Keep Chicago Livable v. City of Chicago ( 2019 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
Nos. 17-1656 & 17-2846
KEEP CHICAGO LIVABLE, an Illinois not-for-profit corporation,
et al.,
Plaintiffs-Appellants,
v.
CITY OF CHICAGO,
Defendant-Appellee.
____________________
Appeals from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 1:16-cv-10371 — Sara L. Ellis, Judge.
____________________
ARGUED OCTOBER 22, 2018 — DECIDED JANUARY 14, 2019
____________________
Before FLAUM, EASTERBROOK, and SCUDDER, Circuit Judges.
SCUDDER, Circuit Judge. An organization known as Keep
Chicago Livable and six individuals challenge the constitu-
tionality of Chicago’s Shared Housing Ordinance. The City
passed the Ordinance in 2016 to regulate home-sharing activ-
ities, including services offered by companies like Airbnb. The
district court denied a request for a preliminary injunction on
certain claims and later dismissed without prejudice the
2 Nos. 17-1656 & 17-2846
remaining claims from an amended complaint. These two ap-
peals then followed. We now vacate the district court’s deci-
sions, as we cannot say with any confidence that any named
plaintiff—Keep Chicago Livable or any of the six individu-
als—has pleaded or otherwise established sufficient injury to
confer the subject matter jurisdiction necessary to proceed to
the merits of any claim.
We have before us an organization and individuals with
strongly-held views about the constitutionality of the City’s
Ordinance, but Article III of the Constitution requires more:
our authority is limited to deciding cases or controversies be-
tween adverse litigants, and without a clear indication that at
least one named plaintiff has an actual or imminent injury, we
have no authority to go further. So we remand to the district
court to make a determination of standing and to proceed if
and as appropriate from there.
I
A
Home-sharing websites like Airbnb offer homeowners op-
portunities to rent their homes on a short-term basis. These
online platforms operate as intermediaries by offering owners
a forum to advertise their properties, helping prospective
renters find rooms and houses for temporary stays, and facil-
itating rental transactions. In June 2016 the City of Chicago
enacted its Shared Housing Ordinance to regulate these short-
term housing arrangements. The Ordinance imposes a range
of requirements and restrictions, but all that is necessary here
is a brief and general overview.
The Ordinance requires interested hosts to register with
the City and acquire a business license before listing their
Nos. 17-1656 & 17-2846 3
units for rent online. The licensing standards bring with them
geographic eligibility requirements, restrictions on how many
units within a larger building can be rented, and a list of
buildings where such rentals are prohibited. Approved hosts
are then subject to health, safety, and reporting requirements,
including, for example, supplying clean linens and sanitized
cooking utensils, disposing of waste and leftover food from
host properties, and reporting illegal activity known to have
occurred within a rented unit. Failure to comply subjects reg-
istered hosts to fines and other penalties, including revocation
of their rental license.
B
Keep Chicago Livable, a non-profit organization that
focuses on educating home-sharing hosts, and individual
plaintiffs challenged the constitutionality of the Ordinance in
the district court. In their original complaint, Keep Chicago
Livable and its president Benjamin Wolf alleged that the
Ordinance violated the First Amendment by impermissibly
restraining non-commercial speech as well as by compelling
speech through content-based disclosure requirements. The
complaint also characterized the Ordinance as “so prolix as to
be incomprehensible” and thus void for vagueness under the
Due Process Clause.
In February 2017 the City modified portions of the Ordi-
nance, prompting Keep Chicago Livable and Wolf to file an
amended complaint. The new complaint added five new in-
dividual plaintiffs and new claims alleging that the amended
Ordinance offends not only their alleged First Amendment
right to intimate and expressive association, but also the
Equal Protection Clause by arbitrarily treating shared-
4 Nos. 17-1656 & 17-2846
housing arrangements differently than guest suite and hotel
rentals.
C
Before us are two appeals, which we have consolidated,
from two orders entered by the district court. First, in the or-
der leading to appeal No. 17-1656, the district court denied
plaintiffs’ motion for a preliminary injunction on their free
speech and vagueness claims. The main thrust of the district
court’s reasoning was that the Ordinance regulates conduct—
in particular, economic activity—not speech. And plaintiffs’
vagueness challenge, the district court determined, was too
undeveloped to warrant a preliminary injunction. Second, in
the order leading to appeal No. 17-2846, the district court dis-
missed without prejudice the new claims added by and re-
maining in plaintiffs’ amended complaint, stating that those
claims could be refiled and revisited following this court’s de-
cision on the merits of the claims at issue in the first appeal.
