Big John's Billiards v. State, 852 N.W.2d 727

Nebraska amended the Clean Indoor Air Act (2008) to ban indoor smoking in public places and places of employment, while exempting: (1) designated smoking guestrooms (<=20% of rooms), (2) indoor research lab areas for smoking studies, and (3) "tobacco retail outlets" (stores selling only tobacco and directly related products).
In 2009 the Legislature added a separate exemption for "cigar bars" (Class C liquor license holders meeting specific criteria).
Big John’s Billiards (a billiards hall) sued, claiming three exemptions (guestrooms, tobacco retail outlets, cigar bars) violated the Nebraska Constitution’s prohibition on special legislation and also asserted contract-impairment and regulatory-taking claims.
The district court held the three exemptions (guestrooms, tobacco retail outlets, cigar bars) were unconstitutional special legislation but severable; later rulings resolved remaining claims for the State and this appeal followed.
The Nebraska Supreme Court reviewed whether each exemption was special legislation, whether the unconstitutional exemptions were severable, and whether the Act impaired contracts or effected a regulatory taking.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether exemptions constitute unconstitutional special legislation	Exemptions arbitrarily grant special privileges inconsistent with Act’s public-health purpose	Exemptions are reasonable distinctions tied to legitimate legislative objectives	Guestrooms exemption constitutional; tobacco retail outlets and cigar bars exemptions unconstitutional special legislation
Proper focus for special-legislation analysis	Examine purpose of the Act overall (and compare exempted class to general class)	Focus only on the purpose of the exemptions themselves	Court: examine both Act’s purpose and purpose behind exemptions; compare classes in light of Act’s purpose
Severability of unconstitutional exemptions	Unconstitutional exemptions were inducements to passage; whole Act should fail	Exemptions are severable; Act remains workable and enforceable without them	Exemptions severable; Act remains valid without tobacco-retail and cigar-bar exemptions (cigar-bar exemption also enacted separately)
Contract impairment and regulatory-taking claims	Act impairs Big John’s lease-based business expectations and its right to allow smoking; thus unconstitutional impairment/taking	Act did not alter lease terms; any revenue impact is incidental; no vested right to smoke on premises	No impairment of contract and no regulatory taking as matter of law (no vested property right in ability to permit smoking)

Hug v. City of Omaha, 275 Neb. 820 (2008) (analysis of exemptions to smoking bans — compare exempted vs. nonexempted facilities in light of ordinance purpose)
Connelly v. City of Omaha, 284 Neb. 131 (2012) (statute presumed constitutional; resolve doubts for validity)
Gourley v. Nebraska Methodist Health Sys., 265 Neb. 918 (2003) (classification proper if special class has reasonable distinction related to legislative purpose)
State ex rel. Bruning v. Gale, 284 Neb. 257 (2012) (severability factors and whether invalid portion was inducement to passage)
United States Cold Storage v. City of La Vista, 285 Neb. 579 (2013) (discussion of vested-rights principles for property/contract challenges)