CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0 0 REPORTER'S RECORD VOLUME OF VOLUMES TRIAL COURT CAUSE NO. DC--0-A DALLAS, TEXAS CONSUMER SERVICE ALLIANCE ) IN THE DISTRICT COURT OF TEXAS, INC., ET AL., ) //0 0:: AM PLAINTIFFS, ) LISA MATZ ) Clerk vs. ) DALLAS COUNTY, TEXAS ) CITY OF DALLAS, TEXAS, ) DEFENDANT. ) TH JUDICIAL DISTRICT DEFENDANT'S PLEA TO THE JURISDICTION On the th day of February, 0, the following proceedings came on to be held in the above-titled and numbered cause before the Honorable Eric V. Moyé, Judge Presiding, held in Dallas, Dallas County, Texas. Proceedings reported by computerized stenotype machine., CSR, RPR TEXAS CSR NO. Expiration Date: //0 Official Court Reporter of the th Judicial District Court Dallas County, Texas 00 Commerce Street, Dallas, Tx 0 -- FILED IN th COURT OF APPEALS TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0 0 APPEARANCES REPRESENTING PLAINTIFF TITLEMAX OF TEXAS, INC.: MS. CAROL C. PAYNE SBOT NO. 00 ESTES OKON THORNE & CARR, P.L.L.C. 00 Maple Avenue, Suite 00 Dallas, Texas Telephone:..000 Facsimile:..0 REPRESENTING PLAINTIFF CONSUMER SERVICE ALLIANCE : MR. MICHAEL P. LYNN, P.C. SBOT NO. 00 MR. KENT D. KRABILL SBOT NO. 00 LYNN TILLOTSON PINKER & COX, L.L.P. 00 Ross Avenue Suite 00 Dallas, Texas 0 Telephone:..00 Facsimile:.. REPRESENTING DEFENDANT MS. JENNIFER C. WANG SBOT NO. 0 MR. PETER HASKEL SBOT NO. 000 MS. BARBARA ROSENBERG SBOT NO. 00 CITY ATTORNEY'S OFFICE CITY OF DALLAS 00 Marilla Street, Suite BN Dallas, Texas 0 Telephone:.0. Facsimile:.0.0 TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0 0 VOLUME Defendant's Plea to the Jurisdiction February, 0 PAGE VOL. Appearances... Proceedings... Defendant's Plea to the Jurisdiction... Argument by Ms. Wang... Response by Ms. Payne... Response by Mr. Lynn... Argument Continued by Ms. Payne... Response by Mr. Lynn... Reply by Ms. Wang... Adjournment... Reporter's Certificate... TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0:: 0:: 0::0 0::0 0::0 0 0 P R O C E E D I N G S (Open Court; Proceedings commenced at 0: a.m.) THE BAILIFF: All rise. The th District Court is now in session. The Honorable Eric V. Moyé presiding. THE COURT: Good morning. You may be seated. We are on the record in -, Consumer Service Alliance versus City of Dallas. May I have announcements, please. MS. PAYNE: Carol Payne on behalf of Plaintiff TitleMax. THE COURT: Ms. Payne. MR. LYNN: Mike Lynn on behalf of Consumer Service Alliance of Texas. THE COURT: Mr. Lynn. MS. WANG: Jennifer Wang on behalf of the City of Dallas. THE COURT: Ms. Wang. MS. WANG: I am also joined by Peter Haskel and Barbara Rosenberg. THE COURT: I have read the Plea to the Jurisdiction and the response and the replies. I'll hear from you briefly. MS. WANG: Thank you, Your Honor. There was also filed with the Court a TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0:: 0:: 0::0 0:: 0:: 0:: 0 0 supplement to the plea; I don't believe that that was in the notebook that you were given earlier. Can I bring that over to you at the bench? THE COURT: When was that filed? MS. WANG: It was filed December 0 th. THE COURT: I can't believe I don't have it. (Document handed to the Court.) THE COURT: Thank you. I have -- I do have this. MS. WANG: You do? All right. Your Honor, the City is seeking dismissal of the lawsuit today because Plaintiffs have not and cannot plead the facts necessary to establish the Court's jurisdiction. Even though the Plaintiffs' petition asserts that this Court has jurisdiction over the City's ordinance because it is civil in nature, we have since conferred briefly this morning and Plaintiffs are now in agreement with the City that the ordinance is penal in nature and are taking that position in the response -- responsive brief that they have recently filed with the Court. And since we are treating the City's ordinance as penal in nature, then the State of Texas TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0:: 0:: 0:: 0:: 0:: 0:: 0 0 versus Morales sets forth the controlling standard for a court's jurisdiction and that case requires that -- that the ordinance be both unconstitutional and that enforcement will result to irreparable injury to a vested property right. In this case Plaintiffs haven't pleaded the necessary facts for either factor. With respect to a constitutional challenge, Plaintiffs have not made one; all they're