Ferguson Has Authority To License and Regulate Owners of Residential Rental Property

Facts: In 2006, Ferguson enacted an ordinance creating a regulatory fee and licensing system for owners of residential property within Ferguson who seek to lease or rent their property to others.  The ordinance mandates that property owners meet certain requirements and pay a fee to obtain a license to rent or lease their property.  Property owners must undertake building inspections, file affidavits stating whether any adult tenants are registered sex offenders, and maintain a property manager within twenty-five miles of the rental property.  The ordinance makes it unlawful for property owners to rent or lease their property without a license.

In 2008, the St. Louis Association of Realtors (Realtors) challenged the validity of the ordinance on constitutional and statutory grounds and amongst other things specifically, alleged that Ferguson’s license program is unauthorized by its charter or by statute.  Ferguson filed a motion to dismiss because the Realtors did not have standing.  After an appeal, the Missouri Supreme Court held that the Realtors had standing, the matter was reversed and remanded to the trial court.

After additional legal maneuvering the trial court ruled that the matter was moot because of amendments to the city code and that decision was appealed to the Eastern District.  The Eastern District reversed the trial court’s holding that the amendment to the Ferguson City Code did not make the matter moot and remanded the case again to the trial court for further action.  The trial court then ruled in 2015 that Section 71.610, limited Ferguson’s power to impose a license fee on the business of licensing residential property because Section 94.110 did not specifically list this type of business as taxable.

Opinion: The City of Ferguson appealed to the Eastern District, which ruled that Ferguson as a constitutional’s charter city had the power to license, tax and regulate all business services, occupations, professions, vocations, activities or things of any nature, which are authorized by state statute based on incorporation by reference of state statutes in its Charter.  The Eastern District noted that:

“Ferguson is a constitutional charter city. Ferguson’s charter grants it the power, through the enactment of ordinances, to license, tax, and regulate all business services, occupations, professions, vocations, activities or things of any nature which are authorized by state statute with respect to any statutory, special charter, or constitutional charter city.  The charter further provides that the above-described power shall not be interpreted to limit the general power of the city to impose license taxes upon any business, vocation, pursuit, or calling not prohibited by law.  Thus, Ferguson, by incorporating in its charter the power to license and tax any business authorized by state statute applicable to any statutory, special charter, or constitutional charter city, has the authority to impose a license tax on any business which Missouri statutes have authorized statutory, special charter, or constitutional charter cities to regulate.  See Erb Indus. Equip. Co., Inc., 845 S.W.2d at 552 (noting that such incorporation by reference is lawful).”

The Eastern District reversed the trial court because Ferguson had the authority to adopt a license charge and regulate the rental of housing pursuant to its charter and remanded the matter for further action.  This time the Eastern District specifically directed the trial court to determine issues not addressed by the appeal by ruling on Realtors counts I, II, IV, V and VI.  The Eastern District specifically noted that an unresolved issue is whether or not Fergusons license fee is even a tax at all, or whether it is a user free.  St. Louis Association of Realtors v. City of Ferguson, (ED103385, 09/27/16)

Comment Howard:  The above quote from the case is very useful in that it supports charter provisions that provide for incorporation by reference of statutes.  Seems like the Eastern District would like this matter resolved, considering that the litigation is now approaching a decade.  This case takes on particular significance because of Constitutional Amendment 4, which will be considered by the voters on November 8, 2016.  It would seem that the Missouri Association of Realtors and others who are supporting Constitutional Amendment Number 4 are determined to limit the ability of local government to adopt housing codes that will prevent blight and provide for safe and decent rental housing.

Absolute Immunity For City Prosecutor Means Absolute

 Facts: The City of Woodbury’s Police Department (City) responded to a 911 call at Sample’s residence regarding an incident in which a woman, J.D., claimed that Sample had assaulted her.  Attorney Vierling of the Eckberg law firm obtained copies of the police reports regarding the incident and attorney Christiansen of the Eckberg law firm filed a criminal complaint against Sample on behalf of the City.   At the time the criminal complaint was filed, Vierling and the Eckberg law firm represented J.D. in a domestic civil action in Hennepin County, including the filing of an order for protection.

The Eckberg law firm later asked another firm to prosecute the criminal case against Sample, citing that it had a conflict of interest.  Sample filed a motion to dismiss the City’s charges against him.  The state court granted Sample’s motion and dismissed the criminal complaint, finding that the Eckberg law firm engaged in prosecutorial misconduct when it brought criminal charges against Sample on behalf of the City while simultaneously representing the alleged victim in domestic civil actions, including an action seeking an order for protection against Sample.  The state court found that this misconduct violated Sample’s constitutional right to due process.

