Seattle’s landlord regs at the Supreme Court

Landlords in Seattle must rent to the first person to walk in the door, so long as they check out on paper. This “first-in-time” rule has slogged through several years of litigation over whether the rule violates landlords’ constitutional rights (full disclosure–I represent the plaintiffs). That case, called Yim v. City of Seattle, has now crescendoed with a petition to the United States Supreme Court. The Court should seize the chance to decide two pressing questions about the Constitution’s role in protecting property rights: (1) if regulation destroys a fundamental attribute of property ownership–like the right to exclude, or the right to sell–does the regulation result in a taking that requires compensation? and (2) if a regulation is “unduly oppressive” of individual rights, does it violate due process?

The first-in-time rule is something of a novelty. The rationale behind the rule is to prevent implicit bias; a landlord can’t unconsciously discriminate if she doesn’t have any discretion to decide whom to rent to. Hence, the rule allows landlords to set pre-established criteria, though all criteria must have minimum thresholds (i.e., minimum credit score). The landlord cannot thereafter deviate from that criteria and must simply rent to the first person who qualifies, even if ten or fifteen applicants check all the boxes. After the landlord rents to the first comer, the lucky winner has 48 hours to sit on the offer, after which time the offer moves on to the next person in line.

The bottom line is that landlords can no longer make common-sense judgment calls about who will live on their property. The practical challenges that result are daunting, for small landlords in particular. A landlord cannot, for instance, deny an applicant because they feel threatened or unsafe when an applicant tours a unit. That’s a big deal for plaintiff Kelly Lyles, a single woman and sexual assault survivor. Or for MariLyn Yim, who owns a triplex and lives in one of the units with her husband and kids. They share a yard and common spaces with their tenants–compatibility and safety are key. And some of the Yims’ units have roommates, where the ability to select people that will get along and feel comfortable with each other is essential. But basic discretion is out the window with first-in-time. If Lois Lane advertises the fortress of solitude for rent and Lex Luthor shows up with his spotless credit score and seven-digit income, she’s out of luck.

And renting property often involves a give-and-take negotiation that’s no longer possible under the rule. Tom Riddle’s credit score is shabby, but he offers a two-year lease instead of one to make his application more appealing. Not under first-in-time. Pam Isley offers to do landscaping if the landlord drops rent by $50 a month. Nope. Nor can landlords offer leniency by deviating from their criteria because they want to give a second chance to someone down-and-out.

MariLyn Yim and Kelly Lyles sued on the theory that removing everyday discretion in this manner constitutes an unconstitutional taking and a violation of due process. They won at trial and lost before the Washington Supreme Court. Now, the questions they bring to the Supreme Court’s attention raise some fundamental questions about the Fifth Amendment’s takings clause and the Fourteenth Amendment due process guarantee.

The plaintiffs argue that a taking occurs when regulation destroys a fundamental attribute of property ownership. They invoke a well-known metaphor in property law: the “bundle of sticks.” Property is not really a single right–it’s a bundle of various rights that a person has with respect to a physical thing, such as the right to exclude others, the right to use the property, to occupy it, to sell it, and so on. Plaintiff’s theory is that each of these “sticks” in the bundle is entitled to independent constitutional protection; when one of those sticks is destroyed by regulation, that constitutes a taking of property as surely as a seizure of land. In this case, plaintiffs argue that denying them the right to decide who will occupy their property destroys their right to sell property to the person of their choosing and their right to exclude people not of their choosing.

This is an important and uncertain question under the Fifth Amendment. The Supreme Court has held in the past that a taking occurred where various attributes of property ownership were destroyed. For instance, when the United States required a marina to open a private lagoon to the public, the Supreme Court held a taking occurred because the government had destroyed the right to exclude, “one of the most essential sticks in the bundle of rights that are commonly characterized as property.” Likewise, the Supreme Court held that a taking occurred when Congress prohibited owners of tribal lands to pass on the property to their heirs, which was a “total abrogation” of a right that “has been part of the Anglo-American legal system since feudal times.”

