Frey Corporation, an Illinois Corporation v. City of Peoria, Illinois

In the
United States Court of Appeals
For the Seventh Circuit
No. 12‐3571
FREY C ORPORATION, an Illinois
Corporation,
Plaintiff‐Appellant,
v.
C ITY OF P EORIA, ILLINOIS,
Defendant‐Appellee.
Appeal from the United States District Court
for the Central District of Illinois.
No. 1:10‐cv‐01062‐JBM‐JAG — Joe Billy McDade, Judge.
A RGUED MAY 21, 2013 — D ECIDED A UGUST 16, 2013
Before R IPPLE , WILLIAMS, and T INDER , Circuit Judges.
T INDER , Circuit Judge. Frey Corporation brings the present
appeal against the City of Peoria, Illinois, after an unfavorable
disposition of its case in the district court. Frey has owned the
commercial property located at 1823 West Lincoln Avenue,
Peoria, Illinois 61605, for more than forty years. A shopping
center is located on the property, which includes retail space

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2 No. 12‐3571
for a grocery store. Frey had been leasing retail spaces within
the shopping center for years, apparently without incident. But
on November 5, 2009, the tenant renting Frey’s grocery store
space, Krunal and Jiger, Inc. d/b/a Shop Rite Supermarket
(hereinafter “Shop Rite”), ran into serious trouble with the law.
After receiving information that the President of this Shop
Rite franchise, Vasant Patel, was illegally selling Viagra from
inside the store, Peoria police obtained a search warrant for
both Patel and the Shop Rite store. There, police found 121
Viagra pills in Patel’s office, which Patel later admitted to
selling at the store for $7 per pill. Patel was not a licensed
pharmacist, nor did the Shop Rite store contain a pharmacy. As
a result, Patel was arrested, indicted on felony drug charges,
and later pled guilty to misdemeanor drug charges.
As the City of Peoria took legal action against Patel
personally, the City simultaneously took legal action against
Patel’s business, Shop Rite. On November 12, 2009—only a
week after Patel’s arrest—the City went after Shop Rite’s liquor
license. The City charged the store with a violation of Peoria,
Ill., Code § 3‐28, which prohibits officers of a business holding
a liquor license from “engag[ing] in any activity … which is
prohibited by … the law of the state or the United States.” The
Peoria Liquor Commission held a hearing regarding Shop
Rite’s liquor license on November 24, 2009, and after
evaluating the evidence, decided the next day to revoke the
grocery store’s liquor license. The Commission’s decision to
revoke Shop Rite’s liquor license is not at issue in this case; in
fact, appellant Frey even admitted at oral argument that there
was “no dispute that the liquor licensee violated the

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No. 12‐3571 3
ordinance.”
What is at issue in this case, however, is the additional
action taken by the Commission as a result of Shop Rite’s
violation of Peoria, Ill., Code § 3‐28. In its November 25th
order, the Commission not only revoked Shop Rite’s liquor
license; it also revoked “site approval for the retail sale of
alcoholic liquors at the location of 1823 W. Lincoln, Peoria,
Illinois.” Appellant Frey, the owner of 1823 W. Lincoln,
believes that this revocation of site approval for the retail sale
of alcohol denied the corporation of its property without due
process of law. For the reasons stated below, we disagree with
Frey’s position, and we affirm the judgment of the district
court.
I
Appellant Frey argues that both its procedural and
substantive due process rights under the Fourteenth
Amendment were violated by the Peoria Liquor Commission’s
revocation of its site approval. The district court largely
ignored Frey’s substantive due process claim after finding that
Frey had failed to explain the claim sufficiently in its written
filings. With respect to Frey’s procedural due process claim,
the district court determined that Frey “simply ha[d] no
property right to vindicate under the due process clause, and
[the City of Peoria] owed him no ‘process’ when revoking the
site approval.” As such, the district court denied Frey’s motion
for summary judgment, granted the City’s motion for
summary judgment, and terminated Frey’s case. We review the
district court’s disposition of Frey’s case de novo. Durable Mfg.
Co. v. U.S. Dep’t of Labor, 578 F.3d 497, 501 (7th Cir. 2009).

