Big Box v. Little Bavaria: Lessons in Animus from the Sixth Circuit

The Sixth Circuit's recent decision in Loesel v. City of Frankenmuth, 10-2354, 2012 WL 3553272 (6th Cir. Aug. 20, 2012) provides us new lessons both in the big box wars and for this blog's on-going debate about what constitutes animus for purposes of equal protection claims in the land use context. 

Frankenmuth, “Michigan's Little Bavaria,” is one of the top tourist destinations in Michigan. Despite its popularity with tourists, Frankenmuth maintains a small town atmosphere with a population of 4,838 in the City and 2,049 in the Township, according to the 2000 U.S. Census (the last Census taken before the events relevant to this case occurred). The City is famous for its Bavarian-themed stores, restaurants such as the Bavarian Inn and Zehnder's serving family-style chicken dinners, and its gift shops. Bronner's Christmas Wonderland, the world's largest year-round Christmas store, draws over two million visitors annually.

The Loesels, the plaintiffs, were the co-owners of a 37–acre tract of land that borders Main Street just outside the Frankenmuth city limits but within the city's urban growth area established by the city and surrounding township to maintain the city's character.  In 2005, the Loesels, who were renting to land to a tenant farmer, entered into an agreement with Wal-Mart to purchase the property for $2.9 million, but subject to a condition that permitted Wal-Mart to back out of the agreement during a "feasibility period" if it determined that it would not be able to build a store on site.  At the time of the agreement, the store Wal-Mart wanted to build was permitted by local zoning code.  However, local officials took significant steps to change the local zoning in a way that other cities had done in successful efforts to keep out Wal-Mart. 

In particular, Frankenmuth's City Manager e-mailed a planner at the state department of transportation noting that "We have heard rumors that the proposed project is a Walmart which I am totally opposed to, and I think most people in Frankenmuth will be opposed to."  The zoning of the Loesels property was subsequently changed, Wal-Mart determined it could not build the store it wanted, and exercised its option to terminate the agreement with the Loesels.  The Loesels subsequently sued the city for $4 million, alleging a variety of constitutional violations.

Of particular note, I believe, was that the Loesels proceeded on an equal protection claim under the "class-of-one" theory in the Supreme Court's Village of Willowbroook v. Olech, 528 U.S. 562 (2000).  It is hard to win these cases because, as part of the plaintiffs' burden, they

must show that the adverse treatment they experienced was so unrelated to the achievement of any combination of legitimate purposes that the court can only conclude that the government's actions were irrational. This showing is made either by negativing every conceivable reason for the government's actions or by demonstrating that the actions were motivated by animus or ill-will.

Id. at *8.  Given our recent discussions on this blog about comments by local government officials stating that they would not issue a permit for a Chik-fil-A because of statements by the owner about gays, I was most interested in the animus discussion.  Here is what the Sixth Circuit held on that front:

Finally, the City contends that the district court should have granted the City judgment as a matter of law on the issue of whether animus or ill will against the Loesels motivated the enactment of the 65,000–square–foot size restriction. The district court determined that a reasonable jury could conclude that the City harbored animus against the Loesels because no invitations or notices were sent to the Loesels concerning the city council meeting at which the proposed size-limitation ordinance was discussed. But the fact that the City was not cognizant of or proactively seeking the Loesels' opinions is a far cry from harboring animus or ill will. Animus is defined as “ill will, antagonism, or hostility usually controlled but deep-seated and sometimes virulent.” Webster's Third New International Dictionary, Unabridged (2002). Similarly, ill will is defined as an “unfriendly feeling: animosity, hostility .” Id. These definitions indicate that a showing of animus or ill will (hereinafter collectively referred to as “animus”) requires more than simply failing to invite the Loesels to a meeting.

The Loesels attempt to bolster the district court's determination on this issue by claiming that Sheila Stamiris, Executive Director of the DDA, harbored feelings of envy because, when Stamiris first heard rumors of the potential sale of Loesels' property to Wal–Mart, she informed City officials in a memorandum that the Loesels were selling their land for a “great deal of money.” But Stamiris never indicated in the memorandum that the amount of money bothered her, nor did she say anything negative about the Loesels in the document. She even mentioned in the memorandum that she was grateful that the City had “been given the ‘heads up’ by the [Loesels]” about the proposed sale. Furthermore, her statement about the money involved in the deal was true: by that date, the Loesels had been offered nearly $3 million by Wal–Mart. Stamiris's isolated remark is therefore insufficient to prove that Stamiris—much less the City officials who actually enacted the ordinance—was motivated by any animus against the Loesels.

Although the Loesels presented abundant evidence showing that certain City officials, such as City Manager Graham, strongly opposed having a Wal–Mart supercenter in Frankenmuth, the animus had to be directed against the Loesels to be relevant to their claim. See Taylor Acquisitions, L.L. C., v. City of Taylor, 313 F. App'x 826, 838 (6th Cir.2009) (holding that the plaintiff had to show in its class-of-one equal protection claim that government officials expressed animus against the plaintiff, not against the development it was proposing); see also Ziss Bros. Constr. Co. v. City of Independence, Ohio, 439 F. App'x 467, 479 (6th Cir.2011) (concluding that the plaintiff failed to allege an equal protection violation based on animus where the plaintiff alleged that the animus of the defendant-city was directed at the plaintiff's proposed development plan and not at the plaintiff itself); McDonald v. Vill. of Winnetka, 371 F.3d 992, 1001 (7th Cir.2004) (holding that a class-of-one claim may be established by showing that there “is a totally illegitimate animus toward the plaintiff by the defendant” (emphasis added) (internal quotation marks omitted)). The district court, therefore, should have granted the City's motion for judgment as a matter of law on the animus theory of liability.

Id. at *13 - 14 (emphasis added).  You may recall that Ken Stahl had mentioned that Chick-fil-A might have an equal protection claim under Village of Willowbrook for statements of local government officials stating that they would not permit a Chick-fil-A should such officials follow through on those claims.  What makes the Frankenmuth decision of interest to me is that, similar to the Chick-fil-A controversy, the city manager openly stated that he was "totally opposed to" Wal-Mart and the city changed the zoning code that initially permitted the store with the primary intention of driving Wal-Mart away. 

The difference, the Sixth Circuit seems to imply, is that the plaintiffs are not, in fact, Wal-Mart, but the landowners that sought to sell their land to Wal-Mart.  Is that a legitimate distinction?  I'm not sure I buy it.  For instance, in many such transactions, big box stores enter into a long-term ground lease of the land from the property owners and own only the improvements on the land. Even if this were a long-term lease agreement between the Loesels and a big box store, however, it would seem that the Sixth Circuit's reasoning would not permit recovery under the animus prong of an equal protection claim.  I don't know that I believe there is such a strong distinction between the landowner and a potential big-box purchaser, especially where the sale is conditioned upon permit approvals.  Nonetheless, the Court's reasoning adds more color to the question of the animus debate and who can make such claims that will be of import in how these claims go forward. 

The decision may even effect how future deals between landowners and big box stores are structured in the future.  For instance, might we imagine a scenario in which, as part of a purchase-sale agreement negotiation, the attorneys for the landowner seek a term requiring the big box purchaser to join a lawsuit--if in name only--alleging animus that could potentially be brought by and paid for by the landowner, should the big box exercise its feasibility provision that kills the deal? 

Stephen R. Miller