Clay Wortham v. Village of Barrington Hills

The Worthams' claims stem from their business of leasing their primary residence in the Village of Barrington Hills, Illinois ("the Village") during periods they were away. The Worthams used an online leasing platform called Vrbo to offer stays at their home for as brief as three days.¹Beginning in March 2020, the Village requested the Worthams discontinue leasing their home and communicated that the Village's municipal code prohibited short-term leasing of properties like the Worthams'. Despite additional warnings, the Worthams continued leasing their property through Vrbo. In the fall of 2020, the Village initiated administrative adjudications to fine the Worthams for their infractions and to bar the Worthams from leasing their home. The Worthams sought administrative review in state court after they lost those adjudications. The Worthams argued they had not violated the municipal code because, under their interpretation, the code permitted leases for durations not exceeding thirty days. The Worthams also argued that if the municipal code did prohibit "short-term"

leasing, as the Village argued, the code's failure to quantify the term meant the prohibition was unconstitutionally vague under the Due Process Clause of the Fourteenth Amendment.

The Illinois appellate court affirmed the final administrative decisions. In addition to finding that the municipal code prohibited the Worthams' short-term leasing business, the court deemed the Worthams' vagueness challenge baseless absent any argument the code was vague as to the Worthams' specific conduct. See Wortham v. Village of Barrington Hills, 202 N.E.3d 987, 997 (Ill. App. Ct. 2022) (citing Shachter v. City of Chicago, 962 N.E.2d 586, 606 (Ill. App. Ct. 2011)).

The Village enforced the administrative orders through proceedings in state court in April 2022, and the Worthams discontinued leasing their home and paid the fines. The administrative decisions did not order the Worthams to remove their online Vrbo listing. During the course of the enforcement proceedings, however, the Village demanded the Worthams remove their Vrbo listing or face future enforcement actions. In June 2023, the Worthams filed a federal complaint. They asserted that the Village's zoning code was unconstitutionally vague under the Due Process Clause and that the Village's demand that they remove their Vrbo listing violated the First

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Amendment.²The Village filed a motion to dismiss the complaint, raising res judicata and the statute of limitations as affirmative defenses.

The district court granted the motion to dismiss. The court found res judicata barred the Worthams' First Amendment claim because they had not raised it during the enforcement proceedings, and in doing so noted the Worthams never argued they were prevented from litigating the claim in those proceedings. The district court's decision on the vagueness claim was more complicated. To the extent the Worthams' federal complaint brought an as-applied challenge, the district court concluded Rooker-Feldman or res judicata, depending on whether they brought that claim before the Illinois appellate court, would bar their claim. To the extent the Worthams brought a facial challenge, the court found the claim raised a series of issues, including res judicata, mootness, and inadequate pleading. After the Worthams failed to file an amended complaint, the district court entered judgment for the Village. The Worthams appeal, contesting the court's application of res judicata.

"We review a dismissal on res judicata grounds de novo." Baek v. Clausen, 886 F.3d 652, 660 (7th Cir. 2018). In doing so, we view the facts in the light most favorable to the Worthams and "sustain the entry of judgment only if it is beyond doubt that the nonmoving party cannot prove facts sufficient to support its position and that the movant is entitled to relief." Citizens Ins. Co. of Am. v. Wynndalco Enters., LLC, 70 F.4th 987, 994 (7th Cir. 2023). In addition to considering the complaint, "[w]e may take judicial notice of public records, including public court documents …." White v. Keely,

814 F.3d 883, 885 n.2 (7th Cir. 2016). Although neither party advances the prospect raised by the district court that Rooker-Feldman bars the Worthams' due process claim, we "have an independent obligation to determine whether subject-matter jurisdiction exists, even in the absence of a challenge from any party." Arbaugh v. Y&H Corp., 546 U.S. 500, 514 (2006). "The Rooker-Feldman doctrine recognizes that Congress has not 'authorize[d] district courts to exercise appellate jurisdiction over state-court judgments.'" Gilbank v. Wood Cnty. Dep't of Hum. Servs., 111 F.4th 754, 765 (7th Cir. 2024) (en banc) (alteration in original) (quoting Verizon Md., Inc. v. Public Serv. Comm'n of Md., 535 U.S. 635, 644 n.3 (2002)). In order for Rooker-Feldman to apply, "the claim must invite the federal district court to review and reject the state-court judgment." Id. at 766. We consider the relief the

