Court: Supreme Court of Kansas; April 16, 1993; Kansas; State Supreme Court
The case involves Aleta Blue, Donald R. Steele, several credit unions, and the Kansas Department of Revenue, specifically targeting the constitutionality of S.B. 486, which aimed to eliminate automobile brokering in Kansas. The plaintiffs sought a declaratory judgment stating that S.B. 486 is unconstitutional, along with temporary and permanent injunctions against its enforcement and recovery of attorney fees under 42 U.S.C. 1988. The district court ruled that S.B. 486 violated the First and Fourteenth Amendments of the U.S. Constitution and corresponding Kansas constitutional provisions, granting the requested injunctions and awarding attorney fees.
Aleta Blue operates Signature Fleet and Leasing, holding multiple licenses as a broker and dealer. Signature does not maintain an inventory or showroom and primarily facilitates sales through referrals from credit unions, charging dealers a commission per vehicle sold without compensating the credit unions. The arrangement allows credit unions to enhance member services and generate profit through financing loans. The defendants appealed the district court's decision.
Credit unions do not have agreements with participating car dealers, operating a service that allows members to avoid negotiating directly with dealers. Members can purchase vehicles for $100 above the manufacturer's invoice price and obtain information regarding various vehicle specifications and financing options through a representative, Ms. Blue. If a member wishes to purchase a vehicle, Ms. Blue facilitates the order using dealer-provided forms and collects a deposit for the dealer. Upon dealer acceptance, all necessary paperwork for the transaction is handled as it would be if the customer dealt directly with the dealer. Vehicle delivery can occur at various locations, including the customer’s home or the dealership.
Donald R. Steele, a licensed car salesman, also facilitates transactions through credit union referrals, operating without a showroom or significant business presence until moving to rented quarters. His operations mirror those of Ms. Blue, acting as a broker between customers and dealers while providing vehicle information. The vehicle sales industry in Kansas is highly regulated, requiring licensing for all parties involved. The Vehicle Dealers and Manufacturers Licensing Act governs these regulations. Previously, automobile brokering was allowed until 1990, when legislation aimed at eliminating the brokerage business was enacted following extensive legislative hearings. The law took effect on January 1, 1991.
On November 5, 1990, a legal action was initiated challenging the constitutionality of S.B. 486. The district court issued a temporary injunction to maintain the status quo and prevent enforcement of the bill, later ruling S.B. 486 as constitutionally impermissible and void. The temporary injunction was made permanent, and the plaintiffs were awarded attorney fees and costs. The defendants subsequently appealed these decisions.
Presenting S.B. 486 posed logistical challenges due to its extensive amendments to various sections of the Act, much of which was irrelevant to the current issues, complicating the context. The decision was made to exclude excessive unamended material to focus on pertinent amendments, with the full text of S.B. 486 available in L. 1990, ch. 52.
Key amendments include the redefinitions of terms such as "vehicle dealer," encompassing various roles involving vehicle transactions for compensation, and "broker," which refers to individuals arranging sales of vehicles or mobile homes for a fee. The public policy outlined in K.S.A. 8-2402 emphasizes fair regulation of vehicle and mobile home transactions, promoting honesty and protecting the public interest against fraudulent practices while ensuring a stable and verifiable distribution system.
K.S.A. 1989 Supp. 8-2404 has been amended to establish requirements for vehicle dealers regarding financial responsibility and licensing. The director may demand that applicants or licensees provide a bond ranging from $5,000 to $20,000 to ensure compliance with statutes and indemnity against losses resulting from actions that could lead to license suspension or revocation. Specifically, used vehicle dealers, new vehicle dealers, and broker dealers must maintain a bond of $15,000 under similar conditions.
Furthermore, vehicle dealers must demonstrate a bona fide franchise or sales agreement with a manufacturer or distributor to engage in selling new vehicles or mobile homes. Engaging in the business of buying, selling, or exchanging new motor vehicles requires a license from the director, which includes activities such as displaying, advertising, or soliciting buyers. Similar requirements apply to mobile home dealers and those dealing in used motor vehicles, with licensing necessary for such activities as display, advertising, or solicitation of buyers for used vehicles.
