Whistle Stop Inn, Inc. and Louise Liford d/b/a Thirsty Turtle v. City of Indianapolis, Mayor Greg Ballard, Indianapolis City-Council, and Hoosier Park, LLC , 51 N.E.3d 195 ( 2016 )

ATTORNEY FOR APPELLANTS ATTORNEYS FOR APPELLEE CITY OF
Mark Small INDIANAPOLIS, MAYOR GREG BALLARD,
Indianapolis, Indiana INDIANAPOLIS CITY-COUNTY COUNCIL
Andrew P. Seiwert
ATTORNEYS FOR AMICI CURIAE INDIANA Adriana Katzen
ASSOCIATION OF CITIES AND TOWNS AND Amanda J. Dinges FILED
INDIANA MUNICIPAL LAWYERS ASSOCIATION Pamela G. Schneeman Apr 11 2016, 2:30 pm
J. Lee McNeely Office of Corporation Counsel
Cynthia A. Bedrick Indianapolis, Indiana CLERK
Indiana Supreme Court
Scott A. Milkey Court of Appeals
and Tax Court
McNeely Stephenson ATTORNEYS FOR APPELLEE
Shelbyville, Indiana HOOSIER PARK, LLC
A. Scott Chinn
ATTORNEYS FOR AMICUS CURIAE CITY OF Anne K. Ricchiuto
GARY Brian J. Paul
George A. Gasper Faegre Baker Daniels LLP
Eric J. McKeown Indianapolis, Indiana
Ice Miller LLP
Indianapolis, Indiana Mark Crandley
Peter J. Rusthoven
Barnes & Thornburg LLP
Indianapolis, Indiana
_____________________________________________________________________________
In the
Indiana Supreme Court
_________________________________
No. 49S02-1604-MI-175
WHISTLE STOP INN, INC. AND
LOUISE LIFORD D/B/A THIRSTY TURTLE, Appellants-Plaintiffs,
v.
CITY OF INDIANAPOLIS,
MAYOR GREG BALLARD,
INDIANAPOLIS CITY- COUNTY COUNCIL, AND Appellees-Defendants
HOOSIER PARK, LLC, Appellee-Intervening
Defendant
_________________________________
Appeal from the Marion Superior Court, No. 49D14-1310-MI-38464
The Honorable James B. Osborn, Judge
_________________________________
On Transfer from the Indiana Court of Appeals, No. 49A02-1407-MI-519
_________________________________
April 11, 2016
Dickson, Justice.
We uphold Indianapolis' non-smoking ordinance ("Ordinance"), finding that it does not
violate the Equal Privileges and Immunities Clause of Article 1, Section 23 of the Indiana
Constitution. While the Ordinance provides an exemption to satellite gambling facilities but not
to bars and restaurants, Article 1, Section 23 does not prohibit this disparate treatment. We
affirm the trial court's grant of summary judgment in favor of the city.
Indianapolis first passed the Ordinance in 2005, banning smoking in public businesses
but providing some exemptions, including for bars and taverns that had liquor licenses and
neither served nor employed anyone under the age of eighteen. See CITY OF INDIANAPOLIS AND
MARION COUNTY, IND., REV. CODE tit. III ch. 616 (2005). A 2012 amendment removed the
exemption for bars and taverns, but exempted businesses licensed as satellite gambling facilities
by April 1, 2012. 1 INDIANAPOLIS REV. CODE tit. III ch. 616 sec. 204(a)(5) (2012). The plaintiffs
sued, claiming that the Ordinance violated the Equal Privileges and Immunities Clause of the
Indiana Constitution because it applied to them as bars and restaurants but exempted satellite
gambling facilities. Hoosier Park, as a licensed satellite gambling facility 2 exempted from the
Ordinance, intervened as a defendant. The defendants filed motions for summary judgment,
which the trial court granted, finding that the Ordinance's exemptions did not violate the Indiana
Constitution.
