Seventh Circuit Court of Appeals Commentary : In Their Opinion : Lawyer & Attorney Michael E. Rigney : Kelley Drye & Warren Law Firm

LABELLA WINNETKA, INC. v. THE VILLAGE OF WINNETKA (December 29, 2010)

LaBella Winnetka operated as a restaurant in Winnetka, Illinois since 1993. It occupies a leased space and renews the lease from time to time. It also has a liquor license. Each year, Winnetka sends it a renewal form. Each year LaBella completes the form and Winnetka renews the license. A fire at the building in early 2007 damaged the roof over the LaBella dining room and forced its closure. The Village refused to allow repairs to the restaurant’s interior until the roof was fixed. It also refused to allow LaBella to reopen the undamaged portion of its leased premises. At the same time, other restaurants, even one operating out of the same building, were allowed to reopen in allegedly similar circumstances. LaBella's most recent liquor license was due to expire in March of 2008. Winnetka never sent a renewal form and terminated the license went LaBella did not file for renewal. LaBella brought suit against the Village and the Village Manager, alleging a violation of its equal protection, substantive due process, and procedural due process rights. The complaint alleged that the benefits bestowed on the other restaurants came about because of their friendships with the Village Manager. Judge Kendall (N.D. Ill.) granted defendants' motion to dismiss. LaBella appeals.

In their opinion, Seventh Circuit Judges Posner, Flaum, and Sykes affirmed. The Court first considered the "class of one" equal protection claim. In order to state such a claim, one must allege treatment different from others "similarly situated." LaBella concedes that the restaurants that were allowed to reopen did not incur the same major fire damage as the LaBella roof. They are therefore not "similarly situated" and the equal protection claim fails. The Court next considered and rejected LaBella's substantive due process claim relating to its property interest in its lease and business. In order to prevail on that claim, LaBella had to show an independent constitutional violation or the inadequacy of state law remedies. It did neither. Finally, the Court rejected LaBella's procedural due process claims related to the liquor license non-renewal. First, to the extent the claim is based on the Village's simple failure to send a renewal form, there was no constitutional deprivation. Second, to the extent the claim is that the Village revoked the license without notice or hearing, the allegations of the complaint fall far short of even the notice pleading requirements of the federal rules. Finally, the claim fails because LaBella does not even allege that it took advantage of post-deprivation remedies or that they were inadequate.

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ABCARIAN v. MCDONALD (August 13, 2010)

Dr. Herand Abcarian was a senior surgeon at the University of Illinois College of Medicine and the University of Illinois Medical Center in Chicago. Over time, he clashed frequently with co-employees over issues like recruitment, compensation, risk management, and benefits. He alleges that several of these co-employees conspired to defame him and deprive him of his constitutional rights. In particular, he alleges: a) they caused the University to settle a malpractice claim against him for almost $1 million, b) the reported the malpractice settlement to federal and state databanks, and c) they caused the malpractice plaintiff's attorney to file suit against Abcarian only to then have it dismissed as a result of the settlement. Abcarian brought suit pursuant to § 1983, alleging constitutional violations of his right to free speech, equal protection, and procedural due process. Judge Der-Yeghiayan (N.D. Ill.) dismissed for failure to state a claim. He also denied Abcarian's requests to amend the judgment and to amend his complaint. Abcarian appeals.

In their opinion, Judges Kanne, Williams, and Hamilton affirmed. The Court first addressed his First Amendment claim that he was retaliated against for his speech. Garcetti dealt with an employer's retaliation and the Court noted that it had already reserved judgment once about whether that rule applied to a co-employee's retaliation. Again, the Court ducked the question whether Garcetti applies to all employees but did conclude that it applies to employees whose actions are advancing the interests of their employer. The Court also concluded that a practical view of the speech, keeping in mind Abcarian's role and the content and context of the speech, lead to the conclusion that he spoke as a public employee under Garcetti, not as a private citizen. His speech was therefore not protected. Abcarian's equal protection claim was a "class-of-one" claim under which a plaintiff need not allege a suspect classification. The plaintiff must, however, allege arbitrary treatment without a rational basis. The basis of Abcarian's claim is that the defendants reported the malpractice settlement. But they had no discretion in the matter. Federal and state law required the report and would have exposed them to punishment had they failed to report. The Court concluded that the lack of discretion precluded an equal protection claim. Abcarian's third constitutional claim was a procedural due process claim based on the defendants' defamation. In order for defamation to rise to the level of a due process violation, a plaintiff must allege that was stigmatized by publicly disclosed information and that he suffered a loss of employment opportunities. The Court concluded that Abcarian could not meet this test because he still maintains his same positions at the Medical Center and College of Medicine. One cannot be thought to have been deprived of something that one still possesses. Finally, the Court concluded that Abcarian could not and did not meet the test for a Rule 59(e) motion. Since a post-judgment amendment would only be allowed if his Rule 59(e) motion was granted and it was clear that the district court had entered a final judgment, Abcarian was also not entitled to amend his complaint.

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REGET v. LA CROSSE (February 8, 2010)

John Reget has operated an auto restoration and body shop business in La Crosse, Wisconsin for several decades. For almost as long, he and the City have been at odds. In 1980, the City condemned his building and gave him the funds to relocate and remodel his current building. In the early 1990s, the City cited Reget a number of times for ordinance violations pertaining to junk dealers. All the citations were ultimately dismissed. In the mid-1990s, the City threatened to rezone the area of Reget's current building. The move would have forced Reget to relocate yet again. The City backed down -- but only after Reget promised to comply with the ordinances, build a fence, and limit his nighttime operations. Both sides claim the other failed to live up to its bargain. Reget filed a lawsuit alleging a violation of his Equal Protection rights as a result of the City's selective enforcement of its ordinances. The district court granted summary judgment to the City. Reget appeals.

