Posted by: Patricia Salkin | February 23, 2014

Fed. Dist. Court in MI Addresses Due Process and Equal Protection Claims for Peddler’s License

Benjamin Horn is a resident of the City of Mackinac Island (“City”), a tourist and resort destination located in the state of Michigan. Horn served in the United States Army between 1997 and 2005, from which he was honorably discharged. In 2010, Horn obtained a peddling license from the state of Michigan in hopes of beginning a peddling business in the City. The Michigan peddling statute allows for honorably discharged members of the U.S. armed forces to obtain peddling licenses, as long as it is for the sale of “his or her own goods…for [his or her own] direct personal benefit.” At the time that he obtained the license, the City did not have any zoning laws governing street vendors or peddlers.

Later in 2010, both Horn and his father were informed by the City’s Chief of Police that they were not allowed to conduct a peddling business without first obtaining a business license from the City. Horn began his business anyway, but stopped shortly thereafter when he was warned that he was not permitted to do so without a business license. He then applied for a business license, which required him to comply with numerous zoning regulations, including size and location restrictions. As such, the City denied Horn’s license application, and Horn stopped his peddling business for the rest of the 2010 season.

Horn eventually retained counsel who informed Horn that the City had no laws prohibiting peddling, so the peddler’s license he possessed allowed him to continue his business. The City Council conceded that no such laws existed and advised Horn to conduct his business at a location known as the “Four Corners.” The following summer, the City began exploring options for regulating street vendors in the City. In September of 2011, the City Council adopted Ordinance No. 459, which prohibits the sale of goods on City streets and sidewalks. When Horn continued his peddling business in the summer of 2012, he was cited and fined for violating Ordinance No. 459.

Horn filed this action against the City, alleging violations of his Fourteenth Amendment due process and First Amendment free speech rights, as well as seeking declaratory judgment that Ordinance No. 459 is both preempted by state law and in violation of the Fourteenth Amendment. The City filed a motion for summary judgment seeking dismissal of all of Horn’s claims. Horn responded to the City’s motion, and the City replied to Horn’s response. The United States District Court for the Western District of Michigan, Northern Division, considered all the parties briefs and decided to grant the City’s motion in part and deny it in part.

The court first considered Horn’s alleged due process violations. In its motion, the City argued that Horn was not in compliance with the veteran’s peddler’s license statute “because he was not peddling his own goods.” Although the City conceded that Horn had purchased the goods and legally owned them, the City claimed that he was not selling his “own goods” since they were purchased from someone else. The court rejected this argument, explaining that the plain meaning of the statutory phrase “own goods” suggests that the goods must belong to the individual selling them. Since Horn had properly purchased the goods from someone else, he properly owned them, and they were thus “his own.”

Horn alleged that the City deprived him of his substantive due process rights to life, liberty, or property. The court first analyzed whether Horn possessed interests protected by the Fourteenth Amendment Due Process Clause. Horn claimed he had an interest in “pursuing gainful employment as a peddler.” Since the Supreme Court has recognized that an individual has a liberty interest in “engag[ing] in any of the common occupations of life,” the court here agreed that Horn had an interest in his pursuit of a peddling career. Further, Horn alleged a property interest in the goodwill of his peddling business and license. The court noted that property interests can stem from state law, and the Michigan law provides Horn with a property interest in his peddling license. The court further concluded that “goodwill can constitute a protected property interest,” and in turn agreed with Horn’s alleged property interests.

Horn’s first due process claim was that the City enforced an inapplicable ordinance (the business license ordinance) to prevent him from conducting his business, even though there was no law that prohibited peddling. Horn cited to two cases in which the Sixth Circuit held that the municipalities arbitrarily enforced invalid zoning laws against the plaintiffs in a biased manner. Although the court here found no evidence that the City acted with bias, the court acknowledged that evidence of bias is not necessary to establish a due process violation. Instead, it must be shown that there was no rational basis for the decision at issue. Here, the City enforced an inapplicable law to preclude Horn from selling his goods when he had a valid license that allowed him to do so. The court found this to be arbitrary and capricious and denied the City summary judgment on this issue.

