Supreme Court Allows Lawsuit in L.A. Cab Case

The Supreme Court ruled today a Los Angeles taxicab company that contends the city destroyed its business may sue for damages.

The 6-3 decision marks a second Supreme Court victory for the Golden State Transit Corp. in a nearly decade-long dispute sparked by the city’s refusal in 1981 to renew the cab company’s franchise because of a drivers’ strike.

Today’s decision, written by Justice John Paul Stevens, clears the way for Los Angeles’ oldest and largest cab company to seek compensatory damages in court. In the midst of the lengthy proceedings, the company went into involuntary bankruptcy and eventually was liquidated.

Chief Justice William H. Rehnquist and Justice Sandra Day O’Connor joined Justice Anthony M. Kennedy in a dissenting opinion.

The cab company, operating as Yellow Cab, had argued successfully before the high court in 1986 that the city violated Golden State’s federal rights by making settlement of the strike a condition for franchise renewal.

In subsequent proceedings, the U.S. 9th Circuit Court of Appeals found that Golden State was not entitled to compensatory damages because the city did not directly violate the National Labor Relations Act.

The high court reversed that decision today, however, finding the city violated the cab company’s right to use “economic weapons” in a labor dispute without governmental interference.

“The city argues that it cannot be held liable . . . because its conduct did not violate any rights secured by the NLRA,” Stevens wrote. “We reject this argument.”