Paul Stieler Enters., Inc. v. City of Evansville & Evansville Common Council

• Decision Date: 11 February 2014
• Docket Number: Nos. 82S01–1306–CT–436,82S01–1306–PL–437.,s. 82S01–1306–CT–436
• Citation: 2 N.E.3d 1269
• Parties: PAUL STIELER ENTERPRISES, INC., d/b/a Harbor Bay, et al., Appellants (Plaintiffs), v. CITY OF EVANSVILLE and Evansville Common Council, Appellees (Defendants). VFW Post 2953, et al., Appellants (Plaintiffs), v. City of Evansville and Evansville Common Council, Appellees (Defendants).
• Court: Indiana Supreme Court

2 N.E.3d 1269

PAUL STIELER ENTERPRISES, INC., d/b/a Harbor Bay, et al., Appellants (Plaintiffs),

v.CITY OF EVANSVILLE and Evansville Common Council, Appellees (Defendants).

VFW Post 2953, et al., Appellants (Plaintiffs),

v.City of Evansville and Evansville Common Council, Appellees (Defendants).

Nos. 82S01–1306–CT–436, 82S01–1306–PL–437.

Supreme Court of Indiana.

Feb. 11, 2014.

Charles L. Berger, Berger and Berger, Evansville, IN, Attorney for Appellants.

Allyson R. Breeden, Keith W. Vonderahe, Robert L. Burkart, Ziemer Stayman Weitzel & Shoulders, LLP, Evansville, IN, Attorneys for Appellee, City of Evansville.

John A. Hamilton, Scott A. Danks, Danks and Danks, Evansville, IN, Attorneys for Appellee, Evansville Common Council.

Mark J. Crandley, Barnes & Thornburg LLP, Indianapolis, IN, Attorney for Indiana Assoc. of Cities and Towns and the Indiana Municipal Managers Assoc.

On Transfer from the Indiana Court of Appeals, Nos. 82A01–1205–CT–242 and 82A01–1206–PL–255

DICKSON, Chief Justice.

The Equal Privileges and Immunities Clause, Article 1, Section 23 of the Indiana Constitution, prohibits the “grant to any citizen, or class of citizens, privileges or immunities, which, upon the same terms, shall not equally belong to all citizens.” Today we hold that this clause invalidates an Evansville ordinance expanding the city's smoking ban to bars and restaurants but exempting its only riverboat casino (“the Casino”).

In 2012, the Common Council of the City of Evansville (collectively “the City”) enacted an ordinance (G–2012–1, “the Amending Ordinance”) that amended an existing smoking ban (Evansville, Ind., Code ch. 9.80 (2006), later renumbered ch. 8.30,¹ “the Smoking Ban”). This amendment extended the Smoking Ban to “[a]ll bars and taverns” and “[a]ll restaurants and eating establishments, including but not limited to any coffee shop, cafeteria, sandwich stand, and any other eating establishment which gives or offers for sale food to the public, guests, or employees.” Evansville, Ind., Ordinance G–2012–1, § 2 (Feb. 14, 2012). But the Amending Ordinance exempted riverboat casinos ² from the Smoking Ban. Various affected bars and private clubs brought two separate actions against the City and its Council, seeking injunctive and declaratory relief on grounds of unconstitutionality. In one case, the lead plaintiff, Paul Stieler Enterprises, Inc., is one of twenty-seven plaintiffs—bars and taverns that sell alcohol and food consumed on site, some of which also operate with a license for gaming activities. In the other case, VFW Post 2953 is one of nine plaintiffs—fraternal organizations who sell food and alcohol and conduct gaming operations under a charitable gaming license. Collectively, the bars and the private clubs (“the Bars and Clubs”) contend that the 2012 Amending Ordinance, on its face,³ violates the Equal Privileges and Immunities Clause of the Indiana Constitution.⁴

The trial court denied injunctive relief, upholding the constitutionality of the Amending Ordinance, and issued final judgment. The Court of Appeals affirmed. See Paul Stieler Enterprises, Inc. v. City of Evansville, No. 82A01–1205–CT–242, 984 N.E.2d 257 (Ind.Ct.App. Feb. 15, 2013) (table); VFW Post 2953 v. City of Evansville, No. 82A01–1206–PL–255, 984 N.E.2d 257 (Ind.Ct.App. Feb. 15, 2013) (table). The plaintiffs in both cases filed petitions to transfer, which we granted. Simultaneously addressing both appeals in today's opinion,⁵ we hold that the 2012 Amending Ordinance, on its face, violates the Equal Privileges and Immunities Clause of the Indiana Constitution.

