Friday, August 21, 2009

What's fair is fair for Bronx gun shop in due process case

A gun shop in The Bronx was raided in October 2001, one month after the terrorist attacks, when NYPD was trying to provide enhanced security in the region. The gun shop, Olinville Arms, was raided without a warrant, and the shop's security was deemed "grossly inadequate." The store got its license back a few months later after the owner, Spinelli, promised to improve store security. In a case that clarifies due process in the context of a business search and seizure, the Second Circuit rules in the gun shop's favor.

The case is Spinelli v. City of New York, decided on August 7. New York City regulations allow authorities to inspect gun dealers "at all times by members of the Police Department." Failure to comply with this rule means the store will lose the dealer's license for good cause, after notice of the charges and the opportunity for a hearing.

While the store re-opened, Spinelli lost business during the time it was closed. So Spinelli did what any red-blooded American would do when they get shafted by the government. Lawsuit. Not all claims survive the Second Circuit's ruling, but Spinelli gets that rare grand slam in the Court of Appeals: a claim is not only reinstated by the Court of Appeals but the court directs that summary judgment be entered in her favor.

First, the losing claim. The warrantless search claim fails because, although the Fourth Amendment prohibits unreasonable searches and seizures and most warrantless searches are illegal, gun shops and other "closely regulated industries" enjoy reduced privacy protections. While Spinelli claims the officers had ulterior motives in searching the business, subjective intent is irrelevant in assessing Fourth Amendment search and seizure cases. What ends the case for Spinelli is that City regulations allow the police to search these kinds of businesses "at all times." The Constitution does not require search warrants where the burden of obtaining a warrant would frustrate the reasons for the search. The Court of Appeals holds that "an effective inspection of a gun dealer's premises requires that searches be unannounced in order to discover potential security infractions." (Judge Sotomayor was on the panel but did not decide the appeal as she now sits on the Supreme Court. I wonder if Second Amendment advocates would have used this case against her).

On the other hand, Spinelli wins it all on her due process claim. Under the Fourteenth Amendment, the government cannot seize your property without notice and an opportunity to be heard. If you think this concept is easy, you should know that an entire volume of the U.S. Code is devoted to fine-print annotations governing precisely what kind of process is due in an untold number of factual scenarios. This is due, in part, to Mathews v. Eldridge, 424 U.S. 319 (1976), which devises a three-part test which weighs the government's interest in seizing the property, the private interest in retaining the property and the risk of an erroneous seizure.

Spinelli wins this three-way test. Her interest in retaining her license is strong, the Court of Appeals holds, because she is operating a business and is pursuing a livelihood. Surprisingly, there is little case law on this issue. The Second Circuit cites an unpublished Tenth Circuit case and some general language from the Supreme Court on the severity of stripping someone of her livelihood. Further supporting Spinelli's due process claim is the fact that the notice of alleged violations was vague in stating simply that security at the gun shop was inadequate. No particularity means that Spinelli had to guess about the nature of the security breaches. Hey, what's fair is fair.

The more complicated due process issue is whether the City denied Spinelli an opportunity to be heard after the government raided the store. The Court rejects the City's argument that no due process was required because Spinelli's lawyer quickly negotiated an end to the dispute and Spinelli got her property back. The Court also takes the City to task for not providing a hearing until after the investigation runs its course. "The City's blanket policy of only providing a hearing after the investigation is completed cannot be squared with due process." As the City concedes the hearing may take place months or years after the raid, due process requires more. Here again, the Court of Appeals relies on legal authority from the other Circuits on this issue. It is now the law in the Second Circuit. As that kind of delay serves no purpose and "would have wiped out Spinelli's livelihood," the City loses this part of the analysis.

As the Second Circuit next finds that the City has no legitimate interest in delaying resolution of its dispute with Spinelli while her business twists in the wind, it's a clean sweep for Spinelli, who not only succeeds on reversing the district court's ruling but persuades the Court of Appeals that she is entitled to summary judgment. The case is remanded to the district court for a damages inquest.

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