Sanimax USA, LLC v. City of S. St. Paul

• Decision Date: 26 October 2020
• Docket Number: Case No. 20-cv-01210 (SRN/ECW)
• Citation: 496 F.Supp.3d 1285
• Parties: SANIMAX USA, LLC, Plaintiff, v. CITY OF SOUTH ST. PAUL, Defendant.
• Court: U.S. District Court — District of Minnesota

496 F.Supp.3d 1285

SANIMAX USA, LLC, Plaintiff,

v.CITY OF SOUTH ST. PAUL, Defendant.

Case No. 20-cv-01210 (SRN/ECW)

United States District Court, D. Minnesota.

Signed October 26, 2020

Aaron R. Wegrzyn, Foley & Lardner LLP, 777 East Wisconsin Avenue, Milwaukee, WI 53202; Andrew Casimir Gresik, Foley & Lardner LLP, 150 East Gilman Street, Suite 5000, Madison, WI 53703; Stephan J. Nickels, Foley & Lardner LLP, PO Box 1497, Madison, WI 53701; and Henry M. Helgen, III and Leland Patrick Abide, Kutak Rock LLP, 60 South Sixth Street, Suite 3400, Minneapolis, MN 55402, for Plaintiff.

John M. Baker and Katherine M. Swenson, Greene Espel PLLP, 222 South Ninth Street, Suite 2200, Minneapolis, MN 55402, for Defendant.

ORDER

SUSAN RICHARD NELSON, United States District Judge

This matter is before the Court on the Motion to Dismiss [Doc. No. 10] filed by Defendant City of South St. Paul. Based on a review of the files, submissions, and proceedings herein, and for the reasons below, the Court GRANTS in part and DENIES in part the motion.

I. BACKGROUND

Plaintiff Sanimax USA, LLC has operated an animal rendering and used cooking oil processing facility in the City of South St. Paul ("the City") for over fifty years. (Compl. [Doc. No. 1] ¶¶ 1, 19-20.) The area around Sanimax's facility has historically been dominated by stockyards and meatpacking plants. (Id. ¶¶ 20-21.) Although some of these businesses have left the area, cattle hide processing and tanning companies, a beef processing plant, a recycling center, a pet crematorium, and South St. Paul's compost site remain. (Id. ¶ 21.) Sanimax's rendering operations (as well as the operations of these other nearby businesses) produce odors, which Sanimax has endeavored to minimize by investing in odor mitigation technology at its facility. (Id. ¶¶ 6-7, 21-22, 24.)

Beginning in 2014, Sanimax alleges that the City "targeted" Sanimax by passing new ordinances directed at them. (Id. ¶¶ 7, 23-30.) The City first passed a nuisance ordinance designating Sanimax a "significant odor generator," and it is alleged that the nuisance ordinance imposed "draconian" restrictions on Sanimax and "threatened" Sanimax with "severe financial penalties." (Id. ¶¶ 7, 23.) In 2017, Sanimax sued to prevent enforcement of the 2014 ordinance, and, it is alleged, the City responded by amending it. (Id. ¶¶ 7, 26.) Later in 2017, the City proposed a zoning ordinance that would have created a "light industrial district" covering Sanimax's facility and would have declared as prohibited uses "processing of grease or organics into by-products" and "rendering, reclaiming or processing of animals or meat by-products"—activities that constitute Sanimax's core business. (Id. ¶¶ 8, 27.) Sanimax again challenged the proposed ordinance, and the City ultimately withdrew it. (Id. ¶¶ 8, 28.)

In 2019, the City passed another zoning ordinance (the "Zoning Amendment") nearly identical to the 2017 ordinance. (Id. ¶¶ 9, 31.) The Zoning Amendment designated Sanimax's property—as well as numerous neighboring parcels—as a "light industrial district." (Id. ; Compl., Ex. A.) Like the 2017 proposal, the Zoning Amendment lists "processing of grease or organics into by-products" and "rendering, reclaiming or processing of animals or meat by-products" as prohibited uses. (Compl. ¶ 34.) But it does not prohibit such "heavy industrial" uses as oil refineries, coal mining, or metallurgy. (Id. ¶ 34.) The Zoning Amendment is geographically narrower than the 2017 proposal, and does not include "similar businesses in the immediate vicinity," such as Long Cheng Hmong Livestock (a slaughterhouse) and Twin City Hides (a tannery). (Id. ¶¶ 31, 54.) Consequently, Sanimax alleges that it is "the only business in the ‘light industrial zone’ that faces serious negative impacts from the Zoning Amendment." (Id. ¶ 31.)