Sample then brought a Section 1983 action in federal district court, alleging that the Attorneys’ filing of criminal charges against him while acting under a conflict of interest, and the failure to have a conflict policy in place, violated his constitutional rights.  The City and the Attorneys filed separate Rule 12(b)(6) motions to dismiss the complaint for failure to state a claim, which the district court granted after a hearing.  The district court held that the Attorneys enjoyed absolute prosecutorial immunity as to Sample’s Section 1983 claim as well as to his claims of abuse of process, malicious prosecution, and negligent failure to establish a conflicts policy.  The district court also held that the City enjoyed derivative absolute immunity on the claims.  Sample appealed the dismissal to the Eighth Circuit.

Opinion

Absolute Immunity for Prosecutors: The Eighth Circuit notes that: “Prosecutors enjoy absolute immunity in their review of and decisions to charge a violation of the law.”  In addition: “Absolute immunity protects prosecutors against claims arising from their initiation of prosecution and presenting a criminal case.” Allegations of improper motive in the performance of prosecutorial functions do not defeat the protection afforded by absolute immunity.

With respect to the claim that the prosecutors wrongfully failed to develop a conflicts policy, as an administrative duty, the complaint failed to state a claim because the development of a conflicts policy and the determination as to what constitutes a conflict of interest would necessarily require legal knowledge and the exercise of related discretion; therefore, development of a conflict of interest policy is protected by absolute immunity.

Liability of the City: Unlike government officials, municipalities do not enjoy absolute or qualified immunity from suit under Section 1983.

Nevertheless municipalities enjoy some protection in that they can only be liable under Section 1983 if municipal policy or custom caused the unconstitutional injury.  Extending absolute immunity to municipalities as the City proposes would leave innocent persons harmed by the abuse of governmental authority without a remedy for compensation for their injury.  Therefore, the trial court erred when it dismissed Samples complaint on the grounds of absolute immunity because it does not apply to the municipal corporation.  Sample v. City of Woodberry, (8^th Cir., 15–3213, 09/06/16)

Comment Howard: With respect to liability of the City the opinion only addresses the question of absolute liability.  It does not address the question of liability of the City under respondent superior for its failure to have a policy, which apparently is for another day.  The court noted that the City they have some protection under the law to the extent that respondeat superior liability plays a role in this matter.  Even though the prosecutors for the City did not have liability, the failure to have a policy with respect to conflicts between their public and private practice was a very serious embarrassment to the law firm and the City.

 

Sales Tax Of 4% On Frozen Meals Served On Airplanes Survived Challenge Based On Uniformity Clause

Gate Guormet v. Director of Revenue, (SC95388, 10/4/16), involved whether or not frozen meals served on an airplane to airline customers should be taxed at 1% or 4%.  The state statute imposed a 4% sales tax on frozen airline meals while frozen meals for home consumption paid only a 1% sales tax.  Gate Guormet challenged the statute based upon the uniformity clause of the Missouri Constitution.  The uniformity clause requires that taxes “shall be uniform upon the same class or subclass of subjects within the territorial limits of the authority levying the tax.”

The Missouri Supreme Court held that the statutory distinction between a tax rate for frozen meals for home consumption and other types of consumption (like frozen meals on airplanes) under the uniformity clause was a reasonable distinction.  Gate Guormet v. Director of Revenue, (SC95388, 10/4/16.

Comment Howard: The uniformity clause in the Missouri Constitution should be kept in mind when drafting ordinances, which is distinguished between classes or subclasses of subjects.

Difference Between Employee And Independent Contractor

In Timster’s World Foundation v. Division of Employment Security, (WD79053, 07/26/16) the Western District considered an appeal from a decision by the Labor and Industrial Relations Commission, which held that persons providing services as parent aides, family assistance, service delivery, mentoring, and tutoring for the Division of Employment persons were employees working for Timster’s World Foundation (Foundation) and were not independent contractors of the Foundation by applying the 20-part IRS test.  You can add another two components to the IRS 20-part test based upon a Supreme Court decision.  Timster’s World Foundation v. Division of Employment Security, (WD79053, 07/26/16)

 Comment Howard: I will not bore you with the minutia involving the 20-part test.  Suffice it to that this is a lengthy opinion that applies the test to the facts providing a treasure trove for comparison purposes, making this a good place to start your research.  Improper classification of a worker as an independent contractor presents potential liability for local government; therefore, drafting of provisions in agreements with independent contractors should attempt to shift the liability to the independent contractor for representations that it meets the 20-part test.

No Default Judgment In Election Contest

Facts: Silvey (Contestant), the Republican nominee for election to Missouri Senate District 17, filed a petition to have the Democratic nominee (Contestee) for the same seat disqualified on the basis of residency.  The court held a preliminary hearing and set the case for trial on August 29, 2016.  On August 24, Contestant filed a motion for default judgment or, in the alternative judgment on the pleadings based on the fact that the Contestee had not filed an answer.  On August 26, the Contestee filed his answer alleging facts supporting his defense that he satisfied the residency requirements along with a motion to file out of time, which the court granted.

