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Not Taking Liberties: Appellate Court Dismisses Constitutional Challenge to Chicago Vehicle Forfeiture Ordinance
In O'Donnell v. City of Chicago, 163 F.4th 411 (7th Cir. 2025), the U.S. Court of Appeals for the Seventh Circuit held that the City of Chicago’s vehicle forfeiture practices pursuant to its municipal traffic code do not amount to “takings” under the Fifth Amendment’s Takings Clause and the Illinois Constitution, affirming the decision of the U.S. District Court for the Northern District of Illinois.
Facts
The Municipal Code of the City of Chicago requires vehicle owners issued tickets by the city’s police department to either pay the ticket or contest the violation within a specified time frame. 163 F.4th at 413. Vehicle owners who fail to pay the fine or appeal the violation are then issued a notice of final determination of liability by the city. If a vehicle owner accrues a certain number of final determinations of liability, all vehicles registered to that owner become eligible for immobilization on 21 days’ notice. If a vehicle is immobilized, the vehicle owner has 24 hours to comply with the city ordinance and pay the amount due, or the city can tow and impound the vehicle. Id. Following impoundment, the city sends another notice to the vehicle owner, who has 21 days to pay the fine and claim the vehicle. If the vehicle goes unclaimed for 21 days, the ordinance authorizes the city to sell or dispose of it — which does not absolve the vehicle owner from any accrued fines or liabilities under the ordinance. Id.
Michael Goree and Ryan O’Donnell (plaintiffs) each had their vehicles disposed of by the city without compensation. They sued the city and URT United Road Towing, Inc., a private city towing contractor (defendants), alleging a violation of the Takings Clause. The plaintiffs also alleged a Monell claim under 42 U.S.C. §1983, as well as various state law claims. The defendants moved to have the case dismissed for the plaintiff’s failure to state a viable cause of action. The district court granted the defendants’ motion to dismiss, finding that the forfeiture scheme established by the city’s ordinance was not an unconstitutional taking. Id.
Appeal
The Seventh Circuit reviewed the plaintiffs’ state and federal takings claims concurrently. Under the Fifth Amendment, as applied to the states through the Fourteenth Amendment, private property may not be taken for public use without just compensation. 163 F.4th at 413 – 414. Citing Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 161 L.Ed.2d 876, 125 S.Ct. 2074, 2080 (2005), the appellate court noted that to establish a violation of the Takings Clause, the plaintiffs must demonstrate that (a) the government took their property, either through a physical taking or through unduly onerous regulations; (b) the taking was for a public use or purpose; and (c) the government has not paid just compensation. 163 F.4th at 414.
Addressing the claim on its merits, the appellate court relied on its recent decision in Hadley v. City of South Bend, 154 F.4th 549, 554 (7th Cir. 2025), to distinguish between takings exercised through eminent domain and takings exercised through a state’s police power. As established in Hadley, the appellate court recognized that while not all police powers automatically preclude a takings claim, the exercise of law enforcement authority was a “classic example” of a police power that does foreclose takings claims. 163 F.4th at 414, citing Hadley, supra, 154 F.4th at 556.
The appellate court identified the city’s forfeiture ordinance as a clear mechanism to enforce its traffic code. The court considered immobilizing, towing, impounding, and disposing of nonresponsive owners’ vehicles a reasonable means of punishment for those who had otherwise evaded consequence, as “the threat of impoundment and disposal forces [the vehicle owners] to internalize the consequences of their behavior and, accordingly, deters those violations in the first place.” 163 F.4th at 414.
The appellate court was unpersuaded the plaintiffs’ characterization of the city’s forfeiture ordinance as a “debt-collection mechanism” that punishes the inability to pay fines, noting the mere fact that the practice raised revenue for the city did not overshadow its primary objective of compliance with traffic laws. 163 F.4th at 414 – 415. Moreover, because the plaintiffs raised a facial challenge to the ordinance, the appellate court rejected the plaintiffs’ further arguments of hypothetical circumstances where specific factual scenarios may warrant a taking. The appellate court also shot down the plaintiffs’ attempts to distinguish the case from Bennis v. Michigan, 516 U.S. 442, 134 L.Ed.2d 68, 116 S.Ct. 994, 1001 (1996), on the basis that Bennis authorizes the forfeiture of vehicles when there is criminal activity, whereas the Chicago forfeiture ordinance addresses financial delinquency. 163 F.4th at 415.
Finally, the plaintiffs challenged the city’s failure to use the proceeds of the vehicle sales to satisfy the vehicle owner’s outstanding debts. The appellate court did not buy the plaintiffs’ characterization of the practice as an unfair, excessive “tax,” instead finding that a city imposing a fine as an exercise of its police powers was an enforcement mechanism subject to different limitations. Id.
Accordingly, the appellate court affirmed the district court’s dismissal of the plaintiffs’ takings claims and held that the city “lawfully impounded and disposed of the plaintiffs’ vehicles.” Id. The court tossed the plaintiffs’ other challenges as well, as they were inextricably entwined with the success of the takings claims.
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