Category: Equal Protection claims

Local ordinance requiring conditional use permit for business selling alcohol not preempted by state liquor licensing law

Gary Taylor

by Gary Taylor

Lime Lounge, LLC v. City of Des Moines

Iowa Court of Appeals, February 8, 2023

Lime Lounge owns and operates a bar in the East Village of Des Moines. To sell alcoholic beverages in Iowa an establishment must obtain a liquor control license from the state Alcoholic Beverages Division (ABD). Among other requirements, the applicant for the license must first file the application with the local authority – in this case the city of Des Moines – for its approval. If the local authority disapproves of the application, the applicant has the ability to appeal the decision to the administrator of the ABD.

To sell alcoholic beverages in Des Moines an establishment must, among other things, be granted a conditional use permit (CUP), which places different requirements on establishments than the liquor control license. Depending on the type of business it is engaged in, a business is required to meet standards related to noise, litter, hours of operation, and others. The city will not consider a liquor control license application until the CUP is approved.

Lime Lounge obtained a CUP from the Des Moines Zoning Board of Adjustment (ZBA) and had their liquor control license approved in 2011. In 2015, the ZBA amended Lime Lounge’s CUP after multiple noise complaints. The ZBA revoked Lime Lounge’s CUP in March 2016. Lime Lounge challenged the revocation, but the revocation was upheld on appeal. On May 14, 2019, Des Moines filed a complaint with the ABD to revoke Lime Lounge’s state liquor license on the basis of the establishment’s failure to comply with local ordinances. Lime Lounge resisted the city’s complaint by filing a temporary injunction, but the district court dismissed Lime Lounge’s suit. Lime Lounge appealed.

Preemption. Lime Lounge’s first argument was that the Des Moines zoning code requirement of a CUP for an establishment selling liquor was preempted by the state alcoholic beverage control law found in chapter 123 of the Iowa Code because the zoning code requires an additional permit and fees in order to obtain a state liquor license. Lime Lounge asserted that the doctrine of express preemption, which “applies where the legislature has specifically prohibited local action in a given area,” rendered the Des Moines ordinance illegal.

Courts will look to the “specific language used by the legislature” to determine whether express preemption applies. Although Iowa Code section 123.37(1) provides, “The power to establish licenses and permits and levy taxes as imposed in this chapter is vested exclusively with the state. Unless specifically provided, a local authority shall not require the obtaining of a special license or permit for the sale of alcoholic beverages at any establishment….” the Court of Appeals determined that this did not apply to the city’s CUP permitting scheme because the zoning provisions related to the use of land. It agreed with the conclusion of the district court that “[t]he ordinance does not require a permit for the sale of alcohol, it requires a permit to use certain premises for the sale of alcohol. It’s a land-use regulation, not a regulation on the sale of alcohol. Thus, the requirement to obtain a CUP is not a permit requirement ‘for the sale of alcoholic beverages'” as contemplated by chapter 123. The Court of Appeals further observed that chapter 123 provides:

Local authorities may adopt ordinances or regulations for the location of the premises of liquor control licensed and retail wine or beer permitted establishments and local authorities may adopt ordinances, not in conflict with this chapter and that do not diminish the hours during which alcoholic beverages may be sold or consumed at retail, governing any other activities or matters which may affect the retail sale and consumption of alcoholic beverages and the health, welfare and morals of the community involved.

Iowa Code 123.39(2)

Equal Protection. Lime Lounge also asserted the the Des Moines zoning ordinance violates the Equal Protection clause of the Iowa and United State Constitutions, which has been interpreted by courts to direct that “all persons similarly situated should be treated alike.” Whether this ideal has been met in the context of economic legislation is determined through a “rational basis” test. If the regulation is “rationally related to a legitimate governmental purpose” then the regulation will be deemed valid.

Lime Lounge alleged the varied requirements—particularly the necessity of obtaining a CUP and the fees necessary to do so—imposed on different establishments such as restaurants, bars, and retail establishments are arbitrary, and that the municipal ordinance allows the ZBA to “impose virtually any condition which it can contemplate—and, more onerously—on an individualized basis.”

The court disagreed with both allegations. The city has a legitimate purpose in ensuring the health, welfare, and safety of the community. The distinctions drawn in the ordinance between bars, restaurants and other retail establishments is rationally related to that purpose because each has different characteristics of operation. For example, bars tend to operate later in the evening than restaurants, create more noise from music and patrons, and have increased law enforcement requirements. Requiring additional permitting for these and other businesses that are more likely to exhibit greater nuisance behaviors is rationally related to protecting the community.

The court also disagreed that the ordinance allows the ZBA “unfettered discretion” in imposing permitting restrictions. The ZBA is in fact constrained by criteria found in the ordinance for imposing conditions related to public health and safety, noise, traffic congestion, and nuisance prevention. The East Village of Des Moines is a mixed-use neighborhood, containing both commercial and residential buildings. Tailoring certain zoning restrictions related to noise, congestion, and other nuisance behavior to the specific circumstances of the area is rationally related to promoting the community’s welfare.

Spot zoning. Finally Lime Lounge asserted that the code section amounted to illegal spot zoning, but the court dismissed that assertion by noting the similarities between the city’s treatment of Lime Lounge and those of several of its East Village contemporaries. Furthermore, the noise restrictions and other directives limiting nuisance behavior fall squarely within the city’s police power.

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Sioux Falls, SD slaughterhouse proposal gives me an excuse to talk about zoning by initiative and referendum

Gary Taylor

In South Dakota, the people have a right to propose or refer legislation at the state and also local government levels through initiative (propose new legislation through direct public vote) and referendum (put a recent legislative action up for public vote to accept or reject).

