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Bruner v. Zawacki

United States District Court, E.D. Kentucky, Central Division

February 3, 2014

RALEIGH BRUNER, et al., Plaintiffs,
v.
TOM ZAWACKI, Commissioner of Motor Vehicle Regulation for the Kentucky Department of Vehicle Regulation, et al., Defendants

Page 692

For Raleigh Bruner, an individual, Wildcat Moving, LLC, a Kentucky Limited Liability Company, Plaintiffs: Kristopher David Collman, LEAD ATTORNEY, The Getty Law Group, PLLC, Lexington, KY; Joshua P. Thompson, Timothy Sandefur, PRO HAC VICE, Pacific Legal Foundation, Sacramento, CA.

For Tom Zawacki, Commissioner of Motor Vehicle Regulation for the Kentucky Department of Vehicle Regulation, Martin Mathews, Director for Motor Carriers of the Kentucky Transportation Cabinet Division of Motor Carriers, Mary Cook, Assistant Director of the Kentucky Transportation Cabinet Division of Motor Carriers, Brian Beaven, Assistant Director of the Kentucky Transportation Cabinet Division of Motor Carriers, Bill Debord, Officer of the Kentucky Transportation Cabinet Division of Motor Carriers, Official Defendants: Paul Kevin Moore, LEAD ATTORNEY, Kentucky Transportation Cabinet, Frankfort, KY; Thomas J. Hellmann, LEAD ATTORNEY, Robert C. Moore, Hazelrigg & Cox, LLP, Frankfort, KY.

OPINION

Danny C. Reeves, United States District Judge.

Page 693

MEMORANDUM OPINION AND ORDER

This matter is pending for consideration of Plaintiffs Raleigh Bruner's and Wildcat Moving, LLC's motion for summary judgment. [Record No. 72] The Plaintiffs contends that they are entitled to summary judgment on their claim that the notice, protest, and hearing provisions of the Kentucky statutes applicable to moving companies, contained within KRS § 281.615 et seq., and the implementing regulations, violate the Fourteenth Amendment of the United States Constitution. They request that the Court issue prospective injunctive relief, permanently enjoining the Defendants from enforcing the statutes in a way that violates the constitutional rights of new moving companies by allowing existing moving companies to veto new competition. For the reasons set forth below, the Plaintiffs' motion will be granted.

I.

Wildcat Moving, LLC (" Wildcat" ), is a Kentucky limited liability company owned by Raleigh Bruner. [Record No. 1, p. 2 ¶ 2] Bruner offered his moving services informally via the Internet until forming Wildcat in 2012, " to operate as a full-service moving company throughout the state of Kentucky." [ Id. ] Since 2012, Wildcat has moved thousands of clients. [Record No. 73, p. 8] It now employs thirty-one people, including Bruner, and operates five moving trucks. [ Id., p. 4 ¶ 10] However, Wildcat has been performing moving services without the requisite certificate under Kentucky law.

In Kentucky, individuals and companies involved in moving -- that is, the intrastate transporting of personal effects and property used or to be used in a dwelling -- are required by statute to obtain a Household Goods Certificate, also known as a Certificate of Public Convenience and Necessity (hereafter, a " Certificate" ) from the Kentucky Transportation Cabinet Division of Motor Carriers (hereafter, the " Cabinet" ). See KRS § 281.615 et seq. [1] Operating without a Certificate is a misdemeanor punishable by a fine ranging from $2,000 to $3,500 and imprisonment of up to thirty days. KRS § 281.990(2).

Under the statute, a Certificate:

shall be issued to any qualified applicant therefor[e], authorizing the whole or any part of the operation covered by the application, if it is found that the applicant is fit, willing, and able properly to perform the service proposed and to conform to the provisions of this chapter and the requirements and the administrative regulations of the department promulgated thereunder, and further that the existing transportation service is inadequate, and that the proposed service, to the extent to be authorized by the certificate, is or will be required by the present or future public convenience and necessity, and that the proposed operation, to the extent authorized by the certificate, will be consistent with the public interest and the transportation policy declared in this chapter. . . .

KRS § 281.630(1) (emphasis added).

