Bruner v. Zawacki

Decision Date03 February 2014
Docket NumberCivil Action No. 3:12–57–DCR.
Citation997 F.Supp.2d 691
CourtU.S. District Court — Eastern District of Kentucky
PartiesRaleigh BRUNER, et al., Plaintiffs, v. Tom ZAWACKI, Commissioner of Motor Vehicle Regulation for the Kentucky Department of Vehicle Regulation, et al., Defendants.

997 F.Supp.2d 691

Raleigh BRUNER, et al., Plaintiffs,
v.
Tom ZAWACKI, Commissioner of Motor Vehicle Regulation for the Kentucky Department of Vehicle Regulation, et al., Defendants.

Civil Action No. 3:12–57–DCR.

United States District Court,
E.D. Kentucky,
Central Division,
at Frankfort.

Feb. 3, 2014.






Held Unconstitutional


KRS 281.625, KRS 281.630.

[997 F.Supp.2d 693]

Kristopher David Collman, The Getty Law Group, PLLC, Lexington, KY, Joshua P. Thompson, Timothy Sandefur, Pacific Legal Foundation, Sacramento, CA, for Plaintiffs.


MEMORANDUM OPINION AND ORDER

DANNY C. REEVES, District Judge.

This matter is pending for consideration of Plaintiffs Raleigh Bruner's and Wildcat Moving, LLC's motion for summary judgment. [Record No. 72] The Plaintiffs contends that they are entitled to summary judgment on their claim that the notice, protest, and hearing provisions of the Kentucky statutes applicable to moving companies, contained within KRS § 281.615 et seq., and the implementing regulations, violate the Fourteenth Amendment of the United States Constitution. They request that the Court issue prospective injunctive relief, permanently enjoining the Defendants from enforcing the statutes in a way that violates the constitutional rights of new moving companies by allowing existing moving companies to veto new competition. For the reasons set forth below, the Plaintiffs' motion will be granted.

I.

Wildcat Moving, LLC (“Wildcat”), is a Kentucky limited liability company owned by Raleigh Bruner. [Record No. 1, p. 2 ¶ 2] Bruner offered his moving services informally via the Internet until forming Wildcat in 2012, “to operate as a full-service moving company throughout the state of Kentucky.” [ Id.] Since 2012, Wildcat has moved thousands of clients. [Record No. 73, p. 8] It now employs thirty-one people, including Bruner, and operates five moving trucks. [ Id., p. 4 ¶ 10] However, Wildcat has been performing moving services without the requisite certificate under Kentucky law.

In Kentucky, individuals and companies involved in moving—that is, the intrastate transporting of personal effects and property used or to be used in a dwelling—are required by statute to obtain a Household Goods Certificate, also known as a Certificate of Public Convenience and Necessity (hereafter, a “Certificate”) from the Kentucky Transportation Cabinet Division of Motor Carriers (hereafter, the “Cabinet”). SeeKRS § 281.615 et seq.1 Operating without a Certificate is a misdemeanor punishable by a fine ranging from $2,000 to $3,500 and imprisonment of up to thirty days. KRS § 281.990(2).

Under the statute, a Certificate:

shall be issued to any qualified applicant therefor[e], authorizing the whole or any part of the operation covered by the application, if it is found that the applicant is fit, willing, and able properly to perform the service proposed and to conform to the provisions of this chapter and the requirements and the administrative regulations of the department promulgated thereunder, and further that the existing transportation service is inadequate, and that the proposed service, to the extent to be authorized by the certificate, is or will be required by the present or future public convenience and necessity, and that the proposed operation, to the extent authorized by the certificate, will be consistent with the public interest and the transportation policy declared in this chapter....

KRS § 281.630(1) (emphasis added).


This statute and the corresponding regulations establish a multi-step process to

[997 F.Supp.2d 694]

obtain a Certificate. First, an aspiring mover such as Bruner submits his application to the Cabinet. The Office of Legal Services reviews the application to determine whether the applicant is “fit, willing, and able to properly perform the service proposed.” KRS § 281.630(1); [Record No. 73–2, p. 6 lns. 4–7] In addition to a finding that an applicant is “fit, willing and able,” the mover must show that existing moving services are “inadequate,” and that a new moving company serves the “present or future public convenience and necessity.” KRS § 281.630(1).