Horn’s second due process claim was that Ordinance No. 459 precluded him from conducting his peddling business, even though he had a valid peddling license from the state of Michigan. In order to succeed on this claim, Horn would need to show that the ordinance did not “rationally further a legitimate government interest.” The court here cited one Supreme Court case and one Ninth Circuit case in which both courts found that the municipalities could have had a rational interest in prohibiting street vendors to protect the communities’ aesthetic appearances. In the present case, the City adopted Ordinance No. 459 in order to prevent traffic congestion and promote safety. The court here found it reasonable for the City to have an “interest in controlling traffic, decreasing congestion, and ensuring safety on [the] streets and sidewalks.” The ban on street vendors was reasonably related to this interest, so Ordinance No. 459 was thus valid.

Further, Horn asserted that the ordinance was unnecessary because he was the only person peddling in the City, and residents had not complained about his activity. The court rejected his argument since the City “was not obligated to produce evidence supporting the need for the ordinance,” and it is not the place of the court to question the purpose of legislation.

Horn also argued that Ordinance No. 459 was preempted by state law. The court rejected this argument as well because Horn failed to cite any authority to support that this would violate his substantive due process rights.

As for Horn’s First Amendment claim, Horn claimed that the City retaliated against him in response to his speaking out against the City’s enactment of Ordinance No. 459. A First Amendment retaliation claim requires the plaintiff to show that “(1) he was engaged in protected conduct; (2) the defendant took an adverse action against the plaintiff that would deter a person of ordinary firmness from continuing to engage in that conduct; and (3) the adverse action was motivated at least in part by the plaintiff’s protected conduct.” Here, the court found that Horn satisfied the first two elements because (1) Horn’s comments at the City’s public meetings were protected conduct under the First Amendment, and (2) the enactment of Ordinance No. 459 (which prohibited him from continuing his peddling business) was sufficiently adverse to deter him from continuing to speak out at the meetings. With respect to the third element, the court noted that Horn failed to provide evidence that the City’s adoption of the ordinance was motivated by Horn’s speaking out at the meetings. Instead, the evidence suggested that the City enacted the ordinance in response to the peddling itself, not to Horn’s public opposition to the ban on peddling. The court concluded here that the evidence showed that the City enacted Ordinance No. 459 to address the lack of legislation regulating street vendors. Since Horn failed to prove the third element of a First Amendment retaliation claim, the court held in favor of the City on this issue.

Finally, the court addressed Horn’s requests for declaratory relief with respect to Equal Protection Clause violations and preemption by state law. Horn claimed that Ordinance No. 459 violated the Equal Protection Clause by targeting peddlers in general, and veteran peddlers in particular. “The Equal Protection Clause prohibits states from making distinctions that (1) burden a fundamental right, (2) target a suspect classification, or (3) intentionally treat a person differently from others similarly situated without any rational basis for doing so.” Here, the court began by noting that the ordinance at issue does not burden a fundamental right, nor does it target a suspect classification. As for the final prohibition, the court found that Horn failed to show how either peddlers or veteran peddlers were treated differently from others similarly situated. Furthermore, as previously established, the City had a rational basis for prohibiting street vendors because of traffic and safety concerns. The court concluded that Horn had failed to establish an Equal Protection violation and refused to declare any such violation.

Horn additionally sought a declaration that Ordinance No. 459 was preempted by the state law that provided him with his veteran’s peddler’s license. On this issue, the City asserted that the claim was barred by issue preclusion since the state district court had already decided that the ordinance was not preempted by state law. The court in the present case rejected the City’s argument, explaining that issue preclusion applies only to questions of fact, and Horn’s preemption claims are “pure issues of law.” Nevertheless, the court declined to address Horn’s state-law request for declaratory judgment. The court found that it would be inappropriate for it to decide state law issues; these are better left to the Michigan state courts.

Horn v. City of Mackinac Island, 938 F. Supp. 2d 712 (WD MI 3/29/2013)

The opinion can be accessed at: http://docs.justia.com/cases/federal/district-courts/michigan/miwdce/2:2011cv00448/68524/36/0.pdf?1364655552


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