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Fares Pawn, LLC v. State of Indiana, Department o, 13-3240 (2014)

Court: Court of Appeals for the Seventh Circuit Number: 13-3240 Visitors: 59
Judges: Flaum
Filed: Jun. 20, 2014
Latest Update: Mar. 02, 2020
Summary: In the United States Court of Appeals For the Seventh Circuit _ No. 13-3240 FARES PAWN, LLC, and WILLIAM K. SAALWAECHTER, Plaintiffs-Appellants, v. INDIANA DEPARTMENT OF FINANCIAL INSTITUTIONS, et al. Defendants-Appellees. _ Appeal from the United States District Court for the Southern District of Indiana, Evansville Division. No. 11-cv-136 — Richard L. Young, Chief Judge. _ ARGUED APRIL 3, 2014 — DECIDED JUNE 20, 2014 _ Before POSNER, FLAUM, and ROVNER, Circuit Judges. FLAUM, Circuit Judge. Ind
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                               In the

    United States Court of Appeals
                 For the Seventh Circuit
                     ____________________
No. 13-3240
FARES PAWN, LLC, and
WILLIAM K. SAALWAECHTER,
                                                Plaintiffs-Appellants,

                                 v.

INDIANA DEPARTMENT OF
FINANCIAL INSTITUTIONS, et al.
                                               Defendants-Appellees.
                     ____________________

         Appeal from the United States District Court for the
          Southern District of Indiana, Evansville Division.
           No. 11-cv-136 — Richard L. Young, Chief Judge.
                     ____________________

       ARGUED APRIL 3, 2014 — DECIDED JUNE 20, 2014
                ____________________

   Before POSNER, FLAUM, and ROVNER, Circuit Judges.
   FLAUM, Circuit Judge. Indiana businesses that engage in
pawnbroking activity must get a license from the state’s De-
partment of Financial Institutions (DFI). The plaintiff in this
case, William Saalwaechter, owns Fares Pawn LLC, a pawn
shop in Evansville, Indiana. He applied for a license in
March 2009, but DFI denied his application, citing concerns
2                                                  No. 13-3240

about previous pawnbroking on the property and about his
store manager’s criminal history. Saalwaechter brought an
administrative action challenging the denial. He eventually
received a license after he signed a memorandum of under-
standing agreeing to comply with certain conditions, in par-
ticular not employing the worrisome manager.
     Saalwaechter is convinced that the license-application
process should have gone much more smoothly than it did.
After getting his license, he sued DFI in federal court for vio-
lating the Equal Protection Clause of the Fourteenth
Amendment. Saalwaechter did not contend that DFI treated
him unfavorably on account of some identifiable characteris-
tic, such as age, sex, or race. He simply argued that the state
had singled him out for disparate treatment without a ra-
tional basis. This is a so-called “class-of-one” theory, which
rests on the premise that “[w]hen those who appear similar-
ly situated are nevertheless treated differently, the Equal
Protection Clause requires at least a rational reason for the
difference, to ensure that all persons subject to legislation or
regulation are indeed being treated alike, under like circum-
stances and conditions.” Engquist v. Oregon Dep’t of Agricul-
ture, 
553 U.S. 591
, 602 (2008) (internal quotation marks omit-
ted).
    The district court granted summary judgment in favor of
the defendants, finding that no reasonable jury could con-
clude that DFI treated Saalwaechter differently from similar-
ly situated applicants without a rational reason. We agree,
and therefore affirm the judgment of the district court.
No. 13-3240                                                 3