The trouble is, though, that some other decisions of the Supreme Court can be read to refute this approach to takings. Hence, the city of Seattle argues that these takings precedents don’t represent the current state of takings law. This question thus presents an important opportunity for the Court to clarify the scope and meaning of the Fifth Amendment.

The second issue is no less compelling: does the oppressive impact of a law bear on whether it satisfies due process? The federal courts tend to answer yes, while a large number of state courts answer no. The Fourteenth Amendment’s due process clause imposes, at minimum, a floor of rationality–a law must be rationally related to a legitimate government interest. The question raised in the Yim petition asks the Court to address whether an unduly oppressive means (obliterating discretion) of achieving a legitimate government purpose (preventing discrimination) satisfies this threshold of rationality. The Supreme Court has repeatedly held that a law’s oppressive nature bears on whether the law is arbitrary or irrational. That is, a government has no legitimate interest in imposing oppressive laws on its people, and the use of oppression to achieve an otherwise legitimate government interest is arbitrary and irrational, in violation of due process.

The Washington Supreme Court, however, held that the U.S. Supreme Court had implicitly overruled this “unduly oppressive” analysis. It also overruled a whopping 61 of its own cases recognizing and applying this “unduly oppressive” test–so many that it provided a separate index of cases fed through the shredder. By joining a growing number of states that refuse to recognize that an unduly oppressive law violates the rational basis test required by due process, the Washington Supreme Court has teed up an important issue that warrants the U.S. Supreme Court’s attention.

These questions will grow in significance as government control of the rental market expands. Since enacting first-in-time, for instance, Seattle has imposed a ban on criminal background checks, a ban on winter evictions, a requirement that landlords rent to a tenant’s choice of roommate, and more. Other cities are enacting similar restrictions on landlord control over their own property. The U.S. Supreme Court should address the pressing constitutional questions that such regulations raise.

Coronavirus and takings

City governments are flirting with a ban on evictions during the coronavirus pandemic. I doubt, however, that doing so comports with the Constitution’s takings clause or, perhaps, the contracts clause.

San Jose has introduced legislation that will ban evictions due to un/underemployment resulting from coronavirus. Seattle’s socialist firebrand, Kshama Sawant, calls for similar action. Her letter, though, betrays the truth behind many proposed emergency measures–she’s leveraging the crisis to further her political agenda, particularly her hatred of capitalism. In the letter, she froths: “The status quo under capitalism is deeply hostile to the majority of working people, and it would be unconscionable to place the further burden of the Coronavirus crisis on those who are already the most economically stressed.” Never mind that the status quo in the absence of capitalism would be grinding poverty.

But, in any case, the proposal to ban evictions and force landlords to renew leases as the pandemic sweeps across the states raises serious constitutional concerns. Even in times of crisis, observance of constitutional norms remains essential. In part, this is because laws passed as emergency measures tend to hang about long after the emergency subsides. New York rent control began as a wartime measure, for instance, and that curse still plagues the New York rental market. The other reason, of course, is that the Constitution is built for just these moments. The pressure to invade rights, after all, comes when things are not going well. As Justice Sutherland once put it, “If the provisions of the Constitution be not upheld when they pinch, as well as when they comfort, they may as well be abandoned.”

Forcing landlords to either renew leases or forego eviction for lease violations likely raises at least two constitutional problems: takings and impairment of contractual obligations. While such laws don’t literally seize property, they effectively impose a servitude on landlords’ property, stripping them of control over the disposition and occupation of their land. When an essential attribute of property ownership is destroyed by regulation in this manner, the government must offer compensation. We already know this compensation requirement applies during national emergencies. During World War II, for instance, the Supreme Court held that the United States had to compensate property owners and leaseholders when it temporarily seized factories for wartime production.

