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Barry Doyle
Barry Doyle
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Taxi cab companies now playing the corporate shell game

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The Chicago Sun Times ran an article in today’s newspaper entitled, "Badly Injured in cab crash? Good luck collecting much". The article described how Chicago taxi cab companies are structuring their business operations so as to confine their exposure to liability for serious cab accidents to the minimum $350,000 in liability insurance mandated by the City of Chicago.

In essence, the City of Chicago requires the owners of taxicab medallions (the license required to legally operate a cab in the City of Chicago) to carry $350,000 in liability insurance. Each medallion is in turn owned by a separate corporation which leases the medallion (and the right to pick up fares) to the individual cab drivers. Of course, the individual cab drivers almost never have any assets.

The taxicab companies (think Yellow Cab) claim that they are in the business of leasing the medallions to the cab drivers who are independent businessmen. They claim that the liability for cab accidents should be confined to the driver and possibly the corporation that holds the individual medallion.

The article quoted Jeffrey Feldman, the former president of Yellow Cab. I took his deposition years ago in a taxi case and he kept referring to the cab drivers as "our customers." When I asked him what he called the people who sit in the back of taxis when the meter is running, he told me that they were "our customer’s customers."

There is really only one reason for this business structure: to avoid legal accountability for accidents caused by cab drivers. You only need to spend a day in downtown Chicago to know that many cab drivers drive very aggressively and often without any real regard for the Rules of the Road. By claiming that the cab drivers are in business for themselves, the cab companies are seeking to avoid the consequences of the accidents that cab drivers inevitably cause.

This model is one which is fairly popular in the nursing home industry, and is gaining popularity in the trucking industry as well. Lawyers who are experienced in prosecuting nursing home cases have had some luck in breaking through this corporate structure to hold the businesses accountable for the injuries which are caused by the business operations.

People who are involved in accidents with taxis should be aware that there is not a large company with sufficient insurance backing the person who is sitting behind the wheel of the taxi. In fact, they are taking every step they can to distance themselves from their drivers. It takes help from a skilled lawyer who understands these structures and how to defeat their liability-dodging features to make sure the victims of taxicab accidents are properly compensated.