Court Opinion

ID: 172617
Source: CourtListenerOpinion
Date Created: 2010-08-14 18:54:21+00
Date Added: 2024-06-11T17:25:20.301437
License: Public Domain

FILED
                                                               United States Court of Appeals
                                                                       Tenth Circuit

                                                                    September 3, 2009
                 UNITED STATES COURT OF APPEALS
                                                                   Elisabeth A. Shumaker
                                                                       Clerk of Court
                                 TENTH CIRCUIT

 WASATCH PEDICAB CO. L.L.C.,

          Plaintiff-Appellant,

 v.

 SALT LAKE CITY CORPORATION, a
 municipal corporation; LARRY
 SPENDLOVE; TIM RODRIGUEZ;                                No. 08-4119
 MAYOR ROSS C. ANDERSON, also                     (D.C. No. 2:07-CV-00546-TS)
 known as ROSS C. “ROCKY”                                 (Dist. Utah)
 ANDERSON; SAM GUEVARA; and
 MELONIE REIF,

          Defendant-Appellees,

 DAVID DOBBINS,

          Defendant.

                          ORDER AND JUDGMENT *

Before BRISCOE, SEYMOUR and LUCERO, Circuit Judges.

      The district court dismissed Wasatch Pedicab Company LLC’s (“Wasatch”)

      *
         This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. It may be cited,
however, for its persuasive value consistent with F ED . R. A PP . P. 32.1 and 10 TH
C IR . R. 32.1.
42 U.S.C. § 1983 claim against the Salt Lake City Corporation (the “City”) for

violation of the Equal Protection Clause of the Fourteenth Amendment for failure

to state a claim. 1 We affirm.

      Wasatch was founded in 2004. Before Wasatch invested in its pedicab

business, Larry Spendlove, a City official, told Wasatch that to obtain a revocable

permit it would need to carry a policy providing $1 million dollars in aggregate

personal injury coverage and $200,000 in property damage coverage. Mr.

Spendlove later informed Wasatch that the requirement had changed to $2 million

in aggregate personal injury coverage and $500,000 in property damage coverage.

On February 11, 2005, Wasatch entered into a Revocable Permit and License

Agreement (“Revocable Permit”) with the City to operate pedicabs. The

Revocable Permit was renewed twice, extending it through December 2006. The

requirements of $2 million in aggregate personal injury coverage and $500,000 in

property damage coverage remained in place until January 2006 in spite of

repeated promises by City officials, including the Mayor, to reduce them. On

January 9, 2006, the City informed Wasatch that the insurance requirement would

be raised to $3 million and that failure to provide an updated certificate within

three weeks would be considered a default of the agreement with the City.

      Wasatch alleged it “discovered that the maximum amount for which the

      1
          Wasatch does not appeal the dismissal of its claims alleging violation of
its rights to due process and free speech.

                                         -2-
City could possibly be held liable under the [Governmental Immunity] Act was

$2.3 million 2 for personal injury and $233,000 for property damage [sic].”

      2
         The public records indicate the amount is $2 million not $2.3 million.
City ordinances require persons operating a public transportation for hire business
to obtain a certificate of public convenience and necessity, which in turn requires
proof of insurance.

      No certificate of public convenience and necessity shall be
      issued or continued in operation, unless there is on file with
      the city recorder a certificate of insurance executed by an
      insurance company . . . that there is in full force and effect
      vehicle liability insurance covering the operation of applicant’s
      transportation vehicles with minimum limits of two hundred
      fifty thousand dollars ($250,000.00) for one person in any one
      occurrence, five hundred thousand dollars ($500,000.00) for
      two (2) or more persons in any one occurrence and one
      hundred thousand dollars ($100,000.00) for property damage
      or such greater amounts as set forth in section 63-30-34, Utah
      Code Annotated, 1953, as amended, or its successor [section
      63-30-34 (1953) was repealed in 2004 and was succeeded by
      section 63 G-7-604 (2009)] or such greater amounts as may be
      required by the Utah department of transportation or the
      United States department of transportation. . . . (Ord. 24-99 §
      2, 1999: Ord. 51-89 § 1, 1989).

