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The Huffington Post
California Supreme Court Puts Big Box Stores In a Legal
Box
Posted June 9, 2007 | 01:57 PM (EST)
A decision this week by the California Supreme Court in
a 4-year-old case has reinforced the right of cities
and towns to regulate the size and location of big box
stores--as long as they have defined a clear public
purpose in doing so. Even though a small merchant lost
in this case -- small merchants everywhere have won.
Here are the basic facts in the case, Hernandez v City
of Hanford:
In 1989, the city of Hanford, Calif. created a new
commercial district of several hundred acres of land
called the "Planned Commercial" district -- designed
for large, big box stores. City officials wanted to
create a zone that would allow big stores, but not have
a negative impact on the downtown commercial district.
Specifically, the city did not want to allow the big
box zone to have uses that were already prominent in
the downtown, because they wanted those uses to remain
downtown--such as furniture stores, banks, car dealers,
and professional offices. The new PC district allowed
department stores to sell furniture -- but did not
extend that right to furniture stores. The city allowed
"home furnishings" accessories to be sold in retail
stores in the PC district, but furniture stores could
not sell furniture. Stores like Wal-Mart, Home Depot
and Sears, which came to the PC district, were selling
furniture.
In 2002, a downtown furniture merchant tried to open up
a furniture store in the big box district. When the new
store opened, a city inspector instructed the merchant
to remove all furniture from the store. The owner
complained that the zoning code was being enforced in a
discriminatory fashion, because department stores in
the PC district were being allowed to sell furniture,
but he could not -- in the same district.
After conducting a series of study sessions, the city
decided to change its code in 2003 to allow department
stores over 50,000 square feet to sell furniture only
in one location within the store, no larger than 2,500
square feet of floor area. The PC zone was rewritten to
state, "the sale of furniture is prohibited in the PC
district except by department stores." The merchant who
had opened a furniture store in the PC district then
sued the city, arguing that the ordinance regulated
economic competition, and violated the equal protection
clause of the federal and state constitutions. The
lower court ruled against the plaintiff, noting that
the purpose of the ordinance was not to limit
competition, but to preserve the vitality of the
Hanford downtown district. The court said that treating
large stores differently than smaller stores was not a
violation of equal protection, because the city was
trying to lure big stores to the PC district.
The merchant appealed this ruling, and the Court of
Appeals sided with the merchant, saying that limiting
furniture sales to stores in excess of 50,000 square
feet in the PC zone was arbitrary, and "a rational
relationship between the size classification and the
goal of protecting downtown simply does not exist." The
Appeals Court said it was not a detriment to have
smaller retailers in the PC zone.
The City of Hanford then appealed to the California
Supreme Court, which ruled this week. The Court quoted
case law going back to 1971, which said: "so long as
the primary purpose of the zoning ordinance is not to
regulate economic competition, but to subserve a valid
objective pursuant to a city's police powers, such
ordinance is not invalid even though it might have an
indirect impact on economic competition." The Supreme
Court noted that "all zoning has some impact on
competition." The court added that zoning ordinances
can have a direct impact on competition, as long as its
"principal and ultimate objective...is to achieve a
valid public purpose, such as furthering a
municipality's general plan for controlled growth or
for localized commercial development." Any community
can cite "controlling growth" or "protecting the
downtown district" as legitimate public purposes for
limiting store size and location.
The Supreme Court also cited in this case the zoning
code in Turlock, Calif., which limited big box stores
with a grocery component. Wal-Mart sued Turlock, and
lost. Turlock passed the ordinance because it said
"discount superstores (are) likely to negatively impact
the vitality and economic viability of the city's
neighborhood commercial centers by drawing sales away
from traditional supermarkets located in these
centers." In the Turlock case, the court ruled that
cities are empowered "to control and organize
development within their boundaries as a means of
serving the general welfare." Avoiding "urban/suburban
decay" is a legitimate public interest.
In the Hanford case, the Supreme Court said that even
though the furniture sales ban regulated competition,
its primary purpose was to "promote the legitimate
purpose of preserving the economic viability of the
Hanford downtown business district, rather than to
serve any impermissible private anticompetitive
purpose." The Supreme Court also found that equal
protection was not violated, because the Hanford
ordinance served multiple purposes, one of which was
attracting big box stores, which normally sell
furniture. Allowing smaller retailers to come to the PC
zone and sell up to 2,500 square feet of furniture
would have undermined the city's attempts to attract
big stores.
Even though, on the surface, a local merchant lost his
appeal in this case to locate in a big box zone, this
decision in California helps opponents of big box
stores everywhere argue that if a legitimate public
purpose has been articulated, local police powers can
be used to create a cap on the size of buildings
throughout a community to serve the general welfare of
the area.
Companies like Wal-Mart can complain about the impact
on competition, or the impact on equal protection under
the law -- but they will lose. For a copy of the
Hanford decision, contact [email protected]
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