Appeals Court allows Jacksonville food truck lawsuit to proceed

A unanimous North Carolina Court of Appeals panel will allow a legal challenge against Jacksonville’s food truck restrictions to move forward. The decision announced Tuesday reverses a trial court ruling favoring the city.

“Plaintiffs argue the trial court erred by granting Defendants’ motion because it applied the wrong legal test to their claims and, even assuming the trial court had applied the correct legal tests, their complaint adequately alleged facts sufficient to survive dismissal,” wrote Judge Jefferson Griffin for the three-judge appellate panel. “We agree with both of Plaintiffs’ arguments and reverse the trial court’s order dismissing Plaintiffs’ claims.”

A business property owner and two food truck operators working with the Institute for Justice sued Jacksonville in December 2022 over rules that limit food truck operations within the city. Superior Court Judge John Nobles dismissed the suit in January.

“Plaintiffs allege the location restrictions prevent food truck operators from conducting business in approximately ninety-six percent of property located in Jacksonville. Because of these restrictions, Plaintiffs contend their rights to engage in safe and lawful occupations are severely infringed,” Griffin wrote.

The suit challenges Jacksonville’s food truck sign restrictions as violations of state free-speech rights.

“Article 1, section 14 of the North Carolina Constitution provides that ‘[f]reedom of speech and of the press are two of the great bulwarks of liberty and therefore shall never be restrained, but every person shall be held responsible for their abuse.’ This provision requires State action regulating commercial speech to satisfy either strict scrutiny or intermediate scrutiny depending on whether the regulation is content-based or content-neutral, respectively,” Griffin wrote. “We hold the trial court erred by applying the wrong legal test to their freedom of speech claim.”

The lawsuit emphasized that Jacksonville’s unified development ordinance treated food truck owners differently from competitors.

“Another consequence of the UDO’s classifications is that ‘[a] specialty-eating establishment like a bakery, a coffee shop, or an ice cream shop could open on Eligible Property next door to a restaurant, residential property, or a food truck …, but a food truck offering the very same baked goods, coffee, or ice cream could not.’ Plaintiffs’ Complaint contains numerous other factual allegations explaining how the UDO’s classifications allow for businesses engaged in substantially the same business as Plaintiffs, namely selling food and drink, to set up shop in areas that food trucks may not,” Griffin wrote.

In addition to free speech and equal protection claims, the Appeals Court will allow the suit to move forward with claims that Jacksonville violated the plaintiffs’ rights under the “fruits of their own labor” and “law of the land” clauses of the state constitution.

“[B]oth the Fruits of Their Own Labor clause and the Law of the Land clause protect citizens’ constitutional right to earn a living from arbitrary regulations,” Griffin explained.

“Here, Plaintiffs allege the City and its officials enacted the UDO, and the challenged provisions therein, ‘to protect brick-and-mortar restaurants from competition.’ In support of this contention, Plaintiffs point to the UDO’s enactment history. Plaintiffs allege the UDO initially provided for a less restrictive scheme which would have allowed food trucks to operate within a larger area of Jacksonville. However, the UDO was redrafted because ‘in the restaurant owners’ view, the original overlay map did not sufficiently insulate them from competition.’ As a result of this pressure, ‘the City Council considered allowing food trucks only if they did not operate within 250 feet of, among other things, any other parcel with a restaurant,’” the Appeals Court opinion continued.

“[T]aking Plaintiffs’ allegations as true, we hold they sufficiently pled an unlawful and improper governmental purpose for the UDO,” Griffin wrote.

Appellate judges also will allow the plaintiffs to challenge Jacksonville’s food truck fees.

“Plaintiffs allege the fees were not set based on the City’s actual or reasonably anticipated costs nor that the fees ‘bear any relationship to the City’s actual or reasonably anticipated cost to regulate food trucks.’ Rather, Plaintiffs contend, the fees were set ‘based on a comparison to the approximate property tax burdens on some properties where brick-and-mortar restaurants are located[,]’ which results in the fee amounts exceeding the actual or reasonably anticipated cost for the City to enforce the UDO regulations,” Griffin wrote.

“While cognizant that the UDO enjoys a presumption of validity, we nonetheless hold the trial court erred by applying an erroneous blanket-test to Plaintiffs’ claims,” Griffin concluded.

Judges John Tyson and Allegra Collins joined Griffin’s decision. The case heads back to a trial judge to address each of the plaintiffs’ claims.

The three judges heard oral arguments in the case on Sept. 24.

“The trial court dismissed our claims that the Jacksonville City Council used its police power to choose winners and losers in a private marketplace,” argued IJ lawyer Bob Belden.

“We allege: that the city manager warned the city council of food trucks, saying ‘We must protect the brick-and-mortar restaurant’; that the mayor agreed, saying that food trucks needed to be kept substantial distances away from restaurants; and the city planning and transportation director confirmed for the city council that food trucks would not be allowed to create competition with restaurants,” Belden added.

Belden represents Jacksonville business property owner Nicole Gonzalez and food truck operators Anthony Proctor and Octavius Raymond. Their lawsuit alleges that Jacksonville’s rules block Gonzalez from being able to host a food truck on her property, even though its zoning permits food trucks.

“You can’t be within 250 feet of a restaurant. You can’t be within 250 feet of a property that has another food truck on it. You can’t be within 250 feet of a residential area,” Belden said. The restrictions effectively place 96% of the city off-limits for food trucks, Belden argued.

Belden pointed to the state Supreme Court’s recent ruling in Kinsley v. Ace Speedway to bolster his clients’ argument that their lawsuit should be allowed to move forward. In the Ace Speedway case, the state’s high court allowed race track owners to move forward with a lawsuit claiming that state government officials violated their economic rights when shutting them down during the COVID-19 pandemic.

Jacksonville’s lawyer distinguished city food truck rules from other restrictions courts have struck down in the past.

“There’s a difference between a complete prohibition or a licensing scheme that makes it impossible — literally puts you out of business — and business regulations,” Norwood Blanchard argued.

The lawsuit challenges three ways Jacksonville officials “restrict food trucks to eliminate unwanted competition with restaurants,” according to a June court filing. “These included free speech, property rights, economic liberty, and ultra vires claims.”

“Ultra vires” refers to a claim that a government’s actions are beyond its powers.

“But instead of applying each claim’s respective test, the trial court dismissed all the claims at the pleadings stage under a single, incorrect legal test that only requires ‘envision[ing] … reasonably conceivably rational bases’ for the challenged restrictions,” the plaintiffs’ lawyers wrote.

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