Greater Houston Small Taxicab Co. Owners Ass'n v. City of Houston, 2011 U.S. App. LEXIS 20590

The City of Houston enacted Ordinance 2007-1419 authorizing 211 new taxicab permits over four years, allocating them by company size (Large, Mid-large, Mid-small, Small, New entrant).
Permits for Small and New entrant categories were heavily limited, with Small entrants entering only a first-year lottery for 16 permits and no additional opportunities in years 2–4.
The City based its distribution on differences in services and capacity among company sizes, aiming to enhance competition, broadening service, and improving efficiency and accessibility.
Code provisions § 46-66(d) and § 46-66(e) provide a petition process and a cap that permits may not exceed 25% of available permits for additional entrants, as a safeguard for smaller players.
The Association, representing about 60 of the 117 small taxi firms with 1–3 permits, sued under 42 U.S.C. § 1983 alleging Equal Protection violation, and the district court granted summary judgment for the City.
On appeal, the Fifth Circuit reviewed the district court de novo, applying rational basis scrutiny to the size-based classifications.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Ordinance violates Equal Protection by classifying taxi companies by size.	Small operators are similarly situated to mid-small; distinctions are irrational.	Differences in services and ability to satisfy public goals justify size-based classifications.	No, rational basis supports the distinction.
Whether the City's legitimate purposes include promoting full-service taxi operations and public benefits.	Any preference is pretextual economic favoritism with no public benefit.	Goals include competition, improved service, and efficiency; small and mid-small differ in capacity to meet these goals.	Yes, there is a legitimate governmental purpose.
Whether the ordinance is rationally related to its asserted purposes despite not being narrowly tailored.	There were simpler means (e.g., service requirements) that would better achieve goals.	The plan has a reasonable fit and need not be perfectly tailored; alternative means could still be inferior.	Yes, it bears a rational relationship.
Whether the plan's safeguards (Petition process, market share retention) mitigate concerns of favoritism.	Safeguards are insufficient to prevent perceived favoritism toward larger operators.	D48 and the petition mechanism mitigate imperfection and preserve market dynamics.	Yes, safeguards and market-share preservation support rationality.

Heller v. Doe, 509 U.S. 312 (1993) (rational basis review permits plausible government justifications)
Dandridge v. Williams, 397 U.S. 471 (1970) (statutes need not employ the least restrictive means)
Craigmiles v. Giles, 312 F.3d 220 (6th Cir. 2002) (pretextual and nakedly protective regulation invalidates certain schemes)
Doe v. Pa. Bd. of Prob. & Parole, 513 F.3d 95 (3d Cir. 2008) (noting meaningful but limited rational review)
Schweiker v. Wilson, 450 U.S. 221 (1981) (rational basis review is not toothless)
Johnson v. Rodriguez, 110 F.3d 299 (5th Cir. 1997) (equality and rational basis considerations under scrutiny)