City’s Different Treatment Of Large And Small Stores Is Constitutional If It Serves A Legitimate Legislative Purpose

Issue

In Hernandez v. City of Hanford, (— Cal.Rptr.3d —, 2007 WL 1629830, Cal., June 7, 2007), the California Supreme Court considered a challenge to a City zoning ordinance that allowed large department stores to sell furniture within a specified district but prohibited smaller stores from doing so.

The Court reversed a Court of Appeal decision that the policy violated the United States Constitution’s Equal Protection clause. The Court ruled zoning regulations are constitutional, even if they disadvantage some businesses, if they serve a valid public purpose.

Facts

The City of Hanford (“City”) enacted a zoning ordinance creating a Planned Commercial (“PC”) District. It was intended to house large “big box” style stores in a separate area from smaller businesses in the City’s smaller downtown area. The ordinance allowed stores larger than 50,000 square feet to sell furniture, but in an area no larger than 2,500 square feet. Smaller stores were barred from selling furniture entirely.

Years later, Adrian and Tracy Hernandez opened a small furniture store called “Country Hutch” in the PC District. A city inspector cited them for violating the zoning ordinance, and instructed them to remove all of the furniture from the store. The Hernandez’s sued, claiming that the ordinance violated their constitutional right to equal protection of the law, because it prohibited their store from doing the same type of business that was permissible for larger stores within the district.

The trial court rejected their contentions and upheld the ordinance. A Court of Appeal reversed that decision, finding that the 2,500-square-foot restriction on furniture sales rendered the 50,000-square-foot threshold for overall store size arbitrary, and a violation of the Equal Protection Clause. The City appealed to the Supreme Court.

Decision

The Court analyzed the United States Supreme Court’s decision in Fitzgerald v. Racing Assn. of Central Iowa (2003) 539 U.S. 103, in which the Court ruled an Iowa law that taxed slot machine revenue from race tracks at a higher rate than slot machine revenue from riverboats was constitutional. The State’s legitimate policy reasons for the tax break, which was not intended to benefit or harm any specific business, made it constitutional, the Fitzgerald Court said. “We will not overturn such a statute unless the varying treatment of different groups or persons is so unrelated to the achievement of any combination of legitimate purposes that we can only conclude that the Legislature’s actions were irrational.”

Like the Iowa statute in Fitzgerald, the Hanford ordinance was intended to serve a combination of purposes, the Court said—protecting the economic viability of the downtown business district, while keeping large department stores in the city in the PC district. Because the City deemed allowing furniture sales by the large stores was vital to keeping them, and excluding furniture sales in the district by smaller stores was vital to the downtown area’s economy, the ordinance served multiple legitimate public purposes, rather than impermissible anticompetitive purposes, the Court ruled.

The ordinance therefore did not violate the Equal Protection Clause and the Court of Appeal’s judgment was reversed.