Hause v. City of Fayetteville, Arkansas

IN THE UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF ARKANSAS

FAYETTEVILLE DIVISION

SHELLEY HAUSE and STEPHEN HAUSE PLAINTIFFS

V. CASE NO. 5:24-CV-5143

CITY OF FAYETTEVILLE, ARKANSAS DEFENDANT

MEMORANDUM OPINION AND ORDER

TABLE OF CONTENTS

I. BACKGROUND .......................................................................................................... 2

II. DISCUSSION ............................................................................................................. 5

A. Justiciability ........................................................................................................ 5

1. Standing ......................................................................................................... 5

2. Arkansas Law and the Court’s Jurisdiction .............................................. 11

3. Abstention .................................................................................................... 12

4. Duplicative Litigation .................................................................................. 14

5. Collateral Estoppel ...................................................................................... 14

B. Preliminary Injunction ...................................................................................... 15

1. Likelihood of Success on the Merits ......................................................... 15

2. Likelihood of Irreparable Harm ................................................................... 29

3. Balance of Equities and the Public Interest .............................................. 31

III. CONCLUSION ........................................................................................................ 32

Plaintiffs Shelley and Stephen Hause bring this suit challenging Fayetteville’s

short-term rental ordinance. The ordinance creates various requirements for operating a

short-term rental and limits the number of short-term rentals allowed to operate in

Fayetteville. Plaintiffs purchased a house in Fayetteville after the ordinance had gone into

effect, believing they would be able to get the permit and license needed to operate the

house as a short-term rental. They were unable to secure the necessary permit and have

filed suit in state and federal court seeking to have the ordinance declared

unconstitutional and the City of Fayetteville enjoined from enforcing it.

Now before the Court are the City’s Motion to Dismiss (Doc. 13), Plaintiffs’

Response in Opposition (Doc. 15), Plaintiffs’ Motion for Preliminary Injunction (Doc. 18),

and the City’s Response in Opposition (Doc. 20). On November 20, 2024, the Court held

a hearing on the Motions and took the matter under advisement. Having considered the

matter fully, the Court DENIES Plaintiffs’ Motion for Preliminary Injunction and

DISMISSES Counts II and V of their Amended Complaint (Doc. 11) for the reasons

explained herein.

I. BACKGROUND

In 2021, the City of Fayetteville enacted an ordinance (the “Ordinance”) regulating

short-term rentals (“STRs”), which had previously been treated as hotels/motels and were

therefore prohibited from operating in residential zoning districts. (Doc. 2-1). The

Ordinance defines an STR as a residential dwelling or portion thereof rented out “for a

period of less than thirty (30) consecutive days.” Fayetteville, Ark., Code of Ordinances §

118.01(E) (2024). The Ordinance divides STRs into two categories, “Type 1” and “Type

2.” A Type 1 STR is principally used as a full-time residence; “The occupant or owner

must occupy the residence for nine (9) months of the year.” Id. § 118.01(E)(1). A Type 2

STR “is not occupied by a permanent resident”; “The owner lists this property full-time as

a short-term rental and has no intention of having permanent residents living in the

property.” Id. § 118.01(E)(2).

A license is required to operate both types of STRs. But a conditional use permit

(“CUP”) is also required before an operator can get a license to operate a Type 2 STR in

a residential zoning district, and the Ordinance caps the total number of Type 2 STRs in

the City at 475. Id. §§ 118.01(E)(2), (E)(16). The Ordinance also requires STR operators

to maintain guest registration records detailing dates of occupancy, total number of

guests, and rates charged. Id. § 118.01(E)(11).

Plaintiffs live in Texas, but their daughter is a student at the University of Arkansas.

She has health issues that require her parents to make regular visits, so in 2023 they

bought a house in Fayetteville. (Doc. 2, ¶ 8). When Plaintiffs bought the house, the City

had not reached the 475 cap, so Plaintiffs assumed that if they applied for a CUP to

operate the house as a Type 2 STR, the application would be granted. Id. at ¶¶ 8–9, 11.

However, Plaintiffs’ CUP application was denied by the City’s Planning Commission

because, although the city-wide cap had not been reached, the Commission was

concerned about the concentration of existing Type 2 STRs in the neighborhood and the

availability (or lack thereof) of street parking while construction in the neighborhood was

ongoing. (Doc. 2-2, p. 7). Without a CUP, Plaintiffs cannot get a license to operate the

house as an STR, so it has been sitting vacant between visits.

Plaintiffs initially tried to appeal the Planning Commission’s decision to the

Fayetteville City Council. Property owners, however, have no right to appeal a Planning

Commission’s CUP denial to the City Council, but the City Council can review such

decisions on the motion of three City Council members. Fayetteville, Ark., Code of

Ordinances § 155.05(A)(3). No City Council members took up Plaintiffs’ CUP denial, so

Plaintiffs attempted to appeal to the Washington County Circuit Court under Arkansas

District Court Rule 9. (Doc. 15-3). Their state court action was filed on December 6, 2023.

Id. The Circuit Court denied Plaintiffs’ request for a preliminary injunction (Doc. 15-2) and

granted partial summary judgment for the City, dismissing Plaintiffs’ as-applied

challenges, because their appeal was untimely (Doc. 15-3). Plaintiffs are currently

appealing both of the Circuit Court’s orders to the Arkansas Supreme Court, and their

facial challenges remain pending before the Circuit Court.

On July 14, 2024, more than seven months after filing suit in state court, Plaintiffs

filed this federal action under 42 U.S.C. § 1983, urging that the Ordinance is

unconstitutional on several bases: (1) it violates the dormant Commerce Clause; (2) it

violates the right to interstate travel; (3) it is void for vagueness; (4) it constitutes a taking

without just compensation; and (5) its guest registry requirement violates the Fourth

Amendment.

The City filed a Motion to Dismiss asking the Court to dismiss or stay on a number

of grounds but primarily centered on the pending state court litigation. Plaintiffs filed a

Motion for Preliminary Injunction, seeking to enjoin the City from enforcing the Ordinance

while this litigation is pending. The Court first addresses the justiciability issues raised by

the City before turning to Plaintiffs’ Motion for Preliminary Injunction.

II. DISCUSSION

A. Justiciability

1. Standing

Although not raised in its Motion to Dismiss, in its Response in Opposition to

Plaintiffs’ Motion for Preliminary Injunction, the City argues that Plaintiffs do not have

standing to seek an injunction. The City also challenges Plaintiffs’ standing to bring their

dormant Commerce Clause, right to travel, and Fourth Amendment claims in particular.

Because standing is a jurisdictional prerequisite to the Court’s consideration of Plaintiffs’

claims, the Court takes it up first.

i. Standing Generally

To establish Article III standing, a plaintiff must show that: (1) they have “suffered

or likely will suffer an injury in fact”; (2) “the injury likely was caused or will be caused by

the defendant”; and (3) “the injury likely would be redressed by the requested judicial

relief.” FDA v. All. for Hippocratic Med., 602 U.S. 367, 380 (2024) (citations omitted). “[A]

plaintiff must demonstrate standing for each claim he seeks to press and for each form of

relief that is sought.” Town of Chester v. Laroe Ests., Inc., 581 U.S. 433, 439 (2017)

(quoting Davis v. Fed. Election Comm’n, 554 U.S. 724, 734 (2008)).

