To-Ro Trade Shows v. Collins

• Decision Date: 21 April 2000
• Docket Number: No. 23126-3-II.,23126-3-II.
• Citation: 997 P.2d 960,100 Wash.App. 483
• Parties: TO-RO TRADE SHOWS, d/b/a O'Loughlin Trade Shows, Appellant, v. Grant COLLINS and Kathy Barrosfriedt, in her official capacity as the Director of the Department of Licensing, The State of Washington, and Robert Smith, and John Does 1 Through 5, Respondents.
• Court: Washington Court of Appeals

997 P.2d 960

100 Wash.App. 483

TO-RO TRADE SHOWS, d/b/a O'Loughlin Trade Shows, Appellant, v. Grant COLLINS and Kathy Barrosfriedt, in her official capacity as the Director of the Department of Licensing, The State of Washington, and Robert Smith, and John Does , Respondents.

No. 23126-3-II.

Court of Appeals of Washington, Division 2.

April 21, 2000.

Rene David Tomisser, Atty. Gen. Office/tort Claims, Olympia, for Respondents.

Richard H. Wooster, Mann, Johnson, Wooster & McLaughlin Ps., Tacoma, for Appellant.

ARMSTRONG, A.C.J.

Lake City RV sells recreational vehicles through its Idaho dealership located thirteen miles from the Washington State border. Lake City displayed vehicles at an RV trade show in Spokane sponsored by To-Ro Trade Shows d b a O'Loughlin Trade Shows. But Lake City is not a Washington dealer licensed to operate its business in Washington as required by statute. At the trade show, an agent of the Department of Licensing ("DOL") instructed Lake City to close and lock its displayed RV units. Lake City did so. As a result, a number of show patrons demanded refunds.

To-Ro, the trade show promoter, sued (1) for a declaration that the statute as enforced by DOL is unconstitutional, (2) for damages under 42 U.S.C. § 1983, and (3) for damages resulting from tortious interference with its business expectancy. To-Ro alleged that DOL's action and the statutory licensing requirements violate its and the out-of-state dealer's First Amendment and equal protection rights. To-Ro also alleged that the statute discriminates against out-of-state dealers under the Commerce Clause. The trial court dismissed To-Ro's claims. Holding that To-Ro lacks standing to challenge the constitutionality of the licensing scheme, we affirm.

FACTS

To-Ro produces and promotes trade shows throughout the Northwest, including a spring RV show in Spokane. The Spokane show draws patrons from Washington, Idaho, Montana, and Canada. To-Ro invited Lake City RV to participate in the 1994 show. Lake City is a licensed dealer in Idaho, located thirteen miles from the Washington State border. DOL told both Lake City and To-Ro that Lake City could not participate in the show without a Washington license. But Lake City did not have time to obtain a license before the show.

After the show opened, Collins, a DOL investigator, found out that Lake City was participating in the show. Lake City representatives said they were under the impression that vehicles could be displayed as long as they were not for sale. "For display only" and "not for sale" signs were posted on the vehicles. It was disputed whether prices were actually displayed on the vehicles, whether sales were solicited, and when the "for display only" signs were posted. Collins told Lake City to close and lock their units until he received further direction from his superiors. Lake City complied.

When Lake City's display was closed, people immediately demanded a refund. To-Ro refunded the ticket price to at least one hundred people and admitted new customers for free. Robert O'Loughlin from To-Ro also testified that Lake City committed to purchase space at its 1995 Spokane RV show but cancelled at the last minute. According to O'Loughlin, Lake City RV could not get a waiver of the statutory requirement for an in-state location and did not have the money to open a second location in Washington. See RCW 46.70.023; 46.70.025.

To-Ro sued, alleging three causes of action: (1) a declaratory judgment action challenging the constitutionality of the licensing statutes; (2) an action for damages under 42 U.S.C. § 1983, alleging due process and First Amendment violations arising from DOL's enforcement of the statute at the Spokane trade show; and (3) an action in tort for interference with To-Ro's business expectancy.

In its declaratory judgment action, To-Ro challenged the constitutionality of the licensing scheme under the First Amendment,¹ the Equal Protection Clause,² and the Commerce Clause.³ Under the First Amendment, To-Ro challenges RCW 46.70.021, which provides in part:

It is unlawful for any person, firm, or association to act as a vehicle dealer or vehicle manufacturer, to engage in business as such, serve in the capacity of such, advertise himself, herself, or themselves as such, solicit sales as such, or distribute or transfer vehicles for resale in this state, without first obtaining and holding a current license as provided in this chapter,...

