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Regan v. City of Hammond

United States District Court, N.D. Indiana, Hammond Division

July 25, 2018

CHRISTOPHER REGAN, et al., Plaintiffs,



         This matter is before the court on the cross motions for summary judgment filed by plaintiffs Christopher Regan and Northwest Indiana Creative Investors Association, Inc. (“NICIA”) and defendant City of Hammond, Indiana. For the reasons identified below, plaintiffs' motion (DE # 39) will be denied and defendant's motion (DE # 46) will be granted.

         I. BACKGROUND

         Plaintiff Christopher Regan owns and leases real property in the City of Hammond. (DE # 1 at 1.) Regan lives in Cook County, Illinois. (Id.) Plaintiff NICIA is a non-profit corporation acting as a trade association for real estate investors who lease real property in Hammond. (Id. at 2.) In their complaint, plaintiffs allege that sections of Hammond's municipal code are unconstitutional because the Code requires Hammond property owners who do not reside in their property to obtain licenses, or hire licensed contractors, to complete home repairs, but the Code exempts homeowners who live in their Hammond homes from this requirement.

         The Hammond municipal code requires persons engaged in “the business of a building contractor” in Hammond to be licensed. Hammond Municipal Code § 150.017. However, the Code specifically exempts resident homeowners from the licensing requirement:

(B) Nothing contained in this subchapter shall prohibit the resident homeowner of a private residence from doing building contracting in his or her own private home and surrounding property, providing he or she resides there, is able to establish proof of residency, and is in compliance with all requirement tests and regulations provided by law and this code. Falsification or misidentification of residency is a violation of this section and is subject to penalty as set forth in § 150.999. A resident homeowner excluded under this section acts as his or her own contractor and assumes all responsibility for work done. All work must be done in a workmanship manner and there must be compliance with all codes and laws. If the owner of the property chooses to hire a contractor, such contractor must be licensed in the city.

         Hammond Municipal Code § 150.017. The Code definition of “Building Contractor” for purposes of Section 150.017, includes “[a]ny person or persons who own a building that they lease or rent;” but excludes “[i]ndividuals who remodel the single family residence in which they reside; upon review and inspection(s) by the Building Commissioner.” Hammond Municipal Code § 150.015.

         Plaintiffs allege that these sections of the Code violate the dormant Commerce Clause by imposing an “improper, unreasonable burden on interstate commerce by charging higher fees to non-city owners of Hammond property than to Hammond-domiciled owners of property.” (DE # 40 at 1.) Plaintiffs also claim that the Code provisions run afoul of the Equal Protection Clause of the Fourteenth Amendment because the provisions are not related to any legitimate government interest. (Id.)[1]

         Defendant, on the other hand, contends that the ordinance provisions have no effect on interstate commerce because the provisions treat all similarly situated persons the same, regardless of their location. (DE # 46 at 1.) Defendant claims that the City's regulation of for-profit building contractors and landlords, but not resident homeowners repairing their single-family homes, is rationally related to legitimate governmental interests. (Id. at 1-2.) Thus, the City argues, the ordinances survive review under both the dormant Commerce Clause and the Equal Protection Clause. (Id.)

         Both parties have moved for summary judgment. This matter is fully briefed and is now ripe for resolution.


         Federal Rule of Civil Procedure 56 requires the entry of summary judgment, after adequate time for discovery, against a party “who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In responding to a motion for summary judgment, the non-moving party must identify specific facts establishing that there is a genuine issue of fact for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986); Palmer v. Marion County, 327 F.3d 588, 595 (7th Cir. 2003). In doing so, the non-moving party cannot rest on the pleadings alone, but must present fresh proof in support of its position. Anderson, 477 U.S. at 248; Donovan v. City of Milwaukee, 17 F.3d 944, 947 (7th Cir. 1994). A dispute about a material fact is genuine only “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248. If no reasonable jury could find for the non-moving party, then there is no “genuine” dispute. Scott v. Harris, 550 U.S. 372, 380 (2007).

         The court's role in deciding a summary judgment motion is not to evaluate the truth of the matter, but instead to determine whether there is a genuine issue of triable fact. Anderson, 477 U.S. at 249-50; Doe v. R.R. Donnelley & Sons Co., 42 F.3d 439, 443 (7th Cir. 1994). In viewing the facts presented on a motion for summary judgment, a court must construe all facts in a light most favorable to the non-moving party and draw all legitimate inferences and resolve all doubts in favor of that party. NLFC, Inc. v. Devcom Mid-Am., Inc., 45 F.3d 231, 234 (7th Cir. 1995).

         III. ANALYSIS

         A. Dormant Commerce Clause

         “The Commerce Clause grants Congress the power to ‘regulate Commerce . . . among the several States,' but the Supreme Court has long held that a ‘dormant' or ‘negative' component of the Clause implicitly limits the states from ‘erecting barriers to the free flow of interstate commerce' even where Congress hasn't acted.” Park Pet Shop, Inc. v. City of Chicago, 872 F.3d 495, 501 (7th Cir. 2017) (internal citations omitted). Modern Commerce Clause precedents “rest upon two primary principles that mark the boundaries of a State's authority to regulate interstate commerce. First, state regulations may not discriminate against interstate commerce; and second, States may not impose undue burdens on interstate commerce.” S. Dakota v. Wayfair, Inc., 138 S.Ct. 2080, 2090-91 (2018).

         A state or local law may fall into one of three categories, for purposes of a dormant Commerce Clause analysis: (1) disparate treatment; (2) disparate impact; and (3) “laws ‘that do not give local firms any competitive advantage over those located elsewhere.'” Park Pet Shop, 872 F.3d at 502 (quoting Nat'l Paint & Coatings Ass'n v. City of Chicago, 45 F.3d 1124, 1131 (7th Cir. 1995)). In the first category are laws that explicitly discriminate against interstate commerce. These laws are treated as “presumptively unconstitutional, ” Id. at 501, and are subject to strict scrutiny review. Legato Vapors, LLC v. Cook, 847 F.3d 825, 830 (7th Cir. 2017).

         In the second category are laws that are neutral on its face, but have a discriminatory effect in practice. If the law bears so heavily on interstate commerce that it acts as an “embargo on interstate commerce without hindering intrastate sales, ” the law is treated as if it were facially discriminatory. Park Pet Shop, 872 F.3d at 502. If, however, the law has only a “mild disparate effect and potential neutral justifications, ” the law is analyzed under Pike v. Bruce Church, Inc., 397 U.S. 137 (1970), which “established a balancing test that requires the reviewing court to weigh the burden on interstate commerce against the nature and strength of the state or local interest at stake.” Id. If the law “regulates even-handedly to further a legitimate local public interest, and the effect on interstate commerce is merely incidental, the law will be upheld unless the burden on commerce is “clearly excessive in relation to the putative local benefits.” Id.

         Finally, the third category consists of laws that may effect commerce but do not burden it, and do not give local entities any competitive advantage over entities located elsewhere. Id. Laws in this category receive rational-basis review. Id. As the Seventh Circuit stated: “‘No disparate treatment, no disparate impact, no problem under the dormant commerce clause.'” Id. (quoting Nat'l Paint, 45 F.3d at 1132).

         1. The Hammond Ordinances Do Not Receive ...

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