saying is that the ordinance is invalid because it is preempted by state law, in this case, the Texas Finance Code. Plaintiffs appears to be arguing both field preemption as well as concept preemption and there simply is neither. Texas law is clear that the entry of the state into a field of regulation does not automatically preempt that field from regulation. In this case the Finance Code's regulation of CABs, credit access businesses, does not mean that they occupy the field of credit access business regulation, and, in fact, state law says that if the legislature decides to preempt a subject matter, it must do so with unmistakable clarity. There's simply nothing in the state laws TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0:: 0:: 0:: 0::0 0:: 0:: 0 0 that states with unmistakable clarity or otherwise that it intends to occupy the field of regulation of credit access businesses. In fact, the Texas Finance Code, I believe, indicates otherwise. It says that credit access businesses may assess fees as permitted and is permitted to charge amounts as allowed by other laws as applicable, clearly recognizing that "other laws" may apply to the regulation of credit access businesses. Furthermore, as a part of the supplement that the City has filed, the Texas Office of Consumer Credit Commissioner, the OCCC, the state agency responsible for regulating CABs and for implementing the Texas Finance Code, issued a bulletin in December that clearly indicated that they did not consider the City of Dallas's ordinance preempted by the Finance Code. In fact, the OCC bulletin was warning CABs that any attempt to circumvent municipal regulations, including the ordinance at issue here in Dallas, may be an indication that CABs are running afoul of the legislative intent of the very laws that Plaintiff now allege are preempted by the City ordinance. THE COURT: Well, that in and of itself would not particularly -- I mean, isn't that just being prudent? I mean, you're not suggesting that there is a TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0:: 0:: 0:0: 0:0: 0:0: 0:0: 0 0 waiver or -- of any acknowledgment -- of any position asserted by the Plaintiffs, are you, by that? MS. WANG: No. What I'm saying is rather than stating with unmistakable clarity that the state occupies the field of CAB regulation, I believe both the face of the statute of the Texas Finance Code, as well as this bulletin by the OCCC, which is the agency responsible for implementing, is -- are indications that they see no such preemption. And, in fact, you know, there's no indication of any conflict preemption. THE COURT: Should we take anything from the fact that the Labor Code speaks in terms of law as opposed to ordinances? MS. WANG: No -- No, Your Honor -- The Texas Finance Code you mean? THE COURT: Yes. I'm sorry. Did I say -- I said Labor Code. Forgive me. I'm sorry. I meant Finance Code. MS. WANG: No. No, I don't believe so. Texas -- Dallas is a Home Rule city -- THE COURT: Right. MS. WANG: -- with all the powers -- THE COURT: I understand that. MS. WANG: -- consistent, you know, with a Home Rule city, and I don't see the fact that it says TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0:0: 0::00 0:: 0:: 0:: 0::0 0 0 "as allowed by other laws" indicates, you know, that that would preclude cities. THE COURT: Proceed. MS. WANG: Furthermore, there simply, on the face of the -- the Texas Finance Code, the statute and the ordinance by the City, there is no conflict. THE COURT: What am I to take from the -- The issue of the enforcement since the enactment has been seeming to me somewhat unorthodox. What am I to take from the fact that the City has not for a time been enforcing this ordinance? MS. WANG: Nothing. The -- THE COURT: Then why hasn't it been? MS. WANG: Plaintiffs have said that they are afraid to violate the ordinance for fear of whatever financial repercussions -- THE COURT: I understand that. MS. WANG: -- that they want to cite, and so if there have been no violations of the ordinance then ostensibly there can be no enforcement either. THE COURT: Is it your position that there have been no enforcements because there have been no violations and there has not been a decision -- That's -- That's really distracting, Counsel. Would you please stop doing that? TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