The City argues that, because the state court ruled that Plaintiffs could not bring

their untimely challenge to the CUP denial in state court, Plaintiffs are not injured by the

Ordinance as applied to them, and therefore lack standing. However, Plaintiffs have

established an injury in fact: without a CUP, they cannot obtain a license to operate a

Type 2 STR and are therefore prohibited from operating their house as such. See

Sarasota Wine Mkt., LLC v. Schmitt, 987 F.3d 1171, 1178 (8th Cir. 2021) (finding injury

where seller was “prohibited from selling, delivering, or shipping wine . . . to its Missouri

customers because it was not eligible for a Missouri off-premises retail license” (cleaned

up)). It is not clear how the state court’s decision resolves Plaintiffs’ injury; if anything it

reinforces it. And the second and third requirements are also met: this injury is traceable

to the Ordinance and would be redressed by the Court enjoining its enforcement.

The City instead seems to be attempting to fit an exhaustion requirement into the

standing analysis. It is well established that exhaustion of state remedies is not a

prerequisite to suit under § 1983. Carter v. Stanton, 405 U.S. 669, 670–71 (1972) (per

curiam) (holding that “the District Court plainly had jurisdiction of th[e] case pursuant to

42 U.S.C. § 1983” even though plaintiff did not “appeal from a county decision denying

welfare assistance”). A plaintiff’s failure to exhaust state remedies does not deprive them

of standing. Sabri v. Whittier All., 833 F.3d 995, 999 (8th Cir. 2016). Thus Plaintiffs have

standing, generally, to challenge the Ordinance.

ii. Standing: Dormant Commerce Clause

With respect to the dormant Commerce Clause claim, the City argues that Plaintiffs

cannot challenge the Type 1 STR provision because they only want to operate a Type 2

STR. The Supreme Court has squarely rejected this argument. Comptroller of Treasury

v. Wynne, 575 U.S. 542, 569 (2015). In Wynne, the Supreme Court held that the plaintiffs

had standing to bring a dormant Commerce Clause challenge to a state tax scheme’s

treatment of out-of-state income even though the state could cure the dormant Commerce

Clause violation without lowering the plaintiffs’ tax burden. Id. “Whenever government

impermissibly treats like cases differently, it can cure the violation by either ‘leveling up’

or “leveling down.’” Id.

Here, too, Plaintiffs are not challenging the mere scope of the burden imposed on

them by the Ordinance, but rather the different burdens imposed on out-of-state property

owners as compared to state residents. The City could, for example, require CUPs for all

STR operators (or none), but they cannot, as Plaintiffs have claimed, treat like property

owners differently based on state residency. Thus, Plaintiffs have standing to bring their

dormant Commerce Clause challenge to the Ordinance’s entire purportedly

discriminatory scheme even though their desired course of conduct may only be regulated

under one of its provisions.

iii. Standing: Right to Travel

With respect to Plaintiffs’ right-to-travel claim, the City argues that Plaintiffs are

asserting other people’s right to travel, not their own. The Supreme Court’s third-party

standing doctrine establishes that “a party ‘generally must assert his own legal rights and

interests, and cannot rest his claim to relief on the legal rights or interests of third parties.’”

Kowalski v. Tesmer, 543 U.S. 125, 129 (2004) (quoting Warth v. Seldin, 422 U.S. 490,

499 (1975)). However, courts recognize a limited exception when the party seeking third-

party standing shows “a ‘close’ relationship with the person who possesses the right” and

“a ‘hindrance’ to the possessor’s ability to protect his own interests.” Id. at 130 (quoting

Powers v. Ohio, 499 U.S. 400, 411 (1991)). In response, Plaintiffs point to Craig v. Boren,

429 U.S. 190 (1976), where the Supreme Court applied this exception and permitted a

vendor to assert “the rights of third parties who seek access to their market or function.”

Id. at 195.

In Craig v. Boren, the Court examined the constitutionality of an Oklahoma law that

prohibited the sale of 3.2% beer to men under age 21 and women under age 18. Id. at

192. Among the plaintiffs challenging the law was a man who was between 18 and 21 at

the time the suit was filed but had aged out by the time it reached the Supreme Court. Id.

The Court recognized third-party standing, noting that the objectives of its “salutary ‘rule

of self-restraint’ designed to minimize unwarranted intervention into controversies where

the applicable constitutional questions are ill-defined and speculative” would not be

furthered by denying third-party standing because doing so would “foster repetitive and

time-consuming litigation” when the constitutional issue inevitably reappeared in a new

case. Id. at 193–94 (quoting Barrows v. Jackson, 346 U.S. 249, 255 (1953)).

The same cannot be said here. The purposes of the third-party standing doctrine—

avoiding unnecessary (and potentially unwanted) constitutional pronouncements and

ensuring constitutional issues are sharply and concretely presented—would not be

served by adjudicating unknown and unrepresented travelers’ right-to-travel claims here.

While the Craig vendor had a symbiotic relationship with her customers such that the

constitutional issue was “presented vigorously and ‘cogently’” even in their absence, the

same cannot be said of Plaintiffs’ relationship with their potential future guests. Id. at 194

(quoting Holden v. Hardy, 169 U.S. 366, 397 (1898)).

Here, Plaintiffs as putative rental operators do not necessarily have the same

interests in zoning enforcement as their potential guests. While Plaintiffs are principally

interested in “operating their business profitably,” the potential guests whose rights they

purport to assert may be more concerned about the risks associated with unlicensed,

unregulated STRs. Gold Cross Ambulance & Transfer v. City of Kansas City, 705 F.2d

1005, 1016 (8th Cir. 1983); see Rozman v. City of Columbia Heights, 268 F.3d 588, 591

(8th Cir. 2001) (“[The landlord] lacked standing to claim that the notice requirement

violated the tenants' rights because he cannot assert the rights of his tenants.”).

Moreover, Plaintiffs have made no showing that guests burdened by the Ordinance

are hindered in asserting their own rights. Unlike in Craig, the right at issue here is not

“affected by concerns of imminent mootness,” and Plaintiffs have not pointed to any other

possible hurdles. Gold Cross, 705 F.2d at 1016. Given the risk of misaligned interests

here, the Court is not willing to proceed in the absence of a plaintiff with a claim to the

right in question.1 Therefore, Count II of Plaintiffs’ Amended Complaint (Doc. 11) is

DISMISSED for lack of standing.

iv. Standing: Fourth Amendment

Finally, with respect to Plaintiffs’ Fourth Amendment claim, the City argues that

Plaintiffs cannot challenge the registry requirement because, although Plaintiffs have pled

their desire to, they are not currently operating an STR and are therefore not subject to

the registry requirement. In a similar case, the Eighth Circuit examined a challenge to a

1 Additionally, Plaintiffs’ argument for why this Ordinance violates their potential guests’

right to travel would break new ground in an already confused area of constitutional law.

Plaintiffs argue that the Ordinance places an unconstitutional burden “on transients’ ability

to find lodging” by “exclud[ing] them from certain [specifically residential] areas of the city.”