The plaintiffs appealed, arguing that the trial court erred by denying the plaintiffs'
motions for emergency relief and judgment on the pleadings, by granting Hoosier Park's Motion
to Intervene, and by granting summary judgment for the defendants on the Equal Privileges and
Immunities claim. The defendants responded to these arguments and the City also asserted that
1
The satellite gambling facilities exemption required licensing from the Indiana Horse Racing
Commission under Indiana Code chapter 4-31-5.5, which governs satellite facilities providing off-track
pari-mutual wagering on horse races.
2
To be licensed as a satellite gambling facility, Hoosier Park submitted to the Indiana Horse Racing
Commission a Tobacco Management Plan which "tried to accommodate the needs of both customers who
smoke and those who do not." Appellants' App'x at 17.
2
the plaintiffs' claims were barred by res judicata. The Court of Appeals reversed the trial court,
holding that the plaintiffs' claims were not barred by res judicata, that Hoosier Park was properly
permitted to intervene, that judgment on the pleadings would have been inappropriate, and that
the Ordinance's exemption for satellite facilities violated the Equal Privileges and Immunities
Clause as compared to bars and restaurants. Whistle Stop Inn, Inc. v. City of Indianapolis, 36
N.E.3d 1118, 1130 (Ind. Ct. App. 2015). The Court of Appeals severed the satellite facility
exemption, finding that the rest of the Ordinance could still be given its intended effect. Id. The
plaintiffs and Hoosier Park each petitioned for transfer, 3 and we now address the
constitutionality of the Ordinance's exemptions under the Indiana Constitution's Equal Privileges
and Immunities Clause, and, except for severability, 4 summarily affirm the Court of Appeals on
the other issues.
Article 1, Section 23 of the Indiana Constitution provides that "The General Assembly
shall not grant to any citizen, or class of citizens, privileges or immunities, which, upon the same
terms, shall not equally belong to all citizens." This Court in Collins v. Day "adopted a
preeminent two-part standard for determining a statute's validity" under this provision:
First, the disparate treatment accorded by the legislation must be reasonably related to
inherent characteristics which distinguish the unequally treated classes. Second, the
preferential treatment must be uniformly applicable and equally available to all persons
similarly situated.
Paul Stieler Enters., Inc. v. City of Evansville, 2 N.E.3d 1269, 1273 (Ind. 2014) (quoting Collins
v. Day, 644 N.E.2d 72, 80 (Ind. 1994)). This test applies to municipal ordinances as well as state
statutes, and both prongs must be satisfied for the enactment to be constitutional. Id. "Whether a
statute or ordinance is constitutional on its face is a question of law and we review the matter de
novo," though it "stands before this Court clothed with the presumption of constitutionality until
clearly overcome by a contrary showing." Id. at 1272-73 (internal quotations and citations
omitted).
3
In previous orders we denied the plaintiffs' transfer petition and now grant Hoosier Park's transfer
petition.
4
Because we uphold the constitutionality of the satellite facility exemption, we do not address
severability or summarily affirm the Court of Appeals on this issue.
3
As established in Collins, we "must accord considerable deference to the manner in
which the legislature has balanced the competing interests involved." 644 N.E.2d at 80 (citation
omitted). We "[p]resum[e] the statute to be constitutional," placing "the burden upon the
challenger to negat[e] every conceivable basis which might have supported the classification."
Id. (internal quotation omitted). This deference, however, does "not eviscerate the two-prong
constitutional test established," but "merely emphasize[s] the importance of appropriate
legislative deference, especially with regard to legislative classifications." Paul Stieler, 2 N.E.3d
at 1277. "[I]t is within the province of this Court to determine whether the exercise of legislative
discretion violates express provisions of the Indiana and Federal constitutions." Id. (emphasis in
original).
The plaintiffs argue that applying the Article 1, Section 23 test may be unnecessary
because "[i]f Paul Stieler controls, there is no need for further analysis." Appellants' Br. at 25.
