A legal team that litigates for limited government and free enterprise has gone to court against “state-sanctioned cronyism” in the moving industry in West Virginia, which is giving companies the power to veto any competitors who want to come to the state.
It’s not the first state in which the Pacific Legal Foundation has challenged the practice of requiring a state-issued “certificate of need” or a similarly titled document before a company can provide services.
The organization’s earlier campaigns resulted in the repeal of similar laws in Oregon, Missouri and Montana. In Kentucky, a federal judge struck the state’s “competitor’s veto” law, concluding it served no legitimate public purpose.
In the West Virginia case, the complaint was filed on behalf of Arthur Vogt and his Vogt Ventures, doing business as Lloyd’s Transfer and Storage. It names as defendants state officials Ingrid Ferrell, Michael Albert, Brooks McCabe and Kara Cunningham Williams. It also names all of the state Public Service Commission and Attorney General Patrick Morrisey.
Pacific Legal contends West Virginia “is imposing unconstitutional restrictions on entry into the moving business, by forcing entrepreneurs to prove a ‘need’ for additional moving services before they are allowed to operate – a restriction that lets established firms ‘veto’ new competition.”
The lawsuit challenges the “Certificate of Necessity” law as a violation of due process, equal protection and the U.S. Constitution’s Commerce Clause.
Vogt’s business is in Virginia, but he cannot provide service to potential customers only 10 miles away in West Virginia, the complaint explains.
“West Virginia makes it illegal to run a moving business if existing moving companies object,” said PLF attorney Larry Salzman. “Indeed, not a single moving company that has been protested by established firms has been permitted to compete for business in West Virginia during the past 15 years. That’s why we call the ‘Certificate of Necessity’ requirement by what it really is – a ‘competitor’s veto’ law.”
He continued: “West Virginia’s ‘competitor’s veto’ law harms entrepreneurs and consumers alike. This law has nothing to do with protecting public health and safety, but everything to do with protecting established businesses from honest competition. That’s not only unfair, it violates the U.S. Constitution.”
At issue is West Virginia’s code 24A-2-5, which requires state approval for household goods movers.
Approval can be obtained only “by proving a ‘need’ for new services that cannot be met by existing companies.”
“There are no objective standards in the law for demonstrating a ‘need.’ Moreover, established companies are allowed to protest applications by would-be competitors; if a protest is lodged, the process turns into full-blown litigation, effectively allowing existing companies to block their own competition,” Pacific Legal said.
“West Virginia’s ‘competitor’s veto’ law is state-sanctioned cronyism,” Salzman noted. “It drives entrepreneurs off the road merely to safeguard the market share of existing moving companies.”
See the foundation’s video about the fight:
Vogt has been a mover in the region for more than 20 years. He obtained the business by buying out his former boss, but an existing permission his company held did not transfer with the ownership. When he reapplied, he spent a full year and $10,000 in legal fees to respond to a challenge from a company that doesn’t even have offices within 100 miles of his, PLF explained.
“People are flabbergasted when we tell them we cannot do a move within the state of West Virginia,” said Vogt. “I can move you to Brazil, I can move you to Wisconsin. But for no good reason, I’m not allowed to do a move in West Virginia, 11 miles from my office. I’m fighting this battle in memory of my wife, who passed away when we were trying, unsuccessfully, to get the West Virginia license. In her memory, and on behalf of everyone’s right to engage in honest free enterprise, I am determined to get this un-American law struck down. And I am grateful to be working with Pacific Legal Foundation in this cause.”
The case seeks a judgment declaring the West Virginia requirements unconstitutional.
“This case challenges a state law that burdens interstate commerce in violation of Article 1, Section 8, Clause 3 (Commerce Clause) of the U.S. Constitution and deprives plaintiffs of their constitutional rights to earn a living in a common and lawful occupation of their choice. That right is guaranteed by the Due Process, Equal Protection, and Privileges or Immunity Clauses of the 14th Amendment,” the complaint says.