(Doc. 18-1 pp. 9, 12). Put differently, Plaintiffs argue that, because short-term renters are

engaged in “ordinary living purposes such as relaxing, eating, sleeping, and bathing” that

are consistent with residential use, restricting their ability to do so in accommodations

located in residential neighborhoods unconstitutionally discriminates against them

because they are not residents of Fayetteville. But Plaintiffs’ argument is not limited to

STRs. If Plaintiffs are correct that cities cannot exclude lodging facilities from residential

neighborhoods, it would not just be STRs shoehorned into these neighborhoods, but also

hotels, hostels, boarding houses, or any other facility whose guests are likewise engaged

in ordinary living activities like sleeping and bathing. Plaintiffs cite no authority that

supports such a sweeping proposition, and principles of judicial restraint counsel against

considering Plaintiffs’ desired constitutional pronouncement on behalf of parties who are

not before the Court.

city’s billboard ordinance. Advantage Media, L.L.C. v. City of Eden Prairie, 456 F.3d 793,

796 (8th Cir. 2006). There, the court acknowledged that the plaintiff had been injured by

the denial of its permit application but held that it did not have standing to challenge the

constitutionality of ordinance provisions that “were not factors in the denial of its permit

applications.” Id. at 799. Because the code’s provisions were severable, the plaintiff had

to “show injury, causation, and redressability with respect to each provision it

challenge[d].” Id. at 801. Here, too, Plaintiffs must establish standing as to the registry

requirement separate and apart from the provisions under which their CUP application

was denied. See Fayetteville, Ark., Code of Ordinances § 10.07 (severability provision).

Plaintiffs have not alleged that the registry requirement has been enforced against

them or will be at any time in the future, absent this Court’s intervention on their other

claims. “An allegation of future injury may suffice if the threatened injury is ‘certainly

impending,’ or there is a ‘substantial risk’ that the harm will occur.” L.H. v. Indep. Sch.

Dist., 111 F.4th 886, 893 (8th Cir. 2024) (quoting Missouri v. Yellen, 39 F.4th 1063, 1068

(8th Cir. 2022)). Generally, “[p]laintiffs have standing to challenge the facial validity of a

regulation notwithstanding the pre-enforcement nature of a lawsuit, where the impact of

the regulation is direct and immediate and they allege an actual, well-founded fear that

the law will be enforced against them.” Gray v. City of Valley Park, 567 F.3d 976, 984 (8th

Cir. 2009). Put differently, “[w]here plaintiffs allege an intention to engage in a course of

conduct arguably affected with a constitutional interest which is clearly proscribed by

statute, courts have found standing to challenge the statute.” United Food & Com.

Workers Int'l Union v. IBP, Inc., 857 F.2d 422, 428 (8th Cir. 1988).

Here, Plaintiffs have not alleged a well-founded fear that the registry requirement

will be enforced against them: while Plaintiffs have alleged that they intend to operate

their home as an STR, they have not alleged any desire to violate the registry

requirement. Further, whatever infringement the registry requirement may work on STR

operators, it has not put Plaintiffs “to the choice between abandoning his rights or risking

prosecution” because they do not currently operate an STR and thus do not have an

obligation to comply with the registry requirement. MedImmune, Inc. v. Genentech, Inc.,

549 U.S. 118, 773 (2007). Plaintiffs have failed to demonstrate “circumstances that render

the threatened enforcement sufficiently imminent.” L.H., 111 F.4th 886 at 895 (quoting

Sch. Of the Ozarks, Inc. v. Biden, 41 F.4th 992, 1000 (8th Cir. 2022). Thus, they have not

suffered the injury in fact necessary to bring a challenge to the Ordinance’s registry

requirement, so Count V of Plaintiffs’ Amended Complaint (Doc. 11) is DISMISSED for

lack of standing.

2. Arkansas Law and the Court’s Jurisdiction

In its Motion to Dismiss, the City argues that this Court lacks jurisdiction to hear

Plaintiffs’ as-applied challenges because they constitute “an appeal of the Planning

Commission’s decision.” (Doc. 14, p. 15). The City points to the Arkansas rule limiting

appeals from administrative decisions of municipal bodies and an Arkansas Supreme

Court decision interpreting that rule as jurisdictional in nature. Id. at 15–16 (first citing Ark.

Dist. Ct. R. 9; and then quoting Combs v. City of Springdale, 366 Ark. 31, 34 (2006)).

This, the City argues, means that all courts, including this one, were divested of

jurisdiction when the Circuit Court found that Plaintiffs’ appeal was barred by the rule. Id.

at 16.

This argument is plainly without merit. Although a state’s laws may—in diversity

cases—limit a federal court’s jurisdiction, “where resort is had to a federal court not on

grounds of diversity of citizenship but because a federal right is claimed, the limitations

upon the courts of a State do not control a federal court sitting in the State.” Angel v.

Bullington, 330 U.S. 183, 192 (1947) (citing Holmberg v. Armbrecht, 327 U.S. 392 (1946)).

Plaintiffs’ claims under § 1983 asserting federal constitutional violations are federal

claims; the Court’s jurisdiction to hear them cannot be limited by state law.

3. Abstention

The City also argues that the Court has discretion to dismiss Plaintiffs’ complaint

in favor of the ongoing state court litigation. (Doc. 14, p. 7). The City cites both Brillhart v.

Excess Ins. Co., 316 U.S. 491 (1942) and Colorado River Water Conservation District v.

United States, 424 U.S. 800 (1976). Neither case or its progeny justify abstention here.

i. Colorado River Abstention

“Abstention from the exercise of federal jurisdiction is the exception, not the rule.”

Id. at 813. “Federal courts have a ‘virtually unflagging obligation to exercise the jurisdiction

given them,’ which ‘does not evaporate simply because there is a pending state court

action involving the same subject matter.’” Spectra Commc'ns Grp., LLC v. City of

Cameron, 806 F.3d 1113, 1121 (8th Cir. 2015) (cleaned up) (first quoting Colo. River, 424

U.S. at 817; and then quoting Federated Rural Elec. Ins. Corp. v. Ark. Elec. Coops., Inc.,

48 F.3d 294, 297 (8th Cir. 1995)). Thus, abstention under Colorado River is justified only

in exceptional circumstances. Id. Assuming that the prerequisite of “parallel” state and

federal actions is met, see Fru-Con Const. Corp. v. Controlled Air, Inc., 574 F.3d 527,

535 (8th Cir. 2009), the City has not shown exceptional circumstances warranting

abstention.

To determine whether exceptional circumstances exist, courts typically balance six

non-exhaustive factors, “with the balance heavily weighted in favor of the exercise of

jurisdiction.” Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 16 (1983).

However while the City cites Colorado River, neither party discusses the Colorado River

factors at all. Absent any argument as to how the Colorado River factors justify abstention

in this case, the Court will not exercise its discretion under Colorado River to stay or

dismiss it in favor of the state case. See id. at 19.

ii. Brillhart Abstention

The City also argues that the Court has discretion to abstain under Brillhart.