While Paul Stieler did involve a superficially similar ordinance and constitutional claim,
important differences prevent it from controlling our decision here. Instead, we apply anew the
two-part Collins test to the challenged exemptions in this Ordinance. Because of differing views
among the parties, we particularly address inherent characteristics of classes and the role of
legislative deference.
1. The First Collins Prong
Under the first prong of the Collins test, "the disparate treatment accorded by the
legislation must be reasonably related to inherent characteristics which distinguish the unequally
treated classes." 644 N.E.2d at 80. In this case, the disparately treated classes are satellite
gambling facilities, which are exempted from the Ordinance, and bars and restaurants, where the
Ordinance bans smoking. "In analyzing a Section 23 challenge, it is the disparate classification
alleged by the challenger, not other classifications, that warrants review." Myers v. Crouse-
Hinds Div. of Cooper Indus., Inc., --- N.E.3d ----, ---- (Ind. 2016); 2016 WL 825111 at *3. But
those classifications must "have a sufficient basis in the challenged legislation." Id. Here, the
plaintiffs argued in their Motion for Judgment on the Pleadings that the Ordinance violates
Article 1, Section 23 "in that smoking is banned in taverns and restaurants but allowed in satellite
4
gambling facilities." Appellants' App'x at 85. See also Appellants' Br. at 13 (arguing that
Indianapolis "has not established the inherent qualities that justify unequal treatment of Bar
Owners and Hoosier Park"). This class distinction has a sufficient basis in the Ordinance, which
exempts "[a]ny business that on or before April 1, 2012 held a license pursuant to IC 4-31-5.5 to
operate a satellite facility in the consolidated city and county" but did not exempt bars and
restaurants such as the plaintiffs. INDIANAPOLIS REV. CODE tit. III ch. 616 sec. 204(a)(5). Under
this first prong we therefore examine whether the Ordinance's disparate treatment is reasonably
related to any of these classes' inherent characteristics.
a. Inherent Characteristics
The plaintiffs and defendants apply different definitions of "inherent" when identifying
potentially inherent characteristics. The plaintiffs cite several dictionaries, arguing that
"inherent" characteristics are "permanent," "essential," "intrinsic," and "inalienable." Appellants'
Br. at 31. Hoosier Park responds that under Indiana case law, "different regulatory treatment
between legislatively created classes" may be "inherent for purposes of equal privileges and
immunities analysis." Appellee Hoosier Park's Pet. to Tr. Reply Br. at 1. Under Indiana's Equal
Privileges and Immunities Clause, "inherent" does not refer only to immutable or intrinsic
attributes, but to any characteristic sufficiently related to the subject matter of the relevant
Collins classes.
Collins itself was not concerned with dictionary definitions of "inherent," but with long-
standing precedent that "[t]here must be inherent differences in situation related to the subject-
matter of the legislation which require, necessitate, or make expedient different or exclusive
legislation with respect to the members of the class." 644 N.E.2d at 78 (quoting Heckler v.
Conter, 206 Ind. 376, 381, 187 N.E. 878, 879 (1933)). Such difference must have "reference to
the subject matter." Collins, 644 N.E.2d at 80. Differences unrelated to the subject matter
cannot satisfy the Equal Privileges and Immunities Clause's inherency requirement, which
"incorporates and satisfies the often expressed concerns that such legislative classifications be
'just,' 'natural,' 'reasonable,' 'substantial,' 'not artificial,' 'not capricious,' and 'not arbitrary.'" Id. at
79 (citations omitted).
5
This meaning of "inherent" is reflected in our Article 1, Section 23 decisions. In Collins,
"the prevalence of sole proprietorships and small employment units" and "the distinctive nature
of farm work" were among inherent characteristics of Indiana agricultural employers. 644
N.E.2d at 81. In Gambill v. State, the presence of mental illness was inherent to "those who are
mentally ill and commit crimes, but who also appreciate the wrongfulness of their conduct." 675
N.E.2d 668, 677 (Ind. 1996). In Martin v. Richey, medical treatment and medical malpractice
insurance were inherent to health care providers and medical malpractice victims. 711 N.E.2d
1273, 1281 (Ind. 1999). And in Horseman v. Keller and League of Women Voters of Indiana,
Inc. v. Rokita, not being present at the Election Day polling site was inherent to being an
absentee voter. 841 N.E.2d 164, 172 (Ind. 2006); 929 N.E.2d 758, 770 (Ind. 2010). These
characteristics refer to the subject matter distinguishing the classes and are therefore inherent for
purposes of Article 1, Section 23.