0 CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0::0 0::0 0:: 0:: 0:: 0::0 0 0 MR. HASKEL: Yes, Your Honor. THE COURT: I'm sure it distracts her as much as it does me. MR. HASKEL: Yes, Your Honor. THE COURT: Okay. Are you representing to the Court that there have been no enforcement actions because there have been no violations, or has there not been -- It appears that there's been some tacit agreement that there was not going to be a violation -- -- Excuse me. -- there's not going to be an enforcement of the statute, am I correct in that or not? MS. WANG: There previously had been -- THE COURT: Right. MS. WANG: -- at the institute of this lawsuit a tacit agreement not to proceed, but as the Plaintiffs have pointed out in their responsive brief and in the e-mail that they've attached as an exhibit, the City gave them notice that as of June th, I believe, of this -- of 0, that the City would, in fact, be enforcing the ordinance. And part of what's necessary is to be able to receive a complaint from a consumer. And since there have been no complaints that have come in, ostensibly because there's been no violation of the ordinance, the City simply hasn't had time or reason to enforce, but TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0:: 0:: 0:: 0:: 0:: 0:: 0 0 there is no agreement that the City will never enforce and there's certainly no implication by the City that it does not intend to enforce. THE COURT: Let me hear from the Plaintiffs, please. MS. PAYNE: Thank you, Judge. I think you have zeroed in on what makes this case different from the Morales case and why we believe City of Austin is the appropriate case to look at. THE COURT: Uh-huh. MS. PAYNE: The problem with Morales is that there was a long history of nonenforcement, and I believe the state even stipulated that they had no intention of enforcing going forward -- THE COURT: We don't have that here now, do we? MS. PAYNE: We don't have that here. We have -- The statute has been in effect since -- or the ordinance -- Excuse me. -- has been in effect since January st. There was an agreement of nonenforcement through about June. THE COURT: Right. MS. PAYNE: And then we got the e-mail that said open season on your folks. TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0:: 0::0 0:: 0:: 0:: 0:: 0 0 THE COURT: Right. MS. PAYNE: And so -- And so there has been -- these are businesses that some of which are larger than others, but with respect to my client, for example, there's been an attempt to comply with this. And, in fact, my client has been the one that is discussed although, you know, in very general terms in that supplemental plea that you've received. THE COURT: Uh-huh. MS. PAYNE: And so the problem there is that there's an ordinance that's out here, they're not enforcing it, there's concerns about economic suicide if you run afoul because you have no idea when the City might enforce it, and now you've got these other -- THE COURT: The City said as of June they were going to enforce it, did they not? MS. PAYNE: Well, they said that anybody could be subject to enforcement, all right? THE COURT: Is that not a "yes" to my question? MS. PAYNE: Well, you would think so except that there's been a six-month period where we have heard of no instances of enforcement, and I suspect that had there been any instances of enforcement the City would have come forward with some evidence of that. TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0:: 0::0 0:: 0:: 0:: 0:: 0 0 THE COURT: Ms. Wang suggests that the only reason that there's been no enforcement is because there's been no violation; is that correct? MS. PAYNE: We -- We don't know. I think my client would feel like -- feels like it has not violated, but I don't know about any of the other folks. THE COURT: So you're not aware of any violations of the ordinance as we stand here, are you? MS. PAYNE: We are not aware and I believe that that is a fact question that could be subject to discovery and fleshing out in this case. And that leads to another issue -- THE COURT: Well, let me -- Hang on now. MS. PAYNE: Sure. THE COURT: Before we get to whether they have a property right or not, wouldn't the Consumer Service Alliance of Texas know -- which I understand to be some measure -- some manner of a -- an umbrella organization for these businesses, wouldn't they know -- MS. PAYNE: My understanding is -- THE COURT: -- if -- Let me