Legislative power–Initiative and referendum. The legislative power of the state shall be vested in a Legislature which shall consist of a senate and house of representatives. However, the people expressly reserve to themselves the right to propose measures, which shall be submitted to a vote of the electors of the state, and also the right to require that any laws which the Legislature may have enacted shall be submitted to a vote of the electors of the state before going into effect, except such laws as may be necessary for the immediate preservation of the public peace, health or safety, support of the state government and its existing public institutions. Not more than five percent of the qualified electors of the state shall be required to invoke either the initiative or the referendum….This section shall apply to municipalities….

South Dakota State Constitution, Article III, Section 1

Sioux Falls City Charter Section 6.03 expressly reserves the powers of initiative and referendum to the citizens.

In September of 2021, Wholestone Farms announced their intent to build a $500 million-plus pork processing plant on a 170-acre parcel of land in northeast Sioux Falls. Soon after the announcement, an opposition group emerged seeking to halt construction of the plant. Smart Growth Sioux Falls objected to building a slaughterhouse inside the city limits. The group gathered the required signatures to have the voters of Sioux Falls weigh in on whether the city should prohibit future slaughterhouses in Sioux Falls city limits. The question is on the November 8 ballot. If approved by the voters the following language would be added to the city’s code of ordinances:

Notwithstanding any other provision of this Code to the contrary, no new Slaughterhouse may be constructed, or be permitted to operate, within the city limits.

This section does not apply to any existing Slaughterhouse constructed and operating before the effective date of this section. This section does not apply to the expansion or alteration of any Slaughterhouse constructed and operating before the effective date of this section so long as such expansion or alteration occurs at the existing site.

Governor Noem has weighed in, saying that the ballot measure was bad for business and that “at the last minute one person(1) can get mad, do a ballot petition and end my business and my investment.” The Sioux Falls Chamber of Commerce also opposes the measure and states its reasoning here.

Iowa does not allow zoning questions to be put to the people through either initiative or referenda, but a number of other states do and this South Dakota situation gives me an excuse to visit the topic. Referenda are commonly used to call for voter review of legislative actions such a rezoning or a major change to the ordinance. Administrative or quasi-judicial actions – such as conditional uses, variances, and staff decisions – are not subject to referendum, although the line between legislative and administrative decisions is well-known to get messy.

Would we be better off in Iowa if “ballot box zoning” were possible? From a policy perspective the availability of initiative and referendum for zoning matters is controversial. Proponents support ballot box zoning as the most direct expression possible of residents’ wishes for how their communities should grow and thrive. Opponents are concerned that such measures undermine planning, block needed reforms such as increased residential density and fair housing, and violate the due process rights of property owners (see the Sioux Falls Chamber’s policy position).

Zoning initiative and referenda have been the subject of a wide variety of state court cases. They focus on the validity of the ballot box process when a state’s zoning statutes define a process for notice and hearing, when individual referenda appear to conflict with state mandates for fair housing, when referenda appear to conflict with state statutes and/or caselaw requiring consistency with a comprehensive plan, and other issues. The US Supreme Court has weighed in on federal constitutional questions related to zoning referenda twice. In City of Eastlake v. Forest City Enterprises (1976) the majority opinion supported zoning referenda as giving “citizens a voice on questions of public policy” when it dismissed the developer’s contention that the referendum violated due process as a standardless delegation of legislative power to voters. The Court’s majority stated that the Ohio Constitution contemplated a reservation of the power of referendum by the people, and was not a delegation of power to them. The dissent asserted that the “‘spot’ referendum technique appears to open disquieting opportunities…to bypass normal protective procedures for resolving issues affecting individual rights.”

In City of Cuyahoga Falls v. Buckeye Community Hope Foundation (2003) voters petitioned to place site plan approval for a low income housing complex on the ballot. At city council meetings and independent gatherings, some of which the mayor attended to express his personal opposition to the site plan, residents voiced concerns that the development would cause crime and drug activity to escalate, that families with children would move in, and that the complex would attract a population similar to the one on Prange Drive, the City’s only African-American neighborhood. Voters rejected the site plan at the ballot box, and the Court rejected the developer’s Equal Protection challenge to the results. The Court affirmed previous holdings that “[S]tatements made by private individuals in the course of a citizen-driven petition drive, while sometimes relevant to equal protection analysis…do not, in and of themselves, constitute state action for the purposes of the Fourteenth Amendment….[R]espondents put forth no evidence that the ‘private motives [that] triggered’ the referendum drive ‘can fairly be attributed to [city government].”

In fact, by adhering to charter procedures, city officials enabled public debate on the referendum to take place, thus advancing significant First Amendment interests. In assessing the referendum as a “basic instrument of democratic government,” …we have observed that provisions for referendums demonstrate devotion to democracy, not to bias, discrimination, or prejudice.

City of Cuyahoga Falls v. Buckeye Community Hope Foundation, 538 U.S. 188, 196 (2003)

(1) Over 6,000 petition signatures were in fact required for the measure to appear on the November ballot.

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Field of Dreams site cleared for development of baseball complex and tourist attraction

Gary Taylor

by Gary Taylor

Residential and Agricultural Advisory Committee, LLC et al. v. Dyersville City Council
Iowa Supreme Court, December 9, 2016

The Dyersville City Council voted to rezone the area containing the site of the 1989 movie Field of Dreams from A-1 Agricultural to C-2 Commercial in order to facilitate the development of a  a 24-field baseball and softball complex, along with the farmhouse and original baseball field used for the movie which would continue to be maintained as a tourist attraction. Community members filed two writs of certiorari to challenge the rezoning on a number of grounds.  The District Court annulled the writs and found in favor of the city council.  This appeal followed.  The Iowa Supreme Court engaged in a 20-page recitation of the facts of the case on its way to its 44-page decision.  Only those relevant to the outcome of each challenge will be repeated here.