The director of vehicles is mandated to publish a Kansas vehicle or mobile home salesman's manual, which serves as the basis for a written examination that applicants must pass to obtain or renew their salesman's license. Additionally, no license for acting as a salvage vehicle dealer can be issued or renewed without proof of compliance with the junkyard and salvage control act (K.S.A. 68-2201 et seq.). Effective immediately, individuals are prohibited from acting as brokers in the sale or advertising of new or used motor vehicles, although exceptions are made for licensed individuals dealing with mobile homes, manufactured homes, or used recreational vehicles that have been previously owned for at least 45 days or are repossessed vehicles. Unlicensed individuals are permitted to sell their own vehicles occasionally without needing a license.
The district court found that S.B. 486 infringed on the plaintiffs' due process and equal protection rights under the Fourteenth Amendment by terminating their automobile brokering businesses. Citing Williamson v. Lee Optical Co., the text introduces judicial review principles, focusing on the unconstitutionality of certain provisions that restrict unlicensed opticians from fitting or duplicating lenses without prescriptions, which the court deemed not reasonably related to public health and welfare.
The court determined that an optician could use standard mechanical methods to measure and replicate a broken lens without necessarily requiring a written prescription. It found that the legislative regulation, although addressing a public interest, imposed means that were not reasonably necessary or related to the intended goal. Consequently, the court concluded that the law violated the Due Process Clause by arbitrarily hindering the optician's business rights.
The court referenced the precedent set in Roschen v. Ward, which upheld regulations requiring the supervision of licensed professionals in retail eyeglass sales, suggesting that while legislative measures may appear excessive, it is the legislature's role to weigh their merits. The court also noted that many written prescriptions lack specific fitting instructions, though some are essential for proper vision correction.
The legislature could have reasonably mandated a prescription in cases where it deemed frequent necessity to exist for ensuring correct fittings or duplications, particularly given the significance of eye examinations in detecting health issues. The law permits using an existing prescription on file for new fittings or lens duplications, indicating it doesn't require eye exams for every change.
The court asserted that a law does not need to be perfectly consistent with its aims to be constitutional, emphasizing that addressing a recognized issue can justify legislative action. The court noted a shift away from striking down state laws under the Due Process Clause based on perceived imprudence or discord with specific ideologies. Ultimately, it reinforced that public recourse against legislative overreach lies in the electoral process rather than through judicial intervention.
The District Court determined that exempting sellers of ready-to-wear glasses from regulation while subjecting opticians to it violated the Equal Protection Clause of the Fourteenth Amendment. Legislative classification issues are complex and do not have a singular definition, as different evils may require different remedies. The legislature has the discretion to address specific issues within a field selectively, but this cannot lead to invidious discrimination. In the present case, the ready-to-wear glasses market in Oklahoma may not be significant enough to warrant such discrimination.
In a related case, Ferguson v. Skrupa, the Supreme Court reviewed a Kansas statute that made it a misdemeanor to engage in debt adjusting unless it was part of legal practice. Skrupa, a debt adjuster, argued that his business was useful and not harmful to public welfare, thus should not be prohibited. The court found that while Skrupa's business fell under the statute's prohibition, the regulation was unreasonable and constituted a violation of the Due Process Clause. The court enjoined enforcement of the statute, referencing a similar Pennsylvania case that upheld the right to regulate but not prohibit legitimate businesses.
The Pennsylvania court's decision heavily referenced Adams v. Tanner, which established that the Due Process Clause prevents states from prohibiting businesses that are deemed 'useful' and not 'inherently immoral or dangerous.' Both the District Court and the Pennsylvania court in Stone adopted this principle, asserting that courts should assess the morality and utility of businesses in relation to statutes impacting them. Historically, the Due Process Clause was used to invalidate laws perceived as unreasonable, such as those regulating working hours and wage standards. This judicial intervention was opposed by Justices Holmes and Brandeis, who argued that state legislatures should have the authority to legislate unless explicitly restricted by the Constitution. They emphasized that the constitutionality of a law should not hinge on whether it is deemed beneficial. The prevailing view has shifted away from allowing courts to invalidate laws based on perceived legislative unwise actions. The Supreme Court has affirmed that states can legislate against harmful practices in their commercial affairs, provided such laws do not conflict with federal constitutional prohibitions or valid federal laws. The reliance on Adams v. Tanner is now considered outdated, mirroring the Court's earlier rejection of similar philosophies. Consequently, it was determined that the Kansas Legislature possessed the authority to enact legislation addressing debt adjusting.