finish my question, please. MS. PAYNE: Certainly. THE COURT: Wouldn't they know if there was, indeed, one of their members who was actively TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0:: 0::0 0:: 0:: 0:: 0:: 0 0 violating the statute? MS. PAYNE: I have to let Mike address that, that is his client, but -- THE COURT: You mean "Mr. Lynn". MS. PAYNE: -- I will say this -- THE COURT: "Mr. Lynn". Right? MR. LYNN: Your Honor, -- THE COURT: Ma'am? Ms. Payne, we're a little bit more formal than that in this Court, -- MS. PAYNE: Yes, sir. THE COURT: -- if you don't mind. Do we know -- Isn't that a fair assumption, Mr. Lynn? MR. LYNN: That we would know? THE COURT: Yes. MR. LYNN: Well, I don't have any evidence to suggest that there's been a violation, but, on the other hand, there are a number of the folks that I believe that are out there and operating and -- THE COURT: Sure. MR. LYNN: -- and my supposition is that there are probably violations out there if they were investigated. THE COURT: Okay. But my -- Is it not a reasonable -- Would it not be reasonable to assume that TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0:: 0::0 0:: 0::0 0::0 0:: 0 0 if a member of the Alliance were operating in opposition to the statute that the Alliance would know? MR. LYNN: I don't believe so because I don't believe that -- And let me explain why. The governing structure of it is that these folks get together on telephone calls and they have sometimes inside counsel and sometimes not -- THE COURT: Right. MR. LYNN: -- and they're discussing for all practical purposes -- THE COURT: (Tapping). Mr. Haskel. MR. HASKEL: Yes, Your Honor. THE COURT: I'm not going to let Ms. Payne and Mr. Lynn talk while you're up because that's just rude. I want you to give them the same courtesy. MR. HASKEL: I apologize, Your Honor. THE COURT: I'm sorry, Mr. Lynn, would you make your point again. MR. LYNN: It is that the -- the conversations that I've been on, and there have been few, the discussions are very general in nature about the operation of the business and this particular lawsuit. So I wouldn't know and I'm not sure it's a fair supposition that those would be discussed at those meetings. TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0:: 0::0 0:: 0:: 0:: 0::0 0 0 THE COURT: All right. That's fair. Thank you. Ms. Payne, you may proceed with your argument. MS. PAYNE: So we have a situation now where we have an ordinance on the books. THE COURT: Right. MS. PAYNE: We have, we know, some parties that are, you know, cowed into complying with it even though they don't think it's an appropriate ordinance, and we believe that there are probably some out there who are -- could be cited but have not, and so we sit in that netherworld between, you know, how do we get judicial review. And, you know, either the lack of enforcement -- well, the lack of enforcement specifically has made it very difficult. THE COURT: If we've got somebody who's -- I don't want to misquote you. You say, "We believe there are probably some who could be cited and who have not." Couldn't you get judicial review by one of your clients who's out there acting in a manner which could get them cited merely to have them cited and then proceed in the criminal context? MS. PAYNE: Well, I guess the question TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0::0 0:: 0:: 0:: 0::0 0:0:0 0 0 is -- THE COURT: No, actually, that's the question that I want answered. MS. PAYNE: Okay. If I understood your question I would answer it this way: You could have one of these organizations out there violating the ordinance. THE COURT: Uh-huh. MS. PAYNE: And you have for each -- for each customer that comes in and each loan that is accessed, for every day there's a $00 penalty and another $00 penalty, and it continues to roll, and we don't know how long it might take the City to enforce it. All right? So it could happen quickly, in which case you're right, we might end up there in front of a criminal court and we could challenge it. The problem is, is that we don't know. And it could be economic suicide for somebody to do that for any length of time. And the fact is that we've been out here for a year and nothing's happened that we are aware of. We're not -- There have been no enforcements, we're not in front of any criminal court, and so, I mean, Judge, this is not all that different from a