Restaurants shouldn’t decide who can open for business or how much competition is enough.

From coast to coast, cities are forcing food truck entrepreneurs to navigate laws whose only purpose is to protect restaurants from competition while providing no public benefit. But unlike Texas cities where food trucks thrive, like Austin, or others that have repealed anti-competitive food truck restrictions, like San Antonio and El Paso,^[1]the City of South Padre Island is going in the wrong direction. Instead of opening the door to food-truck entrepreneurs, the city has largely shut them out.

South Padre Island has never been welcoming to food trucks. Until 2016, the city had banned food trucks from opening for business on the island.  Then, facing pressure, the city announced it was considering revising the ban, which was met with fierce opposition by local restaurant owners. The restaurants insisted that the city severely restrict how many food trucks can obtain permits and to allow restaurant owners a way to veto their food-truck competition.^[2]Capitulating to the restaurant owners’ wishes, the city formally invited the restaurant owners to re-write the proposed food truck law.^[3]And, after placing their order for protection from food-truck competition, the city served a double dose of private economic protectionism.

Street vending has long been an entry point for entrepreneurship in America. In cities across the country, food trucks have gained in popularity because it gives people willing to work hard a way to become entrepreneurs and small business owners. Breaking into the business requires little or no specialized training, just a lot of hard work.

Smart cities have recognized that food trucks play an important role in developing a lively, vibrant and local business climate. But the City of South Padre Island uses its restaurant-permission requirement and permit cap to punish food trucks for choosing a different business model than their brick-and-mortar competitors. South Padre Island should be encouraging the entrepreneurs that operate food trucks, not disadvantaging them by playing favorites.

Customers, not the government, get to pick winners and losers in the marketplace.

That is why the Institute for Justice (“IJ”), SurfVive, and the Avalos brothers are teaming up to challenge the constitutionality of South Padre Island’s anti-competitive food-truck laws under the Texas Constitution.

South Padre Island—stifling entrepreneurs with unconstitutional protectionism.

The City of South Padre Island stifles food-truck entrepreneurs in two ways.

First, food trucks don’t qualify for a vending permit unless the owner of a local restaurant—their would-be competition—signs off on the vending permit.

Second, the city has only twelve vending permits; once twelve food trucks obtain permits on the island it shuts out all other food trucks, period.

The South Padre Island City Code provides that an applicant for a mobile-food-unit permit “must be supported locally and have the signature of an owner or designee of a licensed, free-standing food unit on South Padre Island before being eligible for a permit.”^[4]The Code also imposes a cap on available permits, stating that “[n]o more than Twelve (12) mobile food unit permits may be issued per month on the island[,]”^[5]and further limit those permits to “30 days”^[6]before they expire.

In other words, not only does the city severely restrict the number of available vending permits in any given month, but to obtain one, food-truck entrepreneurs must ask a restaurant owner to sign a vending permit application before their food truck can open for business.

The Plaintiffs

The plaintiffs in this case illustrate the real costs the law imposes on food truck entrepreneurs. In some cases, food trucks are shut out because restaurants can veto competition by refusing to sign a permit application. In others, food trucks are shut out because the City allows only twelve food trucks to open for business on the island.

SurfVive and the SurfVive food truck

SurfVive is a local non-profit whose mission is “to sow love through surfing, food, and all forms of art.” SurfVive’s mission centers on promoting healthy living.  In pursuit of this mission, SurfVive runs a free surfing school, operates learning gardens to teach the importance of responsible food choices, and runs a composting service. To support its mission and promote healthy food options, SurfVive purchased a food truck in March 2018 for the purpose of selling smoothies, coffee, and vegetable bowls on South Padre Island. When it first attempted to open for business, the city informed SurfVive that it had no permits available. A few months later, after SurfVive learned that a permit became available, the city denied its vending permit because no restaurant owner had signed off on the permit application.

Anubis and Ramses Avalos

Ramses and Anubis Avalos are brothers who share passions for music and healthy food. Both Ramses and Anubis adhere to a vegan diet and, after having difficulty finding affordable and flavorful meatless food options, they decided to open a food truck, Chile de Árbol. Their food truck offers a variety of vegan options, including tacos, burgers, and Indian-inspired bowls. Ramses and Anubis currently operate their food truck at a food truck park in Brownsville, and seek to expand their business by bringing their tasty food options to South Padre Island. Unfortunately, the City of South Padre Island’s anti-competitive vending laws make it very difficult for the Avalos brothers to realize their goals.

South Padre Island’s anti-competitive laws violate the Texas Constitution

South Padre Island’s restaurant-permission requirement and permit cap are unconstitutional. Under the Texas Constitution, the government cannot use its power to pick winners and losers in the marketplace. But that is exactly what South Padre Island is doing. By enforcing its anti-competitive restaurant-permission requirement and permit cap, the city is violating the economic liberty of every food truck entrepreneur seeking to open for business on the island.