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4 No. 12‐3571
We turn first to Frey’s substantive due process argument,
of which we too can easily dispose, given the argument’s total
lack of development. Frey only mentioned the term
“substantive due process” twice in its written submissions to
the district court: once in its complaint, and once in its motion
for summary judgment. Both times, Frey simply stated that its
substantive due process rights had been violated. It never
explained how or why the City of Peoria’s actions constituted
a violation of Frey’s substantive due process rights. Even in its
briefing to our court, Frey never explained how or why the
City of Peoria’s actions constituted a violation of its substantive
due process rights. Indeed, it became clear at oral argument
that Frey was throwing around the term “substantive due
process” without fully understanding its meaning.
Accordingly, we take this opportunity to remind Frey that
[s]ubstantive due process is not a blanket
protection against unjustifiable interferences
with property. And it does not confer on federal
courts a license to act as zoning boards of
appeals. It is instead a modest limitation that
prohibits government action only when it is
random and irrational. Unless a governmental
practice encroaches on a fundamental right,
substantive due process requires only that the
practice be rationally related to a legitimate
governmental interest, or alternatively phrased,
that the practice be neither arbitrary nor
irrational. A property owner challenging a land‐
use regulation as a violation of due process is
therefore obliged to show that the regulation is

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No. 12‐3571 5
arbitrary and unreasonable, bearing no
substantial relationship to public health, safety,
or welfare.
Gen. Auto Serv. Station v. City of Chi., 526 F.3d 991, 1000‐01 (7th
Cir. 2008) (quotations and citations omitted).
Frey has not claimed to have a fundamental right to site
approval for the retail sale of liquor on its property (nor should
have Frey made such a far‐fetched claim, for that matter). As
long as the City of Peoria’s revocation of site approval did not
encroach on one of Frey’s fundamental rights, the revocation
would only need to be “rationally related to a legitimate
governmental interest.” Id. at 1000. Given the City’s strong
evidence that prescription drugs were being illegally sold on
Frey’s property, the revocation certainly meets the rational
basis test. Consequently, even if Frey had adequately explained
its substantive due process claim, the claim would still fail.
With Frey’s substantive due process claim out of the way,
we now turn to Frey’s procedural due process claim. Frey
argues that site approval is a property right within the
meaning of the Fourteenth Amendment due process clause,
and as a result, the City of Peoria owed Frey some process
before revoking its site approval. Thus, before we can evaluate
the sufficiency of the process afforded Frey in the revocation of
its site removal, we must first assess whether site approval is
a protected property right under the Fourteenth Amendment
due process clause. Frey advances two arguments why site
approval is a protected property right: (1) site approval
constitutes a land‐use regulation similar to zoning, and (2) site
approval is a property right under the language of Illinois law

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6 No. 12‐3571
and the Peoria municipal code.
Frey’s first argument—that site approval constitutes a land‐
use regulation akin to zoning—is interesting. But since Frey
never breathed a word of this argument to the district court,
we need not address its merits. When a party fails to develop
an argument in the district court, the argument is waived, and
we cannot consider it on appeal. United States v. Ritz, ‐‐‐ F.3d ‐‐‐
, No. 11‐3320, 2013 WL 3336718, at *5‐6 (7th Cir. July 3, 2013).
Frey claims to have raised the argument prior to appeal, but
after scouring Frey’s filings in the district court, we cannot find
any mention of a land‐use regulation argument. In all of Frey’s
filings in the district court, the phrase “land‐use regulation”
never appears. The word “zoning” does appear once in its
response to the City’s motion for summary judgment, but only
in a block quotation of Peoria, Ill., Code § 3‐92. Moreover, Frey
never discussed the “zoning” language of § 3‐92 in the body of
its response.
At oral argument, we questioned Frey about its failure to
raise its land‐use regulation argument below. Frey responded
that this argument had been raised below—by the City of Peoria.
Citing the City’s motion for summary judgment, Frey pointed
out that the City had made the following statement: “the cases
in which a state eliminated a liquor license either through a
legislative change or zoning change are inapplicable to this
instant case.” This prior statement by the City has nothing to
do with Frey’s current land‐use regulation argument. And just
because the City used the word “zoning” once in all of its
filings does not mean that a zoning argument was raised
below—let alone developed. Even though the general issue of

