The Seventh Circuit Court of Appeals has affirmed a lower court’s decision to dismiss a class-action lawsuit challenging the City of Chicago’s aggressive vehicle forfeiture program, ruling that the city’s practice of towing, impounding, and ultimately disposing of vehicles to enforce traffic fines is an exercise of its police power, not an unconstitutional “taking” under the Fifth Amendment.
The case, brought by vehicle owners Ryan O’Donnell and Michael Goree, targeted Chicago’s graduated enforcement scheme, which allows the city to seize and sell cars belonging to individuals with multiple unpaid parking or traffic tickets. The plaintiffs argued that taking their vehicles—and selling them, in O’Donnell’s case, to a towing contractor for scrap value—without compensating them for the property’s full value amounted to a constitutional violation.
However, the Seventh Circuit panel, in an opinion written by Judge Kirsch, disagreed. The court concluded that the city’s actions were firmly rooted in its authority to maintain public order and safety, not in eminent domain, thus shielding the forfeiture process from the Takings Clause requirement of “just compensation.”
The City’s Graduated Forfeiture Process
The core of the dispute lies in Municipal Code of Chicago (MCC) § 9-100-120. The process is clearly outlined:
1. Accumulation of Liability: A vehicle owner faces immobilization if they accumulate three or more final determinations of liability for traffic violations, or two final determinations that are over a year old.
2. Immobilization and Towing: After proper notice, the city can immobilize the vehicle. If the owner fails to pay the overdue fines, enter a payment plan, or request a hearing within 24 hours, the vehicle is towed and impounded by contractors like URT United Road Towing, Inc.
3. Final Disposal: After impoundment, the owner has 21 days to pay up and reclaim the car or request an extension. If the vehicle remains unclaimed, the city may sell or dispose of it. In O’Donnell’s instance, his vehicle was sold to URT at scrap value; Goree’s was relinquished to the lienholder. Crucially, the city did not compensate either owner or use the sale proceeds to offset their outstanding ticket debt.
Police Power vs. Eminent Domain
The plaintiffs argued that this scheme was essentially a debt-collection mechanism masquerading as law enforcement, and that the taking of property for public use without compensation violated the Fifth Amendment.
The Seventh Circuit analyzed this under the framework established in previous cases, distinguishing between the government’s power of eminent domain (physically taking property for public use) and its police power (measures taken to protect public morals, health, or safety).
While the court acknowledged that the line between these powers isn’t always rigid, it found that immobilizing, towing, and disposing of vehicles to enforce traffic laws falls squarely under the police power.
“The purpose of the forfeiture scheme is to target individuals who—by refusing to pay—have hitherto evaded punishment for their traffic and parking infractions,” the opinion stated. The threat of losing the vehicle serves as a necessary deterrent, forcing repeat offenders to “internalize the consequences of their behavior.”
The court cited precedent, including a Supreme Court case (*Bennis v. Michigan*), which upheld a similar scheme where the property was forfeited because it was tied to wrongdoing. The appellate court viewed Chicago’s scheme as “firmly fixed in the punitive and remedial jurisprudence of the country.”
Addressing Plaintiffs’ Arguments
The plaintiffs attempted to distinguish Chicago’s program from punitive forfeiture schemes by arguing that:
1. It’s Debt Collection: They pointed to a prior bankruptcy case (*In re Fulton*) where the scheme was described as more revenue-driven than police-power driven. The appellate court dismissed this, noting that *Fulton* was not a Takings Clause case, and that a law can serve both to raise revenue and improve compliance.
2. Minimal Offenses: They argued that the underlying violations (like minor parking tickets) didn’t justify the extreme penalty of losing a vehicle. The court countered that because the plaintiffs challenged the law facially—meaning the mere enactment of the statute—situational arguments about the severity of the underlying tickets were irrelevant.
3. The *Tyler* Precedent: Plaintiffs heavily relied on *Tyler v. Hennepin County*, where the Supreme Court ruled that a state could not keep the surplus equity from a home sold for unpaid property taxes beyond the amount owed. The Seventh Circuit quickly distinguished *Tyler*, stating that the principle of not taking more than what is owed applies where the government enforces tax debts, but *not* where the government is enforcing laws pursuant to its police power.
Because the court found no underlying constitutional violation regarding the taking of the vehicles, the ancillary claims also failed. This included the claim against URT (a private towing contractor) under *Monell* (which requires an underlying constitutional violation to hold a contractor liable for municipal action) and the state-law claim for unjust enrichment. If the city lawfully disposed of the property, it did not unjustly retain a benefit.
The district court’s dismissal of the case was therefore affirmed.