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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. Just an aside, but regardless of the outcome, I 'm proud of Judge William Hughes. He was the original magistrate on the Home place issue. He ruled for Home Place, and was primaried by Brainard for it. Their tool Poindexter failed to unseat Hughes, who won support for his honesty and courage throughout the county, and he was reelected Judge of Hamilton County's Superior Court. You can still stand for something and survive. Thanks, Judge Hughes!

  2. CCHP's real accomplishment is the 2015 law signed by Gov Pence that basically outlaws any annexation that is forced where a 65% majority of landowners in the affected area disagree. Regardless of whether HP wins or loses, the citizens of Indiana will not have another fiasco like this. The law Gov Pence signed is a direct result of this malgovernance.

  3. I gave tempparry guardship to a friend of my granddaughter in 2012. I went to prison. I had custody. My daughter went to prison to. We are out. My daughter gave me custody but can get her back. She was not order to give me custody . but now we want granddaughter back from friend. She's 14 now. What rights do we have

  4. This sure is not what most who value good governance consider the Rule of Law to entail: "In a letter dated March 2, which Brizzi forwarded to IBJ, the commission dismissed the grievance “on grounds that there is not reasonable cause to believe that you are guilty of misconduct.”" Yet two month later reasonable cause does exist? (Or is the commission forging ahead, the need for reasonable belief be damned? -- A seeming violation of the Rules of Profession Ethics on the part of the commission) Could the rule of law theory cause one to believe that an explanation is in order? Could it be that Hoosier attorneys live under Imperial Law (which is also a t-word that rhymes with infamy) in which the Platonic guardians can do no wrong and never owe the plebeian class any explanation for their powerful actions. (Might makes it right?) Could this be a case of politics directing the commission, as celebrated IU Mauer Professor (the late) Patrick Baude warned was happening 20 years ago in his controversial (whisteblowing) ethics lecture on a quite similar topic: http://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=1498&context=ilj

  5. I have a case presently pending cert review before the SCOTUS that reveals just how Indiana regulates the bar. I have been denied licensure for life for holding the wrong views and questioning the grand inquisitors as to their duties as to state and federal constitutional due process. True story: https://www.scribd.com/doc/299040839/2016Petitionforcert-to-SCOTUS Shorter, Amici brief serving to frame issue as misuse of govt licensure: https://www.scribd.com/doc/312841269/Thomas-More-Society-Amicus-Brown-v-Ind-Bd-of-Law-Examiners

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