Park Pet Shop, Inc. v. City of Chi.

872 F.3d 495

PARK PET SHOP, INC., et al., Plaintiffs-Appellants,

v.CITY OF CHICAGO, et al., Defendants-Appellees.

No. 15-3711.

United States Court of Appeals, Seventh Circuit.

Argued May 24, 2016

Decided September 21, 2017

Sean P. Patrick, Attorney, Rifkind Patrick LLC, Chicago, IL, for Plaintiffs-Appellants.

Jonathon D. Byrer, Attorney, Office of the Corporation Counsel, Appeals Division, Chicago, IL, for Defendants-Appellees.

Before Rovner, Sykes, and Hamilton, Circuit Judges.

Sykes, Circuit Judge.

This case challenges Chicago's "puppy mill" ordinance, which limits the sources from which pet stores may obtain dogs, cats, and rabbits for resale. The ordinance provides that pet retailers in the city "may offer for sale only those dogs, cats, or rabbits" obtained from an animal control or care center, pound, or kennel operated by local, state, or federal government or "a humane society or rescue organization." CHICAGO, ILL., CODE § 4-384-015(b) (2016).

Two Chicago pet stores and a Missouri dog breeder sued to invalidate the ordinance. They allege that it exceeds Chicago's home-rule powers under the Illinois Constitution and violates the implied limits on state power imposed by the Commerce Clause of the United States Constitution. The district court dismissed the suit for failure to state a claim.

We affirm. The Illinois Constitution permits home-rule units like Chicago to regulate animal control and welfare concurrently with the state. And the puppy-mill ordinance doesn't discriminate against interstate commerce, even in mild practical effect, so it requires no special cost-benefit justification under the Commerce Clause. Rational-basis review is the default standard, and the ordinance easily passes that test.

I. Background

In 2014 the Chicago City Council acted to address concerns that pet stores in the city sourced their animals from large mill-style breeders, which are notorious for deplorable conditions and abusive breeding practices, including over-breeding, inbreeding, crowded and filthy living conditions, lack of appropriate socialization, and inadequate food, water, and veterinary care. The Council determined that mill-bred pets develop health and behavioral problems, creating economic and emotional burdens for pet owners and imposing financial costs on the City as owners abandon their physically or emotionally challenged pets or surrender them to the shelter operated by the City's Commission on Animal Care and Control. Nearly a third of all animals that come into the City's care are owner surrenders—the second largest source of dogs and cats taken in by the Commission (strays are the largest). Chicago budgets about $300,000 each year for its shelter service and spends more than $500,000 every year to euthanize animals.

The Council determined that extinguishing the supply of puppy-mill pets to local pet stores would serve several important policy goals. Among other things, it would (1) limit financial support to mill operators; (2) reduce the financial and emotional toll on Chicago consumers who purchase mill-bred pets with latent physical and behavioral problems; (3) boost placement of shelter pets; and (4) reduce the City's animal-care and euthanization costs. The Council also determined that banning the retail sale of mill-bred pets may also promote pet adoption from the City's shelter, which would benefit Chicago residents because the $65 pet adoption fee both offsets the cost to taxpayers of operating the shelter and gives Chicagoans ready access to cheaper pets.

The Council accordingly adopted the following ordinance restricting the sources from which pet stores in the city may obtain dogs, cats, or rabbits for resale:

(b) Restrictions on the retail sale of animals. A retailer may offer for sale only those dogs, cats, or rabbits that the retailer has obtained from:

(1) an animal control center, animal care facility, kennel, pound or training facility operated by any subdivision of local, state or federal government; or

(2) a humane society or rescue organization.

CHICAGO, ILL., CODE § 4-384-015(b) (2016).

Two Chicago pet stores—Park Pet Shop and Pocket Pets—joined forces with Cedar Woods Farm, a Missouri dog breeder, seeking to invalidate the ordinance. They allege that it exceeds Chicago's home-rule powers under the Illinois Constitution and amounts to an unconstitutional regulation of interstate commerce in violation of the dormant aspect of the Commerce Clause. Amended complaints followed—the operative version is the second amended complaint—and the City moved to dismiss for failure to state a claim. See FED. R. CIV. P. 12(b)(6). The district judge granted the motion, holding that the ordinance is a valid exercise of the City's home-rule authority under the Illinois Constitution and is not an unconstitutional regulation of interstate commerce under the Commerce Clause. The judge entered final judgment for the City, and the plaintiffs appealed.