The contract clause problem is also straightforward: barring landlords from enforcing lease terms impairs obligations under pre-existing contracts. The contracts clause, though, has been severely undermined in recent decades, such that a showing of a compelling interest like mitigating the impact of the pandemic may well satisfy the flaccid demands of the modern contracts clause.

It may seem profoundly harsh to impose constitutional constraints on governments trying to resolve a crisis. But three things ought to be kept in mind.

First, an emergency certainly means that some will face a heavy burden, but that fact tells us nothing about how that burden should be allocated. Why should landlords bear the costs? Indeed, As the Supreme Court said in Armstrong v. United States, the takings clause exists to avoid imposing societal burdens on specific individuals: “The Fifth Amendment’s guarantee that private property shall not be taken for a public use without just compensation was designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.”

Second, we should keep in mind that lease agreements already account for risk. That’s baked into the price and terms that give rise to a mutually agreeable arrangement between parties. To simply allow one party to slip out of the terms of the lease distorts that arrangement.

Third, the takings clause does not bar emergency measures, including the seizure of property, but only upon just compensation. No exigency should excuse cities like San Jose or Seattle from compensating for the costs they’re hoisting upon landlords. And in the case of the contracts clause, the government could still honor existing leases by acting as a guarantor for tenants who can’t pay the rent.

All of these points apply to a world in which landlords do not voluntarily exercise leniency. But I think we’ll find that most landlords are forgiving during a temporary crisis. Most landlords have an extreme aversion to evicting tenants–it’s the nightmare, last-ditch option that they try hard to avoid. That, plus the simple dose of compassion that many landlords will feel inspired to offer, may do more toward helping see us through than any emergency measures.

More campaign-finance fiction

Today, Jacobin reports on Bernie Sanders’ proposal to give each American a $50-$200 voucher to spend on politicians’ political campaigns. I’m the lead counsel challenging a similar voucher program in Seattle, so I have some feelings on this subject.

The article opens with this classic ipse dixit: “Everyone knows that rich people skew our political priorities through big-money donations to candidates.” Really? I didn’t know that. But of course this is the big assumption behind so much campaign-finance hype, one that is vague and unprovable, like all good political rhetoric.

My first question here would be an attempt to resolve an ambiguity: what does “skew” mean? Where’s the magical baseline of “unskewed” political priorities? That baseline does not and never has existed. This opening line also fails to account for causation. That is, do donations influence eventual votes, or are both donations and votes attracted to candidate strength? I’ve yet to see a convincing argument that donations have ever “bought” a major federal election.

The article also seems to assume, as many do, that liberal politicians are the ones losing out in the big-donor world. This just isn’t so. Candidates from across the political spectrum receive plenty of cash. Heck, Hillary outspent Trump 3 to 1 in 2016. If she was hoping her donors would “buy” her the election, she was sorely disappointed.

The article also parrots the frequent refrain about our “broken” campaign-finance system. Again, compared to what? Where’s the unbroken system and what does it look like? At the end of the day, politicians need to figure out how to appeal to voters with all that money. How are our politics “skewed” if both parties are receiving plenty of funding with which to present a message that draws votes?

As for the actual voucher proposal, I think most Americans would rather keep their $50-$200 dollars and spend it on something other than a politician, but that’s just a hunch.

Ban on inquiries into wage history upheld

I haven’t read the decision in much depth yet, but the Third Circuit Court of Appeals this week upheld a Philadelphia ban on employer inquiries into job applicants’ wage history.

This is part of a troubling trend. More and more governments are banning inquiries into information that they don’t want people to use. Seattle and other cities have begun banning criminal background checks by landlords. Portland is set to pass a law that bans landlords from asking about a person’s immigration status. Other municipalities have passed and likely will pass more laws banning inquiries into wage history. The Third Circuit opinion will make it much harder to challenge this kind of speech restriction.