Arguments exist that debt adjusting has social utility, but such matters should be addressed by the legislature, not the courts. The judiciary will not act as a 'superlegislature' to assess legislative wisdom or overturn state laws based on perceived unreasonableness or philosophical disagreements. The Kansas debt adjusting statute may be deemed wise or unwise, but any necessary relief must come from the legislative body of Kansas. The exclusion of nonlawyers from debt adjusting does not violate the Equal Protection Clause, as it does not constitute invidious discrimination. The relationship between a debt adjuster and their client involves trust, particularly in insolvency situations, and nonlawyers are legally restricted from providing certain types of advice. Therefore, Kansas may legally choose to limit debt adjusting to licensed attorneys without infringing on equal protection rights.
The excerpt references a significant shift in the U.S. Supreme Court's approach to challenges against economic legislation under the Fourteenth Amendment post-1937. Judicial deference to legislative economic judgments has become substantial, as illustrated in cases like Lincoln Federal Labor Union v. Northwestern Iron & Metal Co., which upheld a state's right-to-work law, and Williamson v. Lee Optical Co., which upheld regulations restricting opticians. The Court has indicated that it will assume a reasonable basis for legislative actions and will even hypothesize potential justifications for laws when explicit reasons are not provided. Thus, those contesting the validity of economic legislation face the burden of disproving the Court's hypothesized reasons for the law's enactment in addition to countering supporting arguments.
The Williamson decision marked a significant departure from the Lochner era, culminating in the dismissal of economic substantive due process. Justice Black's opinion in Ferguson v. Skrupa emphasized that the Court would not act as a superlegislature to evaluate the wisdom of legislative measures, indicating a shift away from protecting laissez-faire economic principles. The Court also ruled in Railway Express Agency v. New York that the equal protection clause does not ensure equal treatment among businesses in economic legislation. The New York ordinance in question, which restricted vehicle advertising, was upheld because its classification served a valid legislative purpose, demonstrating deference to legislative judgment in economic matters.
In contrast, the Court's ruling in Morey v. Doud was a rare instance where a law was found to violate the equal protection rationality test, as it unjustly exempted certain currency exchanges from regulatory requirements based on an arbitrary classification that lacked a solid rationale. Although the regulation aimed to protect the public, the Court noted that the exemption for specific companies could lead to unfair advantages over time. This case highlighted the evolving standards of judicial scrutiny concerning economic regulations and the degree of deference afforded to legislative classifications in economic and social welfare contexts. The later overruling of Morey in City of New Orleans v. Dukes further underscored the Court's trend of deferring to legislative decisions in economic regulation.
The Court found that an Illinois law violated the equal protection clause due to a majority belief that the closed class it created lacked a rational basis. In City of New Orleans v. Dukes, the Court overruled its previous decision in Morey v. Doud, which had invalidated a city ordinance prohibiting pushcart vendors from operating in the French Quarter, except for those qualifying under a 'grandfather' clause. The Court ruled that the ordinance was a legitimate economic regulation, emphasizing the judiciary's deference to legislative classifications that do not infringe upon fundamental rights or involve suspect categories. The Court reiterated that laws are rarely struck down under the rationality standard unless they involve arbitrary discrimination or unjustified burdens on specific groups. It highlighted that while there is a role for judicial review in economic and social welfare legislation, courts should primarily protect fundamental constitutional values, allowing legislative bodies broad discretion in such matters. The district court acknowledged Ferguson v. Skrupa but maintained that Gilbert v. Matthews remained relevant as it had been cited in subsequent cases.
The police power allows the legislature extensive authority to enact laws aimed at promoting public health, morals, security, and welfare. However, this power is constrained by the need to avoid enacting laws that are unequal, unreasonable, oppressive, or violate fundamental legal principles. Once a subject falls under state police power, regulations must genuinely address societal welfare and be designed to prevent potential harms. The legislature holds discretion in determining the necessary measures for these goals.
The differentiation between Gilbert and federal cases lies in the requirement that legislation must specifically address a recognized evil and be aimed at protecting the public from it. Judicial review does not afford any greater latitude based on Gilbert. The concepts of due process and equal protection are distinct; due process focuses on the fairness of state interactions with individuals, while equal protection addresses disparities in treatment among similar individuals.
Historically, courts have fluctuated in their standards for due process, often striking down laws they disagreed with, a practice that diminished after cases like Nebbia v. New York, which established that legislative means must have a significant relation to the intended objective. Courts are now viewed as unable to invalidate laws simply for being perceived as unwise or inappropriate, emphasizing the necessity for regulations to be reasonable and in the community's interest.
