Derby City Betting Against Food Trucks

Introduction

The Derby City bans food trucks from operating within 150 feet of any restaurant if it sells similar food without the restaurant’s permission. Proximity restrictions like Louisville’s are one of the worst impediments to success for existing and prospective street vendors. Smart cities have recognized that food trucks play an important role in developing a lively and vibrant local business climate. But instead of encouraging local entrepreneurs, Louisville officials use the city’s 150-foot ban to punish food trucks for choosing a different business model than their brick-and-mortar competitors.

The ban on food trucks hurts real people like Troy King and Robert Martin. For both, like countless others in America, street vending has been an entry point for entrepreneurship. In cities across the country, including Louisville, food trucks have gained in popularity because they give people willing to work hard a way to become entrepreneurs and small business owners.

Nobody should need their competitors’ permission to operate a business, and whether you can operate your business should not turn on whether a competitor sells the same thing.

Unfortunately, Troy and Robert’s woes are all too common. From coast to coast, cities are forcing food truck entrepreneurs to navigate laws that only protect restaurants from competition while providing no public benefit at all. ¹ Louisville is one of those cities. It is people, not the government, who get to pick winners and losers in the marketplace. That is why the Institute for Justice (IJ) is teaming up with Troy and Robert to challenge Louisville’s 150-foot ban as a violation of the U.S. Constitution.

Louisville’s 150-Foot Ban Against Food Trucks

The city of Louisville is not friendly to food truck entrepreneurs. The Louisville City Code provides that no food truck “shall sell or vend . . . within 150 feet of any restaurant, café, or eating establishment offering as a main featured item or items similar to that restaurant, café, or eating establishment . . . .” ²

In other words, a food truck’s ability to operate on public or private property turns on whether a nearby brick-and-mortar business sells similar food. If a food truck is vending within 150 feet of a restaurant that does not sell similar food, for example, the restaurant can add a “similar” item to its menu and immediately force the food truck to shut down under the law. Food trucks that violate the 150-foot ban face daily fines, up to 30 days in prison, or both, ³ and they also face the possible suspension or revocation ⁴ of their vending license.

To have any chance of evading the 150-foot restriction, a food truck must: (1) approach every restaurant and other brick-and-mortar competitor within 150 feet that sells similar food; and (2) ask the owner for a written permission slip allowing them to operate their food truck within 150 feet. ⁵ If any brick-and-mortar competitor revokes their permission—something they are free to do at any time, for any reason, and without notice—the affected food truck must shut down all vending operations. Even worse, nothing prevents restaurants from extorting food truck entrepreneurs by making them pay restaurants in exchange for the permission slips the government requires to operate in much of the city.

Even food trucks that vend nowhere near restaurants operate under the 150-foot ban’s long shadow. If no restaurants are nearby, a food truck must shut down immediately if a new restaurant that sells similar food opens within 150 feet of pre-existing food trucks. ⁶ It matters not if a food truck was there first. For the same reason, the 150-foot ban constrains truck owners looking to vend in multiple locations and makes it very difficult for them to expand their business by adding additional trucks.

The 150-foot ban does nothing to protect the public or help consumers. But with so many sit-down restaurants, fast food chains, sandwich shops, cafés and other eateries throughout the city, it does force food truck entrepreneurs to operate largely in undesirable locations away from potential customers. The risk of food trucks getting shut down is great, and as a result, food trucks are left with fewer customers, and consumers are left with fewer choices.

Economic Protectionism Is Not a Legitimate Use of Government Power

Louisville’s 150-foot rule is not just bad policy—it is unconstitutional. The U.S. Constitution does not allow government to use its power in order to pick winners and losers in the marketplace. But that is exactly what Louisville is doing. By enforcing its 150-foot ban against food trucks, the city is violating the economic liberty of every food truck entrepreneur in Louisville. And it is adding insult to injury by making food trucks beg their brick-and-mortar competitors for permission to operate that can be revoked on a dime, without notice or warning.

The Constitution protects the right of individuals to earn an honest living free from unreasonable government interference. There is no legitimate justification for prohibiting a food truck from operating on a certain block because a nearby brick-and-mortar business happens to sell similar food. All that the rule does is unfairly protect restaurants and other brick-and-mortar eating establishments from healthy competition.

The U.S. Court of Appeals for the 6th Circuit, which includes Kentucky, addressed this issue in Craigmiles v. Giles and made clear that it is illegitimate to use government power in order to protect one group of competitors against another. ⁷ The 150-foot ban protects one type of business, restaurants, by harming another, food trucks. This is pure economic protectionism and therefore unconstitutional.

