Lexington, KY – A Federal Judge in Frankfort Monday ruled a process used by the Kentucky Transportation Cabinet that in effect allowed moving companies to veto license application for new competitors, violated the equal protection clause of the 14th Amendment.
State law has mandated that not only must an applicant show that they are “fit, willing, and able to properly perform the service proposed,” but that the current services in their market are “inadequate.” As a part of the second segment, the applicant must place in ad in a generally circulated newspaper or email current licensees as to allow objection from the public and existing companies.
According to U.S. District Judge Danny C. Reeves’ ruling: “Since 2007, thirty-nine new applications for Certificates have been filed by companies seeking to enter the moving business… Existing moving companies have filed 114 protests in opposition to these applications… However, no protest has ever been filed by a member of the general public.”
The ruling further stated that 19 applications had more than one protest and of those, 16 withdrew from consideration or abandoned the application process before a hearing could be held to determine the need for a moving business by the Transportation Cabinet. Of the three that waited for the hearing, which could take anywhere from two months to 12 months to be held, all three applications were denied.
“In summary, the Cabinet has never issued a Certificate to a new applicant when a protest from a competing mover was made,” Reeves’ ruling states.
Reeves also pointed out a process within the system that would allow existing certificate holders to sell their certificate to someone looking to enter the market.
“It is also noteworthy that an existing moving company that protests an applicant for a new Certificate may offer the applicant the opportunity to buy a Certificate it holds,” Reeve’s notes while citing a particular company that had twice protested while also offering their license up to the applicant for $25,000. “Further, no application for the sale or transfer of an existing Certificate has ever been protested or denied,” Reeves’ ruling continues.
The case, brought by Lexington moving company Wildcat Moving, did not challenge the initial hurdle of requiring the applicant to prove its own fitness for the application, just the second leg, which Revees’ said was counter to the 14th Amendment.
“A favorable decision by this Court would redress the injury, not because the Plaintiffs would automatically be granted a Certificate, but because the unconstitutional obstacle would be removed from their path to operate a moving company in the Commonwealth,” Revees’ wrote when refuting claims made by the Transportation Cabinet that Wildcat Moving did not have standing to bring the case as the company itself had not completed the application process and had been operating without a certificate from the cabinet.
Reeves writes: “As the protest and hearing procedures are applied, however, an existing moving company can essentially ‘veto’ competitors from entering the moving business for any reason at all, completely unrelated to safety or societal costs. The Cabinet undertakes no review regarding excess entry into the moving business. In fact, Cabinet officials testified that they had never heard of the phrase ‘excess entry.’”
“To the extent that the protest and hearing procedure prevents excess entry into the moving business, it does so solely by protecting existing moving companies — regardless of their quality of service — against potential competition,” Reeves states near the end of his 20-page ruling.