                       I. Background
   For many years, 1432 North Fares Avenue in Evansville
has been home to a pawn shop. Three different businesses
have occupied the property during the past two decades:
Fares Loan, Evansville Pawn, and Fares Pawn. The names of
these entities blend together. As we shall see, their owners
overlapped, too.
    Terry and Linda Duke owned Fares Loan, the original
pawn shop on Fares Avenue. In 1998, DFI ordered the Dukes
to remove a store manager, who was allegedly engaged in
criminal activity, and also to comply with all applicable law.
Six years later, DFI learned that federal authorities were in-
vestigating the Dukes’ son, who worked at the shop, for re-
ceipt of stolen goods and firearms violations. DFI agreed to
postpone any licensing proceedings against Fares Loan until
the federal investigation was complete. By that time, though,
the Dukes had decided to quit the pawn business and sell
the store, so DFI opted to let the matter lie.
    The Dukes sold to Tom Carroll and William Saalwaecht-
er, two men who lived just across the border from Evansville
in Owensboro, Kentucky. Carroll, an attorney, structured the
deal and drew up the pertinent documents; Saalwaechter,
who had recently sold his petroleum distribution business,
provided the capital. The precise terms of the transaction
were murky, however. Later, government regulators would
have trouble understanding the deal, and some of the par-
ticulars remain unclear even on appeal. Apparently, even
Saalwaechter did not know exactly what was going on; he
would later sue Carroll as the deal fell apart.
4                                                 No. 13-3240

    As best we can tell, Saalwaechter expected that he would
purchase the property and pawn business from the Dukes;
lease everything back to a third party, Ryan McDaniel; and
eventually, after giving McDaniel time to put together fi-
nancing, sell to him at a small profit. While they put together
financing, McDaniel and the former manager of Fares Loan,
Jeremy Kamuf, would continue to operate the shop and
make regular payments to Saalwaechter in exchange for the
repurchase option. In essence, Saalwaechter would extend a
short-term bridge loan to be paid back, with interest, within
just a few months.
    The plan hit a snag when Kamuf failed to make the re-
quired monthly payments. Saalwaechter investigated, only
to find out that McDaniel did not know about the deal at
all—what Saalwaechter had thought to be McDaniel’s guar-
antee of the loan turned out to be a forgery. Saalwaechter
evicted Kamuf from the premises but, without a functioning
pawn shop on the property, worried that his real estate in-
vestment would quickly lose value.
    Saalwaechter therefore decided his best course was to
operate the pawn business himself. To his surprise, he dis-
covered that he had never purchased the pawn business or
its inventory, just the underlying real estate. It later became
clear that Tom Carroll had purchased the Fares Loan assets
himself. Carroll had also set up a new company, Evansville
Pawn LLC, obtained a pawn license, and retained someone
named John Jones to manage it (alongside Kamuf, it seems).
Carroll showed Saalwaechter documents describing the deal
and containing Saalwaechter’s signature, but Saalwaechter
claimed that he had never seen them before.
No. 13-3240                                                 5

    The plot further thickened when DFI received materials
indicating that Carroll had procured the Evansville Pawn
license on behalf of Kamuf, who was paying Carroll a
monthly fee for the business (separate from the fee Kamuf
was paying Saalwaechter for the real estate). Such “straw li-
censing” is prohibited under Indiana law. Ind. Code § 28-7-5-
10.5. DFI refused to renew Evansville Pawn’s license, and
ordered Carroll to wind up his pawn business.
    Saalwaechter then decided to create his own entity, Fares
Pawn LLC. Just before Evansville Pawn’s license was set to
expire, Saalwaechter and Carroll agreed that Fares Pawn
would take possession of Evansville Pawn’s inventory and
liquidate its outstanding pawns. Saalwaechter also applied
for a pawn license for Fares Pawn. Until DFI approved the
application, he planned to operate as a buy/sell business.
Unlike a pawnbroker, a buy/sell business does not take the
customer’s property as collateral for a short-term loan, but
instead buys the item outright. This sort of business does not
require a license, but it is less lucrative than pawning.
    Shortly after Saalwaechter submitted his license applica-
tion, DFI informed him that, because he had no background
in the pawn industry, he would need to find a store manager
with two years’ experience. Saalwaechter, who had expected
to manage the store himself, reluctantly listed the only per-
son he knew with that qualification: John Jones, the manager
for Evansville Pawn.
    This choice proved to be inauspicious. Months later,
while running background checks for Saalwaechter’s appli-
cation, DFI learned that Jones had previously been convicted
of a theft- and drug-related felony in Kentucky (the convic-
6                                                          No. 13-3240