A bench trial was held and the court thereafter entered a judgment for the Contestee finding that he “has always intended to be, has always maintained, and but for his service as a soldier in the US Army, has always been physically a resident within Missouri Senate District 17.”  Contestant appealed to the Western District.

Opinion: Chapter 115 establishes specific rules for election contests, including political subdivisions.  These rules  “are exclusive and must be strictly followed as substantive law.”  The statute specifically states that answers to the petition may be filed at the time and as provided in Sections 115.527 to 115.601,” while Section 115.533.3 provides that “the contestee may file an answer.”  Nothing in Chapter 115 requires the contestee to file an answer.  No answer is required because an election contest is not an adversarial legal proceeding pitting one candidate against another candidate; rather it challenges the conduct of the election itself.  Therefore, by not requiring a contestee to file an answer, the election contest statutes “do not permit the entry of a default judgment upon failure to answer.”  The trial courts judgment is affirmed because there was overwhelming evidence to support its decision.  Silvey v. Bechthold, (WD80042, 09/20/16)

Privacy Cases Involving Misuse Of Motor Vehicle Data Base Moves Forward

Earlier in 2015 we reported in the MMAA Newsletter an Eighth Circuit Court of Appeals decision (McDonough v. Anoka County), involving a massive misuse of the Minnesota statewide drivers license database to access personal information of drivers. In McDonough v. Anoka County, the Eighth Circuit directed the trier of the fact assess each complaint based upon: “…that each defendant’s alleged conduct must be assessed independently to insure that plaintiffs had pleaded sufficient facts regarding that defendant’s impermissible purpose to state a facially plausible claim to relief against it.” The Court of Appeals discussed the suspicious access and timing patterns that would nudge some of the claims “across the line from conceivable to plausible.”

In Tichich v. City of Minneapolis, each defendant’s alleged conduct was assessed “…independently to ensure that the facts pleaded regarding that defendant’s impermissible purpose were sufficient to state a plausible claim against that defendant” by applying the following categories:

“1) accesses on the same day as or within a few hours of accesses by other, unrelated entities during the limitations period; 2) multiple late-night accesses during the limitations period; or 3) a history of frequent suspicious accesses fitting the above criteria, even if prior to the limitations period, coupled with accesses within the limitations period.”

In Tichich v. City of Minneapolis the Eighth Circuit reviewed 13 individual lawsuits that were consolidated affirming the district court’s dismissal of 10 of these lawsuits.  The Court of Appeals also found that three of the complaints were “plausible” based upon an examination of the database as applied to the entities or officials who accessed the database; thereby, reversing the district court’s decision.

The Eighth Circuit determined that the statute of limitations was four years and that accesses outside the statute of limitations could be considered in evaluating a claim within the statute of limitations to determine if it was plausible.  Tichich v. City of Minneapolis, (8^th Cir., 14–3151, 09/01/16)

Comment Howard: I am not aware of any data privacy lawsuits in Missouri, involving the misuse of access to motor vehicle driver records.  If you have a lawsuit involving data privacy because of the misuse of the motor vehicle database the Eighth Circuit has pretty well laid out how these cases are to be handled.  More importantly, it seems to me that the most recent case is another wake-up call to make sure that you have a policy in place and monitor use of the database in order to be sure there is no misuse of the motor vehicle database.

Constitutional Amendment Guaranteeing Right To Farm Allows Local Government To Regulate Farming Practices As A Constitutional Right

Christian County (County) issued an order to Producer to abate conditions that might transmit or promote disease with respect to his production and sale of raw milk.  Producer claims that the order violates the recently adopted constitutional amendment in Article 1, Section 35 that protects the right of farmers and ranchers to engage in farming and ranching practices “subject to duly authorized powers, if any, conferred by Article VI of the Constitution of Missouri.”

Section 192.300 authorizes county commissions to promulgate public health rules and ordinances.  Exercising that power pursuant to Article VI, Section 7 of the Missouri Constitution the County adopted an amended Food Order ordinance regulating all bulk sale and distribution.  The Southern District concluded that the Christian County health ordinance did not violate the Right to Farm Constitutional Amendment.  Vimont vs. Christian County Health Department, (SD34414, 10/11/16)

Comment Howard:  This is a second case interpreting the constitutional amendment guaranteeing the right to farm, which recognizes that local government still has a significant role to play with respect to regulating these practices.  A discussion of the Missouri Supreme Courts earlier decision may be reviewed by clicking here. https://momunicipallaw.com/2015/08/05/missouri-supreme-court-lays-waste-to-the-constitutional-amendment-guaranteeing-the-right-to-farm/