We have also found that some attributes are not inherent to certain class distinctions.
Preserving rural land around urban areas and preventing cities from annexing each other's land
are not inherent to a county with a population of 200,000-300,000. Mun. City of South Bend v.
Kimsey, 781 N.E.2d 683, 694 (Ind. 2003). Likewise, a high percentage of out-of-town
customers and recent upgrades to ventilation systems are not inherent to riverboat gambling
facilities. Paul Stieler, 2 N.E.3d at 1275. When, as in these cases, a difference is so unrelated to
the relevant classes that it does not refer to the subject matter distinguishing the classes, it is not
inherent and cannot serve as a basis for disparate treatment under Article 1, Section 23.
In this case, the satellite facility exemption in the Ordinance requires that the facility hold
"a [satellite gambling facility] license pursuant to IC 4-31-5.5. . . ." INDIANAPOLIS REV. CODE tit.
III ch. 616 sec. 204(a)(5). To become licensed, a satellite facility must submit an application to
the Indiana Horse Racing Commission which includes "[a] description of the heating and air
conditioning units, smoke removal equipment, and other climate control devices at the proposed
satellite facility." Ind. Code § 4-31-5.5-4(11). The plaintiffs argue that this licensing
requirement is not an inherent difference because "[a] legislative body may not, by its mere label
of groups or conference of status upon those groups imbue those groups with 'inherent'
6
characteristics for purposes of Art. 1 § 23." Appellants' Br. at 32. But the City of Indianapolis
did not imbue the satellite gambling facility with its inherent characteristic as a state-licensed
facility. The City chose to treat differently two classes which already possessed distinguishing
inherent attributes that "require, necessitate, or make expedient different or exclusive legislation
with respect to the members of the class." Collins, 644 N.E.2d at 78.
Here, the application requirement is inherent because Indiana's legislature has made it a
prerequisite to being a licensed satellite gambling facility. Without specifying "the heating and
air conditioning units, smoke removal equipment, and other climate control devices," a facility
cannot be licensed under Indiana Code section 4-31-5.5 and therefore would not be exempted
from the Ordinance. Ind. Code § 4-31-5.5-4(11). A satellite gambling facility authorized under
this statute cannot exist without compliance with this provision, which thus makes it an inherent
characteristic of such a facility. The City chose to use this statutory licensing requirement as the
basis of an Ordinance exemption. We give "considerable deference" to these choices because
"[t]he question of classification under Section 23 is primarily a legislative question." Collins,
644 N.E.2d at 80. "[W]e will not substitute our judgment for that of the legislature; nor will we
inquire into the legislative motives prompting such classification." Id. 5 We conclude that the
first prong of Collins is satisfied because the disparate application of the Ordinance constitutes
treatment that is reasonably related to the inherent characteristics that differentiate bars and
restaurants from state-licensed satellite gambling facilities.
b. Reasonable Relation
Under Collins' first prong, disparate treatment must also be reasonably related to an
inherent characteristic differentiating the classes. Id. The plaintiffs correctly argue that "[t]here
is no requirement in the Indianapolis ordinance that 'tobacco management' be part of a licensure
process." Appellants' Br. at 27. But obtaining a license in accordance with the Ordinance does
require a description of "the heating and air conditioning units, smoke removal equipment, and
5
The plaintiffs also argue that "smoking is not inherent to gambling and drinking." Appellants' Br. at 33.
