NLF victory: Lawsuit seeking to protect Hidalgo councilman’s bus monopoly dismissed

Press release by Najvar Law Firm:

Hidalgo District Court Dismisses Frivolous Lawsuit Filed by Hidalgo City Councilmember Rodolfo Franz

HIDALGO, TX. – Late yesterday, visiting District Judge Rose Vela signed an order dismissing the lawsuit filed last August by Hidalgo City Councilman Rudy Franz to protect his own bus company from legitimate competition at the Hidalgo-Reynosa International Bridge.

“This lawsuit has been frivolous from day one,” said Jerad Najvar, the attorney for Defendants Juan Munoz (owner of competitor S to N Transport) and Hidalgo councilmembers Guillermo Ramirez and Gustavo Sanchez.  “Rudy Franz doesn’t have any right to operate a monopoly in the Hidalgo transportation industry, and we are satisfied that the court recognized that fact and dismissed this case. My clients will be seeking sanctions against the plaintiffs for wasting the time of the City and Munoz, and for the costs of defending this baseless lawsuit.”

For more than a decade, Franz’s company STS Transportation was the only bus company permitted by the City of Hidalgo.  Franz also owns seven of 14 Hidalgo taxi permits, and until June 2013 Franz and his wife owned the only towing companies included in the Police Department’s non-consent towing rotation.  However, after a five-year effort, on September 23, 2013, S to N Transport finally secured the City Council’s approval to provide bus services.  This contested vote represented a major victory against Franz’s political machine for a city accustomed to official reprisals for anyone who challenged its authority.

S to N did not get to this point without a fight.  Franz first sued two political rivals on the City Council, Guillermo Ramirez and Gustavo Sanchez, alleging “political retaliation” and seeking an injunction to prevent them from voting on the permit.  Franz was initially granted a temporary restraining order (TRO) on August 12, but when that case was removed to federal court and the order expired, Franz filed another lawsuit—this time adding as a defendant the city he is supposed to represent—and secured another TRO.

After retaining Najvar Law Firm, a political and constitutional law firm based in Houston, Ramirez and Sanchez persuaded the judge that no court may enjoin members of city council from doing the job for which they were elected and voting on legislative matters. See Editorial, “Judicial restraint” (The Monitor, Sept. 10, 2013).  This ruling finally allowed a vote in City Council, which approved the permit September 23.

Franz immediately filed another request for an injunction to prohibit S to N from operating under the newly-approved permit.  Still lacking any basis in the law, District Judge Jesse Contreras signed that TRO on September 24, preventing competition in the bus market until that order expired on October 25.

After a multiple-day hearing in November considering the plaintiffs’ injunction request, Judge Contreras announced from the bench that he intended to grant the injunction enjoining the City of Hidalgo (which was not even a party) from approving any further permits for any transportation services, including limousines and jitneys, which were never at issue in the case. (See article in The Monitor, Nov. 6, 2013).  This ruling prompted an editorial from The Monitor, stating in part:

[W]e watched dumbfounded as Contreras listened to three days of testimony and decided this week to grant Franz’ request to temporarily block the newly licensed bus company from operating and also block the city council’s right to issue licenses to other competitors – just months after ruling such judicial actions were inappropriate.

Then bemusement turned to incredulity when we heard the judicial reasoning behind Contreras’ decision. “If I don’t file a temporary injunction to enjoin the city, the taxicab drivers will suffer irreparable injury in their line of work,” Contreras said, before effectively allowing the monopoly to stay in place.

In other words, forget the free enterprise system and forget the merits of competition. A monopoly that happens to protect the business interests of an elected public official is preferable to businesses competing for customers, which might protect the interests of the public.

That was not all.  As the defendant councilmembers left the hearing at the 449th District Court after listening to the ruling, Judge Contreras chased them down in his black SUV on Highway 281, motioning for them to pull over.  Startled, the councilmembers did so, only to field a request from Judge Contreras for the cell phone number of a local candidate running for state representative.  Defendants filed a motion to recuse, based on this incident and other disturbing facts, and Judge Contreras immediately recused himself.  Judge Rose Vela was then appointed to take over the case.  Defendant Munoz filed a motion December 20 to dismiss entire case, which Judge Vela granted yesterday.

The case is Palmas, et al. v. Sanchez, et al., No. C-4917-13-K, in the 449th Dist. Ct. of Hidalgo County.


See this early video report for more background on the dispute.