The Third Circuit decision held that the wage inquiry ban should be subject to the “commercial speech” test. In First Amendment jurisprudence, courts are more forgiving of restrictions on commercial speech than other types of speech. This doctrine, however, is meant to be reserved for advertisements, not any speech that happens to be related to a possible transaction. Here, the Third Circuit extended the rule to include questions asked in the context of an anticipated transaction–an employment contract. This is an unfortunate expansion of a doctrine that arguably shouldn’t exist at all. The First Amendment doesn’t distinguish between commercial and other types of speech, and neither should the courts.

The problem of value in regulatory takings

Regulatory takings law is a mess. The Fifth Amendment promises: “nor shall private property be taken for public use, without just compensation.” This constitutional mandate encompasses direct acquisition of property, government action that damages or restricts property, and regulation of property that effectively results in a taking. Defining what constitutes a regulatory taking has vexed the courts for decades.

I believe much of the trouble comes from the Supreme Court’s fixation on loss of value. The primary test for a regulatory taking looks to reasonable investment-backed expectations dashed by the regulation (i.e., I’d amassed resources and did a lot of footwork to build a house, but a new shoreline buffer prohibits construction), the resulting economic loss, and the character of the government action.

Examining value creates intractable line-drawing problems and fails to establish a predictable rule. How much loss of value is too much? As one might expect, courts come out with wildly different answers, though all of them tend to lean toward not requiring compensation. A Massachusetts court, for example, recently held that a regulation that forbade any development on a parcel of land and resulted in a 91.5% loss of property value was not a taking that requires the government to compensate the property owner.

Hence, no one going into court with a takings claim really has any way to predict what a court might do, though it’s safe to guess that the result will be bad. Courts are reluctant to draw a line in the sand, so they just hand wins to the government. This is not to say that loss of value is wholly irrelevant, of course, but it’s more relevant to the question of how much compensation is due, not whether a taking has occurred in the first place.

Takings law doesn’t have to be this way. In fact, nineteenth-century takings law took a totally different approach. Early courts looked to the burden on the property interest, not the loss of economic value. Most fledgling regulatory takings law developed in the state courts, for two reasons: the Fifth Amendment wasn’t applied against the states until the Fourteenth Amendment was ratified in 1868, and the federal government in the nineteenth century wasn’t much in the business of regulating land.

The early state cases didn’t even consider economic loss in their approach to what constitutes a taking. For instance, in Woodruff v. Neal, an 1859 Connecticut case, a government granted ranchers licenses to graze their cattle on public rights of way that crossed over private land. The private landowners sued for a taking and won because their property rights included rights over the “herbage” that the cows ate. The economic loss had to have been puny, but the court didn’t even bother addressing this, probably because they saw economic loss as pertinent only to the question of compensation due.

Most of the other regulatory takings cases of that time period involved riparian rights–wharfage rights and so on. So it was with one of the United States Supreme Court’s early forays into regulatory takings–a case where, like the state cases that preceded it, did not even bother to mention loss of value. The case was Yates v. Milwaukee (1870). Yates owned land adjacent to a river and had built a wharf that extended out into the water. The city didn’t like his wharf, so they declared it a nuisance and sought to tear it down. Yates argued this was a regulatory taking, and the Supreme Court agreed. They didn’t bother to mention how much the loss of the wharf would cost Yates. They just held that access to a river was among the rights held by owners of a riverbank. The city had destroyed that right, so a taking occurred and compensation was due.

Strangely, seven years later, the Supreme Court started to retreat from regulatory takings altogether and didn’t really return to the doctrine until the early twentieth century. Much later, when the Supreme Court thought up its value-based regulatory takings test in a 1978 case called Penn Central v. City of New York, the Court completely ignored Yates and all the many non-value-based takings cases in the state courts of the nineteenth century. In fact, the Court seemed to believe that regulatory takings law was a twentieth-century creation that began with a 1920 case called Pennsylvania Coal Co. v. Mahon. This bizarre blindness to the real history of regulatory takings law has resulted in an incomprehensible labyrinth of takings jurisprudence. The Supreme Court could learn a few lessons from the state courts of two centuries ago.