Sanimax alleges that the City's decision to enact the Zoning Amendment was motivated by discriminatory animus toward Sanimax. Sanimax points to an agenda report regarding the Zoning Amendment, in which the City allegedly indicated its intent to " ‘transition’ away from business operations like that of Sanimax." (Id. ¶ 32.) It is alleged that the City referred to Sanimax as a "remnant propert[y]" that is "not consistent with the spirit, intent and policies" of the City's zoning plans. (Id. ) Moreover, Sanimax alleges that a zoning administrator stated, at a meeting of South St. Paul's Planning Commission, "Don't you think that if we had any legal means to [shut down Sanimax], we would?" (Id. ¶ 33.) Similarly, Sanimax alleges that a City representative stated that the objective of the Zoning Amendment was to " ‘sunset’ Sanimax as a business in South St. Paul." (Id. ¶ 11.) Sanimax also alleges that in late 2019, Sanimax representatives toured a City property to consider subletting a portion of the property for use as a truck repair shop. (Id. ¶ 30.) The real estate agent retained by the City allegedly told Sanimax's representatives that he had been given "specific instructions from South St. Paul officials to not sell the facility to Sanimax." (Id. )

Prior to the Zoning Amendment, Sanimax's use of its property had been governed by conditional use permits. (Id. ¶ 35.) As a result of the Zoning Amendment, Sanimax's status is now that of a legal, non-conforming use. (Id. ¶¶ 35-36.) At the time the Zoning Amendment was passed, section 118-64 of South St. Paul's zoning code provided that

[n]o repairs or alterations may be made to a nonconforming building or structure ... except those needed to maintain the structural soundness of such building or structure ... except by consent of the city council. A nonconforming building shall not be added to or enlarged in any manner unless such additions and enlargements are made to conform to all the requirements of the zoning use district in which such building or structure is located ....

(Id. ¶ 37; First Decl. Sharon Frisell [Doc. No. 13], Ex. 4.) Sanimax alleges that the restrictions section 118-64 places on its now-non-conforming property "dramatically decrease[ ] the economic value of the property and negate[ ] over 50 years of investment by Sanimax in its facility and South St. Paul." (Compl. ¶ 39.) Moreover, Sanimax alleges that the restrictions would prevent it from complying with a settlement agreement it reached with plaintiffs in an unrelated lawsuit. (Id. )

Sanimax filed this lawsuit against the City, alleging: 1) that the City enacted the Zoning Amendment in retaliation for Sanimax's 2017 lawsuit, in violation of the First and Fourteenth Amendments; 2) that the Zoning Amendment treats Sanimax as a "class of one," in violation of the Equal Protection Clause of the Fourteenth Amendment; 3) that the Zoning Amendment is preempted by Minnesota law; and 4) that the Zoning Amendment constitutes a regulatory taking under the United States and Minnesota Constitutions. The City now moves to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6).

II. DISCUSSION

A. Standard of Review

1. Rule 12(b)(1)

Where the defendant argues that the facts alleged in the complaint fail to establish subject-matter jurisdiction—as the City does here, with respect to Counts III, IV, and V—the plaintiff is afforded similar safeguards as in a Rule 12(b)(6) motion. Osborn v. United States , 918 F.2d 724, 729 n.6 (8th Cir. 1990). Namely, the Court must "accept as true all factual allegations in the complaint, giving no effect to conclusory allegations of law," and determine whether the plaintiff's alleged facts "affirmatively and plausibly suggest" that jurisdiction exists. Stalley v. Catholic Health Initiatives , 509 F.3d 517, 521 (8th Cir. 2007). The Court's review is limited to the face of the pleadings. Branson Label, Inc. v. City of Branson , 793 F.3d 910, 914 (8th Cir. 2015).

2. Rule 12(b)(6)

When considering a motion to dismiss under Rule 12(b)(6), the Court accepts the facts alleged in the complaint as true, and views those allegations in the light most favorable to the plaintiff. Hager v. Arkansas Dep't of Health , 735 F.3d 1009, 1013 (8th Cir. 2013). However, the Court need not accept as true wholly conclusory allegations or legal conclusions couched as factual allegations. Id. To survive a motion to dismiss, a complaint must contain "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Although a complaint need not contain "detailed factual allegations," it must contain facts with enough specificity "to raise a right to relief above the speculative level." Id. at 555, 127 S.Ct. 1955. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements," are insufficient. Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ).

The Court ordinarily does not consider matters outside the pleadings on a motion to dismiss. See Fed. R. Civ. P. 12(d). Matters outside the pleadings include "any written or oral evidence in support of or in opposition to the pleading that provides some substantiation for and does not merely reiterate what is said in the pleadings." Hamm v. Rhone-Poulenc Rorer Pharm., Inc. , 187 F.3d 941, 948 (8th Cir. 1999). The Court may, however, "consider the pleadings themselves, materials embraced by the pleadings, exhibits attached to the pleadings, and matters of public record." Illig v. Union Elec. Co. , 652 F.3d 971, 976 (8th Cir. 2011) (quoting Mills v. City of Grand Forks , 614 F.3d 495, 498 (8th Cir. 2010) ).

Here, the City submitted numerous documents alongside its motion, including documents related to the City's 2030 Comprehensive Plan, transcripts recording statements made by City officials at several public meetings, and other public records. (See First Decl. Sharon Frisell.) Although the Court may consider transcripts of public hearings as "matters of public record," the Court may...