situation where what if the City of Dallas in response TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0:0:0 0:0: 0:0: 0:0: 0:0: 0::0 0 0 to all of those awful shootings that have happened, decided that it was going to pass an ordinance where it became illegal to own or maintain a gun in one's household. THE COURT: Well, then we've got a constitutional issue which -- MS. PAYNE: That's right. THE COURT: -- which -- Hang on. -- which impacts the Second Amendment. And I assume that if you were both counsel for a Plaintiff in that context, one of the first things that you would assert would be that that offends the Second amendment. MS. PAYNE: But I'm not sure that would be enough under their standard and under the Morales case, because you would need to have -- it would have to be unconstitutional and you would have to have a vested property right at issue, and if they never enforce it would it be able to come in front of a civil court, and the answer is I'm not sure that it would. THE COURT: I'm pretty confident of the way that that hypothetical would shake itself out. MS. PAYNE: Okay. But you can also see that there would be other variations of that, where it could sit and be effectively unreviewable like this ordinance has become, because we can't get in front of a TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0:: 0:: 0:: 0:: 0::0 0:: 0 0 criminal court and they suggest that no civil courts have the jurisdiction. But the City of Austin case was different from Morales. And Morales talked about City of Austin and did not overrule it. It distinguished it. THE COURT: Right. MS. PAYNE: So we know that Morales sits up here and City of Austin is still good law. There's no services -- no cases out there that say the City of Austin is bad law. THE COURT: Uh-huh. MS. PAYNE: And the City of Austin had a situation where an ordinance became effectively unreviewable because of the unique circumstances of that particular case, and we argued that this case is far closer to that than it is to Morales. THE COURT: But in the City of Austin you had no one dumping corpses outside the city limits or out- -- outside, inside out, I don't remember. MS. PAYNE: Right. Right. THE COURT: But here we're in a situation where you suggested just a couple minutes ago that you have -- some of your clients who are acting in a manner which could get them cited. MS. PAYNE: No. I have one client -- TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
0 CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0:: 0:: 0:: 0:: 0:: 0:: 0 0 THE COURT: No, that is exactly what you said. MS. PAYNE: But I have one client and I know that my one client is trying his darndest to comply and it's about shut it down which is our virtual preemption argument. All right. So when they say that we haven't made any allegations about the constitutionality of this, we believe that we have. THE COURT: Uh-huh. MS. PAYNE: But -- but -- So I can't speak for other clients. I suspect that there may very well be folks out there, I don't know one way or the other. But back to the Morales versus City of Austin shift, City of Austin is -- is on point with the situation that we have here. And the issue in Morales which is actually very narrow, was that in Morales there was no harm. There was no threat of enforcement and the Plaintiffs that were pursuing the case were not suffering any harm because of the statute, so there was nothing to enjoin. So the Morales case was determined on those facts and on that basis. Now, it goes on to -- there's a lot of dicta in there about what happens or should happen in other cases, but that was a hotly contested - opinion TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0:: 0:: 0:: 0:: 0:: 0:: 0 0 and it doesn't overrule City of Austin. City of Austin survives. And so when you go to apply one of those cases or the other, this case is far more analogous to City of Austin than it ever will be to Morales. THE COURT: All right. MS. PAYNE: If you have any other questions I would be happy to answer them. THE COURT: No. Anything you wish -- I invited you in a little bit earlier than I think you -- If you've got a comment you want to make, Mr. Lynn, the Court will receive it now. MR. LYNN: Thank you, Your Honor. From our perspective the City's playing a game. And it's playing a very serious game. And it's regulating using an ordinance -- using an