Whether a statute or ordinance is constitutional on its face is a question of law and we review the matter de novo. State v. Moss–Dwyer, 686 N.E.2d 109, 110 (Ind.1997). “Our methodology for interpretingand applying provisions of the Indiana Constitution is well established. It requires a search for the common understanding of both those who framed it and those who ratified it.” City Chapel v. South Bend, 744 N.E.2d 443, 447 (Ind.2001) (internal citation omitted). To determine this intent, we “examin [e] the language of the text in the context of the history surrounding its drafting and ratification, the purpose and structure of our constitution, and case law interpreting the specific provisions.” Ind. Gaming Comm'n v. Moseley, 643 N.E.2d 296, 298 (Ind.1994). We look to history “to ascertain the old law, the mischief, and the remedy.” Bayh v. Sonnenburg, 573 N.E.2d 398, 412 (Ind.1991) (quoting State v. Gibson, 36 Ind. 389, 391 (1871)). A statute challenged under the Indiana Constitution “stands before this Court ‘clothed with the presumption of constitutionality until clearly overcome by a contrary showing.’ ” Dvorak v. City of Bloomington, 796 N.E.2d 236, 237–38 (Ind.2003) (quoting Boehm v. Town of St. John, 675 N.E.2d 318, 321 (Ind.1996)). The party challenging the constitutionality of a statute bears the high burden of overcoming this presumption and establishing a constitutional violation, and any doubts are resolved in favor of the legislature. Dvorak, 796 N.E.2d at 238.

1. Equal Privileges and Immunities

The Bars and Clubs contend that the 2012 Amendment to the Smoking Ban gives the Casino a privilege—an exemption from the Smoking Ban—that is not provided to the Bars and Clubs and others similarly situated and thereby violates the Equal Privileges and Immunities Clause of the Indiana Constitution.⁶

In Collins v. Day, 644 N.E.2d 72 (Ind.1994), this Court engaged in a comprehensive review of the text of Section 23 in the context of the history surrounding its drafting and ratification, the purpose and structure of Indiana's 1851 Constitution, and subsequent case law, particularly cases decided contemporaneously with the adoption of Section 23, noting that such cases have been “accorded strong and superseding precedential value.” Id. at 77. Synthesizing text, history, purpose, and case law, we adopted a preeminent two-part standard for determining a statute's validity under Section 23:

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.

Id. at 80. Compliance with both elements is required to satisfy the constitutional requirement. The requirements of Article 1, Section 23 “govern not only state statutes, but also the enactments and actions of county, municipal, and other governmental agencies and their equivalents.” Dvorak, 796 N.E.2d at 238.

Under the facts of this case, both the language of the enactment and the parties identify essentially the same disparately treated classifications. The parties agree that the 2012 Amending Ordinance subjectsbars, clubs, and others to the Smoking Ban but exempts riverboat casinos. Under the City's 2006 Smoking Ban, the Casino and the Bars and Clubs were all in the same exempted classification. That ordinance granted various exemptions, including exemptions (a) for any bar or tavern that holds a beer, liquor and/or wine retailer's permit under the laws of Indiana and excludes customers and employees under the age of eighteen and (b) for any business or club that qualifies for a certain federal tax exemption and is a “club” or “fraternal club” as defined by Indiana statute.⁷ The 2012 Amending Ordinance eliminated the exemptions for these groups but created a new special exemption for “riverboats,” which were expressly defined as “a boat on which lawful gambling is authorized pursuant to Title 4, Article 33 of the Indiana Code, as amended.” ⁸ This Article, entitled “Riverboat Gambling,” provides an elaborate regulatory scheme under which the Indiana Gaming Commission permits gambling on a narrowly restricted number of riverboats operated by licensed owners. Thus, the two distinguishing characteristics upon which the Amending Ordinance establishes different classes for unequal treatment are: (1) whether the establishment is floating or land-based and (2) whether the establishment conducts gambling under the Riverboat Gambling statutes.

The Amending Ordinance accords preferential treatment in that smoking is permitted in floating bars with gambling under Indiana's Riverboat Gambling statute but prohibited in land-based bars and clubs, including those with gambling permitted under other sections of the Indiana Code.⁹ None of the parties argue that the unequal treatment is reasonably related to whether the establishment is floating or land-based. We agree. The issue is thus whether the unequal prohibition of smoking is reasonably related to the sole remaining distinguishing characteristic: the Casino's authorization to conduct gambling under Indiana's Riverboat Gambling statute.

The Bars and Clubs emphasize that prohibiting smoking applies equally to the patrons and employees of all involved establishments, and that there is no reasonable basis for unequal treatment. From the perspective of the Bars and Clubs, there is no public health justification for the inconsistent prohibition of smoking. The variety in the two groups' sources of statutory authority to conduct gambling operations has no reasonable relation to whether smoking should be permitted or prohibited.

The City argues that the Amending Ordinance exempted the Casino from the expansion of the Smoking Ban for economic advantages to the City, which advantages uniquely flow from a riverboat casino with a gambling license, and not from bars and clubs. The City justifies its special treatment by arguing (a) the significant economicimpact and employment considerations are applicable only to the Casino, (b) eighty-seven percent of Casino patrons come from outside the City, and (c) the Casino had recently installed an upgrade to its ventilation system. The last two factors, however, are not embodied in the Amending Ordinance as prerequisites for the...