Quasi-judicial vs. legislative action.  The petitioners argued that the city council’s actions were quasi-judicial in nature rather than legislative, and therefore the council should have been required to conduct a more formal fact-finding proceeding and make findings of fact in support of its decision.  Quasi-judicial proceedings are also subject to greater judicial scrutiny when reviewed by an appellate court.  Petitioners relied on the Iowa Supreme Court’s decision in Sutton v. Dubuque City Council in support of their position. In contrast, the city council maintained that the action of  a legislative body in rezoning land is legislative in nature, which gives the legislative body wider latitude in the conduct of the proceedings.  Courts also give greater deference to legislative decisions made by city councils and county boards of supervisors.

In ruling on this issue the Iowa Supreme Court reviewed Sutton and several other past cases.  It recognized that in its Sutton decision the Court set forth three factors in determining whether zoning activities are quasi-judicial (versus legislative) in nature (1) [when the rezoning] occurs in response to a citizen application followed by a statutorily mandated public hearing; (2) [when] as a result of such applications, readily identifiable proponents and opponents weigh in on the process; and (3) the decision is localized in its application affecting a particular group of citizens more acutely than the public at large.   Recognizing that the Court “cited these factors with approval” in Sutton, it noted that at the time it chose not to hold that all public zoning hearings should be classified as adjudicatory.  It stated:

The Sutton Case dealt with a different situation than many of our previous zoning cases because it involved PUD zoning.  We noted the ‘quasi-judicial character of municipal rezoning is particularly evident in matters involving PUD zoning.’  We discussed the distinction between traditional rezoning and PUD zoning:

Creating zoning districts and rezoning land are legislative actions, and…trial courts are not permitted to sit as ‘super zoning boards’ and overturn a board’s legislative efforts….The [PUD] concept varies from the traditional concept of zoning classifications.  It permits a flexible approach to the regulation of land uses. Compliance must be measured against certain stated standards….Since the board was called upon to review an interpretation and application of a n ordinance…and the ordinance was not challenged per se, the board’s decision was ‘clearly quasi-judicial’.

Rather than follow Sutton, the Court found the present case to be “much more analogous” to the case of Montgomery v. Bremer County Board of Supervisors.  In Montgomery, the county Board rezoned two parcels of land from agricultural to industrial after two rezoning petitions were filed.  In Montgomery, the Court found that the zoning decision of the supervisors was “an exercise of its delegated police power,” and held that “the generally limited scope of review applicable to the case [was] to determine whether the decision by the Board to rezone [was] fairly debatable.”   In making the analogy, the Court observed:

The city council [in the present case] was acting in a legislative function in furtherance of its delegated police powers.  The council was not sitting ‘to determine adjudicative facts to decide the legal rights, privileges or duties of a particular party based on that party’s particular circumstances.  The [decision] was not undertaken to weigh the legal rights of one party (the All-Star Ballpark Heaven) versus another party (the petitioners).  The council weighed all of the information, reports, and comments available to it in order to determine whether rezoning was in the best interest of the city as a whole.

The Court held that the proper standard of review “in this case is the generally limited scope of review” utilized to “determine whether the decision…is fairly debatable.”  A decision is “fairly debatable” when “reasonable minds may differ, or where the evidence provides a basis for a fair difference of opinion as to its application to a particular property.”  If a rezoning decision is “fairly debatable” then a court will decline to substitute its judgment for that of the city council or board of supervisors.

Impartiality of the city council.  The Court noted that, while it was true that several council members viewed the rezoning and the project as an opportunity for the city, each council member attended all meetings, read reports, listened to citizens speak for and against the project, asked questions, and investigated issues and concerns.  Nothing in the record demonstrated that any council member had any conflict of interest.  Several members participated in an economic development bus trip to Des Moines to discuss the project with legislators and state officials, but the Court found that mere participation in such activities for the potential benefit of the city does not establish partiality or bias. “Rather, this is more akin to the council members upholding their public duty by performing their due diligence in determining what state aid might be available to help with the project before any formal action was taken.  The council make its decision based on what it believed was best for the community after a full and open discussion of the issues over many months.”

Decision was arbitrary, capricious, unreasonable. A decision is arbitrary, capricious, or unreasonable when it is not authorized by statute, or is unsupported by the facts.  For the reasons cited above, the Court declined to find in favor of the petitioners on these grounds.

Inconsistent with comprehensive plan.  Under Iowa Code 414.3, zoning regulations “shall be made in accordance with a comprehensive plan.”  The Court referred to its prior decision in Iowa Coal Mining Co. v. Monroe County for the principle that “compliance with the comprehensive plan requirement merely means that the zoning authorities have given ‘full consideration the problem presented, including the needs of the public, changing conditions, and the similarity of other land in the same area.'”  The Court referred to the boilerplate language found in every plan that says rezonings should be made with consideration of the unique character of the area, the suitability of the land for the proposed use, the conservation of buildings or value, and the encouragement of the most appropriate use of the land.  It noted that the Field of Dreams site is a unique parcel of land, and that the council considered the distinctiveness of the land and whether the proposed rezoning would be the best use of the site for the benefit of the community as a whole.  The city’s community builder plan also specifically addresses the importance of preserving the site in order to maintain and increase tourism.

