Cherry Grove Beach Gear lawsuit
In Florence, a federal judge is set to resolve a years-long legal dispute between, Cherry Grove Beach Gear, a North Myrtle Beach rental business and the city.
It is expected that U.S. District Court Judge Joseph Dawson III will rule soon in Cherry Grove Beach Gear’s legal dispute with the city. In July 2022, Derek and Jacqueline Calhoun sued North Myrtle Beach for its long-standing ordinance that gives the city or authorized franchisees exclusive rights to set up rental equipment on its shores.
In court, the Calhouns said they asked North Myrtle Beach for a franchise twice but were denied both times. Their initial 20-page motion accused the city of antitrust violations.
The city’s actions “intentionally and flagrantly targeted Plaintiffs by enacting an amendment to North Myrtle Beach City Ordinance 5-24 to render Plaintiffs’ lawful and existing business practices unlawful, without setting up any amortization period during which Plaintiffs could recover their business investment,” the lawsuit says.
According to the lawsuit, the city’s actions were “positive, aggressive, illegitimate, unlawful, unreasonable, and unconstitutional.”
According to the lawsuit, the business owners are also suing for defamation, libel, and slander, alleging the city is damaging their reputation by publishing statements about them.
Council members first required vendors to obtain a franchise agreement in 1981 when they restricted private commerce on the sands. As of 2010, the law has been updated with authorized hours, rules for the placement and size of shading devices, and rules for the removal of equipment.
The city attorneys have repeatedly cited a 25-year-old state law that gives coastal communities the authority to adopt ordinances regulating beach safety, including franchise agreements.
The law has been in place for years, predating the Plaintiffs’ business venture in 2019. Unlike other beach equipment companies who follow the law by providing delivery to their clients’ accommodations, the Plaintiffs have chosen not to abide by it. According to city attorneys, they openly oppose the law and deliberately flout it, using their violations as a marketing strategy. They even proudly publicize each citation on social media with the hashtag #outlawbeachlife, and encourage people to contribute towards their intentionally incurred fines.
From beach rentals, the city receives between $1.5 million and $3 million annually, which is used to offset tax increases and fund beach safety initiatives. At the July 2022 city council meeting, Marilyn Hatley, North Myrtle Beach’s five-term mayor, said franchise agreements were an additional source of revenue since a percentage of the sales went to the city.
According to its attorneys, North Myrtle Beach owns and maintains approximately 2,800 beach chairs and 1,500 umbrellas that are installed by municipal employees.
There are similar regulations in place on Hilton Head Island, Isle of Palms, Horry County, and Myrtle Beach that prohibit private companies from setting up equipment on public beaches.
Cherry Grove Beach Gear was denied a preliminary injunction by a federal judge in September 2022, because the company failed to demonstrate that it would likely succeed in its lawsuit.
In December, the city filed a motion to dismiss the entire case.