An applicant is required to publish notice of his application in a newspaper of general circulation in the proposed territory or e-mail existing certificate holders. KRS §§ 281.625(b), 281.6251. Following the notification, “[a]ny person having interest in the subject matter may ... file a protest to the granting, in whole or in part, of the application.” KRS § 281.625(2). If a protest is filed, the department must hold a hearing. Otherwise, the hearing is discretionary. KRS § 281.625(2); see also601 KAR § 1:030(4)(1). The length of time until a hearing takes place varies. A hearing may be held sixty to ninety days after the filing of the protest, but it may take up to a year. [Record No. 73–2, p. 30 lns. 12–15] Additionally, applicants are generally required to be represented by counsel at the hearing. See Ky. State Bar Ass'n v. Henry Vogt Machine Co., Inc., 416 S.W.2d 727 (Ky.1967) (representation of a corporation before administrative bodies constitutes the practice of law).

Since 2007 2, thirty-nine new applications for Certificates have been filed by companies seeking to enter the moving business.3 [Record No. 73, p. 11; see, e.g., Record No. 73–10.] Existing moving companies have filed 114 protests in opposition to these applications. [ Id.; see, e.g., Record No. 73–14.] However, no protest has ever been filed by a member of the general public. [Record No. 7, pp. 16–17] Of the decided applications, nineteen were protested by one or more Certificate-holding moving companies. [Record No. 73, p. 11] Of those nineteen protested applicants, sixteen chose to abandon or withdraw their applications. [Record No. 73–8] The Defendants concede that it is “a common result” for a protested applicant to abandon the application process rather than go through the hearing process with a moving company already in business. [Record No. 73–2, p. 13 lns. 4–5] Ultimately, the three applicants which chose to undergo the hearing procedure were all denied Certificates. [Record No. 73–18] In summary, the Cabinet has never issued a Certificate to a new applicant when a protest from a competing mover was made.

Even where a protested applicant is determined to be “fit, willing, and able,” he or she will be denied an application if the applicant has not shown that existing moving services are inadequate.4 [Record No. 73–18, pp. 8–9; Record No. 73–23, p. 5] Proof of a population explosion in the service

[997 F.Supp.2d 695]

area by expert testimony is not sufficient to overcome the competitor's protest. [Record No. 73–23, p. 3] It is also noteworthy that an existing moving company that protests an applicant for a new Certificate may offer the applicant the opportunity to buy a Certificate it holds. KRS § 281.630(8); [ See Record No. 73–12, p. 6 (noting that two moving companies that protested the application of Margaret's Moving, LLC, offered to sell a Certificate to the applicants for $25,000.00).5] Further, no application for the sale or transfer of an existing Certificate has ever been protested or denied. [Record No. 73–8]

The Plaintiffs filed this action under 42 U.S.C. § 1983 against members of the Cabinet in their official capacities (collectively “the Cabinet”), alleging that the notice, protest, and hearing procedure set out in KRS § 281.615 et seq., and the corresponding regulations, are unconstitutional under the Fourteenth Amendment of the United States Constitution. The Complaint seeks both declaratory and injunctive relief. 6

The Plaintiffs do not challenge the regulations to the extent an applicant for a Certificate is required to be “fit, willing, and able” to provide moving services. Instead, they claim that that the protest and hearing process currently followed infringe on their constitutional right to pursue the occupation of providing moving services in Kentucky in violation of due process. SeeU.S. Const. Amend XIV § 1. They also argue that the protest and hearing procedures violate the equal protection clause because they arbitrarily favor existing moving companies over new companies. See id. Further, the Plaintiffs assert that the statutes violate the privileges and immunities clause, and that the statutes are unconstitutionally vague.

II.

Summary judgment is required when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Chao v. Hall Holding Co., 285 F.3d 415, 424 (6th Cir.2002). A dispute over a material fact is not “genuine” unless a reasonable jury could return a verdict for the nonmoving party. That is, the determination must be “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251–52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); see Harrison v. Ash, 539 F.3d 510, 516 (6th Cir.2008). In deciding whether to grant summary judgment, the Court views all the facts and inferences drawn from the evidence in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

[997 F.Supp.2d 696]

Whether a rational basis exists for a government regulation is a question of law. Greenbriar, Ltd. v. Alabaster, 881 F.2d 1570, 1578 (11th Cir.1989). The rationality of a governmental policy is “a question of law for the judge—not the jury—to determine.” Myers v. Cty. of Orange, 157 F.3d 66, 74 n. 3 (2d Cir.1998). As discussed more fully below, substantial latitude is granted to the government regarding legislative enactments. However, that latitude is not without limits.

III.

As noted, the Plaintiffs have moved for summary judgment on their...

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