Salt Lake City Code of Ordinances, § 5.05.120 (emphasis added). Utah Code §§
63G-7-604 (1)(c) and (d) (2009) require:

      (1) (c) Except as provided in Subsection (2) and subject to
      Subsection (3), if a judgment for property damage against a
      governmental entity, or an employee whom a governmental entity has
      a duty to indemnify, exceeds $233,600 in any one occurrence, the
      court shall reduce the judgment to that amount, regardless of whether
      or not the function giving rise to the damage is characterized as
      governmental.

      (d) Subject to Subsection (3), there is a $2,000,000 limit to the
      aggregate amount of individual awards that may be awarded in
      relation to a single occurrence.

                                        -3-
Compl. para. 32. It also alleged that “its efforts to discover the insurance

coverage required of taxicabs and horse carriages in Salt Lake City were

frustrated by the City’s non-enforcement of City Code 5.05.120, which requires

all recipients of a Certificate of Convenience and Necessity to keep their

insurance certificates on file at all times with the City Recorder’s office.” Id.

para. 33. Wasatch attached certificates of insurance filed by several

transportation companies indicating they actually carried less insurance than

required by the City.

      The City has ordinances for other public transportation-for-hire businesses,

e.g., horse-drawn carriages and taxicabs, and told Wasatch that it would pass an

ordinance for pedicabs if Wasatch proved its usefulness. Wasatch attempted to

have the City change the insurance requirements for its Revocable Permit. In

January 2006, the City sent Wasatch a draft ordinance. The proposed ordinance

would have required pedicab operators to complete fingerprinting, police station

photos, a five-year employment history, and an extensive criminal background

check. Wasatch voiced its concern that the licensure requirements for pedicab

operators were greater than those imposed on operators of horse-drawn carriages.

The City responded that it “was operating under an assumption that pedicabs are

more dangerous than horse carriages,” but did not offer any evidence to support

this claim. Id. para. 40. Wasatch alleges “the rate of incidents causing injury

and/or property damage is substantially lower for pedicabs than for horse

                                          -4-
carriages and taxicabs.” Id. para. 41.

      By February 2007, Wasatch did not have a permanent operating permit,

advertising revenue, funds to pay the insurance premium required under its

temporary permit, or an ordinance governing pedicab operations. Therefore, it

had to let the revocable permit lapse and cease operation. Wasatch contends the

City violated the Equal Protection Clause by requiring an excessive insurance

amount that was not rationally related to a legitimate government interest but

aimed instead at forcing the company out of business. The district court granted

with prejudice the Rule 12(b)(6) motion filed by defendants to dismiss for failure

to state a claim. We review that dismissal de novo. Teigen v. Renfrow, 511 F.3d

1072, 1078 (10th Cir. 2007).

      Wasatch’s equal protection argument before the district court was solely

focused on the lack of a rational relationship between a legitimate City interest

and the amount of the required aggregate coverage insurance; i.e., the $2 and

(arguably) $3 million requirements. In its reply brief, however, Wasatch for the

first time asserted the City’s allegedly wholly arbitrary and irrational requirement

for the separate $500,000 property coverage insurance as an independent basis for

its equal protection claim. Because Wasatch neither apprised the district court of

this issue nor raised it in its opening brief, we decline to address it. State Farm

Fire & Cas. Co. v. Mhoon, 31 F.3d 979, 984 n.7 (10th Cir. 1994). We limit our

analysis to the rationality of the City’s aggregate coverage insurance requirement.

                                          -5-
         The Fourteenth Amendment prohibits any state from denying “any person

within its jurisdiction the equal protection of the laws.” U.S. Const. amend. XIV,

§ 1. Wasatch claims the City violated its equal protection rights when it

“imposed licensure and insurance requirements on Wasatch that are more onerous

and burdensome than those imposed on similarly situated transportation

companies, including horse drawn companies and taxi cab companies.” Compl.

para. 67. Because Wasatch is neither a member of a suspect class nor claims the

classification it challenges burdens a fundamental right, we apply rational basis

scrutiny. Tonkovich v. Kansas Bd. of Regents, 159 F.3d 504, 532 (10th Cir.

1998).