Economic liberty is an individual right protected by Article I, Section 19 of the Texas Constitution. It allows everyone to earn an honest living in their chosen occupation, free from unreasonable government interference. No health or safety concerns are addressed by South Padre Island’s anti-competitive food-truck ordinance. Laws addressing food and traffic safety are already on the books. But the restaurant-permission requirement and permit cap do no such thing. All those rules do is protect brick-and-mortar restaurants and other retail food establishments from their food-truck competition. But protecting one type of business by harming another—i.e., pure economic protectionism—is not a legitimate use of government power.

The Texas Supreme Court issued a landmark ruling in 2015 in a constitutional case involving economic liberty. In Patel v. Texas Department of Licensing and Regulation, the Court made clear that economic liberty is a meaningfully protected individual right under Article I, Section 19’s Due Course of Law Clause. Under Patel, Texas courts apply a constitutional test that provides greater protections for economic liberty under the Texas Constitution than under the U.S. Constitution. Texas courts must determine whether a legitimate government interest exists to support an economic regulation, whether the challenged law is rationally related, in the actual, real world, to that governmental interest, and now must also look at the law’s effect as a whole and determine if it is so “unreasonably burdensome that it becomes oppressive.”

To vindicate their economic liberty rights, SurfVive along with Ramses and Anubis Avalos have teamed up with IJ to file a lawsuit challenging the constitutionality of South Padre Island’s anti-competitive food truck laws.

IJ’s National Street Vending Initiative

In response to the anti-competitive array of laws lined up against street vendors in cities nationwide, the Institute for Justice is helping them fight back. 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 and protectionist laws.

The Team

IJ filed its petition in this case, SurfVive v. City of South Padre Island, on February 28, 2019. The litigation team is lead by Arif Panju, the managing attorney of IJ’s Texas office, and IJ attorney Kirby Thomas West.

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 including the following cases:

• Patel v. Texas Department of Licensing and Regulation—In June 2015, the Texas Supreme Court ruled that the Texas Department of Licensing and Regulation violated the state constitution when it ordered eyebrow threaders to stop working unless they obtained 750 hours of conventional cosmetology training. This landmark ruling vindicated the threaders’ economic liberty rights under the Texas Constitution. Patelestablished a new test for reviewing the constitutionality of economic regulations that infringe on an individual’s economic liberty.
• Castaneda v. City of El Paso—In January 2011, the Institute for Justice brought suit against the city of El Paso, Texas, which barred mobile food vendors from operating within 1,000 feet of a restaurant or convenience store, and prohibited them from stopping to await customers anywhere in the city. As a result of the lawsuit, the city passed a new ordinance that eliminated these and other protectionist restrictions.
• Brantley v. Kuntz—In January 2015, the United States District Court for the Western District of Texas declared as unconstitutional under the 14th Amendment a set of laws that forced small African hair braiding schools to transform into fully-equipped barber schools just so they could teach students to braid hair for a living. The court’s ruling is a model of judicial engagement, a genuine search for the truth concerning the constitutionality of the government’s ends and means on the basis of real evidence.
• Saint Joseph Abbey v. Castille—In August 2010, the Institute for Justice teamed up with the monks of Saint Joseph Abbey in Louisiana to challenge a requirement that they be licensed as funeral directors just to sell their handmade wooden caskets. In 2013, the Fifth U.S. Circuit Court of Appeals agreed that the requirement violated the 14th Amendment to the United States Constitution, declaring that mere economic protectionism is an illegitimate “naked transfer of wealth[.]”
• Lopez v. City of San Antonio—In October 2015, the Institute for Justice teamed up with four food-truck entrepreneurs to file a lawsuit against the city of San Antonio, Texas, which made it illegal to vend within 300 feet of a restaurant. To have any chance at vending in these restricted areas, food trucks had to first get written, notarized permission slips from the very brick-and-mortar competitors the law is designed to protect. In response to IJ’s lawsuit, the San Antonio City Council voted to repeal the decades-old protectionist law.

^[1]SeeJosh Baugh, City rescinds 300-foot rule on food trucks, San Antonio Express-News (Nov. 19, 2015), available athttps://www.expressnews.com/news/local/article/City-rescinds-300-foot-rule-on-food-trucks-6644866.php; Karla Ronquillo, Food truck trend continues to grow as profits roll in, Borderzine (Oct. 31, 2014), available athttp://borderzine.com/2014/10/food-truck-trend-continues-to-grow-as-profits-roll-in/

^[2]See http://townspi.granicus.com/MediaPlayer.php?view_id=4&clip_id=2647.

^[3]See https://www.myspi.org/egov/documents/1455122110_41107.pdf.

^[4]South Padre Island, Tex., Code § 10-31(C)(3).

^[5]South Padre Island, Tex. Code § 10-31(C)(2).

^[6]South Padre Island, Tex. Code § 10-31(F)(2)(a).