MALIBU, Calif. (CN) - Malibu voters approved a ballot measure limiting out-of-state chain retailers - but it's unconstitutional, two developers claim in Federal Court.
The Park at Cross Creek and Malibu Bay Co. sued Malibu on Monday, claiming its Measure R unconstitutionally mandates that new developments give at least 70 percent of retail leases to local merchants.
The ballot measure, which passed in November with 59 percent of the vote, also requires any commercial development of more than 20,000 square feet be approved by voters.
Park at Cross Creek says it has invested more than $11.4 million in developing a shopping center with a 24,549 square-foot Whole Foods Market, retail spaces, dining, parking, a playground, and a garden.
Malibu Bay says it has invested more than $6.6 million in a mixed-use commercial development with office, retail and restaurant spaces. That development will be 60,727 to 80,970 square feet.
"Framed in the broad vernacular of 'preserving small town, rural character,' Measure R is an anti-development ballot initiative intentionally designed to protect locally owned businesses from competition by national out-of-state retailers," the lawsuit states. "Measure R clearly articulates its discriminatory purpose ... that it seeks to 'Limit chain stores in our City.'"
The developers claim Measure R violates the Commerce Clause of the Constitution, the 14th Amendment guarantee of equal protection, and the California Constitution.
"Malibu has become increasingly urbanized. The city's commercially zoned properties are not 'rural,'" the complaint states. "The severe restrictions and limitations Measure R places on commercial development cannot advance that which no longer exists."
The developers claim Measure R was promoted by local activists known as "Preserve Malibu," who sought to "protect local merchants against what they view as unfair competition from national retailers."
Measure R proponent, movie director Rob Reiner, "explained that the entire purpose of Measure R was to limit commercial development and keep undesirable formula retail stores from locating in Malibu," the lawsuit states.
The developers say the measure "effectively eliminated the ability of many out-of-state national retailers from entering the Malibu market."
The measure is unconstitutional because "(l)ocal retailers are subject to no restrictions whatsoever under the measure and can operate any type of store, of any size, in any location, with any kind of design, whereas a national competitor seeking to operate the same type of store (e.g. selling jeans) is subject to onerous restrictions."
The developers seek declaratory judgment and an injunction stopping Malibu from enforcing Measure R.
They are represented by David Waite, with Cox, Castle & Nicholson, of Los Angeles.Follow @jamierossCNS
Subscribe to Closing Arguments
Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.