ordinance that we think is challengeable but we're unable to get -- we're unable to challenge it. And the way I look at the case law, the way I've read it, Your Honor, there are four elements. There has to be a threat, a realistic threat. And I think that's what Morales said, there was an -- a sodomy of law, there was no threat, that they'd ever tried to enforce the law, it was not something that was out TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0::0 0:: 0:: 0:: 0:: 0:: 0 0 there. Here we have e-mails and we have letters that suggest that they are threatening to do this, but they're not doing it. Why they're not doing it politically or whatever else, I'm not sure, but what it does is it basically freezes a business in place where it can't get review of the statute. What does that do? The second element. There is a vested property right that we have here. I mean, we have businesses that are being put out of business and we have this case that we've cited Your Honor to, this Smith versus Decker case, which is a case, Texas Supreme Court, which I believe is on point and I believe Your Honor will find that to be on point. THE COURT: Consumer Service Alliance of Texas doesn't have a vested property interest, does it? MR. LYNN: We're representing those who do. THE COURT: That means, "No, it does not"; isn't that right? MR. LYNN: It -- It itself will not be put out of business -- THE COURT: Right. MR. LYNN: -- but its constituents will be -- TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0:: 0:: 0:: 0:: 0:: 0:: 0 0 THE COURT: Yeah, but the initial -- as the case started, when it was just this one association or the corporation and -- the Alliance -- Excuse me. -- versus the City of Dallas, it had no vested property rights; isn't that true? MR. LYNN: The association has -- THE COURT: Right. MR. LYNN: -- no -- it does not run a business and those vested property rights to which I've been referring, it does not have. THE COURT: Okay. All right. MR. LYNN: But, that said, just like a number of associations, those that involved in education, those involved in racial protection, those involved in a variety of others, those associations also brought claims on constitutionality and argued that they were representing their members in these takings. THE COURT: We don't have a constitutional assertion here, do we? MR. LYNN: We do, because we're arguing that there was a taking of that right. And we are saying there is no remedy. THE COURT: Okay. I'm sorry, I want you... MR. LYNN: That's, I think -- TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0:: 0::0 0:: 0::0 0:: 0:: 0 0 THE COURT: Hold on for me just a minute, if you don't mind. MR. LYNN: May I consult with Mr. Krabill? THE COURT: Okay. I'm look- -- Yes -- Yes, you may consult with whomever you want if you need to for a second. MR. LYNN: Don't we have -- (Sotto voce discussion ensued.) MR. LYNN: I'm sorry, Your Honor, I apologize. THE COURT: My question is where -- I'm looking in the Third Amended Petition and I don't see a claim asserting that the City's ordinance is somehow unconstitutional. MR. LYNN: Do we not argue preemption, Your Honor? THE COURT: I want you to direct me where in your pleading you are asserting that the ordinance is unconstitutional. (Sotto voce discussion ensued.) MR. LYNN: I -- Page. THE COURT: Okay. MR. LYNN: I think we have the virtual prohibition argument that we have alleged -- THE COURT: I understand but -- I TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0:: 0:: 0:: 0::0 0:: 0:: 0 0 understand virtual prohibition but I'm asking, you -- you made an assertion a couple minutes ago with regard to the -- the Alliance making an argument that the ordinance was unconstitutional, and I don't see that in this petition and I'm asking if I'm missing it. MR. LYNN: No, you're not missing anything and, yes, your analysis -- THE COURT: That's always a good answer -- always a good response. MR. LYNN: I've learned that at home as well. The argument would be this and it's probably one you understand and I probably stated it and frankly I may have stated it wrong. We have associational standing because of TitleMax to make the argument on the preemption, and I think that that's what the pleading says and I think fairly read. And I think that that is -- that's the way we're able to connect those dots in this case. THE COURT: Okay. MR. LYNN: But