tion was later downgraded to a grade A misdemeanor). 1 DFI
also concluded that Jones had not been forthright with offi-
cials when they interviewed Jones and Carroll about Car-
roll’s pawn license application in 2007. Specifically, Jones had
not told DFI that he was related to Linda Dukes, the former
owner of Fares Loan, and had not mentioned anything about
Jeremy Kamuf’s involvement in Evansville Pawn.
    Based on this information, DFI told Saalwaechter that
they would not give him a license so long as Jones worked at
the pawn shop. Saalwaechter, who earlier had not wanted to
hire Jones, now protested. He claimed that he had worked
alongside Jones for several months and considered him a
good employee. Saalwaechter later met with two members
of the DFI staff, John Schroeder and Mark Tarpey, to try to
explain the situation, but did not dispel their concerns.
    A brief word about DFI’s application process may be ap-
propriate at this point. DFI is required to evaluate each ap-
plicant’s and his affiliates’ “financial standing, competence,
business experience, and character” to determine whether
the business will be operated “honestly, fairly, and efficient-
ly” and whether “the convenience and needs of the public
exist for the operation of the business in the community.”
Ind. Code § 28-7-5-8. Once it determines that these condi-
tions are met, DFI “shall issue” the license to the applicant.
Id. DFI’s director
has delegated authority to approve routine

1 Prior to 2009, DFI lacked the authority to run criminal background
checks through the Federal Bureau of Investigation. Furthermore, store
managers did not have to disclose their criminal history to DFI, only ap-
plicants. See Ind. P.L. 1-2009 § 149; Ind. Code § 28-7-5-4(b), (d) (making
these changes). It appears that DFI did run a state background check on
Jones in 2007, but it did not reveal any felony conviction.
No. 13-3240                                                   7

applications personally. Ind. Code § 28-11-1-11. Should the
director decline to exercise his delegated authority, however,
the application is referred to the full seven-member board.
    Saalwaechter’s application came before DFI’s director,
David Mills, in September 2009. Mills had arrived at DFI on-
ly a few days beforehand, and Saalwaechter’s was among
the first applications Mills considered. In light of the tangled
sequence of transactions, the history of straw licensing at the
site, and Saalwaechter’s insistence on employing Jones, DFI
staff expressed concern that the application was not routine.
The staff recommended that Mills decline to exercise his del-
egated authority. Mills agreed. Saalwaechter’s application
thus proceeded to the full board.
     While the hearing before the board was pending, DFI
presented Saalwaechter with a proposed memorandum of
understanding (MOU) and requested his response. The
MOU provided that DFI would grant Saalwaechter a license
if, among other things, he agreed not to employ Jones in any
capacity. In his reply, Saalwaechter thanked DFI for the op-
portunity to address the board but again conveyed his belief
that Jones was fit to manage the business. He wrote:
   I have worked daily, side by side, with Mr. Jones for 5
   months and found him to be a good employee, trust
   worthy [sic] and competent in pawn shop operations.
   I investigated the accusations made against Mr. Jones
   and was never able to confirm anything in his current
   history that reflects inherent criminal conduct or
   tendencies.
                             ***
8                                                 No. 13-3240

    Mr. Jones did a foolish thing 5 years ago as a single
    man, but since has a wife, a two year old girl, a four
    year old boy and a mortgage.
    As you see I am defending Mr. Jones in circumstances
    that may be rumor and some are unfortunate. I would
    like to have the opportunity to employ Mr. Jones in a
    Christian owned business. Certainly, however, I will
    accept the MOU if all consideration for approving my
    application without it has failed.
Saalwaechter did not sign the MOU.
    Also before the hearing, John Schroeder, one of the DFI
employees who had interviewed Saalwaechter earlier in the
process, prepared a memorandum describing the complicat-
ed backstory at 1432 North Fares Avenue. The memo flagged
four issues for the board to consider: (1) Saalwaechter’s role,
if any, in the straw-licensing scheme between Carroll and
Kamuf; (2) Saalwaechter’s desire to retain Jones; (3) uncer-
tainty as to whether Saalwaechter intended to obtain a li-
cense on his own behalf or for a third-party; and (4) Saal-
waechter’s unconventional business acquisitions, some of
which, the memo noted, had apparently drawn the attention
of the police in Saalwaechter and Carroll’s Kentucky
hometown. Ultimately, Schroeder recommended that the
board deny Saalwaechter’s application, citing “concerns with
[his] role in the prior straw license, concerns with respect to
[his] business transactions, and concerns relative to [his]
choice for a manager.”
   The board convened in October 2009. Saalwaechter tried
once more to explain to the members how he came to the
business and why he wished to pursue a pawn license. He
No. 13-3240                                                  9

