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Pawn shop owner loses case based on ‘class-of-one’ theory

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An Evansville pawn shop owner couldn’t convince the 7th Circuit Court of Appeals that the state singled him out for disparate treatment without a rational basis when it initially denied his application for a pawnbroking license.

William Saalwaechter, owner of Fares Pawn LLC, applied for a pawnbroking license with the Indiana Department of Financial Institutions. DFI’s director, David Mills, had just started the job when Saalwaecther applied for the license. So instead of making a decision on the application as is allowed under statute, Mills sent the application to the full board for consideration, but it was denied. The agency cited concerns about previous pawnbroking on the property and about his store manager’s criminal history. He eventually received the license after he signed a memorandum of understanding that he would comply with certain conditions, including not employ the store manager in question.

Convinced the license application process should have gone more smoothly, he sued the DFI in federal court alleging it violated the equal protection clause. He argued the state singled him out without a rational basis, the “class-of-one” theory, which rests on the premise that the equal protection clause requires at least a rational reason for the difference to ensure all persons are being treated alike under like circumstances and conditions.

The District Court ruled in favor of the agency.

“We agree with the district court that for each proposed  comparator, either no reasonable jury could conclude that Saalwaechter and the comparator were similarly situated, or there was a rational basis for any differential treatment,” Judge Joel Flaum wrote in Fares Pawn LLC and William K. Saalwaechter v. Indiana Department of Financial Institutions, et al., 13-3240.

The defendants also asked the Circuit Court to extend the U.S. Supreme Court’s holding Engquist v. Oregon Department of Agriculture to Indiana’s pawn-licensing scheme, or at least to Mills’ decision not to exercise delegated authority, both of which the defendants suggest also demand consideration of subjective, discretionary factors.

In Engquist, the Supreme Court held that public employees cannot bring class-of-one claims against their public employers because the theory is a poor fit in the employment context, which involves “discretionary decisionmaking based on a vast array of subjective, individualized assessments.”

The practical problem with allowing class-of-one claims to go forward in the public employment context is … “‘that governments will be forced to defend a multitude of such claims in the first place, and courts will be obliged to sort through them in a search for the proverbial needle in a haystack,’” Judge Joel Flaum wrote, citing Engquist. “Because ‘taking the equal protection route bypasses the administrative and judicial review procedures established to remedy arbitrary official action,’ such a task seems especially wasteful when Indiana already offers an administrative channel to challenge the wrongful denial of license applications.”

“Regardless, having sorted through this haystack and found no needle, the judgment of the district court is affirmed.”
 

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  1. Im very happy for you, getting ready to go down that dirt road myself, and im praying for the same outcome, because it IS sometimes in the childs best interest to have visitation with grandparents. Thanks for sharing, needed to hear some positive posts for once.

  2. Been there 4 months with 1 paycheck what can i do

  3. our hoa has not communicated any thing that takes place in their "executive meetings" not executive session. They make decisions in these meetings, do not have an agenda, do not notify association memebers and do not keep general meetings minutes. They do not communicate info of any kind to the member, except annual meeting, nobody attends or votes because they think the board is self serving. They keep a deposit fee from club house rental for inspection after someone uses it, there is no inspection I know becausee I rented it, they did not disclose to members that board memebers would be keeping this money, I know it is only 10 dollars but still it is not their money, they hire from within the board for paid positions, no advertising and no request for bids from anyone else, I atteended last annual meeting, went into executive session to elect officers in that session the president brought up the motion to give the secretary a raise of course they all agreed they hired her in, then the minutes stated that a diffeerent board member motioned to give this raise. This board is very clickish and has done things anyway they pleased for over 5 years, what recourse to members have to make changes in the boards conduct

  4. Where may I find an attorney working Pro Bono? Many issues with divorce, my Disability, distribution of IRA's, property, money's and pressured into agreement by my attorney. Leaving me far less than 5% of all after 15 years of marriage. No money to appeal, disabled living on disability income. Attorney's decision brought forward to judge, no evidence ever to finalize divorce. Just 2 weeks ago. Please help.

  5. For the record no one could answer the equal protection / substantive due process challenge I issued in the first post below. The lawless and accountable only to power bureaucrats never did either. All who interface with the Indiana law examiners or JLAP be warned.

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