Carmel Taxi owner Duane Gida remembers vividly the day he broke the law.

It was a hot and dusty summer afternoon last June, before the U.S. Open in Pebble Beach. Gida''s 26-car fleet was busy carting golf-happy tourists around town. Gida was in the process of raising Carmel Taxi''s rates to $2.50 for the initial "flag fee" plus $2 per mile. A half-dozen meters had been adjusted to reflect the new rates but they had not been sealed with the official county seal, and three cars'' rates were not posted.

"This is the kind of thing that gives an owner nightmares, because somebody inadvertently is going to charge someone the wrong amount at the wrong time," Gida remembers. His nightmares came true.

A Yellow Cab driver complained to then-County Sealer, Robert Keadle, whose County Division of Weights and Measures is responsible for inspecting taxi meters for accuracy in distance and time, and ensuring rates are posted and meters are sealed for security.

After an investigation of Carmel Taxi--and every other cab company operating in Monterey County--Carmel Taxi got slapped with a $750 fine for operating without seals, driving without posted rates and failing to notify the County Sealer of the new meter rates soon enough.

"We gladly paid the fine," Gida says. "We were in the wrong. We were guilty, so we said let''s pay the fine and get on down the road. We were new to this meter business but you learn quick when you have to pay money."

Yellow Cab, a competing company that has a complicated relationship with Carmel Taxi, was also found guilty of clerical violations--four times as many as Carmel Taxi--including broken security seals and failure to post rates, and fined $3,000.

Following that finding, Yellow Cab co-owner Steve Cardinalli requested a hearing to contest the charges.

Meanwhile, former Keadle, who handled the Yellow cab complaint, had been replaced by Erik Lauritzen, and assistant County Sealer Bob Roach.

At a meeting between Lauritzen and Cardinalli last month, Cardinalli says the two agreed to knock off all but three violations, fine Yellow Cab only $750 and call it even.

"We had documentation that proves we didn''t do all these violations, and these violations are clerical in nature," Cardinalli says.

"Obviously, there was no intent to overcharge customers, it was just the fact that something got misplaced in the notification of the county. The county office, being reasonable as they are, were able to see that."

Gida sees it differently.

"Why would [the County Sealer] reduce those fines," he asks.

"Either you violated the law or you didn''t," Gida says. "The county doesn''t determine these fines, the state does--there''s no negotiating. Keadle told us we could appeal, but we decided not to. We decided no, we were wrong, and we''re going to pay the fine."

Later that week, at the Aug. 21 Monterey City Council meeting, the council approved Yellow Cab''s rate increase. The new rate is $2 for the initial flag-drop fee, plus $2 per mile--the same mileage fee as that charged by Carmel Taxi.

Yellow Cab has had exclusive operating rights in the city of Monterey since 1979. Gida says the city is effectively allowing Yellow Cab to operate as a monopoly, and now that the two companies per-mile fees are even, he doesn''t see any reason to keep Carmel Taxi out of Monterey.

The two companies used to work together, with Carmel Taxi subcontracting its dispatching service to Yellow Cab. Then it got ugly.

Gida says that Yellow Cab''s dispatchers began stealing Carmel Taxi''s calls, forcing drivers to pay the dispatchers in order to get the "good" calls, and being rude to customers on the phone. Carmel Taxi wanted out.

"They know their dispatchers are corrupt and they do nothing about it," says Gida. "So on January 2, 2000, I said I no longer want to do business with them. We put up our own dispatching office, kicked them out of the airport, they sued me for breach of contract and for using the name Carmel Yellow Cab, and they lost every issue."

Gida also produces letters of support from local resorts and eateries such as Inn at the Spanish Bay and Carmel Valley Ranch, as well as individual Peninsula residents, applauding the reliable, courteous and professional personnel at Carmel Taxi. The letters also criticize Yellow Cab, with complaints ranging from annoyance that Yellow Cab can''t dispatch cars to Monterey fast enough, to tales of name-calling and rude dispatchers to horror stories of no-show cabs.

Cardinalli scoffs at the tales.

"We have nothing to hide," he says. "We provide the best service in Monterey."

Gida sent the letter to Monterey City Manager Fred Meurer in October, in an attempt to obtain an operating license for picking up taxi customers within the city of Monterey.

"We can drop off people in Monterey but we can''t pick them up, Gida says. I don''t know of any other business that is forced to give away your customers to your competitor, or why Monterey is protecting these guys going on 23 years.

"It doesn''t serve the interest of the customer. I thought this kind of stuff only went on in New Jersey and Chicago--I can''t believe this stuff goes on in Monterey."

In February, the City Council denied Carmel Taxi''s request to bring its fleet into the city, saying that one company was sufficient, and citing Yellow Cab''s rates as a good deal for Monterey residents. At that time, Cardinalli told the council he had no plans to increase his rates.

Cardinalli brushes off Gida''s allegations that Yellow Cab treats its customers poorly.

"Our intention is always to provide the lowest rate possible and the best customer service. We''ve operated on that theme for over 20 years as a family-run business in Monterey."

He also applauds the Monterey City Council''s decision to keep Carmel Cab out of town. He says that the threat of rising fuel prices and increased insurance costs drove his decision to raise his rates.

"We requested the rate increase months ago, the same time the news reported that gas was going to increase to $3 a gallon, and PG&E costs were going through the roof. Our insurance had increased over 30 percent--we figured at the rate we were operating under it would be difficult if not impossible to survive."

And what about Gida''s charges that Yellow Cab runs a monopoly business in Monterey?

"It''s one-sided," Cardinalli says. "If you wanted to look at the airport for which he has the monopoly, that monopoly is ok. In his eyes, that''s not a monopoly. The city is not a monopoly, it''s a controlled monopoly. We haven''t had a rate increase in years. We''re still below the state average. We''re a family-owned company. It''s our feeling that if we can provide our service, and keep our volume high--and low cost does keep volume high. That will make up the difference."

Or force the cab drivers in the 70-car Yellow Cab fleet to flee the county, counters Gida.

"The reason Yellow Cab hasn''t raised rates is that the company doesn''t make a dime on the meter rates. The meter rates only benefit the driver. If the company wants to make money, they make money by putting more cabs on the road. The Cardinallis have flooded the streets with cabs which hurts the drivers and they don''t give the owners raises as the cost of gas goes up. These drivers have been eating that cost for years. The meter rate is for the benefit of the drivers, they deserve it and they need it."

Which is why he supports the city''s decision to raise Yellow Cab''s rates, Gida says.

But it also gives him added ammo to fight for operating rights in the city. In a month or so, Gida says, he plans to make another request for a taxi operating license within the Monterey city limits. He plans to request a hearing soon.

"When I go to the city of Monterey, I''m going to ask them very politely to approve the rate we have. Yellow Cab raised its per-mile rates to match ours; now that we''re all the same rate, what''s the reason to turn me down now? If they turn me down now, I''ll be forced to go through the litigation process."

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