Midwest Retailers lawsuit against Toledo continues

The lawsuit over the 'convenience store licensing law' (which applies to all kinds of businesses and not just convenience stores) is getting more interesting as the City and the Midwest Retailers Association (MWRA) make their various filings.

MWRA requested an injunction. The city responded in opposition to the injunction and now, Scott Ciolek, MWRA's attorney, has filed their reply.

Now, I'm not an attorney so I'm not qualified to judge the merits of the various claims and defenses. However, a small dose of common sense is all that is needed to appreciate the position of the MWRA.

MWRA claims the ordinance is vague. The city says it isn't.

"Because Ordinance 797-07 lacks any discernible standards, a reasonable business owner is left without guidance as to what conduct is required to achieve compliance. Defendant responds that the City, on request by a business owner, will provide “suggestions of what actions to take to comply with the Ordinance.”2 If “appropriate actions” is not vague terminology, Defendant should be able to do better than merely offer “suggestions” as to what conduct may or may not comply with the ordinance. Moreover, the undefined “appropriate actions” requirement sets the stage for arbitrary and erratic enforcement. With no fixed standards in place, the City is free to set a different standard of “appropriate actions” for each store owner."

Furthermore, Ciolek argues, the city readily admits that they sent letters only to certain businesses who are affected by the law, thus demonstrating that the city is engaging in 'selective and arbitrary' enforcement. Seems pretty much like common sense to me...

MWRA, as I've said previously, makes an interesting argument regarding involuntary servitude and the city denies this point. The city says that owners have 'alternatives' if they don't want to follow the ordinance. One 'alternative' is to expand the size of their business to more than 5,000 square feet so the ordinance won't apply to them.

"As an initial matter, it is far from clear how merely expanding the size of a convenience store “alters the nature” of the business. Apparently, an increase in square footage is sufficient to ameliorate the Cityʼs concerns about crime and public safety. But more importantly, it is simply not accurate to say that a convenience store can simply “choose” to expand the size of their business. Many affected businesses do not have available room to expand due to location. Others lack the financial resources required for substantial remodeling. And, at any rate, a business owner cannot expand the size of their business without obtaining applicable permits from the City. In short, Defendant cannot argue that a business owner my freely choose to expand their business when, in fact, such an expansion cannot take place without permission from Defendant.(emphasis added)"

Priceless!

The city gives several examples of undesirable consequences to laws or rules that they present as legal arguments for the constitutionality of this law, including a scholarship recipient not performing their agreed-upon service following graduation or an inmate 'choosing' to stay in jail rather than participating in a work-release program.

"As for defendantʼs other examples, MWRA members have not entered any sort of contract with the City, nor are MWRA members prisoners of the state.

As the Third Circuit observed in Steirer, “the critical factor in every case finding involuntary servitude is that the victim's only choice is between performing the labor on one hand and physical/and or legal sanctions on the other.” 987 F.2d at 999 (3rd. Cir. 1993). This is precisely the choice presented to MWRA members by Ordinance 797-07."

Even this non-lawyer could have told you that.

Then there is the issue of ex post facto laws and their prohibition. The law says that existing business owners must have a criminal background check and they may not be granted a license to operate if they have convictions in their past. The city says they are not penalizing such owners for their previous history - only for their current actions. MWRA responds:

"As Defendant readily concedes, under Ordinance 797-07 “[a] conviction may prevent a person from obtaining a license to operate a convenience store.”8 However, Ordinance 797-07 also permits Defendant to revoke the license of a store owner with a business already in operation, or deny renewal of a license. Under the plain language of Ordinance 797-07, any affected store owner with any type of criminal conviction within five years of the application date may be denied a license to operate. Continuing to operate a convenience store without this license is a criminal offense. This outcome is not, as Defendant claims, based on “a personʼs current actions,” but rather makes a person vulnerable to fines, criminal penalties, and loss of business for no reason other than a past conviction. This is the very essence of an ex post facto law."

Again, not being an attorney, even I understand this point and am simply amazed that either the city didn't see it, or that they are grasping at straws to make arguments in defense of this law.

And these arguments are only about the temporary restraining order. Can you imagine what the actual trial on the merits will be like?

Stay tuned...

'Not business friendly' Post #10 - if you don't like the law, close your business

The Convenience Store Licensing Law just keeps more onerous the more it gets explained.

As pointed out earlier, the law applies to more than just convenience stores. Coffee shops, ice cream parlors, health food stores - any retail business that sells food or beverages for home consumption and is smaller than 5,000 square feet are required to obtain a license to operate, install 24/7 cameras (of a certain quality), and monitor and prevent criminal activity on their property.

The law was 'intended' to help the city when they have trouble at places that sell alcohol when the state liquor control board allows them to keep their liquor license over objections from neighbors. That the state board might be following the law when making such decisions is completely beside the point. Some of the community development corporations (CDCs) don't like convenience stores and they think that if the store goes away, so will the people who do illegal things on or near the property. Yes, if you take away their source of alcohol, such people will no longer drink. If you close down the corner store, a prostitute will not longer offer her body for sale. You get the point.

As this was the whole point of the ordinance, why does it apply to ice cream parlors, gas stations, coffee shops and all the other types of businesses? Either it was intentional in order to get more money for the city, or it was extremely incompetent in that council didn't understand the ramifications of what they were doing. Both explanations are bad.

But that's not the worst of this. I thought that sending letters to convenience stores telling them they had to follow the law despite an agreement to not start enforcing the ordinance during the settlement phase of the lawsuit was pretty awful. But they sent the letters to stores over 5,000 square feet - so that was pretty bad as well. But their response to the temporary restraining order takes the cake.