The excerpt addresses the validity of regulations affecting automobile brokers under substantive due process claims. It references several key Supreme Court cases to establish that states can regulate industries to prevent potential fraud, even if there is no immediate evidence of wrongdoing by brokers. In the case of Detroit Automotive Purchasing Services v. Lee, the court upheld Maryland's licensing requirements for automobile salesmen, which inadvertently affected brokers, highlighting that the state can rationally legislate to prevent conceivable problems. The court noted that the Due Process Clause does not prevent states from anticipating issues that may arise in the future and that the wisdom of such regulations falls within the states' legislative powers. The plaintiffs failed to demonstrate that brokers are inherently less prone to dishonesty than traditional car salesmen, and the existence of less restrictive measures was deemed irrelevant in evaluating the legitimacy of economic legislation. Overall, the court concluded that the General Assembly acted rationally in extending licensing requirements to brokers to protect consumers in the complex automobile market.
The remedy implemented by the General Assembly, which involves licensing vehicle salesmen through licensed dealers, is deemed a rational approach to mitigate consumer abuse in automobile sales. The system's additional supervision of salesmen may provide more effective regulation than the direct licensing and bonding suggested in House Bill 1759 by the plaintiffs. The plaintiffs' arguments against this licensing scheme are more suitable for legislative debate than for a federal district court setting. The licensing does not violate the Due Process Clause of the Fourteenth Amendment, and the plaintiffs’ claims on this basis are not sustainable.
Under the Equal Protection Clause of the Fourteenth Amendment and Article 23 of the Maryland Declaration of Rights, the plaintiffs present two arguments against the licensing scheme. They assert that the provisions unfairly impose stringent regulations on new vehicle brokers and claim selective enforcement regarding their proposal, which was similar to an arrangement allowing United Buying Service to operate legally in Maryland. The court notes that equal protection interpretations align with those under due process.
In economic regulation, courts apply equal protection standards similarly to due process. Classifications that do not infringe on fundamental rights or involve suspect distinctions are upheld if rationally related to a legitimate state interest. The court finds that the licensing scheme meets this rational relationship, nullifying the plaintiffs' claims of discrimination against new vehicle brokers.
Additionally, a relevant Iowa case, State v. Miner, highlights that licensing requirements for used vehicle dealers, aimed at consumer protection, do not indicate a legislative intent to create an unworkable statute, even if they limit certain selling methods.
The prohibition of a legitimate business is irrelevant to the appeal's outcome. The court cites *Chicago Title Insurance Co. v. Huff*, affirming that states can prohibit businesses harmful to public welfare under their police power. Section 322.3(2) and regulation 10.1(4) require defendants to be licensed dealers for the retail sale of used motor vehicles. The court examines whether this licensing requirement violates constitutional or statutory provisions. The defendant raises various constitutional issues, claiming deprivation of due process and equal protection under the U.S. and Iowa constitutions, but has not sought a dealer's license, rendering his claims as substantive due process challenges. The court notes that federal and state due process provisions are interpreted similarly, and economic regulations face a strong presumption of constitutionality. The regulation is justified to address consumer fraud in motor vehicle sales, and it is determined that the use of police power in this context is rational and necessary for consumer protection. The inclusion of used car brokers within the licensing requirement is deemed appropriate, as they are not singled out but included with others in the retail motor vehicle business. The potential impact on brokering does not invalidate the statute.
To protect consumers from fraud in motor vehicle sales, the State can mandate that individuals licensed under chapter 322 take title to any vehicle for sale, effectively prohibiting brokering. The constitutionality of this mandate is not undermined by the potential for a separate licensing scheme for brokers, as the availability of a less restrictive alternative is not a relevant factor in substantive due process challenges to economic legislation. Judicial review of such statutes begins with a presumption of constitutionality, requiring clear evidence of a constitutional violation to strike down the law. The burden of proof rests on the challenger. Courts do not impose their own economic beliefs over legislative judgment and will uphold economic regulations if there is a recognized issue that the legislation reasonably addresses. States can proactively regulate against potential issues as long as these concerns are rationally conceivable. Statistical classifications in economic regulation are presumed constitutional unless they involve invidious discrimination or infringe on fundamental rights. The purpose of S.B. 486 includes an amendment to K.S.A. 8-2402, establishing public policy aimed at fair regulation in the vehicle and mobile home industries, promoting honesty, protecting the public from dishonest sales practices, and ensuring a reliable distribution system for vehicles in Kansas.