Brillhart recognized that federal courts have “broad discretion to abstain from exercising

jurisdiction” in actions under the Declaratory Judgment Act “even if there are no

exceptional circumstances as articulated in Colorado River” because the Declaratory

Judgment Act states “that a court ‘may declare the rights and other legal relations of any

interested parties seeking such declaration,’” not that it must. Royal Indem. Co. v. Apex

Oil Co., 511 F.3d 788, 792–93 (8th Cir. 2008) (quoting 28 U.S.C. § 2201(a)). Plaintiffs

sued under 42 U.S.C. § 1983, not the Declaratory Judgment Act, seeking a declaration

that the Ordinance is unconstitutional and an injunction barring the City from enforcing it.

(Doc. 11, p. 15). “Brillhart applies to declaratory judgment actions generally, but not to

actions that, like this one, involve good faith claims for injunctive relief.” Cedar Rapids

Cellular Tel., L.P. v. Miller, 280 F.3d 874, 879 (8th Cir. 2002). Therefore, the Court may

not abstain under Brillhart.

4. Duplicative Litigation

The City also argues that the Court can and should “decline to exercise their

jurisdiction in order to prevent duplicative litigation.” (Doc. 14, p. 8 (quoting Missouri ex

rel. Nixon v. Prudential Health Care Plan, Inc., 259 F.3d 949, 952 (8th Cir. 2001))). The

City does not cite, and the Court is not aware of, any case where this rule was applied to

concurrent litigation in state and federal court rather than multiple simultaneous cases in

federal court. Bearing in mind the Court’s virtually unflagging obligation to exercise its

jurisdiction and the carefully cabined exceptions set out by the Supreme Court in respect

of our federal system, the Court does not find fit to apply this “duplicative litigation” rule

outside the context of its prior use.

5. Collateral Estoppel

Finally, the City argues that Plaintiffs are collaterally estopped from challenging the

constitutionality of the Ordinance as applied to them. Under Arkansas law, the party

asserting collateral estoppel must show: “(1) the issue sought to be precluded must be

the same as that involved in the prior litigation; (2) the issue must have been actually

litigated; (3) the issue must have been determined by a final and valid judgment; and (4)

the issue must have been essential to the judgment.” Zinger v. Terrell, 336 Ark. 423, 430

(1999). Here, the state court granted summary judgment for the City because Plaintiffs’

appeal of the Planning Commission’s decision was untimely. Where a claim is found to

be time-barred, the merits issues involved are not considered essential to the judgment.

See Alexander v. Twin City Bank, 322 Ark. 478, 482 (1995) (“Judge Bogard's conclusions

that there was no fraud and no fiduciary relationship were not essential to his judgment

in view of his ultimate pronouncement that the statute of limitations barred the claims

whether or not they were true.”). Thus, Plaintiffs are not collaterally estopped from raising

their constitutional claims in federal court.

B. Preliminary Injunction

In determining whether to grant a motion for preliminary injunction, the Court must

weigh the following four considerations: (1) the movant’s likelihood of success on the

merits; (2) the threat of irreparable harm to the moving party; (3) the balance between the

harm to the movant if the injunction is denied and the harm to the other party if the

injunction is granted; and (4) the public interest. Dataphase Sys., Inc. v. CL Sys., Inc.,

640 F.2d 109, 114 (8th Cir. 1981). “A preliminary injunction is an extraordinary remedy,

and the burden of establishing the propriety of an injunction is on the movant.” Turtle

Island Foods, SPC v. Thompson, 992 F.3d 694, 699 (8th Cir. 2021) (quoting Watkins Inc.

v. Lewis, 346 F.3d 841, 844 (8th Cir. 2003)).

1. Likelihood of Success on the Merits

Generally, the movant for a preliminary injunction has shown a likelihood of

success on the merits if they demonstrate a “fair chance” of prevailing on the merits. Sleep

No. Corp. v. Young, 33 F.4th 1012, 1016 (8th Cir. 2022). However if the movant is seeking

to enjoin the enforcement of a statute or regulation, they must show that their success on

the merits is more likely than not. Id. This “more rigorous standard ‘reflects the idea that

governmental policies implemented through legislation or regulation developed through

presumptively reasoned democratic processes are entitled to a higher degree of

deference and should not be enjoined lightly.’” Planned Parenthood Minn., N.D., S.D. v.

Rounds, 530 F.3d 724, 732 (8th Cir. 2008) (en banc) (quoting Able v. United States, 44

F.3d 128, 131 (2d Cir. 1995)). Where a preliminary injunction is sought to enjoin a city’s

ordinance, courts should “evaluate whether ‘the full play of the democratic process[ ] was

involved’ in the action[ ] and ‘then determine which standard would be more appropriate.’”

D.M. ex rel. Bao Xiong v. Minn. State High Sch. League, 917 F.3d 994, (8th Cir. 2019)

(first alteration in original) (quoting Richland/Wilkin Joint Powers Auth. v. U.S. Army Corps

of Eng’rs, 826 F.3d 1030, 1040 (8th Cir. 2016)).

While Plaintiffs admit that the heightened “likely to prevail” standard applies to the

Ordinance itself, they argue that the denial of their CUP application is merely an

“administrative decision” not entitled to deference. (Doc. 18-1, p. 24). But Plaintiffs are

not asking the Court to overturn the Planning Commission’s decision and grant them a

CUP, and the Court would certainly not be competent to do so. See Littlefield v. City of

Afton, 785 F.2d 596, 607 (8th Cir. 1986), overruled on other grounds by Knick v. Twp. of

Scott, 588 U.S. 180 (2019). No, Plaintiffs are asking the Court to enjoin the City from

enforcing the Ordinance, the type of action which Plaintiffs admit must be examined under

the higher “likely to prevail” standard. Id. at 23–24

i. Dormant Commerce Clause

Plaintiffs have argued that the Ordinance violates the dormant Commerce Clause

by discriminating against out-of-state residents. Plaintiffs assert that the law is

discriminatory because it forbids non-residents from obtaining Type 1 licenses. The law

further discriminates against non-residents, Plaintiffs contend, because it makes Type 2

licenses—purportedly the only licenses available to non-residents—more difficult to

obtain than Type 1 licenses. (Doc. 2, ¶¶ 22–26).

There is a circuit split on the constitutionality of various STR restrictions under the

dormant Commerce Clause. The Ninth Circuit has held that Santa Monica’s STR

ordinance, which banned STRs unless a primary resident was on site throughout the stay,

did not violate the dormant Commerce Clause. Rosenblatt v. City of Santa Monica, 940

F.3d 439 (9th Cir. 2019). The Fifth Circuit, by contrast, has held that New Orleans’ STR

ordinance, which allowed STR licenses only for an owner’s primary residence, violated

the dormant Commerce Clause. Hignell-Stark v. City of New Orleans, 46 F.4th 317 (5th

Cir. 2022).