         Supreme Court “cases have recognized successful equal protection claims

brought by a ‘class of one,’ where the plaintiff alleges that she has been

intentionally treated differently from others similarly situated and that there is no

rational basis for the difference in treatment.” Vill. of Willowbrook v. Olech, 528

U.S. 562, 564 (2000). Wasatch contends it has been intentionally and without

rational basis treated differently from horse-drawn carriage and taxicab

companies. The City responds that Wasatch’s claim was properly dismissed

because Wasatch is not similarly situated to other transportation companies and

because it is rational to believe pedicabs expose its citizens to a higher degree of

danger given that pedicabs, unlike taxicabs, are open and do not have airbags, and

are smaller and lower to the ground than horse-drawn carriages.

                                          -6-
      “In areas of social and economic policy, a statutory classification that

neither proceeds along suspect lines nor infringes fundamental constitutional

rights must be upheld against equal protection challenge if there is any reasonably

conceivable state of facts that could provide a rational basis for the

classification.” FCC v. Beach Commc’ns, Inc., 508 U.S. 307, 313 (1993). “[A]

legislative choice is not subject to courtroom fact-finding and may be based on

rational speculation unsupported by evidence or empirical data.” Id. at 315. The

City does not need to “articulate its reasoning at the moment a particular decision

is made.” Bd. of Trustees of Univ. of Ala. v. Garrett, 531 U.S. 356, 367 (2001).

Nevertheless, the City “may not rely on a classification whose relationship to an

asserted goal is so attenuated as to render the distinction arbitrary or irrational.”

City of Cleburne v. Cleburne Living Ctr., 473 U.S. 432, 446 (1985). Moreover,

“some objectives – such as a bare desire to harm a politically unpopular group –

are not legitimate state interests.” Id. at 446-47 (citation, internal alterations, and

quotation marks omitted).

      In reviewing a Rule 12(b)(6) motion to dismiss, we look for “plausibility in

the complaint,” accept all well-pleaded allegations as true, and then consider

“these ‘facts’ according to the deferential rational basis standard” to determine

whether plaintiff had alleged sufficient facts “to overcome the presumption of

rationality that applies to government classifications.” Teigen, 511 F.3d at 1078,

1083. The district court, relying on the City’s assertion that pedicabs are more

                                           -7-
dangerous than taxicabs and horse-drawn carriages, concluded that the City’s $2

million insurance requirement 3 was rationally related to a legitimate interest.

      While Wasatch’s complaint alleges that the rate of pedicab accidents is

substantially lower than those of horse-drawn carriages and taxicabs, it does not

allege that those accidents create an equal or lesser degree of danger. Because

Wasatch is attacking the rationality of the City’s classification, it has “the burden

to negative every conceivable basis which might support it.” Powers v. Harris,

379 F.3d 1208, 1217 (10th Cir. 2004) (internal brackets and quotation marks

omitted). Wasatch has failed to do so. In particular, the complaint is silent as to

the degree of danger pedicabs cause relative to other public transportation

companies for hire. Assuming without deciding that Wasatch is similarly situated

to the other transportation companies the City licenses, we conclude Wasatch has

not alleged facts sufficient to overcome the presumption of rationality that applies

to the City’s insurance requirement. 4 See Teigen, 511 F.3d at 1083.

      Wasatch does not contend the district court should have allowed it to

      3
        The district court based its conclusion on the $2 million requirement
because the amount was not actually raised to $3 million while Wasatch was in
business.
      4
         Wasatch asserts the district court erred “in refusing to apply the Supreme
Court’s holding in City of Cleburne, Tex. v. Cleburne Living Center to the instant
case.” Aplt. Br. at 11-13. However, the district court did not refuse to apply
Cleburne but concluded that the allegations of Wasatch’s complaint are
distinguishable from the facts of Cleburne. See Wasatch Pedicab Co. v. Salt Lake
City Corp., No. 2:07-CV-546, 2008 WL 2224830, at *7 (D. Utah May 27, 2008).

                                         -8-
amend its complaint pursuant to Federal Rule of Civil Procedure 15 before it

dismissed the equal protection claim, nor does it claim the district court should

have dismissed the complaint without prejudice. Accordingly, on this record, we

AFFIRM the district court’s decision.

                                       ENTERED FOR THE COURT

                                       Stephanie K. Seymour
                                       Circuit Judge

                                         -9-