We do not consider this argument because we look at "inherent characteristics which rationally
distinguish the unequally treated classes," and the classes here are not gambling and drinking. Collins,
644 N.E.2d at 79.
7
other climate control devices." Ind. Code § 4-31-5.5-4(11). This description allows the Indiana
Horse Racing Commission to consider the effects of smoking in making its licensing decisions,
making it reasonably related to the Ordinance's exemption for satellite gambling facilities. 6 We
"accord considerable deference to the manner in which the [City] has balanced the competing
interests involved" in finding that the licensing requirement is reasonably related to the decision
to exempt satellite gaming facilities but not bars and restaurants. Collins, 644 N.E.2d at 80.
Paul Stieler also holds that because certain factors were "not embodied" in its challenged
ordinance "as prerequisites," they were "clearly not inherent distinguishing characteristics" and
were not reasonably related to the disparately treated classes. 2 N.E.3d at 1275. After the Court
of Appeals in this case applied that language, amici curiae City of Gary, Indiana Association of
Cities and Towns, and Indiana Municipal Lawyers Association filed briefs requesting
clarification of this precedent. Specifically, amici are concerned that a municipality may be
required "to specifically identify, on the face of all class-creating ordinances, all distinguishing
characteristics of each class and the reasons for those distinctions." Br. of Amici Curiae Ind.
Ass'n of Cities and Towns and Ind. Mun. Lawyers Ass'n at 2. We clarify today that inherent
distinguishing characteristics and how they are reasonably related to disparate treatment do not
have to be specifically stated or explained in an ordinance. As Collins noted, it is enough that
"[t]he legislative classification may have been based upon various features reasonably
distinguishing Indiana agricultural employers from other employers . . . ." 644 N.E.2d at 81
(emphasis added). Disparate treatment may be related to structural differences embodied in an
ordinance or statute which create inherent distinguishing characteristics that are reasonably
related to the disparate treatment.
2. The Second Collins Prong
The plaintiffs also argue that the Ordinance violates the second prong of the Collins test
because it "creates a monopoly" and "creates a preference and establishes an inequality among a
6
The comprehensive Tobacco Management Plan, which the Indiana Horse Racing Commission required
Hoosier Park to complete, exemplifies why the Ordinance exemption is reasonably related to the licensing
requirement–though the reasonable relation exists without it.
8
class of citizens all of whom are equally meritorious." Appellants' Br. at 35, 37. "[U]nder the
second element of the Collins analysis, any 'preferential treatment must be uniformly applicable
and equally available to all persons similarly situated.'" Myers, --- N.E.3d at ----; 2016 WL at *4
(quoting Collins, 644 N.E.2d at 80). The preferential treatment here–exemption from the
Ordinance–does not violate the second prong because the restaurants and bars are not similarly
situated with satellite gambling facilities. The plaintiffs are correct that the "[l]egislature cannot
take what might be termed a natural class of persons, split that class in two, and then arbitrarily
designate . . . the original unit as two classes, and thereupon enact different rules for the
government of each." Appellants' Br. at 32. See Myers, --- N.E.3d at ----; 2016 WL at *4
(finding that Collins' second prong was violated when the legislature treated two classes of
similarly situated tort plaintiffs differently based only on the nature of the tortfeasor). But here,
satellite gambling facilities are significantly different from bars and restaurants–they are distinct
types of businesses with separate licensing requirements and provide different services. The
applicable licensing requirements and regulations are not arbitrary, but are tailored to the type of
business. Indiana Code Title 4 Article 31 regulates "Pari-Mutual Wagering on Horse Races"
including "Satellite Facilities." This article contains thirteen Chapters and dozens of Sections
regulating myriad areas of horse racing and horse-race gambling, all tailored to this specific area
of business. These regulations apply to Hoosier Park, but not to bars and restaurants. Under this
analysis, the classes are not "similarly situated," and the second prong is not violated. Collins,
