The following summary is based on opinion of the U.S. Court of Appeals for the First Circuit, which is the appellate court for decisions of the U.S. District Court for the District of New Hampshire. Opinions of the First Circuit are binding on issues of federal law in New Hampshire.
This case involved a claim by a business owner that a Massachusetts town violated his constitutional rights by denying him a liquor license. Although New Hampshire liquor licenses are regulated by the State, similar issues regarding local business permits could arise in New Hampshire.
The plaintiff bought a tavern and applied for a transfer of the former owner’s liquor license. The Town did not approve the transfer or issue him a new license. After several months of renovations, the tavern opened and the owner served liquor without a license, but still pursued one from the Town. Eventually, the Town police raided the tavern. The Town also issued a final decision without holding a hearing, denying a transfer or a new liquor license. The negative publicity hurt the tavern’s business and it eventually closed. The owner sued the Town in federal court, claiming his due process rights and his equal protection rights had been violated. The federal district court dismissed the case, and it was appealed to the 1st Circuit Court of Appeals.
The Due Process Clause of the 14th Amendment prohibits the government from depriving any person of “life, liberty, or property, without due process of law.” There are two types of due process claims. “Substantive due process” claims require proof that (1) the acts complained of were so egregious as to shock the conscience, and (2) they deprived the plaintiff of a protected interest in life, liberty, or property. These acts must be “truly outrageous, uncivilized and intolerable.” However, the Court noted that “any permit or license denial, no matter how unattractive, that falls short of being ‘truly horrendous’ is unlikely to qualify as conscience-shocking.” Here, the police raid on the tavern was justifiable in light of the Town’s interest in enforcing liquor licensing laws, and there was no proof that the license denial was “designed to put the tavern out of business” as the plaintiff alleged. In short, the Town’s conduct did not shock the conscience, and the Court was not required to move to the second part of the test.
“Procedural due process” claims ensure that government, when dealing with private persons, will use fair procedures. The court asks whether a liberty or property interest has been interfered with, and whether the procedures involved were constitutionally sufficient. In this case, the plaintiff did not identify any liberty interest that was violated, and the only property interest claimed was the liquor license which was never transferred or issued to him. Under Massachusetts law, an applicant for a liquor license has no property interest in the license until it is issued. Therefore, this claim also failed because no protected interest was violated. [It may be useful to note that the New Hampshire Supreme Court has described a business license as a “transient or impermanent interest” that confers no vested rights beyond the license period once it is issued. See Seabrook v. Vachon Management, Inc., 144 N.H. 660, 667 (2000).]
Finally, the Court considered whether the tavern owner’s equal protection rights under the 14th Amendment were violated. Equal protection requires that similarly situated people receive substantially similar treatment from the government. Because the plaintiff failed to show that anyone else was similarly situated but treated differently, this claim was also dismissed.