Dormant Commerce Clause analysis is a two-step process. First, the Court must

determine whether the Ordinance discriminates against out-of-state commerce. Second,

the Court must apply the appropriate level of scrutiny: If the Ordinance is discriminatory,

it is subject to strict scrutiny; if not, it is subject to Pike balancing. SDDS, Inc. v. South

Dakota, 47 F.3d 263, 267–68 (8th Cir. 1995). Under Pike, a law violates the dormant

Commerce Clause “if the burden it imposes upon interstate commerce is ‘clearly

excessive in relation to the putative local benefits.’” LSP Transmission Holdings, LLC v.

Sieben, 954 F.3d 1018, 1026 (8th Cir. 2020) (quoting Hampton Feedlot, Inc. v. Nixon,

249 F.3d 814, 818 (8th Cir. 2001)).

In the dormant Commerce Clause context, “‘discrimination’ simply means

differential treatment of in-state and out-of-state economic interests that benefits the

former and burdens the latter.” Oregon Waste Sys., Inc. v. Dep't of Env't Quality, 511 U.S.

93, 99 (1994). However, “any notion of discrimination assumes a comparison of

substantially similar entities.” Gen. Motors Corp. v. Tracy, 519 U.S. 278, 298 (1997). The

courts in Rosenblatt and Hignell-Stark diverged on whether the ordinances at issue were

distinguishing between substantially similar entities: the Rosenblatt court found that the

Santa Monica ordinance was not discriminating against substantially similar STR

operations, while the Hignell-Stark court found that the New Orleans ordinance was. 940

F.3d at 451; 46 F.4th at 326. Thus, the Rosenblatt court applied Pike balancing, and the

Hignell-Stark court applied strict scrutiny. 940 F.3d at 451; 46 F.4th at 328.

Here, the Fayetteville Ordinance looks more like the Santa Monica ordinance than

the New Orleans ordinance. Like the Santa Monica ordinance and unlike the New Orleans

ordinance, the Fayetteville Ordinance does not require that an STR be owner occupied.

Thus, out-of-state owners like Plaintiffs could lease the house to a long-term tenant for

nine months of the year and operate the house as a Type 1 STR for the other three—

they just don’t want to.2 Instead, they want to operate the house as a Type 2 STR, an

opportunity available on identical terms to residents and non-residents. Plaintiffs

nonetheless claim that the Ordinance is more like the New Orleans ordinance based on

their interpretation of “Type 1 Rental.” The Ordinance defines a Type 1 rental as follows:

“A short-term rental where the principal use of the property remains as a full-time

residence. The occupants or owner rent their primary residence as a short-term rental.”

§ 118.01(E)(1). Plaintiffs make much of the word “their”: they contend that “their primary

residence” means only the occupant can get a Type 1 license, completely foreclosing

non-occupant owners from entering the Type 1 market. (Doc. 18-1, p. 5).

2 Plaintiffs argue that a long-term lease, accepted by both the Rosenblatt and MDKC

courts, see infra, as a way for non-resident owners to enter the STR market, is

“unworkable.” (Doc. 18-1, p. 6). Plaintiffs cite no evidence for this proposition and the

Court would be surprised to learn that there is “no meaningful market” for nine-month

lease terms in a college town like Fayetteville. Id. Further, it is not clear to the Court why

Plaintiffs’ daughter who lives in Fayetteville and is the purported reason for purchasing

the house cannot live in it during the school year, which would allow Plaintiffs to operate

the house as a Type 1 STR. The Court is left with the distinct impression that Plaintiffs

would not, in fact, be satisfied if they were allowed to operate their home as a whole-

home STR for just three months of the year under a Type 1 license.

Plaintiffs’ interpretation of the Ordinance is incongruous with its other provisions.3

In fact, the licensing provision of the Ordinance requires that “[t]he owner of the dwelling

unit or operator of the short-term rental possess a valid and current business license,” not

that the primary resident possess the license. § 118.01(E)(3)(a) (emphasis added).

Further, the Ordinance requires that the “property owner or a designated agent are . . .

able to be physically present at the short-term rental within three (3) hours of being

contacted,” indicating that the Ordinance contemplates owners, rather than only primary

residents, being able to hold STR licenses. § 118.01(E)(10) (emphasis added). Thus, the

Court does not agree with Plaintiffs that out-of-state owners are foreclosed from holding

Type 1 STR licenses under the Ordinance.

Plaintiffs also seek to distinguish Rosenblatt by pointing out that the Santa Monica

ordinance required that a primary resident be present during rentals, while the Fayetteville

Ordinance requires only that the primary resident occupy the house nine months of the

year, allowing Type 1 license-holders to operate whole-home rentals for the other three

months. This, Plaintiffs argue, discriminates against out-of-staters because Fayetteville

residents can “pick the profitable weekends” to offer whole-home rentals under a Type 1

license while living in the house the rest of the year. Out-of-staters, who definitionally do

not live in Fayetteville, can only offer whole-home rentals under the more-difficult-to-

obtain Type 2 license, although they can do so all twelve months of the year.

3 Additionally, the MDKC court, see infra, dealt with an ordinance that did, in fact, require

the license-holder to be the primary resident and still found no dormant Commerce Clause

violation. MDKC, LLC v. City of Kansas City, 2023 WL 6406403, at *2, *7 (W.D. Mo. Oct.

2, 2023).

Plaintiffs acknowledge, however, that our sister court recently upheld Kansas

City’s STR ordinance, which required that the primary resident occupy the house 270

days (approximately nine months) per year to obtain Kansas City’s Type 1 license

equivalent. MDKC, LLC v. City of Kansas City (MDKC I), 2023 WL 6406403 (W.D. Mo.

Oct. 2, 2023); MDKC, LLC v. City of Kansas City (MDKC II), 2024 WL 2852149 (W.D.

Mo. June 5, 2024). The plaintiffs there made the same argument as Plaintiffs here: out-

of-staters cannot operate whole-home Type 1 STRs “because they are unable to live at

the property for 270 days per year by virtue of living out of state. Comparatively, [local]

homeowners can freely live in their home for 270 days and then operate it as a whole-

home STR for the remainder of the year.” MDKC II, 2024 WL 2852149, at *4.

The MDKC court rejected this argument, finding, like the Rosenblatt court, that

local homeowners are not similarly situated to out-of-state investors for dormant

Commerce Clause purposes with respect to STR operations. Id. at *4–5; Rosenblatt, 940

F.3d at 451. The Eighth Circuit has also indicated its support for the proposition that local

residents are not similarly situated to out-of-state investors, favorably citing Rosenblatt in

the process:

[T]he Commerce Clause was “never intended to cut the States off from

legislating on all subjects relating to the health, life, and safety of their

citizens, though the legislation might indirectly affect the commerce of the

country.” Gen. Motors Corp. v. Tracy, 519 U.S. 278, 306 (1997) (citation

omitted). Accordingly, the dormant Commerce Clause doesn't prohibit

differential treatment of companies that perform different services, because

“any notion of discrimination assumes a comparison of substantially similar

entities.” Id. at 298. “Thus, in the absence of actual or prospective

competition between the supposedly favored and disfavored entities in a

single market there can be no local preference . . . .” Id. at 300. State and

local governments are therefore free to treat vacation homes

differently from primary residences, Rosenblatt v. City of Santa

Monica, 940 F.3d 439, 453 (9th Cir. 2019), humane societies differently

from for-profit breeders, Park Pet Shop, Inc. v. City of Chicago, 872 F.3d

495, 497–98 (7th Cir. 2017), and brick and mortar liquor stores differently

from their online counterparts, Cherry Hill Vineyard, LLC v. Baldacci, 505

F.3d 28, 36–37 (1st Cir. 2007), to name a few examples.