644 N.E.2d at 80.
The Ordinance also does not violate Article 1, Section 23 by relying on "solely
economic" rationales. Appellants' Br. at 38. The plaintiffs argue that this case is like Paul
Stieler, where the smoking ban exemption was "tantamount to the government 'selling' an
exemption from the Smoking Ban for the bonus of anticipated financial benefits while
burdening other citizens and snubbing our framers' intent in drafting Article 1, Section 23." 2
N.E.3d at 1276. The plaintiffs here make essentially the same argument as the Paul Stieler
plaintiffs: "fiscal considerations can never be used to justify disparate treatment." 2 N.E.3d at
1275. See also Appellants' Br. at 38 ("The basis for Hoosier Park's exemption is solely
economic."). This argument "misses the point" because "we focus not on the purposes
presumably motivating the enactment, but on the disparate treatment it accords." 2 N.E.3d at
9
1275 (emphasis in original). The disparate treatment resulting from the Ordinance satisfies both
prongs of the Collins test for reasons wholly distinct from economic justifications. But even
looking at the legislative purposes, which "may be considered," does nothing to change this
analysis. Id. The Ordinance's purposes are not economic, but "are (1) to protect the public
health and welfare by prohibiting smoking in public places, and place of employment; and (2) to
guarantee the right of nonsmokers to breathe smoke-free air, and to recognize that the need to
breathe smoke-free air shall have priority over the desire to smoke." Appellees' Joint App'x at
403.
Furthermore, even if the Ordinance's stated purposes were pretextual and the City
included the satellite gambling facility exemption in part to gain economic benefits, the
Ordinance would not violate Article 1, Section 23. As the historical analyses in Paul Stieler and
Collins make clear, an enactment violates the Equal Privileges and Immunities Clause when "[i]t
condones a privilege for purchase" and "is tantamount to the government 'selling' an exemption .
. . for the bonus of anticipated financial benefits while burdening other citizens . . . ." 2 N.E.3d
at 1276 (rejecting a solely economic rationale for disparate treatment); 644 N.E.2d at 76-77.
While economic benefit alone cannot justify treating citizens disparately, "[t]he Delegates of the
Constitutional Convention of 1850 to 1851 did not see Article 1, Section 23 as an obstacle for
legislation that advanced the public good." Paul Stieler, 2 N.E.3d at 1280 n.1 (Rush, J.,
dissenting). The plaintiffs' argument that "Hoosier Park advocated economic benefits [that the]
City would realize" does not establish a privilege for purchase–especially considering the
defendants' non-economic justifications for the exemptions. Appellants' Br. at 40.
The plaintiffs' arguments do not "negate every conceivable basis which might have
supported the classification." Paul Stieler, 2 N.E.3d at 1277. The plaintiffs argue that under Paul
Stieler, they "do not have to negate every possible basis for the ordinance." Appellants' Br. at
41. Of course, plaintiffs are not required to come up with dozens of possible legislative
rationales and refute each one in a complaint or appellate brief. See Paul Stieler, 2 N.E.3d at
1277. The requirement to "negate every conceivable basis," however, reflects the heavy burden
on plaintiffs in establishing the unconstitutionality of a statute. Id. If the challenged statute itself
or a defendant advances a rationale which would satisfy Article 1, Section 23, plaintiffs must
10
negate it in order to carry the burden of proof. 7
Conclusion
The challenged Ordinance does not violate the Equal Privileges and Immunities Clause of
the Indiana Constitution. The Ordinance's exemption for satellite gambling facilities is
reasonably related to the inherent differences distinguishing satellite gambling facilities from
bars and restaurants. The Ordinance also does not create a monopoly or treat similarly situated
classes disparately in violation of Article 1 Section 23. We affirm the trial court's grant of
summary judgment in favor of the City.
Rush, C.J., and Rucker, David, and Massa, JJ., concur.
7
Paul Stieler did not hold, as the plaintiffs contend, that "where the matter is unconstitutional on its face
as here, [plaintiffs] are relieved of th[e] burden [to negate every conceivable basis which might have
supported the classification]." Appellants' Br. at 13.
11