Appellate Court Strikes Down as Unconstitutional Small-Town Voter-Initiative to Limit Chain Establishments

In November of 2014, the City of Malibu enacted Measure R, a voter-approved initiative designed to limit large developments and chain establishments. The measure was funded in large part by Rob Reiner, director and pioneer of such venerable feature films as This Is Spinal Tap, The Princess Bride, A Few Good Men and The Bucket List. Measure R was intended to preserve Malibu’s “small-town, rural character” as a “unique oasis in the midst of urban and suburban sprawl” and to prevent it from turning into “Anything Mall, USA.”

In June 2017, an appellate court overturned Measure R as an improper exercise of legislative power and an illegal restriction on zoning ordinance requirements. In early August, the California Supreme Court declined to hear Malibu’s appeal, making the appellate decision final.  In response to this legal defeat, on October 30, 2017, Malibu’s Planning Commission recommended that its City Council approve a new watered-down version of the chain store restrictions intended to correct the deficiencies identified by the court in the original ordinance.  The good people of Malibu will not be held down for long.

The court’s rationale for invalidating the original ordinance, and the city’s retooled current approach, presents an interesting case study about the limits of a city’s authority to restrict a specific kind of business –  in this case a limitation on chain establishments. The overall sameness of chain establishments, while providing clear branding for consumers, in many cases is contrary to the general direction of certain land use and general plan policies meant to preserve local community character.

The 2014 original Malibu ordinance had two primary components. First, all mixed-use projects over 20,000 square feet needed to prepare a specific plan amendment to the Malibu General Plan and be placed on the ballot for approval by popular vote. Second, new chain stores were restricted in size, subjected to clustering limitations, and were required to obtain a Conditional Use (“CU”) permits. The trial court found both aspects of the ordinance problematic, and the appellate court agreed.

The CU permit requirement rejected by the court was a new approach to regulating chain stores in that the CU permit was “establishment specific.” Therefore, it could not be transferred to a different chain store at the site, even if the new chain store proposed the exact same use. For example, a CU permit to operate a Buffalo Wild Wings was effective if a new owner and operator proposed to keep a Buffalo Wild Wings on site. However, if a new owner or operator wanted to open a Wingstop, the CU permit would not transfer despite the fact both establishments offer a similar fine dining experience with menus highlighted by delicious mango habanero chicken wings. The court found this aspect of the ordinance unconstitutional as it conferred a personal interest not grounded in the use of the land itself.

Malibu’s past legal defeat and current watered-down proposal is informative of how other jurisdictions can structure their own rules restricting chain establishments. A host of towns and cities (outside of Orange County) regulate chain stores, including Truckee.  Reasonable minds can hope that a resolution to this legal scuffle ends with some legitimate and common-sense driven degree of restriction on chain establishments, lest The ‘Bu be transformed from the “small-town, rural … oasis” into the “Anything Mall, USA” its residents wish to avoid.

 

David W. Wolfe is a contract attorney with Porter Simon licensed in California, with offices in Truckee and Tahoe City, California, and Reno, Nevada.

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