Climate crisis or censorship crisis?

Yesterday, the Chair of the U.S. House Select Committee on the Climate Crisis wrote an ominous letter to the CEO of Google. For the second time, the Chair is leaning on Google to police and remove “dangerous climate misinformation” on YouTube. The letter doesn’t threaten direct legal action against Google, but it nonetheless raises serious concern because it runs so counter to the free speech tradition and the value of a robust internet.

According to the Chair, “YouTube has been driving millions of viewers to climate misinformation videos every day, a shocking revelation that runs contrary to Google’s important missions of fighting misinformation and promoting climate action.” The Chair states her own unequivocal commitment to “promoting ambitious federal policy that will … eliminate barriers to action, including those as pervasive and harmful as climate denial and climate misinformation.” It’s hard not to see the veiled threat here.

Note the letter’s subtle casting of the consumers of information as passive actors that must be protected, rather than rational actors who choose what information to consume, a choice they’re entitled to make. She says “YouTube has been driving millions of viewers to climate misinformation” and that Google should “correct the record for millions of users who have been exposed to climate misinformation.” This language strips accountability and action from the viewers, as if they are a captive audience held down and forced to view climate denial videos with eyelid clamps like a scene from A Clockwork Orange. But if that content is promoted and viewed, that’s because there’s a consumer demand for it. The passive language used in the letter exemplifies the paternalism that often lurks behind censorship: for their own welfare, we must protect the public from information they wish to consume.

Note also the absolutism woven into the letter. Google cannot both be committed to climate action and committed to an open culture of public discourse. In the war for humanity’s survival, one priority must dominate above all others.

The letter also relies on the tired tactic of impugning speakers’ motives. Anyone who expresses “climate misinformation” on YouTube just wants “to protect polluters and their profits at the expense of the American people.” It’s impossible for an absolutist to consider that views opposed to her own might be sincerely held. Plus, research has shown that political views frequently do not line up with individual self-interest. Only a shallow thinker or someone with an agenda assumes a political viewpoint is rooted in a selfish motive.

As for the constitutional implications of the letter, there is no question that the federal government cannot impose on Google the duty to remove “climate misinformation” or “climate denial” content. False speech is not exiled from the sanctuary of First Amendment protection. Of course, some false speech can be penalized, such as libel, slander, or fraud. But these are circumstances where there’s some other legally cognizable harm associated with the false statement for which recovery is warranted. There is no general rule that false speech is unprotected.

Government should never be in the position of arbitrating truth. Particularly in the context of hotly debated political controversies, allowing government to label one side as gospel and penalize dissidents opens the door to legally enshrined orthodoxy. As Justice Robert Jackson said 80 years ago: “If there is any fixed star in our constitutional constellation, it is that no official, high or petty, can prescribe what shall be orthodox in politics, nationalism, religion, or other matters of opinion or force citizens to confess by word or act their faith therein.” That’s what the power to ban “climate misinformation” entails.

Indeed, government refereeing of truth will almost always shade toward discrimination against disfavored viewpoints. For example, there is “misinformation” out there on both sides of the climate debate. Those who peddle wild doomsday predictions are just as unhinged as those denying the realities of climate change. Yet the Chair does not propose to censor such misinformation.

When I see such zealous effort to shut someone up, I can’t help but ask myself why the censor is so afraid. The targeting of this speech is likely only draw attention to it. Why worry about the hacks? I’ve always believed what John Milton expressed centuries ago in the Areopagitica: “Let [Truth] and Falsehood grapple; who ever knew Truth put to the worse in a free and open encounter?” Of course, that doesn’t mean that falsehoods lack convincing power, but truth in the end has the edge. Rather than pick the winner in advance, we do much better by letting truth emerge through open debate, bloodied but victorious.

Supreme Court hears vital freedom-of-religion case

Today, the Supreme Court heard  the most important case on the intersection of religion and education to arise in decades–Espinoza v. Montana Department of Revenue. A few years back, Montana had passed its first school-choice program, a tax-credit scheme that allowed a small tax credit for donations to scholarship programs that helped kids afford private school.