The Midwest Retailers Association makes a claim of 'involuntary servitude' as one of their objections to the law. It's an interesting claim. Midwest explains that the law creates this condition “by transferring to selected business owners duties and responsibilities traditionally reserved for law enforcement personnel.” The law requires owners to 'stop' certain criminal activities that are happening on their property and if, despite their best efforts, the activity continues, they lose their license. Seems pretty clear that this is the job of the police.

The city, in their response, says that "not every situation in which an individual faces a choice between labor or legal sanction constitutes involuntary servitude." In fact, they liken the outcome of this law to certain scholarship recipients who do not perform their agreed upon public service upon completion of their schooling. That this was a contract willingly entered into by both parties - and is now being breached by one of them - must have completely escaped those fine legal minds in Government Center.

But it gets worse. Here is the city's conclusion on the claim of involuntary servitude:

Moreover, Midwest’s members have alternatives to performing the actions that the Ordinance requires. Midwest’s members can choose not to operate a convenience store to avoid the Ordinance. Midwest’s members can choose to alter the nature of their business by expanding to more than 5000 square feet or discontinue selling food and beverages for home consumption. Although these choices may not be appealing to Midwest’s members, this fact does not make the actions required under the Ordinance voluntary servitude.

Yep...the city says if you don't like the law, don't have such a business...or expand until it no longer applies to you. Like any business being faced with such a choice is going to even want to expand in this city!

When it comes to the cameras, the 'logic' is the same:

"Midwest’s members are free to use the cameras in any manner. If a member removes an installed high-resolution camera and he wants to continue operating the convenience store, he must replace the subject high-resolution camera with another. However, if a member does not want to continue operating the convenience store, no replacement is necessary."

Yep ... if you don't want to comply with the law, go out of business.

The arrogance and anti-business nature of these pleadings is astounding. Toledo is a city that is losing population and businesses and is raising fees and taxes. It's creating licensing laws and registration fees that drive businesses - and their owners - out of the city. What a wonderful environment!

To expect that a viable option to an onerous and disgusting law is to close up a business - just boggles my mind. Whatever happened to the concept of small businesses being the backbone of our economy? These convenience stores are primarily owned by families in the area and they've hired some non-family members to help with the operations. Aren't these the types of companies we want??? Why would the only other solution to a costly, and maybe unconstitutional, law be to suggest that they go out of business? Some would say that convenience stores are not the 'right' type of business to have in the city. But, considering the current economic condition of the city, can we really afford to drive anyone away? And just because some people don't like the businesses doesn't mean that everyone wants them gone. They obviously have a good customer base or they wouldn't still be in business!

This is certainly not business-friendly and I do hope that the Midwest Retailers Association prevails in their lawsuit as it would be the best thing for the Toledo. And it might finally send a message to our elected officials that they need to get out of being 'stuck on stupid.'

Convenience stores fight licensing law (thank goodness!)

It's official. In a lawsuit filed yesterday in Federal Court, the Midwest Retailers Association, Ltd. is seeking to overturn a convenience store licensing law passed in December by Toledo City Council.

The attorney for the case, Scott Ciolek, has set up a website to track the case events and includes a .pdf of the actual complaint. My on-air discussions of this law are available on the WSPD pod cast page (December 4, 6, 7, and 12). You can also search this blog for 'convenience store licensing fees' for the many posts I made on the issue.

For quick background, our council gets a lot of complaints about illegal activity around convenience stores. Because the laws are not enforced by the police department (due to lack of staff or low priority), the elected officials decided to make the owners of such property responsible for the activity. Of course, the only way to do so would be to create a license for them and then threaten them with revocation of their license if other people do bad things on or near their property. It originally went so far as to require these owners to clean up litter within a one-block radius, even though that specific requirement was not included in the final version.

This is one of the most anti-business pieces of legislation Toledo has considered in ages. While the elected officials said they had several meetings on the issue, the final draft of the law wasn't circulated to store owners and many onerous and costly requirements were never shared with the majority of convenience stores.

As a result of the coverage of this by me and WSPD, there were some changes to the law made at the last minute. But even those were not shared with the public nor the owners prior to the actual vote on the law.

Now that the law is scheduled to take effect next month and store owners are learning all the details, they have joined together to fight it - and, it appears, with a very strong case.

One of the many points of contention, from the web page on the case:

Section 722.11 part 2:

Once a reasonable opportunity to cure the problems has been afforded to the licensee without substantial success, a license should be revoked even though the license holder has taken all reasonable measures to achieve compliance.

“Problems” specifically listed for which the business owner is now held accountable include gambling, prostitution, drug dealing, weapons possession, disorderly conduct, loitering, public nuisance, and obstructing legal process. (721.15)

A business owner doesn’t have the authority to take action to personally stop any of these activities. Unless the city of Toledo intends to force business owners to take up arms and dispense vigilante justice, then the most responsible action business owners could take to curb illegal activities on their property would be to notify the police of the activity. If a business owner has contacted the Toledo P.D. and criminal activity continues on the premises, isn’t that a reflection on the police department? Why are we punishing the business owner because the police are incapable of eliminating crime? Basically, the business owner is being held accountable for the failures of the police department.

Perhaps the section should read:

Once a reasonable opportunity to cure the problems has been afforded to the Toledo Police Department without substantial success, all officers and administrators will be terminated, even though the department has taken all reasonable measures to achieve compliance.

Obviously that would be ridiculous, too, but at least you’d be holding the people who are actually responsible for reducing crime accountable, as opposed to just transferring responsibility to private citizens. If police—who legally carry weapons, arrest and detain citizens, and are authorized to use deadly force,—can’t eliminate crime at these locations, why would anyone think a convenience store owner can do it?

I'll be talking with Scott Ciolek today at 4:30, so tune in as I sub for Brian Wilson and the Afternoon Drive 3-6 p.m. And check back for updates on the case!