Illegal spot zoning. To determine whether illegal spot zoning has occurred, a court must consider (1) whether the new zoning is germane to an object within the police power; (2) whether there is a reasonable basis for making a distinction between the spot zoned land and the surrounding property; and (3) whether the rezoning is consistent with the comprehensive plan.  Noting again the uniqueness of the Field of Dreams site, the Court refused to find this to be a case of illegal spot zoning even though the result is an island of commercial development surrounded by agriculturally zoned properties.

200-foot buffer zone.  Under Iowa Code 414.5, if 20% or more of the landowners immediately adjacent to the property proposed to be rezoned protest the change, then the city council must approve the rezoning by a four-fifths vote.  The rezoning applicants left out of the rezoning request a 200-foot buffer zone along the three sides of the perimeter of the property  (leaving it as A-1 Agricultural).  The petitioners challenged the use of this 200-foot buffer as a way to prevent nearby property owners from objecting to the project and thereby triggering the requirement of a unanimous vote.  While the Court acknowledged that “at first blush the buffer zone can appear to be unfair,” the Court concluded that the buffer in fact provides a benefit to adjacent landowners by addressing their expressed concerns about hunting and farming operations directly adjacent to the ballfields.  The Court also noted that other courts have validated the use of buffer zones to avoid supermajority requirements.  Regardless, even if the 200-foot buffer was improper, the rezoning was adopted by 4-1 vote of the city council.

Incorrect legal description.  While the notice of the original ordinance (Ordinance 770) contained errors in the legal description, the council corrected the legal description in the ordinance that ultimately rezoned the property (Ordinance 777).  No new notices were published, however, for Ordinance 777.  The Court does not require complete accuracy when providing notice.  Neither Iowa Code nor the city ordinances require the publication of a complete legal description.  The purpose of the notice requirement is to give the public reasonable notice of the pending action.  The public was well aware of the ongoing proceedings, and no one was confused or misled by the inaccuracy of the legal description.

Equal Protection.  Petitioners argued that all neighboring landowners were similarly situated, yet the 3-sided 200-foot buffer prevented those neighbors along the buffer from exercising the same right to object as the neighbors along the side of the property without the buffer.  The Court found that the council’s decision met the rational basis test required by the Equal Protection clause in this case.  The buffers, as described above, served a legitimate purpose of protecting the neighboring properties on the three sides.

Due Process.  Petitioners and the public in general were given adequate notice.  Further, they were heard in multiple public hearings.  All community members wishing to speak were allowed to do so.

Based on all preceding points, the Iowa Supreme Court affirmed the rezoning of the Field of Dreams property.

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Recap of yesterday’s Minnesota Supreme Court arguments RE: Winona rental restrictions

Gary Taylor

The Minneapolis Star-Tribune has posted a good article recapping yesterday’s MN Supreme Court arguments concerning Winona’s 30% cap on rental units.  You’ll find the article here.

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News from around Minnesota: Winona rental restriction ordinance now before the MN Supreme Court

Gary Taylor

Winona, Minnesota’s ordinance restricting the number of rental units to 30% of the total properties on any given block is going to be heard by the Minnesota Supreme Court today.  We blogged about the Court of Appeals case here.  The Court of Appeals determined that the 30% rule was a valid exercise of the city’s police power, and was not a violation of the Equal Protection clause of the US Constitution.

An article from the Winona Daily News can be found here.  According to the article, Mankato, West St. Paul and Northfield, Minnesota have all approved similar ordinances, and I know of at least three Iowa cities that are watching this Minnesota litigation.

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Limiting percentage of rental units allowed per block was valid exercise of police power

by Rachel Greifenkamp and Gary Taylor

Dean v. City of Winona

(Minnesota Court of Appeals, February 24, 2014)

In the City of Winona, MN, there exists an ordinance that limits, in certain districts of the city, the number of lots on a block that are eligible to obtain certification as a rental property. Based on the findings from the city’s planning commission and a Parking Advisory Task Force that was formed to consider the issues of increased parking demands, the City found that rental-housing units comprised about 39% of the City’s total housing units, but that these rental properties comprised 52% of the complaints received by the Community Development Department. Based on data from 2004, the planning commission found that 95 of the 99 calls for police service based on noise and party-related complaints involved rental properties. They also found that 52% of the zoning violations that resulted in written violations were for rental properties. In 2005, the idea of restricting the number of rental properties per block was suggested. The Parking Advisory Task Force suggested that the number of rental units be restricted to 30% of the total properties on any given block. The task force adopted a motion to forward a “30% rule” to the planning commission for its consideration. The planning commission voted to recommend the 30% rule to city council, and the council subsequently passed the 30% rule.  The three appellants challenging the 30% rule in this case were the owners of three houses that were purchased after the 30% rule was adopted. In January of 2013 the district court denied the appellants’ motion that the 30% rule was an invalid exercise of the City’s broad police power, and that it violated their Equal Protection, Substantive Due Process, and Procedural Due Process rights under the Minnesota Constitution, and granted summary judgment to the city. The appellants then took their case to the Minnesota Court of Appeals.

Police Powers. The Court of Appeals determined that the 30% rule was, in fact, an authorized exercise of police power. The term “police power” means simply the power to impose such restrictions upon private rights as are practically necessary for the general welfare of all. “The development of the law relating to the proper exercise of the police power of the state clearly demonstrates that it is very broad and comprehensive, and is exercised to promote the general welfare of the state….[T]he public has a sufficient interest in rental housing to justify a municipality’s use of police power as a means of regulating such housing.”