Paul's Indus. Garage, Inc. v. Goodhue Cnty., 35 F.4th 1097, 1099–100 (8th Cir. 2022)

(emphasis added). This Court agrees. Because non-resident homeowners are not

similarly situated to local residents in their ability to personally serve as primary residents

for Type 1 STRs, the Ordinance does not discriminate against interstate commerce by

treating Type 1 and Type 2 STRs differently based on occupancy by a primary resident.

Therefore, Pike balancing applies.

Applying Pike, the Court now considers whether Plaintiffs have shown that the

burden the Ordinance imposes on interstate commerce is “clearly excessive in relation to

the putative local benefits.” 397 U.S. at 142. Here, Plaintiffs argue only that the Ordinance

is discriminatory and strict scrutiny should therefore apply; they do not address what, if

any, burdens the statute imposes on interstate commerce.4 Therefore, Plaintiffs have not

shown that they are likely to succeed on their dormant Commerce Clause claim.

4 Plaintiffs accuse the Rosenblatt court of failing to engage with the purportedly relevant

Supreme Court case Granholm v. Heald, 544 U.S. 460 (2005), offering that “[p]erhaps

the plaintiffs in the Rosenblatt case simply failed to plead the necessary facts to

demonstrate the prohibitive expense associated with the schemes.” But they, too, have

pled no facts demonstrating the prohibitive expense associated with the Ordinance. (Doc.

18-1, p. 7). Like the Rosenblatt court, this Court finds that the Ordinance does not “require

an out-of-state [owner] ‘to become a resident in order to compete on equal terms.’” 940

F.3d at 451 n.5 (quoting Nationwide Biweekly Admin., Inc. v. Owen, 873 F.3d 716, 736

(9th Cir. 2017)). What Plaintiffs seek, instead, is for out-of-state owners to be given more

favorable terms than in-state owners by being exempted from the Type 1 license

requirement that they (or someone they rent to) occupy the property nine months of the

year.

ii. Void for Vagueness

Plaintiffs’ next justiciable claim is that the Ordinance is unconstitutionally vague.

The Ordinance requires a conditional use permit to operate a Type 2 STR in certain

residential zoning districts. §§ 118.01(E)(2), 163.18(A). The Ordinance lists several

factors for the Planning Commission to consider including, as relevant here, the

“[f]requency or concentration of nearby licensed Type 2 short-term rentals.” Id.

§ 163.18(H)(3). Plaintiffs contend that the Ordinance is unconstitutionally vague because

it “does not provide any guidance as to what constitutes an acceptable ‘frequency or

concentration’ of short-term rentals or even what constitutes ‘nearby.’” (Doc. 18-1, pp.

15–18). 5

Vagueness doctrine is principally concerned with the regulation of conduct. See

Lanzetta v. State of N.J., 306 U.S. 451, 453 (1939); Boutilier v. Immigr. & Naturalization

Serv., 387 U.S. 118, 123 (1967) (“The section imposes neither regulation of nor sanction

for conduct. In this situation, therefore, no necessity exists for guidance so that one may

avoid the applicability of the law.”). Here, there is no doubt about what conduct is

prohibited. Plaintiffs do not doubt that they are forbidden from operating their house as a

Type 2 STR without a permit. Instead, they assert that the Ordinance is vague because

they could not accurately predict whether a permit would be granted without applying.

The cases Plaintiffs cite foreclose this argument.

5 It appears from the record that the challenged factor was not the only basis for Plaintiffs’

CUP denial. The Planning Commission also cited the lack of on-street parking due to

ongoing construction in its decision. (Doc. 18-3, p. 7). Because Plaintiffs are only

permitted to bring an as-applied challenge here, see Sanimax USA, LLC v. City of S. St.

Paul, 95 F.4th 551, 569 (8th Cir. 2024), it is not clear whether they can challenge one of

the factors used to deny their CUP application when another factor, which they do not

claim is unconstitutionally vague, also justifies the denial.

“In the area of land use, a conditional use standard must be sufficiently specific to

guide both an applicant in presenting his case and the Board in examining the proposed

use.” Rolling Pines Ltd. P'ship v. City of Little Rock, 73 Ark. App. 97, 105 (2001). That is

not to say, however, that planning commissions or boards may not use discretionary

restraints—the Arkansas Supreme Court has expressly approved such restraints so long

as an ordinance “does not grant unbridled discretion.” Benton Cnty. Stone Co. v. Benton

Cnty. Plan. Bd., 374 Ark. 519, 526 (2008). Further, although Plaintiffs protest the “case-

by-case” nature of the City’s CUP decisions, the Rolling Pines case which they rely on

notes that CUP decisions “involve[ ] the exercise of discretion and necessitate[ ] a quasi-

administrative or quasi-judicial consideration.” 73 Ark. App. at 104 (quoting Robert R.

Wright, Zoning Law in Arkansas: A Comparative Analysis, 3 U. Ark. Little Rock L.J. 421,

452–53 (1980)). Thus, the problem with a statute “so vague and standardless that it

leaves judges free to decide, without any legally fixed standards, what is prohibited and

what is not on a case-by-case basis” is not the case-by-case basis—such decisions are

inherent in the nature of judging—it is the “without any legally fixed standards.” Benton

Cnty. Stone, 374 Ark. at 522.

In Benton County Stone, the Arkansas Supreme Court found that the term

“compatibility” in a land-use ordinance was not unconstitutionally vague. Id. at 525–26.

There, the ordinance enumerated three factors to guide the Board’s discretion in

assessing compatibility: clustering, right to farm, and right to operate. “Clustering” there

was basically the opposite of “frequency or concentration” here—there, certain uses were

encouraged to cluster together to maximize compatibility, whereas here, Type 2 STRs

are encouraged to spread out to maximize compatibility. There, the clustering factor

provided none of the “quantitative standards” Plaintiffs demand here but was upheld. Id.

at 523; see also Grayned v. City of Rockford, 408 U.S. 104, 112 (1972) (approving law

where “the prohibited quantum of disturbance [was] not specified”); Adam & Eve

Jonesboro, LLC v. Perrin, 933 F.3d 951, 958–59 (8th Cir. 2019) (holding that, even where

First Amendment interests were implicated, law at issue did not need to “declare how an

entity’s ‘principal business purpose’ is quantified”).