Amendments to the statute, particularly S.B. 486, reflect legislative concerns about the automobile brokering industry's impact on the traditional dealership distribution system in Kansas. The legislative history indicates significant testimony highlighting the threat posed by automobile brokers to the viability of new car dealers, which are heavily regulated and require substantial investment for franchises, inventories, and facilities. In contrast, brokers operate with minimal overhead, raising concerns about their reliability and the potential decline in dealership numbers—from 433 to 373 in four years—affecting consumer access to warranty and recall services.
Evidence presented included the impending entry of major retailers into the brokering market and the negative implications this could have for consumers, such as reduced availability of spare parts and service options. The amended statute aims to establish a stable distribution method for vehicles and maintain support services, addressing consumer issues arising from dealership closures. Additionally, the amendments propose a regulatory framework for vehicle distribution, although the specifics of these legislative concerns remain somewhat unclear due to a lack of comprehensive documentation from the hearings. The potential for problems related to out-of-state vehicle brokering was also noted, particularly regarding consumer repairs.
Concerns have been raised regarding the potential loss of control over accurate product information in brokered sales, which could mislead customers since brokers operate independently. The district court limited defendants to legislative history for evidence of the legislation's purpose and intent, excluding relevant testimony on enforcement issues and expert analysis regarding the impacts of brokering on the motor vehicle market. This exclusion was deemed erroneous, as the court is not restricted to evidence presented to the legislature when assessing the legislation's intended goals, as established in Williamson v. Lee Optical Co. The district court's interpretation of S.B. 486 as merely protective of the traditional sales system was found to be overly simplistic.
The court overly focused on the individual plaintiffs' operations, which appeared non-harmful to customers, but this does not reflect the broader risks associated with brokering. Issues such as brokers disappearing with customers' payments, providing false title or warranty documents, and the potential for fraud were highlighted. The legislature has historically regulated the motor vehicle sales industry comprehensively, addressing operational standards, licensing, and consumer protection. Unregulated sales could lead to significant consumer risks, including meaningless warranties and widespread fraud.
The regulation of the automobile brokering industry under K.S.A. 8-2402 is deemed a valid legislative objective under police power, with the legislature determining that such brokering poses a threat to the regulatory system and should be abolished. Extensive hearings were held, including testimonies from individual plaintiffs, who subsequently lost their case in the legislature. The courts are not permitted to act as a superlegislature to overturn this legislative action based on claims of Fourteenth Amendment violations.
The summary of conclusions includes:
1. S.B. 486 constitutes economic legislation with purposes outlined in section 2, addressing existing and potential future issues in automobile sales and distribution in Kansas.
2. Licensing businesses in this sector and protecting consumers are valid areas for state economic regulation.
3. The legislature identified a current or potential issue requiring remedial action, which S.B. 486 aims to address. The plaintiffs failed to prove there was no issue requiring correction or that the legislative response was irrational.
4. No evidence of invidious discrimination was presented concerning equal protection claims; the regulation is strictly economic, targeting the elimination of brokering in the automobile distribution system, thus warranting a presumption of constitutionality.
5. S.B. 486 does not violate the Fourteenth Amendment regarding due process or equal protection claims.
Regarding First Amendment rights, the district court's ruling that S.B. 486 violates these rights is contested. The distinction between individual plaintiffs and credit unions is noted, with the definition of commercial speech established as speech proposing a commercial transaction. The context of this speech often arises when laws restrict advertising within a business or profession.
S.B. 486 aims to eliminate automobile brokering, with the court determining that the restriction on individual speech rights related to this abolition does not violate the First Amendment. The individual plaintiffs lack a First Amendment claim since the Act's constitutionality has been upheld.
The situation for credit unions is more complicated. Although they may advertise new car prices and refer inquiries to brokers since brokering is now illegal, they argue that S.B. 486 hinders their ability to provide pricing information or direct members to dealers. The Act requires vehicle dealers to demonstrate a legitimate franchise agreement to engage in vehicle sales and mandates licensing for those involved in buying or selling new vehicles. Credit unions contend that they would need a dealer's license to advertise or refer buyers, which they cannot obtain due to the lack of franchise agreements. The defendants counter that S.B. 486 does not impose such restrictions and assert that the plaintiff credit unions are not licensed by the Motor Vehicle Division in Kansas.
Senate Bill No. 486 allows credit unions to continue referring vehicle customers directly to dealerships, such as Zeller Motor Company, John North Ford, and Hofmeier Chevrolet, without prohibiting direct dealings with these dealers. The bill primarily impacts how credit unions structure their operations but does not change their status as non-automobile dealers. Credit unions may sell repossessed vehicles but do not engage in negotiating sales, handling transactions, or receiving finder's fees for referrals to brokers or dealers. The only benefits for credit unions come from goodwill and potential loan income if the vehicle is financed through them, which is not mandatory for the service.
