While it certainly isn’t New York City, the Disneyland Resort in Anaheim has historically been one of the best places in Orange County for a taxicab driver to make a buck. But that changed last year for many drivers when Disney implemented a “preferred provider” status that favored one cab company.
One of the competing companies has reacted with outrage, anger and a lawsuit over what it says should be considered unfair business practices in the transporting of people near and around the “happiest place on Earth.”
The preferred provider arrangement between Disney and A Greater Yellow Cab of Orange County is an illegal monopoly that hurts the public because it will ultimately reduce the quality of service, argues the lawsuit filed by A Taxi Cab, one of the city’s two other taxi companies.
“I think it’s wrong, the whole thing,” said Maryann Cazzell, A Taxi Cab’s attorney in the lawsuit, which was first filed in 2010 and is now in the discovery phase.
Meanwhile, Disney and two resort-area hotels that are also named in the suit argue that their arrangement does not constitute a monopoly and that the rights were awarded through fair competition. They say Greater Yellow Cab, which was recently ranked the highest quality taxicab provider by a city committee, has showed itself to be the superior taxi provider.
The alleged monopoly is also an example of what some City Hall observers see as a city controlled by a small, well-connected group of insiders. The group has wielded considerable influence over prominent city issues like the recent granting of a controversial $158-million hotel subsidy.
“There is a running joke in Anaheim that 100 people run the whole town,” said one City Hall watcher, who spoke on condition of anonymity.
The Lawsuit
Earlier this month, the Anaheim City Council awarded 10-year service rights to the two companies involved in the suit and one other — California Yellow Cab. These three companies share a total of 255 taxi permits.
In 2010, however, the Hilton Anaheim announced it would allow only drivers from Greater Yellow Cab to line up at the hotel. Soon after, the Anaheim Marriott announced the same policy. By the end of the year, Disney declared that only Greater Yellow Cab drivers would be allowed at the resort.
The resort’s taxi staging areas include the Disneyland Hotel, the Grand Californian Hotel and Spa, and Downtown Disney, according to the lawsuit.
A Taxi Cab argues that this practice violates both the franchise deal it has with Anaheim, which allows it to operate in any part of the city, and antitrust laws that make it illegal for Disney and the hotels to pick and choose who gets the fares.
As a result of this unfair advantage, Greater Yellow Cab has monopolized 80 percent of the taxicab stand market in Anaheim, according to A Taxi Cab President Hossein Nabati.
“As Yellow Cab’s ‘takeover’ trend has continued, and, unless enjoined, will continue, Yellow Cab’s service will literally monopolize this market, which in the end will lower rather than increase the level of service,” the suit asserts.
Cazzell added that the Anaheim Convention Center, the largest in Orange County, is also monopolized by Greater Yellow Cab drivers, because “if you’re leaving [the convention center], the only realistic way to leave is to be directed to the Hilton or the Marriott.”
Disney and the hotels deny that they are engaging in monopolistic business practices, saying there are many other hotels and destinations in Anaheim that the other cab companies can serve. All three companies were given the opportunity to compete for the exclusive staging rights, according to court documents.
The defendants contend that patrons were complaining about overaggressive competition between taxi drivers, who were “making illegal turns and driving erratically.” Some drivers were also turning down short-distance fares and rejecting credit cards, Disney argued.
Disney officials did not respond to Voice of OC’s calls seeking comment.
Greater Yellow Cab had been beefing up its services when the company’s new director of marketing and sales, Charles Lantz, joined the company in 2009. “Immediately upon my arrival, I embarked on a campaign to make yellow cab more competitive in the market place,” Lantz states in a court declaration.
Part of that campaign was to abolish negative traits of stereotypical taxicab drivers, including dirty vehicles, “belligerent attitudes toward customers” and overzealous drivers hustling customers waiting for shuttles or “fighting for fares in view of customers,” Lantz said in his declaration.
After Lantz took over, Hilton Anaheim General Manager Harold Rapoza contacted Lantz and said that he noticed the improvements, according to Lantz’s declaration. “Rapoza told me he wanted our taxi drivers to present themselves as ‘ambassadors’ and representatives of the Hilton,’” Lantz says.
Soon after, Anaheim Marriott and Disney followed suit.
The Politics
When the taxi franchise issue came before the City Council earlier this month, hotelier Bill O’Connell was among those who spoke out in favor of the deal. In January, the council majority had granted an O’Connell partnership a controversial $158-million room-tax subsidy to develop two four-star hotels at the GardenWalk center.
O’Connell and Greater Yellow Cab President Larry Slagle were part of a group that in 2010 controlled the political action committee for Support Our Anaheim Resort (SOAR), which spent tens of thousands of dollars — much of which came from Disney — to help elect council members Gail Eastman, Kris Murray and Mayor Tom Tait.
And the three-member majority (which includes Eastman, Murray and Councilman Harry Sidhu) that approved the subsidy deal also voted in favor of awarding Greater Yellow Cab a larger share of the permits.
Of the 255 permits granted, 155 were granted to Slagle’s firm. The other 100 were split evenly between California Yellow Cab and A Taxi Cab. A city staff report had recommended that California Yellow Cab and A Taxi Cab each receive 10 additional permits.
SOAR is seen as having tremendous clout in the city. The city’s former mayor, Curt Pringle, in an email to a client, called the organization “very important.”
“This political action committee was critical in electing three candidates in the last city election and will be even more critical in this year’s election,” Pringle wrote.
Pringle is in a position to know. California Yellow Cab had hired his firm, Curt Pringle & Associates, to lobby city leaders so that the company would receive a greater share of the taxi permits.
Even with Pringle’s help, however, California Yellow Cab was unsuccessful.
One reason for Pringle’s failure might be the fact that counted among the members of SOAR’s advisory committee are Eastman, Murray, O’Connell, Slagle and the general managers for the Hilton Anaheim and the Anaheim Marriott, the two other hotels involved in the “preferred provider” arrangement, according to the SOAR website.
O’Connell’s support was seen by some City Hall observers as quid pro quo. When O’Connell’s subsidy came before council in January, Slagle had spoken in favor of the deal. O’Connell had simply returned the favor.
The political ties were a large factor in the decisions to exclude A Taxi Cab from the hotel and resort properties, Cazzell argues.
“I would say a majority of it was political,” Cazzell said. “Larry Slagle is definitely the political connection.”
O’Connell declined to comment for this article. Slagle and Robinson did not return phone calls seeking comment, and Gunderson could not be reached for comment.
Please contact Adam Elmahrek directly at aelmahrek@voiceofoc.org and follow him on Twitter: twitter.com/adamelmahrek. And add your voice with a letter to the editor.