Big John's Billiards, Inc. v. State, S–13–803

• Citation: 288 Neb. 938,852 N.W.2d 727
• Decision Date: 29 August 2014
• Docket Number: No. S–13–803,S–13–803
• Parties: Big John's Billiards, Inc., a Nebraska corporation, appellee and cross-appellant, v. State of Nebraska et al., appellants and cross-appellees, and Douglas County Health Department, appellee.
• Court: Supreme Court of Nebraska

288 Neb. 938
852 N.W.2d 727

Big John's Billiards, Inc., a Nebraska corporation, appellee and cross-appellant,
v.
State of Nebraska et al., appellants and cross-appellees,
and
Douglas County Health Department, appellee.

No. S–13–803

Supreme Court of Nebraska.

Filed August 29, 2014

Held Unconstitutional

Neb. Rev. Stat. § 71-5730(3, 4)

[852 N.W.2d 730]

Appeal from the District Court for Lancaster County: Jodi Nelson, Judge. Affirmed in part, and in part reversed.

Jon Bruning, Attorney General, Dale A. Comer, Lynn A. Melson, and Natalee J. Hart for appellants.

Theodore R. Boecker, Jr., of Boecker Law, P.C., L.L.O., for appellee Big John's Billiards, Inc.

Heavican, C.J., Connolly, Stephan, McCormack, Miller–Lerman, and Cassel, JJ., and Pirtle, Judge.

[852 N.W.2d 731]

Syllabus by the Court

1. Constitutional Law: Statutes: Appeal and Error. Whether a statute is constitutional presents a question of law, which the Nebraska Supreme Court resolve independently of the lower court's determination.

2. Constitutional Law: Statutes: Presumptions. A statute is presumed to be constitutional, and all reasonable doubts are resolved in favor of its constitutionality.

3. Constitutional Law: Statutes: Proof. The burden of establishing the unconstitutionality of a statute is on the one attacking its validity.

4. Constitutional Law: Statutes: Proof. The unconstitutionality of a statute must be clearly established before it will be declared void.

5. Constitutional Law: Statutes: Legislature: Presumptions. The Nebraska Legislature is presumed to have acted within its constitutional power despite that, in practice, its laws may result in some inequality.

6. Special Legislation. The focus of the prohibition against special legislation is the prevention of legislation which arbitrarily benefits or grants “special favors” to a specific class.

7. Special Legislation. A legislative act constitutes special legislation if (1) it creates an arbitrary and unreasonable method of classification or (2) it creates a permanently closed class.

8. Constitutional Law: Statutes: Special Legislation. When the Legislature confers privileges on a class arbitrarily selected from many who are standing in the same relation to the privileges, without reasonable distinction or substantial difference, then the statute in question has resulted in the kind of improper discrimination prohibited by the Nebraska Constitution.

9. Special Legislation. Classifications for the purpose of legislation must be real and not illusive; they cannot be based on distinctions without a substantial difference. The question is always whether the things or persons classified by the act form by themselves a proper and legitimate class concerning the purpose of the act.

10. Special Legislation. A legislative body's distinctive treatment of a class is proper if the class has some reasonable distinction from other subjects of a like general character. And that distinction must bear some reasonable relation to the legitimate objectives and purposes of the legislative act.

11. Special Legislation. In order to determine if there is a “substantial difference of circumstances to suggest the expediency of diverse legislation” between the general class governed by a statute and the exempted class, it is necessary to examine both the purpose of the statute and the purpose behind the exemptions. The question is whether there is a difference in circumstances between the general class and the exempted class so as to justify treating one differently than the other, in light of the purpose of the act.

12. Constitutional Law: Statutes. The general rule is that when part of an act is held unconstitutional, the remainder must likewise fail, unless the unconstitutional portion is severable from the remaining portions.

13. Statutes: Constitutional Law: Legislature: Intent: Appeal and Error. To determine whether an unconstitutional portion of a statute may be severed, an appellate court considers (1) whether a workable statutory scheme remains without the unconstitutional portion, (2) whether valid portions of the statute can be enforced independently, (3) whether the

[852 N.W.2d 732]

invalid portion was the inducement to passage of the statute, (4) whether severing the invalid portion will do violence to the intent of the Legislature, and (5) whether the statute contains a declaration of severability indicating that the Legislature would have enacted the bill without the invalid portion.