Here, too, the ordinary meanings of “frequency”6 and “concentration”7 are

sufficiently specific to clearly proscribe Plaintiffs’ desired permit. Five houses out of a fifty-

six-house neighborhood can easily be considered “frequent” or “concentrated,” especially

comparing the concentration in Plaintiffs’ neighborhood to the city-wide density cap of

435 Type 2 STRs out of tens of thousands of housing units. And Plaintiffs cannot

challenge the Ordinance as vague based on its potential applicability in other contexts,

e.g., when there are more houses in the subdivision in the future. Id. at 958. The City is

not required to set out by ordinance a fixed percentage of Type 2 STRs permitted in each

6 See Frequency, Cambridge Dictionary, https://dictionary.cambridge.org/

dictionary/english/frequency [https://perma.cc/Q8BP-PTWV] (“the number of times

something happens within a particular period, or the fact of something happening often

or a large number of times”); Frequency, Merriam-Webster Dictionary,

https://www.merriam-webster.com/dictionary/frequency [https://perma.cc/RU88-MYXQ]

(“the fact or condition of occurring frequently”); Frequency, Oxford English Dictionary,

https://www.oed.com/dictionary/frequency_n?tab=meaning_and_use [https://perma.cc/

7LKC-47XD] (“The fact of occurring often or being repeated at short intervals.”).

7 See Concentration, Cambridge Dictionary, https://dictionary.cambridge.org/

dictionary/english/concentration [https://perma.cc/JP5M-CWG5] (“a large number or

amount of something in the same place”); Concentration, Merriam-Webster Dictionary,

https://www.merriam-webster.com/dictionary/concentration [https://perma.cc/GXN9-

99KQ] (“a concentrated mass or thing”); Concentration, Oxford English Dictionary,

https://www.oed.com/dictionary/concentration_n?tab=meaning_and_use [https://

perma.cc/JEU8-PX78] (“The action or an act of coming together at a single place, point,

or focus, esp. with a resultant increase in intensity or power . . . .”).

neighborhood. See id. at 959. Further, there is no indication that the Ordinance allowed

arbitrary or discriminatory enforcement. Plaintiffs admit that “the Planning Commission

had already denied six conditional use permit applications in the same neighborhood prior

to its hearing Plaintiffs’ application.” (Doc. 18-1, p. 18).

Finally, the Court notes its concern “that federal courts not sit as zoning boards of

appeals ‘when presented with claims which, although couched in constitutional language,

at bottom amount only to “the run of the mill dispute between a developer and a town

planning agency.”’” Littlefield, 785 F.2d at 607 (8th Cir. 1986) (quoting Scott v. Greenville

Cnty., 716 F.2d 1409, 1419 (4th Cir. 1983)). Here, where the Ordinance does not

“impos[e] criminal sanction or implicat[e] constitutionally protected behavior,” the

constitutional demand for definiteness is at its lowest. Woodis v. Westark Cmty. Coll., 160

F.3d 435, 438 (8th Cir. 1998) (citing Vill. of Hoffman Estates v. Flipside, Hoffman Estates,

Inc., 455 U.S. 489, 498–99 (1982)). The Plaintiffs have not shown a likelihood of success

on the merits of their vagueness challenge; it seems that what Plaintiffs actually take issue

with is the City’s grant of discretion to the Planning Commission, a challenge surely more

suited to state court resolution. See Chesterfield Dev. Corp. v. City of Chesterfield, 963

F.2d 1102, 1104 (8th Cir. 1992).

iii. Takings Clause

Plaintiffs’ final justiciable claim is that the Ordinance violates the Takings Clause.

“The Fifth Amendment's Takings Clause prevents the Legislature (and other government

actors) from depriving private persons of vested property rights except for a ‘public use’

and upon payment of ‘just compensation.’” Landgraf v. USI Film Prods., 511 U.S. 244,

266 (1994). Plaintiffs’ primary argument is that the Ordinance constitutes an unlawful

private taking because it was enacted “to enrich private persons, namely hotel owners

and those working in the hotel industry.” (Doc. 18-1, p. 21). Plaintiffs point to statements

in a City Council resolution to develop STR regulations and its accompanying whitepaper.

The resolution states that “there are many benefits from regulation of short-term rentals

including . . . ensuring a level playing field between traditional homes, hotels, and illegal

short-term rentals.” The whitepaper states that “[l]ocal service jobs can be jeopardized as

unfair competition from unregulated and untaxed short-term rentals reduces demand for

local bed & breakfasts, hotels, and motels.” (Doc. 18-2, pp. 1, 7).

While Plaintiffs urge that “protecting local hotels from competition at the expense

of individual property owners (and transients) is not a legitimate government purpose,”

Takings Clause jurisprudence embraces a “traditionally broad understanding of public

purpose.” Doc. 11, ¶ 54; Kelo v. City of New London, 545 U.S. 469, 485 (2005). There is

no private taking so long as the government action “is rationally related to a conceivable

public purpose.” Hawaii Hous. Auth. v. Midkiff, 467 U.S. 229, 241 (1984). Thus, the

Supreme Court has upheld “breaking up a land oligopoly that ‘created artificial deterrents

to the normal functioning of the State’s residential land market’” and forced data sharing

“to promot[e] competition in the pesticide market” as acceptable public takings. Id. (first

quoting Midkiff, 467 U.S. at 242; and then citing Ruckelshaus v. Monsanto Co., 467 U.S.

986, 1015 (1984)).

Far from “protecting hotels from competition,” the Ordinance in fact promotes

competition by helping to remove the unfair competitive advantage conferred on STR

operators who were able, prior to the Ordinance, to do their business under the table,

without the burdens of the health and safety regulations and hefty tax bills to which hotels

are subject. The fact that the expense of competing falls on the heretofore unregulated

group does not obviate the public interest in a competitive market. The Ordinance is

rationally related to that purpose, so Plaintiffs have not demonstrated that the regulations

amount to a private taking.

For public takings, claims generally fall into one of two categories: per se takings

or regulatory takings. It is not clear which type of taking Plaintiffs are alleging, so the Court

will address both. A per se taking occurs when the government “requires an owner to

suffer a permanent physical invasion of her property” or when a regulation “completely

deprive[s] an owner of ‘all economically beneficial us[e]’ of her property.” Lingle v.

Chevron U.S.A. Inc., 544 U.S. 528, 538 (2005) (second alteration in original) (quoting

Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1019 (1992)). Here, Plaintiffs have not

alleged any physical invasion of their house, nor have they alleged that the Ordinance

deprives them of all economically beneficial use of the house.

A regulatory taking, on the other hand, is not “specifically defined by formula or

rule.” Armour & Co. v. Inver Grove Heights, 2 F.3d 276, 278 (8th Cir. 1993). Instead,

courts must conduct an “ad hoc factual inquir[y]” taking into account the following factors:

“(1) the economic impact of the regulation on the claimant; (2) the extent to which the

regulation has interfered with distinct investment-backed expectations; and (3) the

character of the government regulation.” Id. (citing Penn Central Transp. Co. v. New York,

438 U.S. 104, 124 (1978)).

On the first factor, Plaintiffs have alleged only that the Ordinance deprives them of

their desired use of the property, but they have made no showing that it has affected the

economic, rather than personal, value of the house. See Village of Euclid v. Ambler Realty

Co., 272 U.S. 365 (1926) (holding that zoning law which resulted in 75% diminution in

value did not constitute a taking); Iowa Coal Min. Co. v. Monroe Cnty., 257 F.3d 846, 853

(8th Cir. 2001) (holding that ordinance which deprived property of its “most beneficial use”

did not constitute a taking).