nevertheless, the argument is we have a valid -- we have a problem here that we're seeking resolution of. THE COURT: Uh-huh. MR. LYNN: We're seeking to have this TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0:: 0:: 0:0: 0:0: 0:0: 0::0 0 0 Court open its doors and let us resolve it in a fair and dignified and reasonable and lawyer-like way here because we can't get before anybody else to do that. And the City is attempting to have it both ways: Shut this door but not open any other doors. And that makes -- that makes it very difficult to do business in the City of Dallas at the present time. Now, without regard to whether or not one likes this industry or dislikes this industry, we are entitled to have, I believe, a reasonable opportunity to resolve our differences with the City. And the City through its actions has foreclosed our ability to seek that resolution from -- in a reasoned and scholarly way; we just can't do it. THE COURT: I understand. MR. LYNN: So we come before you, sort of, frustrated because there's nothing we know that we can do other than this. And all their arguments to the contrary -- I mean, the problem is, we keep waiting for an opportunity to challenge this and we think we have a pretty good argument, but the City doesn't want to deal with us on the merits and that's why we're here. THE COURT: Okay. Thank you. MS. WANG: Your Honor, this is not a situation remotely like the City of Austin which the TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0::0 0::0 0:: 0::0 0::0 0:: 0 0 Court recognized that the problem there was both the customer as well as the business were unable to challenge because the customer would be subject to criminal prosecution. And so without a customer to bury a body, the cemetery owners were unable to even violate, to -- Here Plaintiffs are saying that they actually believe there may be some members who are violating, can violate, although others choose not to. And here I would say it's Plaintiffs who cannot have it both ways, to say we're not going to violate and yet we want to have this Court here insert its equity jurisdiction over this even though we're not willing to violate in order to allow the City to bring a prosecution. As we've represented, this is not a case similar to Morales -- Even if this were a case like Morales, there is no position the City has taken that it will never enforce or that -- that no enforcement actions will ever be taken as Morales -- THE COURT: Tell me what the City -- I'm sorry. Tell me what the City has done since the e-mail in June to ensure compliance with the ordinance, if you know. TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0:: 0:: 0:: 0:: 0:: 0:: 0 0 MS. WANG: We've actually answered inquiries made on behalf of citizens, if you will, wondering about what their rights would be under the new city ordinance -- THE COURT: Okay. MS. WANG: -- and we've actually said that if you believe there's a violation, you know, to please bring a complaint to the City. Now, as I said, if there's not been a complaint yet brought to the City either because many of them are not violating the ordinance, or because as the OCCC -- I'm sorry. -- OCC bulletin noted, a lot of them are sending -- you know, initiating the loan within the City of Dallas and then telling them to renew elsewhere in which case there is still no violation the City can prosecute or enforce, if you will. In this case it is the City's hands that are tied. Without a complaint coming into the City where the City's aware of a violation, without -- without the Plaintiffs actually committing a violation, the City is unable to enforcement. This is not a situation like the City of Austin where they could not under any circumstance violate the ordinance and then seek redress through the normal coarse by having enforcement and going through TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0::0 0:: 0:: 0::0 0:: 0:: 0 0 prosecution, defending against that prosecution, this is not that situation. You know, what they're saying is they would like to have it both ways, they would like to continue on with their business model without ever, you know, -- or -- or is to not challenge the ordinance in a criminal court by ever violating it. Second, a key factor here is the issue of vested property rights. I mean, having an adequate remedy of law is just one part of the equation; they