mentioned that he was contemplating a lawsuit against his
former partner, Carroll, and discussed two other lawsuits
that he was involved in, both stemming from other business
transactions. He also discussed Jones’ prior criminal convic-
tions and attempted to rebut allegations that Jones had lied
to DFI staff to help Carroll keep his license.
    At the close of Saalwaechter’s remarks, Mills, the DFI di-
rector, told him that “the only thing clear with the discussion
of all the transactions you just summarized is a lack of clari-
ty” and noted that he could not understand “why you don’t
just get rid of this asset and go on to doing things that you
want to do.” Another board member also mentioned a “lack
of clarity” and stated that “I am not convinced that every-
thing here is … something that we should … just give an un-
equivocal approval to.” When Mills moved to deny the ap-
plication, Saalwaechter told him, “I think you are penalizing
something and a person that you shouldn’t be because of all
these other people that didn’t [] have their ducks in a row. …
This [presumably, his relationship with Tom Carroll] is actu-
ally one mistake. It was, it was just dealing with one per-
son.” The board voted to deny the application.
    Saalwaechter soon filed an administrative action chal-
lenging the board’s denial. This action was dismissed when,
after mediation, Saalwaechter agreed to sign the MOU and
commit not to employ Jones. In return, DFI granted him his
license, fifteen months after he applied. Fares Pawn has since
operated without incident.
    In October 2012, Saalwaechter sued the state of Indiana,
DFI, and associated state officials under 42 U.S.C. § 1983. He
alleged that the defendants had violated his right to equal
protection by singling him out for unfair treatment, and
10                                                   No. 13-3240

sought as damages attorney’s fees for the administrative ac-
tion and lost profits for the time that Fares Pawn continued
to operate as a buy/sell business. (Saalwaechter also brought
claims sounding in due process and in state law; these
claims are no longer at issue in the case and we will ignore
them.) The district court granted summary judgment to the
defendants.
                         II. Discussion
    It is clear that a class-of-one plaintiff must show (1) that
he has been intentionally treated differently from others sim-
ilarly situated, and (2) that there is no rational basis for the
difference in treatment. Village of Willowbrook v. Olech, 
528 U.S. 562
, 564 (2000). What is less clear is whether a class-of-
one plaintiff must also allege, and ultimately prove, that the
government officials acted with some kind of bad motive not
grounded in their public duties. In Del Marcelle v. Brown
County Corp., 
680 F.3d 887
(7th Cir. 2012) (en banc), this court
divided over that question, leaving no controlling opinion.
    Fortunately, in this case, we can put to one side the dis-
pute over the role that motive plays in class-of-one claims.
“[A] given action can have a rational basis and be a perfectly
logical action for a government entity to take even if there
are facts casting it as one taken out of animosity.” Flying J
Inc. v. City of New Haven, 
549 F.3d 538
, 547 (7th Cir. 2008). If
we can come up with a rational basis for the challenged ac-
tion, that will be the end of the matter—animus or no. See
D.B. ex rel. Kurtis B. v. Kopp, 
725 F.3d 681
, 686 (7th Cir. 2013)
(“[T]he test for rationality does not ask whether the benign
justification was the actual justification. All it takes to defeat
the plaintiffs’ claim is a conceivable rational basis for the dif-
ference in treatment.”). Accordingly, we shall assume
No. 13-3240                                                              11

(somewhat doubtfully) that there is evidence in this case
from which a jury could conclude that state officials har-
bored ill-will against Saalwaechter, and proceed to deter-
mine whether there is some conceivable rational basis for the
way DFI handled his case nonetheless. 2
    Saalwaechter bears the burden of showing that he was
treated differently without a rational reason. Bell v. Duper-
rault, 
367 F.3d 703
, 707 (7th Cir. 2004). Normally, a class-of-
one plaintiff will show an absence of rational basis by identi-
fying some comparator—that is, some similarly situated per-
son who was treated differently. E.g., Purze v. Village of Win-
throp Harbor, 
286 F.3d 452
, 455 (7th Cir. 2002). The theory be-
hind this approach is that “if all principal characteristics of
the two individuals are the same, and one received more fa-
vorable treatment, this may show there was no proper moti-
vation for the disparate treatment.” Swanson v. City of Chetek,
719 F.3d 780
, 784 (7th Cir. 2013). 3