On the second factor, Plaintiffs allege that the Ordinance interferes with their

reasonable and distinct investment-backed expectations. At the time Plaintiffs purchased

the house, the Ordinance was already in effect. “A reasonable restriction that predates a

landowner's acquisition . . . can be one of the objective factors that most landowners

would reasonably consider in forming fair expectations about their property.” Murr v.

Wisconsin, 582 U.S. 383, 398 (2017). Here, a reasonable buyer would have considered

the possibility that they would not be able to get the permit and license necessary to

operate an STR in forming their expectations about the property.

Further, Plaintiffs have never actually operated the house as an STR. “[L]oss of

future profits-unaccompanied by any physical property restriction-provides a slender reed

upon which to rest a takings claim.” Andrus v. Allard, 444 U.S. 51, 66 (1979). Here,

Plaintiffs do not point to any data about future profitability, so the Court is unable to

engage in even “reasoned speculation.” Id. Considering Plaintiffs have asserted only this

“less compelling” interest in “anticipated gains” coupled with the fact that they knew about

the Ordinance before purchasing, Plaintiffs have not shown that the Ordinance interfered

with their distinct, investment-backed expectations. Id.

On the third factor, Plaintiffs have made no allegation that the Ordinance involves

a physical invasion. “A ‘taking’ may more readily be found when the interference with

property can be characterized as a physical invasion by government than when

interference arises from some public program adjusting the benefits and burdens of

economic life to promote the common good.” Penn Cent., 438 U.S. at 124. Here, the

Ordinance is plainly a public program aimed at increasing the burdens on STRs for the

benefit of the common good in Fayetteville.

None of the Penn Central factors weigh in favor of finding a taking here: Plaintiffs

have shown no economic harm, their distinct investment-backed expectations amount to

nothing more than the hope of future profit, and the Ordinance works no physical invasion

on their property. Therefore, Plaintiffs have not shown a likelihood of success on the

merits of their Takings Clause claim.

2. Likelihood of Irreparable Harm

Plaintiffs argue that they are suffering, and will continue to suffer, irreparable harm

because “Plaintiffs rely on the ability to rent the property out on a short-term basis in

between visits in order to help cover the expenses associated with maintaining a second

home” and because “Plaintiffs have made several cognizable claims that the STR

Ordinance has violated their constitutional rights.” (Doc. 18-1, p. 25).

“[F]ailure of a movant to show irreparable harm is an ‘independently sufficient basis

upon which to deny a preliminary injunction.’” Beber v. NavSav Holdings, LLC, 118 F.4th

921, 929 (8th Cir. 2024) (alteration in original) (quoting Padda v. Becerra, 37 F.4th 1376,

1384 (8th Cir. 2022)). “Irreparable harm occurs when a party has no adequate remedy at

law, typically because its injuries cannot be fully compensated through an award of

damages.” Id. (quoting Cigna Corp. v. Bricker, 103 F.4th 1336, 1346 (8th Cir. 2024)).

“Economic loss, on its own, is not an irreparable [harm] so long as the losses can be

recovered.” Id. (alteration in original) (quoting Wildhawk Invs., LLC v. Brava I.P., LLC, 27

F.4th 587, 597 (8th Cir. 2022)).

Here, while Plaintiffs assert constitutional claims, their injuries are entirely

economic in nature, and compensatory damages are an available remedy in this lawsuit.

Monell v. Dep't of Soc. Servs., 436 U.S. 658, 690 (1978). The City has not asserted that

it is insulated from such damages under Monell’s “policy or custom” requirement, nor

could it because an ordinance is explicitly contemplated as a qualifying policy in Monell.

See id. Plaintiffs argue, however, that “[w]hen an alleged constitutional right is involved,

most courts hold that no further showing of irreparable injury is necessary.” (Doc. 18-1,

p, 25 (quoting Awad v. Ziriax, 670 F.3d 1111, 1131 (10th Cir. 2012)). But the Eighth Circuit

has never so held, instead looking to the nature of the actual injury alleged.

For example, in Roberts v. Van Buren Public Schools, 731 F.2d 523 (8th Cir. 1984),

non-renewed teachers brought actions “under 42 U.S.C. § 1983 claiming violation of their

first, fifth and fourteenth amendment rights in the nonrenewal of their teaching contracts.”

Id. at 524. The court found preliminary injunctive relief improper because if the teachers

“prevail[ed] on the merits of their action they would be entitled to reinstatement and

backpay relief.” Therefore, since “such relief would offer a complete remedy, the

requirement of irreparable harm upon which a preliminary injunction must be based [wa]s

not met.” Id. at 526. Here too, if Plaintiffs prevail on their constitutional claims, under

§ 1983 they will be entitled to compensatory damages which would offer a complete

remedy for the economic harm suffered, so they have not made out a claim for irreparable

harm.

3. Balance of Equities and the Public Interest

“The third and fourth factors for a preliminary injunction—harm to the opposing

party and the public interest—merge when the Government is the party opposing the

preliminary injunction.” Morehouse Enterprises, LLC v. Bureau of Alcohol, Tobacco,

Firearms & Explosives, 78 F.4th 1011, 1018 (8th Cir. 2023) (citing Nken v. Holder, 556

U.S. 418, 436 (2009)). Plaintiffs bear the burden of persuasion on their entitlement to a

preliminary injunction. Mazurek v. Armstrong, 520 U.S. 968, 972 (1997). In their Motion,

Plaintiffs offer no reason why the balance of harms and public interest favor their position

beyond the fact that they have alleged constitutional violations. (Doc. 18-1, p. 25). And at

the preliminary injunction hearing, they asserted that the house was currently vacant and

“allowing them to rent it out . . . would not create any harm to the community.”

First, this statement inverts the standard: it is not enough that an injunction simply

not harm the public. Instead, the injunction must affirmatively further the public interest.

Second, the people of Fayetteville and their elected representatives have determined that

STRs do harm the community—that is why the Ordinance was enacted. And the Court is

not persuaded that Plaintiffs’ private financial interest in renting the house in their

preferred manner outweighs the City’s interest in enforcing its democratically enacted

laws and the public’s interest in having those laws enforced. Thus, the balance of the

equities does not favor Plaintiffs.

“At base, the question is whether the balance of equities so favors the movant that

justice requires the court to intervene to preserve the status quo until the merits are

determined.” Dataphase, 640 F.2d at 113. Granting Plaintiffs desired injunction would

disrupt, not preserve the status quo. The Ordinance was in effect when Plaintiffs bought

the house, and it is in effect now. Plaintiffs have never been authorized to operate the

house as an STR. The Court will not disrupt the status quo to permit them to do so while

this case is pending. Plaintiffs’ Motion for Preliminary Injunction is DENIED.

lll. CONCLUSION

IT IS THEREFORE ORDERED that Plaintiffs’ Motion for Preliminary

Injunction (Doc. 18) is DENIED.

IT IS FURTHER ORDERED that Counts II and V of Plaintiffs’ Amended Complaint

(Doc. 11) are DISMISSED WITHOUT PREJUDICE for lack of standing.

IT IS SO ORDERED on this 19th day of December, 2024.

UNITED STATES DISTRICT JUDGE

32