If S.B. 486 restricts credit unions from providing informational services and direct dealer referrals, it could raise serious First Amendment concerns, as these restrictions may exceed the bill's anti-brokering intent. The Director of Vehicles, responsible for enforcing the Vehicle Dealers and Manufacturers Licensing Act, interprets S.B. 486 as not applying to credit unions unless they act as brokers. This interpretation aligns with the Act's goal of eliminating automobile brokering and suggests that activities not involving brokering are not affected. Consequently, under this construction, credit unions would not have a First Amendment claim.
Additionally, the plaintiffs argue that S.B. 486 violates provisions of the Kansas Constitution. However, it is concluded that the Kansas Constitution does not provide greater rights concerning these issues, and thus its provisions will not be separately addressed.
The prior determination regarding constitutional claims is deemed conclusive for claims under both the United States and Kansas Constitutions. The district court's award of attorney fees to the plaintiffs under 42 U.S.C. § 1998 is contested by the defendants, who argue it was an error. Since the constitutionality of the relevant legislative enactment has been affirmed, the plaintiffs are no longer considered prevailing parties, warranting a reversal of the attorney fee award. Consequently, the district court's judgment is reversed, and the permanent injunction is vacated.
Justice Six concurs with this result, while Justice Allegrucci dissents. Allegrucci critiques the majority's finding of a rational basis for eliminating the automobile brokerage business, asserting that S.B. 486 (L. 1990, ch. 52) fails to meet the rational basis scrutiny required for equal protection under the law. Although the majority agrees that the rational basis test is appropriate, Allegrucci contends that it should not be applied without explicit reference to "rational" and "legitimate." He emphasizes that the rational basis standard, while deferential, is not without substance and must ensure that any statutory classification is reasonably connected to legitimate state interests.
Allegrucci references case law emphasizing that legislative distinctions must not be arbitrary or irrational, and that the desire to harm a politically unpopular group does not constitute a legitimate state interest. He notes that S.B. 486 was introduced to eliminate competition from automobile brokers at the request of the Kansas Motor Car Dealers Association, a motive that the majority and the district court do not recognize as a legitimate state interest. The defendants failed to provide evidence supporting the assertion that banning automobile brokers advances governmental purposes, particularly in relation to informing credit union members about acceptable offers.
Defendants have failed to explain how prohibiting brokers from informing consumers about available deals through licensed dealers serves any government interests. Senate Bill No. 486 restricts individual Plaintiffs from facilitating transactions between buyers and licensed sellers, advertising new vehicles, and referring buyers to licensed salespeople. The State does not provide arguments or evidence that these restrictions promote fair dealings, consumer protection, or support for Kansas car purchasers. The majority opinion attempts to justify S.B. 486 by referencing the burdens placed on car dealers, such as the necessity for a franchise and maintaining inventory, and mentions concerns about large retailers entering the brokering market. However, these considerations do not constitute legitimate state interests that warrant discrimination against automobile brokers. The law is deemed not rationally related to the original purpose of the Vehicle Dealers and Manufacturers Licensing Act. Legislative history reveals no evidence suggesting that automobile brokers pose a threat requiring more stringent measures than existing licensing requirements. Additionally, Defendants' claims regarding police power objectives lack credibility, particularly their argument about chain of title, which fails to acknowledge that licensed salespeople also do not appear in the chain. Ultimately, there is insufficient support for the notion that S.B. 486 addresses any legitimate concerns regarding vehicle sales.
Every new car in Kansas must be sold from a manufacturer to a licensed dealer with a franchise agreement. Cars purchased with Plaintiffs' assistance were sourced from these licensed dealers, who handled the necessary documentation. There is no competent evidence supporting the claim that eliminating brokers is essential for the Kansas titling system. Concerns about unscrupulous brokers can be addressed by existing regulations, which require brokers to maintain a business location, provide financial information, and hold a $15,000 bond. Complaints regarding brokers largely stem from their impact on licensed dealers, particularly concerning competitive pricing and warranty work, rather than brokers' practices themselves. The majority opinion expresses concern about potential issues with brokering, but these are based on unsubstantiated fears rather than evidence. The dissent argues that S.B. 486, which restricts brokers, does not legitimately address consumer protection or fraud and violates the plaintiffs' equal protection rights. The dissenting opinion is supported by Justices Abbott and Davis.