2 “Rational basis” is shorthand for “rational relationship to some legiti-
mate governmental purpose,” see, e.g., Armour v. City of Indianapolis, 
132 S. Ct. 2073
, 2080 (2012), for a government official may have a very ration-
al reason for discriminating against an individual and yet still run afoul
of the Fourteenth Amendment. Consider, for example, a police officer
who harbors an idiosyncratic animus against a particular person and
unjustifiably issues him parking ticket after parking ticket in an attempt
to harass him. Such conduct is perfectly rational—in the sense that the
officer’s actions (the incessant ticketing) bear a very logical relationship
to his preferred outcome (pestering the unhappy vehicle owner)—but
nevertheless unconstitutional, because there is no legitimate reason for
state officials to single out somebody for poor treatment in this way. See
Geinosky v. City of Chicago, 
675 F.3d 743
(7th Cir. 2012).
3 In unusual circumstances, where plaintiffs put forth what amounts to
direct evidence of arbitrary treatment, we have allowed them to mount a
12                                                            No. 13-3240

    Saalwaechter has identified three candidates for a simi-
larly situated entity; all three, he argues, were treated better
than he was without any valid justification. Generally,
“whether individuals are similarly situated is a factual ques-
tion for the jury.” McDonald v. Village of Winnetka, 
371 F.3d 992
, 1002 (7th Cir. 2004). However, summary judgment is
appropriate “where it is clear that no reasonable jury could
find that the similarly situated requirement has been met.”
Id. We agree
with the district court that for each proposed
comparator, either no reasonable jury could conclude that
Saalwaechter and the comparator were similarly situated, or
there was a rational basis for any differential treatment.
    First, Saalwaechter argues that he was similarly situated
to Tom Carroll, who received his license for Evansville Pawn
just thirty-six days after he applied. Carroll listed Jones on
his October 2007 application just like Saalwaechter did in
2009. Thus, Saalwaechter contends, “[a] jury could find that
because DFI felt Jones was good enough for Evansville
Pawn, DFI should also have found that he was good enough
for Fares Pawn.” This is baffling. Jones was no longer “good
enough” in 2009 because that was when DFI officials learned
that Jones had an undisclosed felony, and further concluded


class-of-one claim without pointing to comparators. E.g., 
Swanson, 719 F.3d at 785
(holding that identification of a specific harasser, a plausible
motive, and a series of actions that appear “illegitimate on their face”
suffices to state a claim); 
Geinosky, 675 F.3d at 748
–49 (holding that a pat-
tern of twenty-four bogus tickets in twelve months by itself states a
claim). We see no basis to depart from the similarly-situated approach in
this case, where the evidence of animus is slight at best and where alter-
native, legitimate explanations are not difficult to find.
No. 13-3240                                                 13

that Jones had lied to them during the Evansville Pawn applica-
tion interview two years earlier.
    Saalwaechter contends that there is evidence in the rec-
ord that DFI knew about Jones’ criminal record well before
2009. (There is no evidence that DFI knew in 2007 that Jones
had lied about his relationship to Linda Dukes and about
Kamuf’s role at Evansville Pawn, but no matter.) He points
to a letter DFI received from Linda Dukes in February 2007
that lists Jones as an employee and states that he “had a for-
mer charge which has been amended to a Class A misde-
meanor.” We reject Saalwaechter’s contention that this letter
should have put DFI on notice of Jones’ felony conviction
when it considered Evansville Pawn’s application. Dukes
wrote in response to DFI’s investigation of Fares Loan after
her son got into trouble with federal authorities for firearms
violations; the letter had nothing to do with Evansville
Pawn. Nor could it have, since Carroll did not file his license
application until eight or nine months after Dukes’ letter was
sent. Moreover, the contents of the letter hardly make clear
that Jones had a prior felony conviction. Jones was listed as
one of three employees at Fares Loan, “of which none have
felonies” (emphasis added).
    For the sake of argument, let us suppose with Saal-
waechter that Dukes’ letter should have put DFI on “inquiry
notice” about Jones’ felony conviction when it handled Ev-
ansville Pawn’s application. There is still no evidence that
DFI managed to confirm this information until 2009. (To the
contrary, DFI was not authorized to run an FBI background
check in 2007, and the state background check for Jones
showed nothing of concern.) Remember that a class-of-one
claim requires evidence that the plaintiff was intentionally
14                                                No. 13-3240