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No. 12‐3571 7
whether site approval constitutes a protected property right
was squarely before the district court, Frey’s specific
zoning/land‐use regulation argument was certainly not before
the district court. A party “waive[s] the ability to make a
specific argument for the first time on appeal when the party
fail[s] to present that specific argument to the district court,
even though the issue may have been before the district court
in more general terms.” Id. at *6 (quotation and citation
omitted). Frey has “changed [its] theory after losing below[,]
and that [change] prevents us from considering” its
zoning/land‐use regulation argument on appeal. Id. at *7.
Since waiver prevents us from considering Frey’s first
argument regarding site approval as a protected property
right, we turn to Frey’s second argument—the argument that
actually was presented to the district court. Frey argues that
Illinois state law and the Peoria municipal code together create
a property right in site approval that is protected by the
Fourteenth Amendment due process clause. Analogizing site
approval for the retail sale of liquor to a liquor license, Frey
points out that we have previously found an Illinois liquor
license to be a protected property right under the due process
clause. See Club Misty, Inc. v. Laski, 208 F.3d 615, 618 (7th Cir.
2000) (“[A]n Illinois liquor license is a property right within the
meaning of the due process clause of the Fourteenth
Amendment … [because it] is revocable during its term only
for cause.”); Reed v. Village of Shorewood, 704 F.2d 943, 948‐49
(7th Cir. 1983).
A protected property right under the Fourteenth
Amendment due process clause is something that “is securely

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8 No. 12‐3571
and durably yours under state (or … federal) law, as distinct
from what you hold subject to so many conditions as to make
your interest meager, transitory, or uncertain.” Reed, 704 F.2d
at 948. Although the Fourteenth Amendment protects property
rights, it does not create them. Bd. of Regents of State Colls. v.
Roth, 408 U.S. 564, 577 (1972) (“Property interests, of course, are
not created by the Constitution.”). Instead, property rights “are
created and their dimensions are defined by existing rules or
understandings that stem from an independent source such as
state law—rules or understandings that secure certain benefits
and that support claims of entitlement to those benefits.” Id.;
see also Reed, 704 F.2d at 948 (noting that “whether a license or
other interest is property for purposes of the due process
clause of the Fourteenth Amendment … depends on state (or,
where applicable, … federal) law”).
Here, Illinois state law is silent on the issue of site approval.
This silence, Frey argues, barred Peoria from requiring it to
obtain site approval for the retail sale of alcohol in the first
place. According to Frey, if the Illinois legislature had
approved of local governments imposing a site approval
requirement, it would have said so in the relevant state
statutes. But Frey’s argument ignores the broad language of
235 Ill. Comp. Ann. 5/4‐1, the Illinois statute regulating local
control over retail alcohol sales, which allows local
governments “to establish such further regulations and
restrictions upon the issuance of and operations under local
licenses not inconsistent with law as the public good and
convenience may require.”
Under the broad discretionary authority granted by 235 Ill.

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No. 12‐3571 9
Comp. Ann. 5/4‐1, Peoria’s municipal code both creates and
defines a property owner’s interest in site approval.
Throughout this opinion, we consider the 2009 version of
Peoria’s municipal code, which was the version in place during
the relevant course of events in this case.1 Peoria, Ill., Code § 3‐
92 outlines the criteria by which the Peoria Liquor
Commission—and later the Peoria City Council—determines
whether a site is suitable for the retail sale of alcohol.
Moreover, § 3‐92 makes it clear that the suitability of a site is
contingent upon the “specified class of license”; in other
words, some sites may be suitable for some, but not all, classes
of liquor licenses. The next four sections of the Peoria, Ill., Code
regulate the application process for obtaining site approval,
requiring “[a]ny owner of real property desiring to have his
property used for the purpose of the retail sale of alcoholic
liquors [to] make application to the mayor for approval by the
city council of such site for such use.” § 3‐93(a). Finally, § 3‐
97(a) (emphases added) lays out the terms and conditions for
maintaining site approval, once granted:
1 Peoria, Ill., Ordinance 16940 (Feb. 26, 2013) modified Peoria, Ill., Code §§
3‐92, 3‐97, which are two of the most important sections regulating site
approval for the retail sale of liquor. To view how these relevant sections of
the Peoria, Ill., Code have been recently modified, see Communication from
the City Manager and Interim Corporation Counsel Recommending Adoption of
an Ordinance Amending Chapter 3 of the Code of the City of Peoria Pertaining to
Liquor License Regulation. (New Communication and New Ordinance),
L e g i s S t r e a m O n L i n e ( F e b . 2 6 , 2 0 1 3 ) , a v a i l a b l e a t
h t t p : / / c m x . p e o r i a g o v . o r g / A g e n d a / A g e n d a /
MG77271/AS77283/AS77284/AI77313/DO77337/DO_77337.pdf (last visited
July 12, 2013).