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plaintiff requests to "determin[e] if the plaintiff has indeed asked the court to reject a state court judgment." Id. at 792. Though the Worthams seek reimbursement for the fines they paid, they also seek lost revenue stemming from the order enjoining them from leasing their home, and "awarding damages usually does not affect a state court judgment not sounding in monetary terms." Id. So, at least some of the relief the Worthams seek "does not seek to reverse a state court judgment." Id. at 793. Rooker- Feldman therefore does not bar jurisdiction over the Worthams' due process claim to the extent it seeks lost revenue.

While an aspect of the Worthams' due process claim is not jurisdictionally barred, the claim is barred by res judicata. "Because the prior adjudication was in Illinois state court, we apply Illinois res judicata principles." Chi. Title Land Tr. Co. v. Potash Corp. of Saskatchewan Sales Ltd., 664 F.3d 1075, 1079 (7th Cir. 2011). "There are three requirements for res judicata in Illinois: '(1) a final judgment on the merits ... entered in the first lawsuit by a court of competent jurisdiction; (2) an identity of causes of action exists; (3) the parties or their privies are identical in both lawsuits.'" Doherty v. Fed. Deposit Ins. Corp., 932 F.3d 978, 983 (7th Cir. 2019) (alteration in original) (quoting DeLuna v. Treister, 708 N.E.2d 340, 344 (Ill. 1999)). If satisfied, res judicata's "bar to subsequent litigation 'extends to what was actually decided in the first action, as well as those matters that could have been decided in that suit.'" Baek, 886 F.3d at 660 (quoting River Park, Inc. v. City of Highland Park, 703 N.E.2d 883, 889 (Ill. 1998)). The Worthams dispute the first element alone. They claim there was no final judgment on the merits because the Illinois appellate court declined to reach their as-applied and facial claims. We disagree. The Illinois court rendered a merits ruling by rejecting the Worthams' vagueness argument on the grounds they lacked any argument that the ordinance was vague as applied to them—a requirement for litigants bringing a vagueness challenge outside of the First Amendment. See United States v. Pacilio, 85 F.4th 450, 458 (7th Cir. 2023) ("A vagueness challenge not premised on the First Amendment is evaluated as-applied, rather than facially." (quoting United States v. Calimlim, 538 F.3d 706, 710 (7th Cir. 2008))). The Worthams may disagree with the Illinois appellate court, but res judicata bars them from challenging the state court's conclusion through a separate action.³

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We also affirm the district court's conclusion that res judicata barred the Worthams' First Amendment claim. In the district court, the Village argued in its motion to dismiss that res judicata barred the Worthams' First Amendment claim because the Worthams could have brought their claim during the April 2022 enforcement proceedings. But the Worthams did not respond to this argument in their response brief. By failing to raise an argument against res judicata in the district court, they have waived any such argument on appeal. See Bradley v. Village of University Park,

59 F.4th 887, 897 (7th Cir. 2023). Nor would the Worthams' argument on appeal help them. They contend their claim arose only after the March 2022 decision, but this ignores the district court's reasoning that they failed to bring their First Amendment claim in the subsequent enforcement proceedings.

AFFIRMED

Star Holdings, LLC v. City of Milwaukee, 821 F.3d 795, 803 (7th Cir. 2016) (quoting Citizens United v. Fed. Election Comm'n, 558 U.S. 310, 331 (2010)). Second, the district court offered a range of bases for dismissing the due process claim without committing to a specific ground. The court's conclusory Rooker-Feldman analysis reflects the danger in this approach.

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