On Monday, the Sixth Circuit reversed and remanded a jury verdict that awarded Michigan landowners $3.6 million because the City prevented Wal-Mart from building on the landowners’ property. (Loesel v. City of Frankenmuth) The appeal challenged the City of Frankenmuth, Michigan’s efforts to prevent Wal-Mart from building on land owned by the Loesel family. The local government was trying to protect the small-town feel of the city. Wal-Mart had previously made a conditional agreement to purchase the Loesel’s land for $4 million, but terminated the deal after a post purchase-agreement ordinance made it impossible to build a Wal-Mart on the land. The Loesels sued the City under the Equal Protection Clause of the 14th Amendment and were awarded $3.6 million in damages by a jury.
The Loesels’ equal protection claim was based on a “class-of-one” theory that has been recognized by the U.S. Supreme Court. The City argued that it was entitled to judgment as a matter of law because the zoning ordinance had a rational basis. In order to refute such a rational basis, the Loesels needed to either negate every conceivable basis which could support the City’s rezoning or demonstrate that the action was motivated by animus or ill-will. The Sixth Circuit found that the jury could have concluded that the ordinance lacked a rational basis under a conceivable basis theory. However, the Court determined that an animus theory of liability failed as a matter of law. The jury did not specify whether its decision was based on an animus theory of liability or a lack of conceivable basis theory. Contrary to some other circuits, the Sixth Circuit does not presume that the jury made its judgment based on a factually sufficient theory in civil cases if an invalid theory was also presented to the jury. Therefore, the case was remanded for a new trial.