treated differently from someone similarly situated. Negli-
gent or accidental differential treatment does not count. See
Olech, 528 U.S. at 564
; Snowden v. Hughes, 
321 U.S. 1
, 8 (1944)
(“[A]dministration by state officers … resulting in its une-
qual application to those who are entitled to be treated alike,
is not a denial of equal protection unless there is shown to be
present in it an element of intentional or purposeful discrim-
ination.”). It is absurd to say that because DFI should have
known in 2007, but didn’t, that Jones had a former felony, the
Fourteenth Amendment required DFI to ignore that fact
when it later surfaced in 2009. Government is permitted to
correct its past oversights even if certain parties wish it
would repeat them. And anyway, as we said, we do not see
how DFI made a mistake in the first place.
    Second, Saalwaechter argues that he was similarly situat-
ed to Chase Fiechter, the owner of a pawn shop on the other
side of Indiana called Parlor City Pawn. Before Fiechter
owned Parlor City, the shop belonged to his friends, Tim and
Heidi Bryant. The couple was forced to give up their pawn
license after authorities arrested Tim Bryant for firearms vio-
lations; their son, Clayton, was also convicted of a misde-
meanor in connection with the same incident. After these
events, Fiechter decided that he would take over the shop.
He applied for a license and sought to retain Clayton Bryant
as the store’s manager. DFI, worried about a straw license,
refused. Eventually, Fiechter agreed to sign a memorandum
of understanding stating that he would not employ Clayton
Bryant. Director Mills then granted Fiechter his license.
    We again question whether Saalwaechter and Fiechter
were similarly situated. True, both men had personal histo-
ries with the previous owners of pawn shops on the same
No. 13-3240                                                           15

property, and both fought to employ persons with criminal
backgrounds before relenting. But Clayton Bryant had not
previously lied to DFI officials, as Jones had, and neither
Fiechter nor the Bryants had any history of straw licensing
or any messy and mysterious business transactions between
them. Cf. Sung Park v. Indiana Univ. School of Dentistry, 
692 F.3d 828
, 833 (7th Cir. 2012) (noting that class-of-one claims
must account for “all of [the plaintiff’s] conduct”). In any
event, DFI asked both Saalwaechter and Fiechter to sign
MOUs with similar conditions (not employing John Jones or
Clayton Bryant, respectively). And DFI gave both men their
licenses as soon as they unambiguously agreed to sign. No
equal protection violation here. 4
    Saalwaechter nevertheless complains that Fiechter was
given his MOU before Director Mills decided whether to ex-
ercise delegated authority over Fiechter’s application,
whereas Saalwaechter did not receive the MOU until his ap-
plication was already set to go before the entire board. The
fact that he was not granted a license via delegated authority,
Saalwaechter argues, is itself evidence of unequal treatment.
    We agree with the district court that there was a valid
reason for this small difference in timing: Director Mills had
only been on the job for a few days when he decided that
Saalwaechter’s non-routine application should be reviewed
by the whole board. During this time Mills, whose responsi-
bilities at DFI covered much more than pawn licensure, had

