Club Misty, Inc. v. Laski
208 F.3d 615 (2000)
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Rule of Law:
A state statute that allows voters to revoke a specific business's constitutionally protected property interest, such as a liquor license, through a targeted, standardless referendum violates the Due Process Clause of the Fourteenth Amendment because it is an unconstitutional delegation of adjudicative power to a non-judicial body.
Facts:
- Two taverns were legally licensed to sell liquor in Chicago, Illinois.
- Under Illinois law, liquor licenses are considered a property interest, as they are renewable as a matter of right and revocable only for good cause.
- An Illinois statute, 235 ILCS 5/9-2, allows 40 percent of a precinct's registered voters to petition for a referendum on prohibiting liquor sales at a particular street address.
- If a majority of voters approve the referendum, the license for the establishment at that address becomes void 30 days later.
- The voters in the precincts where the two plaintiff taverns were located held such referenda.
- A majority of voters in each precinct voted to prohibit the sale of liquor at the specific addresses of the two taverns.
- Other liquor licensees existed in both precincts but were not targeted by a similar referendum.
- The record provides no reason why the voters targeted these specific taverns.
Procedural Posture:
- Two licensed taverns sued in the U.S. District Court to enjoin an Illinois state statute.
- The taverns claimed the statute violated the Due Process Clause and was a bill of attainder.
- The district court dismissed the taverns' suit.
- The taverns were granted preliminary relief, which continued on appeal, to prevent the loss of their licenses.
- The taverns appealed the district court's dismissal to the U.S. Court of Appeals for the Seventh Circuit.
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Issue:
Does an Illinois statute that allows voters in a precinct to revoke the liquor license of a specific, targeted business by referendum, without requiring cause or providing a hearing, violate the Due Process Clause of the Fourteenth Amendment?
Opinions:
Majority - Posner, Chief Judge.
Yes. The Illinois statute that allows voters to target and revoke a specific liquor license by referendum violates the Due Process Clause of the Fourteenth Amendment. An Illinois liquor license, being revocable only for cause, is a property right protected by the Constitution. The state cannot circumvent due process requirements by creating a procedure that allows for the standardless deprivation of that right. The challenged statute transforms a referendum from a permissible legislative act (like voting a whole precinct dry) into an impermissible adjudicative one. By targeting a specific address based on the past conduct of a particular licensee, the vote becomes a form of 'popular justice' that evaluates a specific party's behavior without any procedural safeguards, such as notice, a hearing, or standards to guide the decision. This amounts to an unconstitutional delegation of judicial power to the electorate, which the Due Process Clause prohibits.
Dissenting - Bauer, Circuit Judge
No. The Illinois statute does not violate the Due Process Clause. The Constitution permits direct democracy, and the local-option law is a legitimate way for residents to control the character of their neighborhoods, particularly concerning the sale of liquor. There is no meaningful constitutional distinction between voters revoking all liquor licenses in a precinct—an action this court previously upheld—and revoking the license of a single 'bad apple' that is causing problems. The difficulty of the referendum process ensures it is used only for serious issues, and the licensee has the political opportunity to campaign and defend their business to the voters. The majority's insistence on 'judicial guides' for voters is an elitist view of democracy; voters are capable of making rational cost-benefit decisions for their community without court-like procedures.
Analysis:
This decision solidifies the distinction between legislative and adjudicative actions within the context of direct democracy and due process. It establishes that while voters may be delegated legislative power to create general rules, they cannot be delegated judicial power to target and deprive a specific party of a protected property interest. The ruling reinforces the principle from Cleveland Board of Education v. Loudermill that a state cannot define a property right out of constitutional protection by attaching unconstitutional procedures to it. This precedent significantly limits the power of local referenda to single out specific individuals or businesses for adverse action, requiring that such deprivations follow traditional due process pathways.
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