need to have a vested property right in order to bring this -- to invoke the Court's equity jurisdiction. THE COURT: Doesn't TitleMax do that? MS. WANG: There is no vested property right, there's no authority that recognizes what they're claiming to be essentially their business model, their way of doing business as a vested property right. The one case that Mr. Lynn had cited just now, Smith V Decker, having to do with the right of bail bondsmen, that case actually said that there was a right to make a living subject only to valid and subsisting regulatory statutes. There are a whole host of cases that say you can't go about doing your business in any manner in which you choose to do it, you are still subject to TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
0 CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0:: 0:: 0::0 0::0 0:: 0:: 0 0 valid and subsisting regulatory statutes. And, for example, I think one case that runs very similar to this in terms of the kind of financial harm argument they're trying to argue is, you know, in the case of Morrow versus Truckload Fireworks, there, there was a ban on the use of fireworks that the Court recognized would destroy Truckloads business, would cause an unrecoverable loss of income -- THE COURT: Slow down for my court reporter, please. Thank you. MS. WANG: And that even though the total ban on the use of fireworks would result in tremendous financial loss, and even though that loss would be tangible and significant, it is insufficient to constitute a vested property right. THE COURT: All right. MS. WANG: There's simply no authority in Texas law that recognizes a business plan or a business model or way of doing business as a vested property right. THE COURT: All right. Thank you. I will have a decision to both of you before the end of the day. Thank you very much. MS. PAYNE: Your Honor, I have copies of the two cases that deal with the vested property rights, TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0:: 0:: 0::0 0:: 0:: 0:: 0 0 the two cases that we've cited. THE COURT: Sure. MS. PAYNE: May I approach? THE COURT: You may. MS. PAYNE: One is the Smith versus Decker case -- THE COURT: I've read that already. MS. PAYNE: And the other one is the Brazos court case that deals with the franchise concept. MS. WANG: May I take a minute to address the Brazos court case? THE COURT: I believe I've heard all I need to. MS. WANG: All right. THE COURT: Thank you. MR. HASKEL: Thank you, Your Honor. THE COURT: Thank you-all very much. You're excused. MR. LYNN: Thank you. MS. PAYNE: Thank you. THE COURT: Do either of you have a proposed form of order? MS. WANG: I do, Your Honor. MS. PAYNE: Your Honor, I left mine at the office but I can send it up at a moment's notice. TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
CASE NO.: 0--00-CV Defendant's Plea to the Jurisdiction -February, 0 0:: 0:: 0:: 0 0 pleasant day. to you. MS. WANG: I'll give you copies here. MR. LYNN: We'll transmit an order. THE COURT: That will be fine. (Document handed to the Court.) THE COURT: Thank you. MR. HASKEL: May we be excused? THE COURT: You may be excused. Have a MR. HASKEL: Thank you, Your Honor; same (Proceedings adjourned at 0: a.m.) TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS
0 0 STATE OF TEXAS COUNTY OF DALLAS I, Diane L. Robert, Official Court Reporter in and for the th District Court of Dallas County, State of Texas, do hereby certify that the above and foregoing contains a true and correct transcription of all portions of evidence and other proceedings requested in writing by counsel for the parties to be included in this volume of the Reporter's Record in the above-styled and numbered cause, all of which occurred in open court or in chambers and were reported by me. I further certify that this Reporter's Record of the proceedings truly and correctly reflects the exhibits, if any, offered by the respective parties. I further certify that the total cost for the preparation of this Reporter's Record is $.00 and will be paid by Counsel of the City of Dallas. WITNESS MY OFFICIAL HAND, on this the th day of February, 0. BY: /s/diane L. Robert Diane L. Robert, CSR Texas CSR Official Court Reporter th District Court Dallas County, Texas 00 Commerce Street Dallas, Texas 0 Telephone:.. Expiration: //0 drobert@irareporting.com TH JUDICIAL DISTRICT COURT * DALLAS COUNTY, TEXAS