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10 No. 12‐3571
The approval for the retail sale of alcoholic
liquors under a particular class of license at a
particular site shall remain with that site as long as
there is a continuous use of that site for the sale of
alcoholic liquors under the class of license
recommended and approved, or until a different
class of license is actually issued for that site,
whichever occurs first, and as long as no liquor
license at that location has been revoked by the
mayor. A site shall be deemed to be continuously
used as long as there is not a lapse at the site of
more the 12 months in the regular conduct of the
business of the retail sale of alcoholic liquors
under that particular class of license.
§ 3‐97(a) makes clear that site approval does not continue
indefinitely; rather, it is expressly conditional on the existence
of a liquor license for use on the premises.
As these sections of the Peoria, Ill., Code make clear, the
existence of site approval hinges upon the existence of a liquor
license for use on the premises. Whether a site is initially
approved for the retail sale of alcohol depends at least in part
upon the class of liquor license sought. Peoria, Ill., Code § 3‐
92(a). Whether a site continues to be approved for the retail
sale of alcohol depends upon “a continuous use of that site for
the sale of alcoholic liquors under the class of license
recommended and approved.” Peoria, Ill., Code § 3‐97(a). And
as soon as the liquor license issued for use on the premises
ends, so does site approval. If a different class of liquor license
is issued for the premises, then site approval goes away, and

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No. 12‐3571 11
the site must be re‐approved for the new class of license. More
importantly, if a liquor license has been revoked, then site
approval also terminates.
Site approval is neither secure nor durable under the terms
of the Peoria, Ill., Code; site approval relies instead upon a
liquor license for its continued existence. Consequently, site
approval obtained by a party who owns property wholly
depends on the actions of the party who holds the liquor
license for use on that property. As is the case here, the party
who owns the property and the party who holds the liquor
license may be different. Indeed, any time the proprietor of a
liquor store, grocery store, or restaurant rents (and does not
own) the premises, the property owner and the liquor license
holder will be two different parties. In such a situation, a third
party controls what happens to the property owner’s site
approval—and there is nothing secure or durable about an
interest controlled by a third party.
Thus, a Peoria property owner’s interest in a site approval
is fairly characterized as “meager, transitory, [and] uncertain.”
Reed, 704 F.2d at 948. The interest is meager because site
approval depends upon the existence of a liquor license for use
on the property. The interest is transitory because site approval
ends as soon as the liquor license ends. And the interest is
uncertain because the continuation of site approval may
entirely depend on the actions of a third party who is not the
property owner. Our precedent is clear that meager, transitory,
and uncertain interests are not property rights protected by the
Fourteenth Amendment due process clause. Id. Therefore, the
City of Peoria did not owe Frey any process before revoking its

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12 No. 12‐3571
site approval.
Still, Frey does not understand how site approval could fail
to be a protected property right under the Fourteenth
Amendment due process clause when an Illinois liquor license
is a protected property right under our case law. See Club
Misty, 208 F.3d at 618; Reed, 704 F.2d at 948‐49. At first glance,
it may seem puzzling why site approval for the retail sale of
liquor is not a protected property right, yet a license to sell
liquor is a protected property right. But a close comparison of
the statutory language that creates and defines these two
interests reveals just how different they are. With regard to
Illinois liquor licenses, 235 Ill. Comp. Stat. 5/3‐14 provides:
[T]he State Commission may refuse the issuance
or renewal of a retailer’s license, upon notice and
after hearing, upon the grounds authorized in
Section 6‐3 of this Act, and, provided further,
that the issuance of such license shall not
prejudice the State Commission’s action in
subsequently suspending or revoking such
license if it is determined by the State
Commission, upon notice and after hearing, that
the licensee has, within the same or the
preceding license period, violated any provision
of this Act or any rule or regulation issued
pursuant thereto and in effect for 30 days prior
to such violation.
The grounds for refusing to issue, refusing to renew, or
revoking an Illinois liquor license include:
1. Failure to make a tax return.

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No. 12‐3571 13
2. The filing of a fraudulent return.
3. Failure to pay all or part of any tax or
penalty finally determined to be due.
4. Failure to keep books and records.
5. Failure to secure and display a certificate or
sub‐certificates of registration, if required.
6. Wilful [sic] violation of any rule or regulation
of the Department relating to the administration
and enforcement of tax liability.
235 Ill. Comp. Stat. 5/6‐3. According to the statutory language
cited above—the language that both creates and defines a
license holder’s interest in an Illinois liquor license—a license
“can be revoked only for cause, after notice and hearing.” Reed,
704 F.2d at 948. Whenever an interest “is revocable (or
nonrenewable) only for cause, it is property for purposes of
determining whether the state can deprive the licensee of it
without according him due process of law.” Club Misty, 208
F.3d at 619. Thus, an Illinois liquor license is protected
property under the due process clause of the Fourteenth
Amendment.
In contrast, the statutory language that creates and defines
a property owner’s interest in site approval provides no such
protections against revocation. Peoria, Ill., Code §§ 3‐92 – 3‐97
contain the statutory language that creates and defines site
approval, yet nowhere in these sections are property owners
provided a right to notice and a hearing before revocation. Nor
are property owners assured that their site approval will only
be revoked for cause. Quite the opposite—these sections of the

