles City Council refused in 1981 to renew Golden State’s taxi franchise because the cab company was snarled in a labor dispute with a Teamsters union local that represented its drivers.

Golden State, with 400 cabs, had been the city’s largest taxi operator until 1980. The Teamsters called a strike for the same day the city was to consider renewing the franchises of 13 cab companies.

Golden State went out of business after failing to win renewal of its franchise.

The Supreme Court in 1986 ruled that Los Angeles officials improperly interfered in violation of the National Labor Relations Act.

The justices said then that local governments lack authority to tip the balance in labor disputes by defining what economic sanctions either side might suffer.

But the high court ruling left it unclear what remedy was available to Golden State.

The case went back to the lower federal courts, and last September the U.S. 9th Circuit Court of Appeals denied compensatory damages to the defunct taxi company.

The appeals court noted that a federal judge, following the Supreme Court ruling in 1986, ordered Los Angeles to grant Golden State a four-year franchise and pay the market value of the company’s assets less what it received in bankruptcy proceedings.

The company said that was a hollow victory since it had liquidated its assets when it went out of business.