To-Ro argues that the statute, to the extent it prohibits advertising, violates free speech principles. According to To-Ro, if an out-of-state dealer does not engage in sales activity, the First Amendment guarantees the dealer the right to participate in trade shows by advertising, displaying, and promoting products without obtaining a Washington license.

To-Ro's equal protection argument is based on DOL's interpretation of the statute that allows unlicensed, out-of-state dealers to advertise in Washington newspapers or on television but prohibits them from displaying vehicles at a trade show. A DOL representative said that an Idaho dealer can advertise in a newspaper or on television if "they're saying come to Idaho and buy these vehicles." But out-of-state dealers are prohibited from displaying vehicles in Washington.

Under the Commerce Clause, To-Ro challenges the constitutionality of RCW 46.70.023, which requires that "[t]he business of a vehicle dealer ... be ... carried on at an established place of business." Established place of business means "a permanent, enclosed commercial building located within the state of Washington easily accessible at all reasonable times." RCW 46.70.023.

Both parties moved for summary judgment. The trial court dismissed To-Ro's Commerce Clause and First Amendment claims for lack of standing. But the court entered an order on summary judgment, ruling that RCW 46.70.021 does not prohibit the display or pricing of RV's at trade shows by unlicensed dealers and that product representatives could accompany such vehicles.

The case went to trial on To-Ro's tortious interference and Section 1983 claims. To-Ro argued that it was deprived of due process and its First Amendment right to free speech and was, therefore, entitled to damages under Section 1983. At trial, the parties disagreed as to the meaning of the summary judgment orders and the issues to be decided at trial. To-Ro interpreted the second order as a declaration that product display by unlicensed dealers was permitted in the State of Washington. DOL said the order was offered as an interpretation to assist the parties at an upcoming show. The court prohibited the parties from mentioning the order in their opening statements. To-Ro was not allowed to argue its First Amendment or due process claims to the jury but was permitted to present the facts of its tortious interference claim.

Following trial, the court dismissed all causes of action. The court ruled that Lake City did not have a protected property interest that would give rise to a procedural due process claim and, even if Lake City did, To-Ro lacked standing to bring the claim. The court also dismissed the Section 1983 claim, ruling that the State had qualified immunity. And in contradiction to its previous order, the court ruled that prohibiting the display of vehicles by unlicensed dealers was not a violation of the First Amendment. Although this ruling precluded the issue of tortious interference from going to the jury, the court, with the parties' consent, submitted three questions to the jury on an advisory basis.⁴ The jury answered "no" to each of the following questions:

1. Did the Plaintiff prove that no prices were displayed for specific Lake City RV vehicles at the show at any time the show was open to the public?

2. Did the Plaintiff prove that Lake City RV vehicles at the show were marked with "For display only" signs at all times the show was open to the public?

3. Did the Plaintiff prove that Defendants' closure of the Lake City RV display proximately caused the Plaintiff damages?

ANALYSIS

Does To-Ro have standing under the Declaratory Judgments Act?

The State argues that To-Ro does not have standing to raise constitutional challenges to the licensing requirements for motor vehicle dealers. To-Ro responds that it may act in a representative capacity on behalf of out-of-state dealers who want to display their products in Washington and on behalf of out-of-state residents interested in viewing products from their home state at a Washington trade show. In addition, To-Ro argues that the licensing requirements prevent it from presenting a broad array of products at its trade show.

Citing Hunt v. Washington State Apple Adver. Comm'n., 432 U.S. 333, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977), To-Ro notes that representative suits have been recognized in Commerce Clause cases. But Hunt is distinguishable. There, the Washington State Apple Advertising Commission was a state agency whose purpose was to promote the interests of apple growers. Hunt, 432 U.S. at 336-37, 97 S.Ct. 2434. To-Ro is not a member of an association that represents out-of-state dealers and is not charged with the responsibility of promoting the interests of RV dealers.

Hunt is also distinguishable because the suit was brought in federal court. The standing requirement in federal courts is based primarily on the "case or controversy" requirement of Article III, Section 2 of the United States Constitution. Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975); Philip A. Talmadge, Understanding the Limits of Power: Judicial Restraint in General Jurisdiction Court Systems, 22 SEATTLE U.L. REV. 695, 705-07 (1999). In addition to the constitutional constraint of subject matter jurisdiction on federal court jurisdiction, the federal courts have imposed prudential constraints flowing from the case and controversy requirement. Warth, 422 U.S. at 499-501, 95 S.Ct. 2197; Talmadge, supra at...