As in any state, many of Montana’s private schools are religious. Right after the state legislature passed the tax-credit statute, the Montana Department of Revenue promulgated a rule that immediately gutted the program by forbidding students attending religious schools from receiving scholarship money.

The Department based its rule on Montana’s Constitution, which says the legislature can’t “make any direct or indirect appropriation or payment from any public fund or monies . . . for any sectarian purpose or to aid any church, school,” etc. Plenty of states have very similar “no-aid” clauses. Revenue claimed that scholarships for religious students under the tax-credit scheme violated the “no-aid” clause.

It’s worth taking a moment to consider how bizarre this argument is. These scholarships are funded by private donations–the money never enters a public coffer. Yet Revenue thinks such donations would constitute state aid to religion because the donor gets a tiny tax credit (up to $150) for the donation. Underlying this argument is the strange notion that any money the government declines to collect from you is still the government’s money.  This would mean, for instance, that every charitable donation eligible for a tax deduction would likewise constitute a government appropriation. Revenue’s argument has always looked to me like an extremely weak pretext for blatant discrimination against religious students.

So Kendra Espinoza and a few other parents with kids at religious schools sued the Department of Revenue, claiming, among other things, that Revenue’s rule violated their free exercise of religion under the First Amendment. Kendra won at trial, and then lost spectacularly at the Montana Supreme Court. In fact, the Montana Supreme Court did something even worse than the Department of Revenue–it invalidated the entire tax-credit program, such that even students at secular private schools could no longer receive scholarship assistance.

Thankfully, the Supreme Court took up the case, and they heard oral argument today. (My colleagues and I filed an amicus brief with the Court in support of Kendra).

The oral argument transcript shows a Court divided along the typical ideological lines. The liberal justices seemed preoccupied with standing–whether the petitioners had the right to sue. One justice implied that only taxpayers (who have a financial interest because of the tax credit) and schools (who receive the scholarship money) should have the right to sue. This is a weird take, given that families and students are obviously the intended beneficiaries of the scholarship program.

A number of the justices discussed a odd quirk about the Montana Supreme Court’s decision. The basic question they raised is this: since the Montana Supreme Court took the scholarship program away from everyone, are petitioners now being treated equally? But the sole reason the Montana Supreme Court struck down the program was to prevent religious students from receiving scholarship. A government action taken for a discriminatory reason is, well, discriminatory. If the legislature had excluded religious students when it enacted the program, the program would still stand. And if the legislature tried to enact the same program, providing equal treatment to religious and secular students alike, the Court would strike it down. That’s discrimination based on religious status–pretty straightforward.

One justice cited to James Madison’s famous Memorial and Remonstrance Against Religious Assessments, arguing that the founders wouldn’t have wanted public funds flowing to religious schools like this (again no public funds were flowing to Montana religious schools under this program, but why let accuracy get in the way of a good narrative). That’s a terrible misreading of Madison. The Memorial and Remonstrance was an attack on preferential aid to religion, not to a program that provided public benefits to all groups, including religious ones. The difference is vital. Can the government deny churches police protection, fire protection, sewer connections, electrical service, or any other public benefit on the grounds that the government would be providing indirect public funding to religious institutions? Surely not. In fact, that’s exactly what the Supreme Court said in a recent case called Trinity Lutheran, where Missouri denied a church daycare access to a government program that helped renovate playgrounds.

There is a difference between Trinity Lutheran and this case, arguably, which is that here the money goes more directly to religious indoctrination, not something secular like playground materials. But at bottom, public funding is fungible. Providing police protection and other general public benefits obviously makes it easier for a religious institution to fulfill its religious mission.

This case should be an easy one. The government offered a benefit to all private schools. To include religious schools doesn’t “establish” religion. It just treats religious groups equally, as the Constitution requires.