II. Discussion

We review a dismissal order without deference to the district court's decision, accepting as true the well-pleaded facts in the complaint and drawing reasonable inferences in the plaintiffs' favor. Roberts v. City of Chicago , 817 F.3d 561, 564 (7th Cir. 2016). To survive a motion to dismiss under Rule 12(b)(6), the complaint must allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable" as alleged in the complaint. Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

A bit of background about Chicago's regulatory scheme helps to place the state and federal constitutional claims in proper context. To operate a pet shop in Chicago requires a license from the City. CHICAGO, ILL., CODE § 4-384-020(a) (2016). The City's animal-care ordinance defines "pet shop" broadly as "any person primarily engaged in the business of selling or offering to sell animals suitable for use as pets," but excludes "the isolated or occasional sale of animals by a person who sells only such animals that he has produced and raised" and "any person engaged in the business of breeding who owns, has possession of, or harbors 5 or fewer female dogs or cats capable of reproductions and sells only those breeding dogs or cats or their offspring." Id. § 4-384-010. Also excluded are "any animal control center, animal care facility, kennel or pound or training facility" operated by a local, state, or federal government. Id.

Licensees must comply with a host of regulations governing the housing and care of animals offered for sale. For example, the ordinance imposes requirements designed to ensure a sanitary environment for the animals. Id. § 4-384-050. It sets basic standards of animal care. Id. § 4-384-055. It regulates cage size and quality. Id. § 4-384-100. And it requires licensees to submit to regular inspections by city inspectors. Id. § 4-384-130.

Though Chicago's existing regulatory scheme was already extensive, the puppy-mill ordinance is a far more significant restriction. It narrowly limits the sources from which pet retailers may obtain animals for resale: "A retailer may offer for sale only those dogs, cats or rabbits" obtained from an animal care or control facility operated by a unit of local, state, or federal government or from "a humane society or rescue organization." Id. § 4-384-015(b). A "retailer" is "any person licensed or required to be licensed under this chapter who offers for sale any dog, cat or rabbit in the City." Id. § 4-384-015(a).

The ordinance thus effectively prohibits large commercial breeders from supplying dogs, cats, and rabbits to pet retailers in the city. This dramatically changes the business model of Chicago's pet retailers, so it's no surprise that litigation commenced soon after the City adopted the ordinance. This suit alleges that the ordinance is constitutionally infirm in two respects—one state, one federal. We'll begin with the state constitutional claim.

A. Home-Rule Authority Under the Illinois Constitution

As a home-rule municipality under the Illinois Constitution, Chicago "may exercise any power and perform any function pertaining to its government and affairs including, but not limited to, the power to regulate for the protection of the public health, safety, morals and welfare; to license; to tax; and to incur debt."

ILL. CONST art. VII, § 6 (a). This constitutional provision "was written with the intention that home rule units be given the broadest powers possible." Scadron v. City of Des Plaines , 153 Ill.2d 164, 180 Ill.Dec. 77, 606 N.E.2d 1154, 1158 (1992). The state constitution further provides that a municipality with home-rule status may "exercise and perform concurrently with the State any power or function of a home rule unit to the extent that the General Assembly by law does not specifically limit the concurrent exercise or specifically declare the State's exercise to be exclusive." ILL. CONST. art. VII, § 6 (i).

To determine whether the puppy-mill ordinance is a permissible exercise of Chicago's home-rule powers, we follow the Illinois Supreme Court's instructions and evaluate the "nature and extent of the problem" at hand and whether the state has a "vital interest and a traditionally exclusive role" in regulating it. City of Chicago v. StubHub, Inc. , 366 Ill.Dec. 43, 979 N.E.2d 844, 852–53 (2011). These are commonly referred to as the Kalodimos factors. Kalodimos v. Village of Morton Grove , 103 Ill.2d 483, 83 Ill.Dec. 308, 470 N.E.2d 266 (1984) (developing the doctrine).

The puppy-mill ordinance is aimed at reducing the social problems and economic costs associated with mill-bred pets: the emotional and financial costs incurred by individual Chicagoans who find themselves with sick or troubled pets and the financial strain on the...