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Lahny R. Silva

From: Lahny R. Silva, In Search of a Second Chance: Channeling Bmw V. Gore and Reconsidering Occupational Licensing Restrictions, 61 University of Kansas Law Review 495 (December, 2012) (338 Footnotes Omitted)

      In the early 1980s, Mr. Harry Darks and his partner Mr. Andre Milton applied for a license to operate a dance hall in Cincinnati. The hall, called London Hall, was to operate as a disco club on weekend nights between 11:00 p.m. and 5:00 a.m. Liquor licenses were not available and Darks and Milton purposely chose those hours to avoid competition with other halls and clubs that did serve liquor. To Mr. Darks's surprise, the City of Cincinnati summarily denied him the license to operate the hall. The reason underlying the denial was that Mr. Darks had been previously convicted of two felonies to which he pleaded guilty. Mr. Darks sued the City of Cincinnati claiming “that the City's licensing policy deprived [him] of equal protection and due process of law.” The district court granted summary judgment in favor of the city.

      Appealing the district court's judgment, Darks continued to allege equal protection and due process violations. On the equal protection claim, Darks specifically argued that Cincinnati's “practice of denying dance hall licenses to all convicted felons deprived him of equal protection of the laws.” The municipal code of Cincinnati “provide[d] that licenses shall be issued only to ‘reputable person[s] of good moral character.”’ On the due process claim, Darks asserted “that he was deprived of a liberty interest without due process of law because [Cincinnati's] practice of denying licenses to felons on the grounds that they are not persons of good character amounts to an irrebuttable presumption.”

      The Court of Appeals for the Sixth Circuit decided that Cincinnati's policy of wholesale denial of licenses to convicted felons was constitutionally permissible. Quoting the District Court, the Sixth Circuit agreed that,

       [T]he denial of dance hall licenses to convicted felons is rationally related to the legitimate state interest of insuring that such halls are operated by persons of integrity with a respect for the law, and insuring that they do not attract a criminal or other disreputable clientele. It is rational to connect a past felony conviction with a disrespect for the law and a lack of moral integrity. It is also rational to conclude that patrons exhibiting these traits would be more welcome at dance halls operated by those of like disposition than at dance halls operated by those without a past criminal record.

      The Sixth Circuit made no distinction between crimes of moral turpitude and other crimes. Instead, it affirmed the lower court's judgment that wholesale discrimination against individuals with felony convictions was constitutionally permissible under the Equal Protection Clause of the Fourteenth Amendment. With regard to Darks's due process allegations, the court dismissed the argument. For the court, Cincinnati's licensing policy was a “substantive law” that passes rational basis scrutiny and therefore is immune to constitutional attack. Although Darks pleaded guilty to the offenses without advisement from counsel or warning that he would be denied future occupational licenses, the court found no due process violations.

      A few years after the Sixth Circuit's opinion in Darks v. City of Cincinnati, Dr. Ira Gore purchased what he believed to be a brand-new black BMW sedan for $40,750.88 from a Birmingham, Alabama BMW dealer. Nine months later, he took the car to “Slick Finish,” a car detailer, for the purposes of making his new BMW look “snazzier than it normally would appear.” The owner of the detailing company, Mr. Slick, noticed that the car had been repainted. Feeling cheated, Dr. Gore sued BMW alleging that BMW had defrauded him by failing to disclose that the car had been repainted. An Alabama jury agreed, finding BMW liable for $4,000 in compensatory damages and also finding that BMW's nondisclosure policy constituted “gross, oppressive, [and] malicious” fraud, thereby granting Dr. Gore $4 million in punitive damages. The Alabama Supreme Court reduced the award to $2 million to make it “constitutionally reasonable.”

      Six years later the United States Supreme Court held Dr. Gore's $2 million punitive damages award “grossly excessive.” Finding that BMW “did not receive adequate notice of the magnitude of the sanction” that might be imposed by the State of Alabama, the Court held the judgment violative of due process. For the Court, “[e]lementary notions of fairness enshrined in our constitutional jurisprudence dictate[d] that a person receive fair notice not only of the conduct that will subject him to punishment, but also of the severity of the penalty that a state may impose.” Although BMW is a multibillion-dollar corporation with a number of U.S. corporate offices complete with in-house counsel that could have easily researched and informed the company of the punitive damages laws in the fifty states, the Court determined that BMW did not receive fair notice that a first violation of the Alabama Deceptive Practices Act would subject it to a multimillion-dollar punitive damages judgment.

      Unlike the substantive due process review granted to BMW, Mr. Darks, our potential dance hall licensee, received no hearing, nor was he allowed to rebut Cincinnati's presumption that felony convictions demonstrate the felon's lack of moral integrity and disrespect for the law. Even if Mr. Darks received the chance, the irrebuttable presumption doctrine would offer him no relief as the Supreme Court has reasoned away any protection under that doctrine. Mr. Darks was also not entitled to proportionality review balancing his crimes--nonviolent offenses--against the potential lifetime licensing disqualification. Moreover, there was no pragmatic consideration of Mr. Darks's practical ability to “know” or have “fair notice” of potential state penalties that attach to the status of “felon.” In other words, how was Mr. Darks to know that because of his past felonies he would be stricken from participating in the economy in the future? Trial courts are not constitutionally required to include a warning of the employment consequences of conviction during a plea colloquy. Neither is defense counsel mandated to warn her client of these penalties.