Equal Protection. In order for an equal protection challenge to be valid the appellant must show that “similarly situated persons have been treated differently.” Similarly situated means that the two groups in question are alike in all relevant respects. The Court concluded that the 30% rule is not invalid on its face:

The ordinance is facially neutral and applies equally to all property owners in the regulated districts. The ordinance sets a 30% cap, but it does not define or predetermine which lots will be certified. That determination is made based on the changing facts and circumstances on each block, and not based on the ordinance or the characteristics of lot owners. The fact that the number of lots that may be certified might be less than the number of property owners who desire certification is not a class-based distinction between two groups of property owners.

The Court also concluded that the 30% rule was not discriminatory in the manner it was being applied by the city.  The Appellant did not show that the city “has done anything other than apply the mathematical formula on a first-come, first-served basis. Appellants’ real complaint is about the effect of an otherwise neutral ordinance on their particular circumstances, which does not give rise to an equal protection claim.”

Substantive and Procedural Due Process.  The substantive due process and procedural due process claims were also considered invalid. The appellants argued the the 30% rule violated their right to rent their property, but such a right is not a “fundamental right” protected by the Minnesota Constitution.  Unless a fundamental right is at stake, substantive due process requires only that the statute not be arbitrary or capricious.  The Court concluded that the 30% rule was adopted after a long, deliberate information-gathering process that considered public input, data, and expert review, and was thus not arbitrary or capricious.

As for procedural due process, the appellant’s argued that the 30% rule improperly delegates the power of deciding whether or not they may receive a license to their neighbors, but the Court reasoned otherwise because the “neighbors” (owners of certified rental properties) do not determine which other lots may be certified. “The certified-property owners’ views regarding whether a particular lot should be certified as a rental property are irrelevant; they can neither grant certification by consenting to it nor prevent certification by denying consent.”

The Minnesota Court of Appeals affirmed the district court’s award of summary judgment in favor of the city because the adoption of the ordinance was an authorized exercise of its police power and because the appellants did not met the burden to show that the ordinance is unconstitutional.

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Denial of license to mobile food vendor not a violation of Equal Protection or Dormant Commerce Clauses

by Rachel Greifenkamp

The Dog Pound, LLC v. City of Monroe, Michigan

(Federal 6th Circuit Court of Appeals, March 10, 2014)

In Monroe, Michigan The Dog Pound, an aspiring hot dog vendor, applied for and was denied a license under Monroe’s Hawker, Peddler, and Transient Merchant ordinance. The ordinance, in 2009 when the license was applied for, regulated street-vendors’ operations and required additional permission (not just a license) if the vendor wanted to run their vending business in a specific Restricted Area (an area that covered most of downtown Monroe). It also established a 10 minute limit on any activity by a vendor at any one location within the city. The Dog Pound alleged that the ordinance was unconstitutional because it violated the Equal Protection Clause, the Due Process Clause, and the dormant Commerce clause (all appear in both the United States Constitution as well as the Constitution of Michigan). A district court granted the City of Monroe’s motion for summary judgment and dismissed the case.

The Dog Pound claimed that the ordinance violated the Equal Protection Clauses of both the United States and the Michigan Constitutions because it created an illegal classification, itinerant merchants, and treated them differently from permanent business owners. Originally, The Dog Pound sought a declaratory judgment that the ordinance was invalid or a writ of mandamus. In 2011 the City of Monroe and The Dog Pound began settlement negotiations, meanwhile, the city amended the ordinance, eliminating the restricted area. When the negotiations failed, the court took up the question of preliminary injunction, and ended up denying The Dog Pound’s motion stating that the amendment to the ordinance “essentially moots the plaintiff’s arguments.” The Dog Pound then filed two amended complaints. (1) A violation of the Due Process clauses of the United States and Michigan Constitutions, alleging that the sole purpose of the act was to protect local static businesses against competition, (2) A violation of the dormant Commerce Clause, alleging that the disparate treatment of itinerant merchants discriminates against and burdens out-of-state businesses in favor of local businesses. The federal district court granted the City’s motion for summary judgment.

The Sixth Circuit Court of Appeals heard the case on appeal and tackled each of the three claims separately. (1) Equal Protection. The Dog Pound applied for a license under the amended ordinance, in 2001, but the application was incomplete. The city pointed out the deficiencies in the application and how each could be fixed, but The Dog Pound failed to complete the application. Therefore, The Dog Pound couldn’t possibly prove that it had been treated differently from other businesses that had applied for the license. The court stated that “There is therefore no issue of material fact and the district court was correct to grant summary judgment.” (2) Dormant Commerce Clause. The Dormant Commerce Clause is designed to ensure that a state cannot place oppressive and unnecessary burdens on out-of-state businesses. Both in-state and out-of-state businesses had to apply for a license as well as were subject to the 10-minute rule. Because the ordinance did not treat out-of-state businesses any different from in-state businesses, this claim was considered irrelevant. (3) Due Process and Equal Protection, Michigan Constitution. Finally, The Dog Pound argued that the district court did not properly address its claims for relief arising under the Due Process and Equal Protection clauses of the Michigan Constitution. However, because The Dog Pound raised no argument for this on appeal, the issue was waived. The Court of Appeals for the Sixth Circuit ultimately affirmed the district court’s grant of summary judgment in favor of the City of Monroe.