In their opinion, Chief Judge Easterbrook and Judges Williams and Sykes affirmed. The Court noted that Reget's Equal Protection claim was of the class-of-one variety. For such a claim to prevail, a plaintiff must prove that he or she has been treated differently than others similarly situated and that no rational basis exists for such differentiation. The Court concluded that he failed to identify a similarly situated business with respect to any of his claims of discriminatory treatment.

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SRAIL v. VILLAGE OF LISLE (December 7, 2009)

The Oak View subdivision was built in the 1950s. Since its earliest days, a private utility company has provided its residents with water. The Village of Lisle developed its municipal water system in 1967. The municipal system has grown as developers have donated water mains serving new projects. Lisle also purchased a private water utility in 1980. Although both the municipal system and the Oak View system receive their water from the DuPage Water Commission, the Oak View system has insufficient pressure for firefighting. Residents of Oak View sued the Village, alleging that the Village violated the Equal Protection Clause by providing municipal water to some residents and not others. The court granted summary judgment to the Village. The residents appeal.

In their opinion, Judges Ripple, Kanne and Sykes affirmed. The Court first noted that the residents are not members of a suspect class and they do not allege an infringement of a fundamental right. Therefore, the Court's review is on the rational basis test. Although the Court identified issues with the plaintiffs' status as a "class of one" and with an illegitimate animus requirement, it found it unnecessary to reach either issue. Citing the Supreme Court's decision in Engquist, the Court stated that government activity which involves discretionary decision-making based on a number of objective criteria need not treat all persons equally. The Village's decisions over the years to build and extend its system were based on individual assessments made at those times. There is no clear standard that the Village used and that the Court could use to judge any departures therefrom. The Court concluded that it was doubtful that the residents' claim would survive the Engquist test. The Court went on, however, and concluded that the residents failed to establish an equal protection violation. First, they were unable to establish the existence of an appropriate comparator. Second, the cost of extending the system, the apparent lack of interest on the part of most residents, and the Village's desire to avoid competition with the private utility amounted to a rational basis for its conduct.

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SCHOR v. CITY OF CHICAGO (August 13, 2009)

The City of Chicago passed an ordinance that prohibits the use of a mobile phone while driving unless it is used in conjunction with a "hands-free" device. Three individuals who were ticketed for violating the ordinance filed an action against the City, alleging violations of the Fourth Amendment, the Equal Protection Clause and Illinois law. The district court dismissed the claims and refused to allow an amendment to the complaint. The plaintiffs appealed.

In their opinion, Judges Manion, Rovner and Wood affirmed. The Court rejected the Fourth Amendment claim. The officers making the stops observed each plaintiff violating the ordinance. Those observations provided probable cause for the stop – and thus no Fourth Amendment violation. The Equal Protection Clause claim was a "class of the one" claim. To succeed on that claim, the Court stated, the plaintiffs had to show that they were treated differently and that there was no rational basis for the difference in treatment. Here, the drivers were treated differently than other drivers who were not using mobile phones. The basis for the differential treatment, however, was the violation of an ordinance -- clearly a rational distinction. The Court rejected the plaintiffs' Monell claims as well. A direct claim against a municipality must be based on an underlying constitutional violation, which is not present here. Finally, the Court concluded that the district court's refusal to allow an amendment to the complaint was not an abuse of discretion. In the amendment, the plaintiffs sought to include a claims that the ordinance violated their fundamental right to travel and a claim that the ordinance was void for vagueness. The plaintiffs failed to indicate how the ordinance infringed any right to travel or how its terms were so vague that an ordinary person could not understand.

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FLYING J INC. v. CITY OF NEW HAVEN (December 5, 2008)

Flying J develops and operates travel plazas for truck drivers and other travelers. It purchased 50+ acres in New Haven, Indiana (the “City”) to develop a new travel plaza. The City opposed the development and took the position that it was not allowed under the then-current zoning. Flying J ultimately prevailed in the Indiana state courts on its challenge to the City’s position. Undaunted, the City amended its zoning ordinance to limit developments of this type to two acres. The Flying J development was the only parcel affected by this limitation. The City held several public meetings on the amendment but never gave Flying J specific notice of them. In August of 2007, the City advised Flying J that its development must comply with the two acre rule. Flying J filed suit in September, alleging violations of its rights under the U.S. and Indiana Constitutions. The district court dismissed for failure to state a claim. Flying J appeals.

In their opinion, Judges Bauer, Flaum and Williams affirmed. The Court first addressed the City’s position that the Court lacked jurisdiction under the principles of Williamson County. The Supreme Court in Williamson County held that takings claims in land use cases are not ripe until the local authority has reached a final decision, including a decision on a variance application and compensation. Courts have applied the doctrine to takings claims even when they are labeled as due process or equal protection claims. The Court noted that it has created an exception for claims alleging the malicious conduct of a government agent unrelated to a legitimate state objective. Flying J’s allegations of the City’s protracted litigation, its covert amendment to the ordinance, the ordinance’s application only to Flying J, and the potential conflicts of interest of several commission members fit its claim within that exception.

The Court next addressed whether Flying J stated a claim. Relying on its precedent in Wroblewski and Lauth, the Court identified the pleading standard for a class-of-one equal protection claim. In those cases, the plaintiff must negate any set of facts that provides a rational basis for the classification challenged. Animus of the defendant comes into play only after the plaintiff has pled facts that show the irrationality of the government’s conduct. Flying J does allege facts that would show that the City took its actions in response solely to Flying J’s development but it does not allege facts to establish that the zoning amendment was irrational. Flying J’s allegations therefore do not overcome the presumption of rationality the government enjoys in cases of this nature.

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