This statute and the corresponding regulations establish a multi-step process to

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obtain a Certificate. First, an aspiring mover such as Bruner submits his application to the Cabinet. The Office of Legal Services reviews the application to determine whether the applicant is " fit, willing, and able to properly perform the service proposed." KRS § 281.630(1); [Record No. 73-2, p. 6 lns. 4-7] In addition to a finding that an applicant is " fit, willing and able," the mover must show that existing moving services are " inadequate," and that a new moving company serves the " present or future public convenience and necessity." KRS § 281.630(1).

An applicant is required to publish notice of his application in a newspaper of general circulation in the proposed territory or e-mail existing certificate holders. KRS § § 281.625(1)(b), 281.6251. Following the notification, " [a]ny person having interest in the subject matter may . . . file a protest to the granting, in whole or in part, of the application." KRS § 281.625(2). If a protest is filed, the department must hold a hearing. Otherwise, the hearing is discretionary. KRS § 281.625(2); see also 601 KAR. § 1:030(4)(1). The length of time until a hearing takes place varies. A hearing may be held sixty to ninety days after the filing of the protest, but it may take up to a year. [Record No. 73-2, p. 30 lns.12-15] Additionally, applicants are generally required to be represented by counsel at the hearing. See Ky. State Bar Ass'n v. Henry Vogt Machine Co., Inc., 416 S.W.2d 727 (Ky. 1967) (representation of a corporation before administrative bodies constitutes the practice of law).

Since 2007 [2], thirty-nine new applications for Certificates have been filed by companies seeking to enter the moving business.[3] [Record No. 73, p. 11; see, e.g., Record No. 73-10.] Existing moving companies have filed 114 protests in opposition to these applications. [ Id.; see, e.g., Record No. 73-14.] However, no protest has ever been filed by a member of the general public. [Record No. 7, pp. 16-17] Of the decided applications, nineteen were protested by one or more Certificate-holding moving companies. [Record No. 73, p. 11] Of those nineteen protested applicants, sixteen chose to abandon or withdraw their applications. [Record No. 73-8] The Defendants concede that it is " a common result" for a protested applicant to abandon the application process rather than go through the hearing process with a moving company already in business. [Record No. 73-2, p. 13 lns.4-5] Ultimately, the three applicants which chose to undergo the hearing procedure were all denied Certificates. [Record No. 73-18] In summary, the Cabinet has never issued a Certificate to a new applicant when a protest from a competing mover was made.

Even where a protested applicant is determined to be " fit, willing, and able," he or she will be denied an application if the applicant has not shown that existing moving services are inadequate.[4] [Record No. 73-18, pp. 8-9; Record No. 73-23, p. 5] Proof of a population explosion in the service

Page 695

area by expert testimony is not sufficient to overcome the competitor's protest. [Record No. 73-23, p. 3] It is also noteworthy that an existing moving company that protests an applicant for a new Certificate may offer the applicant the opportunity to buy a Certificate it holds. KRS § 281.630(8); [ See Record No. 73-12, p. 6 (noting that two moving companies that protested the application of Margaret's Moving, LLC, offered to sell a Certificate to the applicants for $25,000.00).[5]] Further, no application for the sale or transfer of an existing Certificate has ever been protested or denied. [Record No. 73-8]

The Plaintiffs filed this action under 42 U.S.C. § 1983 against members of the Cabinet in their official capacities (collectively " the Cabinet" ), alleging that the notice, protest, and hearing procedure set out in KRS § 281.615 et seq., and the corresponding regulations, are unconstitutional under the Fourteenth Amendment of the United States Constitution. The Complaint seeks both declaratory and injunctive relief.[6]

The Plaintiffs do not challenge the regulations to the extent an applicant for a Certificate is required to be " fit, willing, and able" to provide moving services. Instead, they claim that that the protest and hearing process currently followed infringe on their constitutional right to pursue the occupation of providing moving services in Kentucky in violation of due process. See U.S. Const. Amend XIV § 1. They also argue that the protest and hearing procedures violate the equal protection clause because they arbitrarily favor existing moving companies over new companies. See id. ...


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