Simply put, the government cannot impose burdens on food truck entrepreneurs for no good reason. It is for consumers, not the government, to decide where to get their lunch.

The Plaintiffs

Troy King

After working in the food service industry for several years, Troy King purchased his first food truck in 2014—a gourmet chicken food truck called Pollo. He offers his customers a range of dishes, including chicken and waffles, fried chicken tacos, chicken gyros, and fried chicken sandwiches. By 2015, Troy had expanded his business by buying a bus and converting it into a second food truck. Troy also continues to buy old buses and vans, converting them into food trucks and reselling them to food truck entrepreneurs around the country.

In September 2016, Troy was operating Pollo in downtown Louisville when a city inspector threatened to issue a citation and tow his truck simply because Troy was serving customers within 150 feet of Cravings ala Carte, a restaurant in the basement of the National City Tower that also serves chicken. Troy was forced to abandon his vending location and his customers.

Troy worries that he can be shut down and forced to abandon his vending location anytime a nearby restaurant claims it sells similar food, or modifies its menu to add an item similar to something he offers. Plans to expand his vending business to other locations around the city invariably run into the proximity ban’s requirement that he obtain written approval from every brick-and-mortar competitor within 150 feet. As a result, Troy must avoid large swaths of Louisville’s good vending locations where it’s convenient for customers to find him.

Robert Martin

Robert Martin operates the Red’s Comfort Foods food truck. He offers specialty gourmet hot dogs and sausages using recipes collected during his years working as a network cameraman across the U.S. Robert operates his food truck at various locations in Louisville, but the 150-foot ban makes it difficult to operate where customers can find him.

In the summer of 2015, Robert was vending downtown on Main Street when a city inspector approached Red’s Comfort Foods and, in front of his customers, issued Robert a citation for vending within 150 feet of a restaurant called Down One. In order to maintain his license after violating the 150-foot ban, Robert agreed to not receive another citation for a period of six months. The 150-foot ban forced Robert to abandon the vending location where his customers knew they could find him and move away to the fairgrounds at the Kentucky Exposition Center.

The 150-foot ban makes it difficult for Robert to operate his Red’s Comfort Foods food truck in Louisville because the law creates no-vending zones that extend 150 feet around every restaurant, café and eating establishment in the city. Robert would need approval in writing from every single one of the brick-and-mortar competitors within 150 feet that sell similar food.

The Defendant

The defendant is the Louisville/Jefferson County Metro Government.

Street Vendors: Part of the Fabric of American Life

Street vending has been a part of the American economy since colonial times. ⁸ Today’s vendors are a diverse group of businesspeople selling from both mobile and fixed locations. They are immigrants, minorities, ex-professionals, men, women, retirees and young entrepreneurs building new businesses. ⁹

Vending also offers entrepreneurial opportunities to those on the first rung of the economic ladder. In a 2015 report, Upwardly Mobile: Street Vending and the American Dream, IJ surveyed 763 licensed street vendors in the 50 largest cities in the U.S. and found that vending is a diverse and vibrant industry that gives people the ability to support themselves, their families and their communities. ¹⁰ And these entrepreneurs create jobs for themselves and others: 39 percent of vendors in cities like Louisville are employers. ¹¹

But many would-be entrepreneurs are often shut out of starting street vending businesses due to complicated, costly and ever-expanding government regulations. ¹² In El Paso, Texas, the city forced food trucks to stay 1,000 feet away from restaurants; the city repealed the law after IJ challenged their constitutionality. ¹³ In San Antonio, Texas, the city forced food trucks to stay 300 feet away from restaurants unless they received written permission slips from their brick-and-mortar competitors; the city repealed the law after IJ challenged its constitutionality. ¹⁴ Such proximity restrictions are unconstitutional and constitute illegitimate exercises of government power.

IJ’s National Street Vending Initiative

IJ’s National Street Vending Initiative is a nationwide effort to vindicate the right of street vendors to earn an honest living by fighting unconstitutional vending restrictions in courts of law and the court of public opinion. As it has done across the country, IJ stands ready to challenge such restrictions, and it will help street vendors oppose attempts to shut them down through the use of unconstitutional protectionist laws.

The Litigation Team

IJ filed its complaint in this case, King v. Louisville/Jefferson County Metro Government, on June 28, 2017 in the U.S. District Court for the Western District of Kentucky. The litigation team for IJ in this case will be attorneys Arif Panju and Robert Frommer.

The Institute for Justice: A History of Protecting Economic Liberties

The Institute for Justice is a public-interest law firm that brings challenges nationwide in support of fundamental individual liberties. IJ has successfully challenged restrictions on economic liberty across the nation.