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Council’s decision not to allow locking covers in lieu of fences around pools had rational basis

by Kaitlin Heinen and Gary Taylor

Gregory Frandsen, et al. v. City of North Oaks
(Minnesota Court of Appeals, February 19, 2013)

The City of North Oaks enacted an ordinance (§§ 150.055-.062) in 1989 that requires permits to build swimming pools and that swimming pools be enclosed by safety fences. Michael Johnson, James Rechtiene, and Gregory Frandsen (the appellants) own swimming pools not enclosed by fences, despite their permits being contingent upon compliance with the fencing requirement.  Instead all three have automatic locking pool covers. In April 2010, the City notified the appellants that they were in violation of the fencing requirement. The appellants asked the City to consider amending the ordinance so that it would allow automatic locking covers to serve as an alternative. The City agreed to suspend enforcement and research the alternative.

After forming subcommittees to research several alternatives, reviewing information from insurance companies, and hearing from citizens at public hearings the planning commission agreed to recommend to the city council that fences be required to enclose all pools built after 1989, that the back of a home could be used as one side of the enclosure, and that locking covers not be allowed as a substitute for the fencing requirement. At a December 2010 meeting, the city council voted in favor of the planning commission’s recommendation. The amended ordinance became effective in July 2011. So in April 2011, the City notified the appellants that they had until July 1 to comply with the amended ordinance. Appellants responded by bringing this suit against the City, alleging that the amended ordinance violates their equal protection rights and that the amended ordinance is arbitrary and capricious. The district court denied their appeal, so the appellants appealed to the Minnesota Court of Appeals.

The Minnesota Court of Appeals’ duty is to determine “whether the district court properly applied the law and whether there are genuine issues of material fact that preclude summary judgment.” The district court referred to the ordinance as one that “promote[s] the health, safety and general welfare of [the city’s] residents.” The Minnesota Court of Appeals agreed that the ordinance is a general safety ordinance.

By exempting pre-1989 pools from the ordinance, the appellants argued that their equal protection rights were violated. They argued that there is no rational reason for this exclusion when the purpose of the ordinance is to keep children from harm: “[W]hatever danger to children exists with respect to pools built after the effective date of the ordinance also exists with respect to pools built before the effective date of the ordinance.” Since the City’s pool safety-fence ordinance became effective in May 1989, building permits of pools prior to May 1989 were not conditioned to comply with this ordinance. But the appellants’ building permits were conditioned to comply with this ordinance because their pools were built after 1989. Therefore the appellants are not similarly situated to homeowners who built pools prior to 1989. In addition, “the practice of grandfathering non-conforming properties has been upheld in the face of equal-protection challenges since at least 1914.” The appellants failed to explain why grand-fathering is rational with respect to zoning ordinances, but irrational with respect to a general welfare ordinance, so the Minnesota Court of Appeals ruled that it was not a violation of equal protection for the City to treat its residents differently with respect to the law effective when their pools were built.

The appellants also argued, without explanation, that the amended ordinance was arbitrary and capricious because it allowed a wall of a building to serve as one side of the enclosure, which they argued increased the risk of harm to children. The appellants cited a unidentified report from “US Public Safety Commission” that supported the conclusion that a house should never be considered part of the fence. But the court could not verify the existence of a “US Public Safety Commission.” To the contrary, the U.S. Consumer Product Safety Commission report considered by the planning commission stated that “when a door opens directly onto the pool area, ‘the wall of the house is an important part of the pool barrier.'” Amending an ordinance is a legislative power in which the municipality has discretion as long as there is a rational basis for its decision. The court held that the City’s decision is rational because it is directly related to promoting prevention of trespassing children gaining access to pools. The City’s decision is not arbitrary as long as one valid reason exists.

Finally, the appellants contested the City’s decision to not allow pool covers as an alternative to the fence requirement. They pointed to evidence that showed that a pool cover is a safe and viable alternative to a fence. This evidence does not mandate that the City to allow pool covers as an alternative, however. The City researched the issue for more than six months and considered numerous resources before reaching a decision. The City expressed concern for pool covers’ susceptibility to mechanical failures, human errors, and enforcement issues. The decision to require fences and not allow locking covers as substitutes is a rational decision.

The Minnesota Court of Appeals affirmed the district court’s decision to deny the appellants’ claims.

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City council corruption does not give rise to Constitutional claims in rezoning denial

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by Kaitlin Heinen

EJS Properties, LLC v. City of Toledo; Robert McCloskey
(Federal 6th Circuit Court of Appeals, September 5, 2012)

In April of 2002, EJS Properties entered into a conditional agreement with Pilkington Corporation to purchase 20 acres of a 43-acre lot that Pilkington owned, which included a technical center that EJS intended to convert into a charter school. This agreement was expressly contingent on obtaining a zoning change from industrial to one that could contain a school. EJS also entered into a non-conditional lease agreement with Lake Erie Academy to open the charter school. In May 2002, EJS filed a re-zoning petition with the Toledo-Lucas County Plan Commission. The Plan Commission recommended the re-zoning and passed the request onto the Toledo City Council. The City Council’s Zoning and Planning Commission held a public hearing on July 17, 2002, where everyone agreed to re-zone only the portion of Pilkington’s lot that would be needed for the school. The Committee voted unanimously to recommend the request for full vote by the Council, which was placed on the City Council’s agenda for August 13, 2002. During this re-zoning process, EJS had obtained an early-start building permit to begin $200,000 worth of repairs and improvements on the technical center.

