Haas: Pawn shop ordinance is constitutional

After receiving a copy of an inquiry from a member of the public sent to the city of Portsmouth, questioning the constitutionality of the city’s proposed Pawn Shop ordinance, the Daily Times asked Portsmouth City Solicitor John Haas to research the ordinance and give his opinion on it’s defensibility should it be challenged.

The city of Portsmouth is considering requiring pawnbrokers and second hand dealers report items purchased by their business to an online clearinghouse on a daily basis.

LeadsOnline is the nation’s largest online investigation system for law enforcement, providing rapid electronic access to transactions from thousands of reporting businesses including scrap metal processors, secondhand stores, Internet drop-off stores, and pawn shops across the country, as well as critical information from eBay listings for criminal investigations.

In a prior conversation, Haas referenced a New York City case that raised some Constitutional issues.

“I read the case today. The Constitutional issues related to claims against the NYPD for harassment of a pawn shop chain that refused to use LeadsOnline even though there was no legal requirement at the time on the pawn shop to do so,” Haas said. “The NYPD allegedly frequently visited the shops, placed items on hold, issued summons and conducted warrantless searches and seizures. The Court ruled that there may be Constitutional implications with respect to the conduct, but those implications had nothing to do with a law requiring use of LeadsOnline.”

Haas told the Times he had received only one inquiry, the one that brought about the request from the Times.

“I reviewed the information he attached to his email relating to a complaint about ethics violation in Hopkinsville, Kentucky and find there to be no relevance to our present situation,” Haas said. “He also referenced the case I explained in the paragraph above (NYPD case) which is not remotely factually related to the proposed Ordinances before Council.”

Haas said there is a case styled Collateral Loanbrokers Association v. City of New York wherein a Court issued an injunction regarding any requirements on pawn shops or secondhand dealers to prepare or provide any reporting to Police.

“That case appears to be an outlier and I cannot locate any additional information as to the ultimate resolution of the claims. I would note, parenthetically, the City’s rental licensing program was found to be unconstitutional because the city’s defense that residential rental is a closely regulated business failed,” Haas said. “As to pawn shops and second hand dealers, there is a plethora of case law indicating they are closely regulated businesses.”

LeadsOnline states on its website that it is used by thousands of law enforcement agencies across the country. Haas said there are hundreds if not thousands of cities across Ohio and the U.S. requiring the use of LeadsOnline or a similar online/electronic reporting service.

“I called LeadsOnline and inquired whether they were aware of any challenges to the use of LeadsOnline,” Haas said. “The only issues they were aware of was the lack of political will to adopt laws requiring its use where there were complaints by businesses in some localities.”

Haas summed up his opinion with: “I am of the opinion that any challenge to the new ordinances on constitutional law grounds is defensible.”

By Frank Lewis

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Reach Frank Lewis at 740-353-3101, ext. 1928, or on Twitter @franklewis.