      Today there are approximately 38,000 statutory and regulatory disqualifications triggered solely by the fact of prior felony conviction. This amounts to an average of 700 per jurisdiction, and it is estimated that 65% of these are employment related. This statutory phenomenon is typically called “collateral consequences” and has been discussed among scholars in the academy for the last twenty years.

      To date, numerous challenges have been brought contesting both occupational license restrictions and employment disqualifications. Equal protection challenges almost always fail. Because felons are not a suspect class and employment and occupational freedom are not “fundamental right[s],” the balancing test typically weighs in favor of the state, with the court finding a state's legitimate interest in “safety” or “health” outweighing the individual's interest in earning a livelihood. Due process challenges have also been levied against employment and licensing restrictions. Procedural due process challenges typically fail because courts presume notice and defer to state legislatures to determine the type and scope of discretion to give department employees in making licensing decisions. Although there are a few exceptions, most courts do not find in favor of the ex-offender even if the statute or regulation is obviously unfair, irrational, and overinclusive. With this, it is time to look for other avenues by which to challenge occupational collateral consequences of a felony conviction. In an era of mass incarceration, historically high rates of criminal recidivism, and massive government expenditures on crime and punishment, a focus on the occupational and employment opportunities of ex-offenders translates into taxpayer savings, an increase in state and federal revenue, and a more productive citizenry.

      This Article advocates for reform of the current occupational licensing policies of the several states on behalf of the nonviolent offender. The additional restrictions and special conditions presented by violent offenders, sex offenders, and immigrant populations are beyond the scope of this Article. For purposes of this Article, the definition of “nonviolent” is the inverse definition of “violent” taken from the Armed Career Criminal Act. I chose this Act due to the congressional guidance it offers regarding the legislative intent on legal elements that define nonviolent offenses. Thus, a nonviolent offender is an individual who has been convicted of a crime that does not have an element requiring “the use, attempted use, or threatened use of physical force against the person of another.” This includes individuals convicted of smaller property crimes and drug trafficking, drug possession, or both. The current focus on nonviolent offenders also has an economic savings component. Current estimates of the U.S. prison population demonstrate that nonviolent offenders comprise at least half of all American inmates. Recommendations in this article would have quite a significant impact not only on a number of nonviolent ex-offenders, but also on government expenditures and taxpayer savings. Finally, it is critical to understand that this thesis focuses on the ex-offender who garners a felony conviction through plea bargaining as opposed to conviction by criminal trial. This is significant as this thesis understands plea bargaining as a process in which the ex-offender must carefully weigh and consider all information regarding sanctions and penalties to make a rational choice. Without all of the information up front, an ex-offender will fail to understand the severity of the penalties she faces outside of the criminal context.

      This Article applies recent Supreme Court jurisprudence in the area of punitive damages to that of occupational licensing restrictions triggered by a felony conviction. By using the framework constructed to evaluate the constitutionality of large punitive damages awards and applying those principles to occupational licensing statutes, it becomes clear that many occupational licensing statutes disqualifying those individuals with a prior felony conviction are constitutionally suspect. This Article adds to the scholarly debate by attempting to construct a solution founded in principles used to evaluate constitutional issues in the punitive damages context. Much of the existing literature focuses on the problems of mass incarceration, collateral consequences, and expenditures on recidivism. This Article understands this problem exists and is interested in uncovering potential constitutional challenges to these burgeoning socioeconomic issues.

      Part II of this Article examines the problem, namely an incarceration crisis exacerbated by the revolving door of criminal recidivism. This section also includes a partial solution to this problem: employment of ex-offenders. Part III places the issue in context by surveying current constitutional doctrine regarding an individual's occupational freedoms, how the Supreme Court has handled collateral consequences in other contexts, precedent on the constitutionality of occupational licensing restrictions based on felony convictions, and the current constitutional challenges that have been tried and failed on this exact issue. Current doctrine is mixed and opaque at best. Part IV discusses the way in which BMW v. Gore, a highly criticized Supreme Court opinion, can be used to ameliorate many of the severe and often irrational occupational licensing and employment disqualifications based solely on the fact of conviction. This section argues that the framework and principles crafted in BMW v. Gore and its progeny ought to have the ability to transcend punitive damages and apply successfully to other areas of constitutional concern in the civil context. To fully demonstrate the analysis, Part IV employs a hypothetical based on a Wisconsin occupational licensing regulation. Part V assesses counterarguments to this line of reasoning including the idea that the reform of occupational and employment disqualifications ought to be left to legislatures, and that challenges to such statutes should be brought under the Eighth or Sixth Amendments instead of due process. Finally, this Article concludes with a brief summary and thoughts of next steps in the challenge against occupational and employment disqualifications for nonviolent ex-offenders.