Prior to August 13, Pilkington executives John Keil and Randy Berg had a lunch meeting with City Council member Robert McCloskey, who represented the district containing the Pilkington lot. McCloskey asked Pilkington to donate $100,000 to assist local retirees at the community center—Keil and Berg declined. At the next council meeting, member Peter Gerken moved to table consideration of the re-zoning for two weeks. EJS claims that McCloskey lobbied the other members to reverse their vote, but when he could not get enough to defeat the measure, he asked Gerken to table the matter. (McCloskey was a former Pilkington union negotiator, who had helped negotiate a labor agreement that capped healthcare benefits for retirees, for which he faced significant criticism upon being elected to City Council.) McCloskey then proceeded to call Keil, Berg, and Erich Speckin, the owner of EJS, and left questionable voicemails that sought the money for the retirement center in connection with the pending re-zoning. On August 22, Keil sent a letter to all of the City Council members and Mayor, seeking support for the re-zoning request and to consider the unrelated issues between Pilkington and McCloskey: “Such issues have the potential for exploitation to the detriment of the zoning request.” Pilkington and EJS never reported McCloskey’s request to the police.

On August 27, 2002, the City Council voted 7-4 against re-zoning (4 members had changed their vote from committee, including McCloskey). Only one member testified that he had been approached by McCloskey, who discouraged voting for the ordinance. EJS did not appeal the denial. Two months later, Toledo voters passed a levy, mandating the building of two new middle schools on the east side of Toledo. Toledo Public Schools (TPS) won an eminent domain lawsuit against Pilkington in November 2003 for the entire 43-acre lot. The Plan Commission, the City Council’s Zoning and Planning Committee, and the City Council approved a re-zoning in January 2004 to build a TPS middle school there.

EJS filed a complaint against the City and McCloskey in May 2004 for deprivation of substantive and procedural due process, deprivation of equal protection, deprivation of its property rights and its First Amendment right to petition in violation of 42 U.S.C.A. §1983, and wrongful interference with a business expectation in violation of state law. The district court granted summary judgment to the City and McCloskey on EJS’ constitutional claims. The court denied McCloskey summary judgment on EJS’ tortious interference claim (the district court actually stayed legal proceedings at one point to see the outcome of McCloskey’s 2006 indictment on federal criminal corruption charges, for which he pleaded guilty and received a 27-month prison sentence). After first dismissing EJS’ appeal for jurisdictional reasons, EJS dropped the state-law claim for wrongful interference. Then the U.S. 6th Circuit Court was able to hear the case.

In arguing for the deprivation of substantive and procedural due process, EJS argues that it had property interests at stake in the ordinance for re-zoning, in its contracts, and in its early-start building permit. The City Council never approved the re-zoning ordinance; rather, the City’s Planning Commission and Committee did. The 6th Circuit found that the only way for EJS to have a property interest in the re-zoning ordinance then is if the City Council lacked the discretion to approve it. However, the Toledo Municipal Code’s use of the word ‘may,’ grants the City Council discretionary authority over zoning regulation. Therefore EJS had no property interest in the re-zoning ordinance. Absent a property interest, EJS had no recognizable rights subject to due process protections.  As for its contracts, EJS argues that the contract options created property interests subject to due process protections; however, the purchase agreement explicitly states that “prior to the Closing Date, [EJS] has no title or estate in the Property…and will not claim any such interest…over any part of the Property.” The contract was explicitly contingent upon obtaining a re-zoning for the property, which did not happen–therefore, EJS possesses no interest in the property as a result of its contract. Finally, in regards to the early-start building permit, the permit did not entitle EJS to a re-zoning change, and the improvement work done on the building was “performed at the applicant’s own risk,” according to Toledo Municipal Code.

EJS also argued that it possessed two liberty interests that were violated: 1) a liberty interest in a government decision free from corruption and 2) a liberty interest in engaging in business contracts without unlawful interference. As to the first claim, corruption only affects procedural due process, which EJS could not be deprived of since the court ruled that EJS never possessed a  property interest of any kind. The court rejected the second claim on the same grounds as its ruling on property interests in relation to EJS’ contracts, holding that the defendants did not interfere with EJS’ right to contract because the contracts were contingent on discretionary zoning.  Additionally, the Supreme Court of the United States has upheld only a short list of liberty interests, and the circuit court here could not find any support for a liberty interest in a discretionary government decision free from corruption or unlawful interference.

In addition, EJS argued that corrupt zoning decisions “shock the conscience” and violate substantive due process as a result, regardless of whether or not a property or liberty interest is at stake. However, the court dismissed this claim, stating, “Our prior precedent makes clear that in the context of a discretionary zoning decision, government action will not shock the conscience unless the arbitrary and capricious action touches on a protectable interest.” With neither a property nor a liberty interest at stake, EJS had no merits for this claim. Even if EJS had a property or liberty interest, the court reasoned that “although we can condemn McCloskey for his misconduct, we simply cannot say that his behavior is so shocking as to shake the foundations of this country,” which was the original purpose for establishing the “shocks the conscience” standard.

Finally, EJS’ last two claims involved its right to petition and its right to equal protection. The court conceded that seeking redress from a government official qualifies as petitioning, for which a zoning request also qualifies. Specifically in regards to its right to petition, EJS argued that its right to meaningful access was violated. The court countered that EJS was equating meaningful access with meaningful process. Process is associated with violations of substantive or procedural due process, which was already decided to not have occurred in this case because EJS lacked both a property and a liberty interest. As for equal protection, the court ruled that EJS and TPS were not similarly situated, which does not grant adequate merits for an equal protection claim. Unlike EJS, TPS owned the relevant property at the time of their re-zoning request. TPS also intended to use the entirety of the property rather than part of it. And TPS planned to build a financially stable public school rather than a private school. These are rational bases for the City Council to have treated EJS differently than TPS.

Having dismissed all of EJS’ constitutional claims, the U.S. 6th Circuit Court upheld the district court’s decision to grant summary judgment to the defendants.