4 Saalwaechter argues that his earlier response to the board—that he
would “accept the MOU if all consideration for approving my applica-
tion without it has failed”—should have sufficed. We think not, especial-
ly because at the hearing he continued to defend Jones and never ex-
pressed his clear intent to sign the MOU.
16                                                No. 13-3240

to devote much of his attention to the failure of Indiana’s
second-largest bank. It was perfectly legitimate for Mills to
determine that, under the circumstances, approving the ap-
plication without the benefit of full board review was not a
wise exercise of his discretion. By contrast, Fiechter applied
for his license two years later, when Mills had less on his
plate and more experience as director.
    Third, and finally, Saalwaechter suggests another pawn
shop in Evansville, called “Deal Brothers,” as a comparator.
Deal Brothers initially operated as a buy/sell, so it was not
required to obtain a pawn license. However, DFI discovered
that the shop was purchasing items, adding a mark-up and
tax, and then selling the items back to customers on laya-
way—activity that, in DFI’s view, constituted “pawning.”
Consequently, Deal Brothers applied for a pawn license.
    DFI soon received word that Deal Brothers’ owner,
George Belt, had gotten into an altercation with a customer.
Reportedly, the encounter culminated with Belt waving a
gun in the customer’s face and forcing him out the door. The
police investigated but did not file charges. When DFI in-
quired about the incident, Belt explained that the customer—
upset that his girlfriend had sold the customer’s property in
order to post his bail—had become loud and aggressive after
Belt told him that Deal Brothers was not a pawn shop and
that he could not redeem the items. Belt said he pulled the
gun because he thought the customer was reaching under
his shirt for a weapon and Belt feared for his life. The direc-
tor of DFI granted Deal Brothers its license four months later.
   Saalwaechter argues that George Belt had “done things
that a reasonable fact finder could find to be ‘worse’ than
what Fares Pawn was accused of,” so that the decision to
No. 13-3240                                                  17

grant Deal Brothers’ application and deny Fares Pawn’s was
irrational. This argument misses the point. It may be true
that, as Saalwaechter reminds us, “[i]f a bad person is treated
better than a good person, this is just as much an example of
unequal treatment as when … a good person [is treated]
worse than an equally good person.” Esmail v. Macrane, 
53 F.3d 176
, 179 (7th Cir. 1995). But an applicant cannot fashion
a triable class-of-one claim merely because he can locate an-
other applicant accused of arguably “worse” conduct. As
with any comparator, the question is whether, given the red
flags in each of their applications, DFI had a rational basis
for licensing Deal Brothers and not licensing Fares Pawn. See
Bell, 367 F.3d at 707
. Clearly, it did—DFI believed Belt when
he said that he acted in self-defense, and it either did not be-
lieve or found insufficient Saalwaechter’s explanation for the
numerous causes for concern that surfaced in his own appli-
cation. That is not a violation of the Equal Protection Clause.
                        *      *      *
    In Engquist v. Oregon Department of Agriculture, the Su-
preme Court held that public employees cannot bring class-
of-one claims against their public employers because the
theory is “simply a poor fit” in the employment context,
which necessarily “involve[s] discretionary decisionmaking
based on a vast array of subjective, individualized assess-
ments.” 553 U.S. at 603
, 605. The defendants urge us to ex-
tend Engquist’s approach to Indiana’s pawn-licensing
scheme—or at least to Mills’ decision not to exercise delegat-
ed authority—both of which, the defendants suggest, also
demand consideration of subjective, discretionary factors. Cf.
United States v. Moore, 
543 F.3d 892
, 901 (7th Cir. 2008) (ap-
plying Engquist to a class-of-one claim based on the govern-
18                                                No. 13-3240

ment actor’s exercise of prosecutorial discretion). But see
Hanes v. Zurick, 
578 F.3d 491
, 495 (7th Cir. 2009) (noting that
courts should be cautious when extending Enquist’s rationale
beyond the public-employment context). In light of the pre-
ceding analysis, we have no need to decide whether class-of-
one claims are indeed a “poor fit” for the licensing process
established by Indiana law.
   We do note, however, that “the practical problem with al-
lowing class-of-one claims to go forward in [the public em-
ployment] context is … that governments will be forced to
defend a multitude of such claims in the first place, and
courts will be obliged to sort through them in a search for
the proverbial needle in a haystack.” 
Engquist, 553 U.S. at 608
. Because “taking the equal protection route bypasses the
administrative and judicial review procedures established to
remedy arbitrary official action,” 
Bell, 367 F.3d at 712
(Pos-
ner, J., concurring), such a task seems especially wasteful
when Indiana already offers an administrative channel to
challenge the wrongful denial of license applications.
   Regardless, having sorted through this haystack and
found no needle, the judgment of the district court is
                                                    AFFIRMED.

Source:  CourtListener

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