14. Constitutional Law: Contracts. A three-part test is applied to determine whether a contract has been unconstitutionally interfered with. Pursuant to that test, a court must examine (1) whether there has been an impairment of the contract; (2) whether the governmental action, in fact, operated as a substantial impairment of the contractual relationship; and (3) whether the impairment was nonetheless a permissible, legitimate exercise of the government's sovereign powers.

15. Constitutional Law: Property. Payment of just compensation pursuant to article I, § 21, of the Nebraska Constitution applies only to vested property rights.

16. Constitutional Law: Property: Legislature. The Legislature is free to create and abolish rights so long as no vested right is disturbed. The type of right that vests can be described generally as an interest which it is proper for the state to recognize and protect and of which the individual may not be deprived arbitrarily without injustice.

17. Constitutional Law: Words and Phrases. To be considered a vested right, the right must be fixed, settled, absolute, and not contingent upon anything.

18. Constitutional Law: Property. With respect to property, a right is considered to be vested if it involves an immediate fixed right of present or future enjoyment and an immediate right of present enjoyment, or a present fixed right of future enjoyment.

19. Constitutional Law: Property. A vested right must be something more than a mere expectation based upon an anticipated continuance of the existing law; it must have become a title, legal or equitable, to the present or future enjoyment of property.

20. Constitutional Law: Statutes: Intent: Presumptions. A vested right can be created by statute. But it is presumed that a statutory scheme is not intended to create vested rights, and a party claiming otherwise must overcome that presumption.

Stephan, J.

The Nebraska Clean Indoor Air Act (the Act) ¹ prohibits smoking in public places and places of employment but exempts certain facilities from that prohibition. In this action, we are asked to determine the constitutionality of three of these exemptions. We conclude that one exemption is constitutional, but the remaining two are unconstitutional special legislation which are severable from the Act.

[852 N.W.2d 733]

I. BACKGROUND

In 2008,² the Nebraska Legislature amended the Act to make it “unlawful for any person to smoke in a place of employment or a public place.” ³ The Act defines “[p]ublic place” as “an indoor area to which the public is invited or in which the public is permitted.” ⁴ The Act specifically provides that “[a] private residence is not a public place.” ⁵

Three indoor areas were exempted from the smoking prohibition in the 2008 legislation:

(1) Guestrooms and suites that are rented to guests and are designated as smoking rooms, except that not more than twenty percent of rooms rented to guests in an establishment may be designated as smoking rooms. All smoking rooms on the same floor shall be contiguous, and smoke from such rooms shall not infiltrate into areas where smoking is prohibited under the [Act];

(2) Indoor areas used in connection with a research study on the health effects of smoking conducted in a scientific or analytical laboratory under state or federal law or at a college or university approved by the Coordinating Commission for Postsecondary Education; [and]

(3) Tobacco retail outlets.⁶

As defined by the Act, a “[t]obacco retail outlet” is “a store that sells only tobacco and products directly related to tobacco. Products directly related to tobacco do not include alcohol, coffee, soft drinks, candy, groceries, or gasoline.” ⁷

In 2009,⁸ the Legislature added a fourth exemption for “[c]igar bars,” which are defined in the Act via reference to the Nebraska Liquor Control Act ⁹ as “an establishment operated by a holder of a Class C liquor license” which “[d]oes not sell food,” “annually receives ten percent or more of its gross revenue from the sale of cigars” and related tobacco products other than cigarettes, “[h]as a walk-in humidor on the premises,” and “[d]oes not permit the smoking of cigarettes.” ¹⁰ A cigar bar may serve alcohol.¹¹

Big John's Billiards, Inc. (Big John's), is a corporation which operates a billiards hall in Omaha, Nebraska. On May 20, 2009, Big John's filed an action in the district court for Lancaster County seeking a declaratory judgment that the Act was unconstitutional. As relevant here, Big John's asserted the Act was unconstitutional because it was special legislation, because it constituted a regulatory taking, and because it impaired its right to contract. The operative complaint named the State of Nebraska, two state agencies, two state officials, and the Douglas County Health Department as defendants. We refer to these parties collectively as “the State.”

In September 2010, the district court held a hearing on summary judgment motions filed by both sides. The hearing was limited to Big John's claim that three exemptions

[852 N.W.2d 734]

from the Act violated the prohibition against special legislation set forth in Neb. Const. art. III, § 18. The district court concluded that the exemptions for guestrooms, tobacco retail outlets, and cigars bars were unconstitutional special legislation. In doing so, it reasoned that the record failed to show that there was a substantial difference in circumstances between those three exemptions and all public places and places of employment when considered in...