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Retrial of Equal Protection “class-of-one” claim proper when city’s size cap limitation ended landowner’s deal with Wal-Mart

Gary Taylor

by Gary Taylor

Loesel, et al, v. City of Frankenmuth (MI)
(Federal 6th Circuit Court of Appeals, August 20, 2012)

Plaintiffs, (Ronald Loesel and others), are the co-owners of a 37-acre tract of land that borders Main Street just outside the Frankenmuth city limits. They inherited the property from their mother when she died in 2003. A 2003 property-tax appraisal valued the land at $95,000.  Although not within the City’s boundaries, the property is within the urban growth area that was established jointly by the City and the Township in 1985 to confine and guide urban growth in order to retain the character of the Frankenmuth community. The City and Township first adopted the Joint Growth Management Plan (the Plan) in 1985, and amended the plan in 2005.  The Loesels’ property lies within an urban limit line established by the Plan to “[p]romote compact residential and commercial development in and near the city limits. To implement the Plan, the western portion of the Loesels’ property along Main Street, approximately 15 acres in size, was zoned as Commercial Local Planned Unit Development (CL-PUD), with the remaining 22 acres to the east designated as Residential Planned Unit Development (R-PUD). Permitted uses for CLPUD-zoned properties include developments that “provide principally for sale of goods and services to meet the general needs of the residents of the Frankenmuth community, including but not limited to grocery, department, drug and hardware stores, financial institutions, professional and personal service offices and transportation sale and service businesses.”

In 2004, the Loesels were approached by Wal-Mart, which was interested in purchasing the property because the western portion abuts Main Street and is commercially zoned.  In late May 2005 the Loesels entered into a conditional agreement to sell 23.55 acres to Wal-Mart for $2,943,750.  Under the agreement Wal-Mart had 180 days to determine the feasibility of the project and pull out without penalty.

Forces within city government and citizens learned of the agreement and marshaled opposition.  in August 2005 the city council adopted a 120-day moratorium on the construction of any facility with an area of 70,000 or more.  The city manager recognized that the commercial zoning classification of the property would allow Wal-Mart to build, but explored the possibility of a permanent ordinance limiting the square footage of commercial establishments, including  the potential legal liability of adopting such an ordinance.  A business group supported the size cap, but only on the north side of the city (Loesels’ property), not in other location (their properties).  A version of the size cap limitation (65,000 square feet) was settled on that only applied in the CL-PUD district, effectively limiting its reach to Loesels’ property and a handful of much smaller parcels.  It was adopted on December 7, 2005.  Wal-Mart pulled out of its agreement with the Loesels, citing the 65,000 square foot restriction.

The Loesels sued the city under 42 U.S.C. § 1983, alleging that the City’s 65,000-square-foot zoning restriction violated their rights under the Equal Protection, Due Process, Privileges or Immunities, and Commerce Clauses of the U.S. Constitution. As a remedy, they sought $4 million in compensatory damages (the sale price of the property under an amended agreement reached by Loesels and the city prior to Wal-Mart pulling out).  The district court granted summary judgment in favor of the city on all claims but Equal Protection.  The Equal Protection claim was allowed to go forward to a jury trial, where the jury found in favor of the Loesels and awarded damages of $3.6 million.  The city appealed, arguing that the district court should have awarded judgment as a matter of law in favor of the city on the Equal Protection claim.

“The Equal Protection Clause prohibits discrimination by government which either burdens a fundamental right, targets a suspect class, or intentionally treats one differently than others similarly situated without any rational basis for the difference.”  Loesels pursued their claim under the “class-of-one” theory which, although recognized by the US Supreme Court in 2000, is generally viewed skeptically for their potential to turn into an exercise in which juries are second-guessing the legislative process.  To prove a class-of-one case the Loesels bear the “heavy burden” of proving that they were treated differently than those similarly situated in all material respects.  In addition, they must show that the adverse treatment they experienced

was so unrelated to the achievement of any combination of legitimate purposes that the court can only conclude that the government’s actions were irrational. This showing is made either by negativing every conceivable reason for the government’s actions or by demonstrating that the actions were motivated by animus or ill-will.

Similarly situated.  To determine whether the Loesels were treated differently than those similarly situated in all material respects, the 6th Circuit determined that the proper comparison is between the Loesels’ property and the properties on which two other similarly-sized commercial establishments sit.  The Court rejected the city’s arguments that the properties were not similarly situated because of differing zoning classifications, because of the fact that the Loesels’ property was the only one of the three that was vacant, and because the traffic capacities of the serving roads were different (road capacity could have been addressed by means other than a size cap).  The 6th Circuit concluded that  district court did not err in denying the City’s renewed motion for judgment as a matter of law on this issue.

No-conceivable basis theory. The city’s expert testified with several reasons why the size cap was only appropriate for properties in the CL-PUD district, which the city asserted provided the rational basis for its decision; however, the Court pointed out that the jury rejected the expert’s testimony on a number of contentions, and that the city manager himself contradicted the expert’s opinions.  The Court concluded that a genuine dispute exists as to whether the ordinance lacked a rational basis.  Denial of the city’s motion for judgment as a matter of law was again proper.

Animus or ill-will.  On this claim the city prevailed.  The Court noted that the animus must be directed toward the Loesels personally to be actionable.  City officials’ animus was not directed at the Loesels, but rather the Wal-Mart project itself.  Judgment as a matter of law for the city on this count should have been granted.

Because the record did not reflect which theory the jury used to find the city liable, the Court vacated the judgment and remanded it back to the district court for a new trial, excluding “animus or ill-will” as possible grounds for a verdict favoring the Loesels.

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