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14 No. 12‐3571
Peoria, Ill., Code make clear that site approval may be revoked
at any time, even if the revocation results from actions taken by
a third party. No matter how Frey attempts to frame its interest
in site approval, it is clear that this interest cannot constitute a
protected property right under the due process clause of the
Fourteenth Amendment.
II
Because we find that site approval for the retail sale of
alcohol is not a protected property right under the due process
clause of the Fourteenth Amendment, Frey’s procedural due
process claim automatically fails, and no additional analysis is
necessary. However, we pause here briefly to note that even if
we had found that site approval constituted a protected
property right, Frey’s procedural due process claim would still
fail. Although Frey was not entitled to any process before the
revocation of its site approval, the Peoria Liquor Commission
nonetheless provided Frey with process, and we believe this
process was sufficient to satisfy the requirements of the
Fourteenth Amendment.
Frey claims it was denied notice and a hearing before
revocation of its site approval, yet the factual record
contradicts Frey’s claims. In granting summary judgment to
the City of Peoria, the district court relied on the City’s
statement of undisputed material facts. Under normal
circumstances, such reliance might call into question whether
the district court actually “viewed the facts in the light most
favorable to” Frey, as required by summary judgment
standards. Payne v. Pauley, 337 F.3d 767, 769 (7th Cir. 2003). But
the district court’s reliance on the City’s statement of the facts

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No. 12‐3571 15
was Frey’s own fault. Frey failed to respond to the City’s
statement of undisputed material facts, and under C.D. Ill.
Local Rule 7.1(D)(2)(b)(6), “A failure to respond to any
numbered fact [in the opposing party’s motion for summary
judgment] will be deemed an admission of the fact.” We
“review[] the decision of a district court concerning compliance
with local rules … only for an abuse of discretion,” and in any
case, it is clear to us from our own review of the district court
filings that Frey never responded to the City’s statement of
undisputed material facts. Koszola v. Bd. of Educ. of City of Chi.,
385 F.3d 1104, 1108 (7th Cir. 2004). Therefore, the district court
was right to rely on the City’s statement of undisputed
material facts in its analysis, and we too will rely on the City’s
statement in our analysis.
According to the City’s statement, Peoria Police Officer and
Nuisance Abatement Officer Elizabeth Hermacinski twice
notified Frey of the November 24, 2009, hearing regarding
Shop Rite’s liquor license: first, at a meeting on November 16,
2009, and second, in a letter dated November 16, 2009.
Although Frey was not a named party to the November 24th
hearing (only the City and Shop Rite were named parties), Frey
was nevertheless allowed to participate in the hearing. During
the penalty phase, the Peoria Liquor Commission permitted
Frey’s counsel to cross‐examine both of the City’s witnesses,
Officer Hermacinski and Officer Scott Jordan (a liquor
investigator).
By twice informing Frey of the hearing and giving Frey’s
counsel the opportunity to cross‐examine the City’s two
witnesses, the Liquor Commission gave Frey “notice and a

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16 No. 12‐3571
meaningful opportunity to be heard” (even though, as seen in
Section I, the Commission had no obligation to do either).
LaChance v. Erickson, 522 U.S. 262, 266 (1998). As a result, Frey
received all the process that the due process clause requires.
Frey seems to think that the due process clause entitles the
company to a full evidentiary hearing whenever one of its
protected property rights is adversely affected, but Frey’s
thinking defies clear Supreme Court precedent: “In general,
something less than a full evidentiary hearing is sufficient prior
to adverse administrative action.” Cleveland Bd. of Educ. v.
Loudermill, 370 U.S. 532, 545 (1985). In sum, even if site
approval were a protected property right under the Fourteenth
Amendment due process clause, Frey would not have been
entitled to any additional process.
III
Frey was not entitled to any process at all before the
revocation of its site approval for the retail sale of alcohol. Yet
Frey nonetheless received due process of law before the Peoria
Liquor Commission revoked its site approval. Consequently,
Frey’s procedural due process claim fails on all accounts. We
accordingly A FFIRM the district court’s grant of summary
judgment to the City of Peoria.

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