If Missouri Supreme Court judges were dreaming of enjoying the nice weather at the Lake of the Ozarks during oral arguments on April 17, it’s hard to blame them.
The two cases before the court that day both concerned whether lake area business districts, which are allowed by statute to collect a lodging tax and use the revenue to promote tourism, are electing members to their advisory boards, run into constitutional problems, and whether the entire statutory scheme behind the districts should be stricken.
In both cases, plaintiffs sought election to the advisory boards in Camden County and Miller County, respectively, in 2020. However, that year, the Tri-County Lodging Association, a nonprofit that each advisory board contracts with to manage taxes and promote each district, changed the election rules. Previously, each business that is a member of its county’s lodging association had one vote. But starting in 2020, each such business could cast one vote for each property it managed.
That goes against the Equal Protection Clause of the 14th Amendment to the U.S. Constitution, argued Curtis Tideman of Lathrop GPM in Kansas City, who represented the plaintiffs.
Additionally, a private entity, as he described the Tri-County Lodging Association and the advisory boards, should not be able to collect and distribute taxes, he said, citing the 1968 Missouri Supreme Court opinion in Ruggeri v. City of St. Louis, which he described as almost the beginning and the ending of this case.
Siding, to some degree, with the plaintiff, Circuit Court Judge Deborah Daniels, who presided over the joint cases, entered a partial summary judgment, finding the statutory scheme was not unconstitutional if she struck the words “which shall be a nonprofit entity” from the description of the advisory board, which she did.
But that’s not enough, argued Tideman.
“Whether you call it a nonprofit entity or whether you strike the language that gives it that label, either way, it operates as a private entity and is therefore unconstitutional,” he said.
On appeal, the plaintiffs argued the trial court erred by failing to strike the entire statutory scheme. Daniels’ severability analysis was wrong, argued Tideman, who said the scheme failed both steps of a two-part severability test. First, the scheme is not susceptible to constitutional enforcement just by removing the words “nonprofit” when the rest of the statute still describes a private entity, he said. Second, the legislature would not have enacted the remaining portions of the scheme if it had known the unconstitutional part would be removed, he claimed.
“The way votes are collected and who gets to vote is essential,” he said. “It’s been very clear that, in any state election or in any local election, every voter gets to vote on any election which applies to the place where they live.”
Marc Ellinger of Ellinger Bell in Jefferson City represented the Camden County business district. He argued the trial court’s severability analysis was correct and that the plaintiffs essentially got what they wanted. He pointed out that the appeals presented facial challenges, which come with a high burden for the plaintiffs, but that Tideman had, at least in part, been arguing as if the challenge were operational. Ellinger also challenged Tideman’s argument that the districts at least operate as private entities.
“Government, by its definition, can’t run a profit. At least, I don’t think it’s supposed to run a profit. And as a result, a nonprofit entity is, theoretically, a governmental entity,” Ellinger said.
T. Michael Ward of Brown & James in St. Louis, who represented the Miller County district, argued that the legislature’s actions should be seen as intentional. Because the statute allowing businesses rather than registered voters to elect board members is more specific and more recent, it must be assumed to govern.
Chief Justice Mary R. Russell asked Tideman what it would mean if the court struck down the statutory scheme due to its allowing businesses rather than registered voters to elect board members.
“If we rule for you on a facial challenge, then are we destroying levee districts?” she asked.
That would not be the case, said Tideman, who argued Missouri has two types of elections: elections by registered voters and elections by property ownership. Allowing businesses to vote falls within neither category.
Judge Zel M. Fischer said the legislature decided on this type of election for the lake area business districts because they were “a different animal” needing a different voter base. And ordinarily, Fischer said, the court would hold that the specific statute overrides the general.
“They can do that so long as they are not providing money or a thing of value to a private entity, association, corporation or individual,” Tideman said.
The cases are Salamun et al. v. Camden County Clerk et al., SC100076, and Griswold et al. v. Miller County et al., SC00083.