September 9, 2020
Morgan T. Dilks
Maryland’s highest state court, the Maryland Court of Appeals, has decided that a Baltimore City ordinance banning food trucks from operating within 300 feet of brick and mortar competitors does not violate the Constitution of Maryland, or specifically, Article 24 of the Maryland Declaration of Rights.
The case which presented this issue, Pizza Di Joey, LLC and Madame BBQ, LLC v. Mayor and City Council of Baltimore City, was decided officially on August 17, 2020. The specific ordinance challenged Baltimore City Code, Art. 15, Subtitle 17-33 governing mobile vendors near retail stores, and states – “A mobile vendor may not park a vendor truck within 300 feet of any retail business establishment that is primarily engaged in selling the same type of food product, other merchandise, or service that is offered by that mobile vendor.” In essence, a mobile vendor cannot compete within 300 feet of a brick and mortar business that is primarily engaged in selling the same goods or services.
In its opinion, the Court of Appeals held that the ordinance was “rationally related” to the city’s legitimate interest in ensuring the economic vibrancy of its commercial districts and their restaurants. When the presence of food trucks began to rise in the latter half of the 2010’s, Baltimore City identified what economists refer to as a “free rider” problem. Individuals are drawn to economically vibrant areas due to the success of the businesses operating in those areas, the City argued. According to the City’s stated intent behind the ordinance, allowing outside vendors to “free ride” on the success of the brick and mortar businesses would detract from the success of the brick and mortar businesses, and may threaten the economic vibrancy of those areas. Baltimore City argued that it has a legitimate interest in the preservation of the viability of these areas, and this ordinance is rationally related to serving that interest. Without offering an endorsement of this policy, the Court of Appeals held that this ordinance did not violate the Constitution of Maryland.
As a former café owner in Baltimore City, I can relate. I understand the tremendous pressure on small business owners to pay suppliers, employees, and lease payments. In Baltimore City, lease payments in competitive areas can be staggering. The introduction of business competition can create tremendous financial difficulties for a small business. When a competing coffee shop moves onto the same block as an existing coffee shop, the market dictates the business landscape (which may include the possibility that there is enough demand for both businesses to thrive). On the other hand, introducing competition that doesn’t have the same financial commitments to those areas (such as monthly lease payments or taxes that they are paying to Baltimore City) could severely hamper businesses, and drive those businesses out of the City or into insolvency. While this does, unfortunately, raise barriers to entry for an already competitive foodservice market in Baltimore, the Baltimore City Council has deemed it necessary, and the Court of Appeals has determined that the City Council has not run afoul of the Constitution of Maryland in doing so.
Our firm represents many restaurants in a wide range of issues specific to the restaurant industry. If you have questions, we’re here to help. Feel free to contact me at MDilks@RKWlawgroup.com.
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