Both parties devote their appellate briefs to debating
whether the district court properly denied plaintiffs’ request
for a preliminary injunction. For their part, plaintiffs also spill
considerable ink on the substance of their remaining claims,
which the district court dismissed without prejudice and
without addressing their merits. Neither party devoted atten-
tion to the threshold issue—federal subject matter jurisdic-
tion—which leads us to vacate the district court’s decisions.
II
Unsure from plaintiffs’ complaints and the district court
record whether any named plaintiff had the requisite injury
or threat of injury to establish the standing necessary for fed-
eral subject matter jurisdiction, we raised the question at oral
Nos. 17-1656 & 17-2846 5
argument and followed by ordering supplemental briefing.
We invited the parties to supply information on the standing
of not only each individual named as a plaintiff, but also Keep
Chicago Livable as an organization.
A
We begin with the individual plaintiffs. While the
amended complaint names six individuals as plaintiffs, the
requisite standing inquiry—”an essential and unchanging
part of the case-or-controversy requirement of Article III”—
proceeds person-by-person. Lujan v. Defenders of Wildlife, 504
U.S. 555, 560 (1992). Standing requires a threefold demonstra-
tion of “(1) an injury in-fact; (2) fairly traceable to the defend-
ant’s action; and (3) capable of being redressed by a favorable
decision from the court.” Pavrati Corp. v. City of Oak Forest, Ill.,
630 F.3d 512, 516 (7th Cir. 2010) (citing Lujan, 504 U.S. at 560–
61). The alleged injury must be not just “concrete and partic-
ularized,” but also “actual and imminent, not conjectural or
hypothetical.” Lujan, 504 U.S. at 560; see also Spokeo, Inc. v.
Robins, 136 S. Ct. 1540, 1547–48 (2016).
The necessity of demonstrating and maintaining standing
does not subside as litigation proceeds. To the contrary,
“standing must be present at all stages of the litigation, in-
cluding on appeal.” Pavrati Corp., 630 F.3d at 516. Or, perhaps
more precisely as applied here, the asserted injury in-fact (and
thus the requirements of concreteness, particularity, actuality,
and imminence) must remain throughout the litigation, lest a
case or controversy cease to exist and become moot. See
Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528
U.S. 167, 189 (2000); see also United States v. Accra Pac, Inc., 173
F.3d 630, 633 (7th Cir. 1999). The burden of making this show-
ing—of demonstrating the requisite injury to invoke federal
6 Nos. 17-1656 & 17-2846
jurisdiction—rests with the plaintiff. See Spokeo, 136 S. Ct. at
1547.
Using these standards, we cannot conclude with
confidence that any named plaintiff presently has standing. We
emphasize that our inquiry focuses on the here and now—
standing at the time of these appeals—because meaningful
time has passed since the original complaint was filed (in
November 2016), and the plaintiffs’ supplemental brief
reveals that the passage of time has resulted in changed facts
and circumstances for each of the six individuals named as
plaintiffs in the amended complaint (filed in February 2017).
Here is what we are able to discern:
• Benjamin Wolf served as Keep Chicago
Livable’s first president and, as alleged in the
original complaint, not only used Airbnb to rent
his home in Chicago, but also intended to
continue doing so. According to plaintiffs’
supplemental brief, however, Wolf has since
sold his property in Chicago and moved to
Ohio.
• Susan Maller lives in a Chicago apartment and,
as alleged in the amended complaint, was pre-
cluded from listing it on Airbnb because of the
“harassment of her building’s property man-
ager.” Plaintiffs’ supplemental brief does not
further explain the harassment and merely
states—without any additional allegation—that
Maller has “ceased Airbnb operations due to the
restrictions of the Shared Housing Ordinance.”
Nos. 17-1656 & 17-2846 7
• Danielle McCarron once lived in an apartment
appearing on the City’s Prohibited Buildings
List but has since moved. And, as with Maller,
plaintiffs’ supplemental brief summarily says
that, because of the City’s Ordinance, she is no
longer attempting to participate in Airbnb.
• Antoinette Wonsey lives in Chicago and, ac-
cording to the amended complaint, is an
“Airbnb host manager” who helps guests in her
neighborhood find accommodations. Without
any particularity, she alleges that she no longer
engages in these activities because of the Ordi-
nance.
• Monica Wolf lives in Kentucky but frequently
visits Chicago and in the amended complaint
alleged that the Ordinance limited her preferred
rental options. Plaintiffs’ supplemental brief
indicates Wolf has not returned to Chicago,
“having been denied full access to all hosts who
would otherwise list on Airbnb.”
• John Doe is a citizen of Canada who frequently
used Airbnb to visit Chicago. In the amended
complaint, he alleged that his ability to
“associate with Chicagoans is inhibited by the
Prohibited Buildings List.” Plaintiffs’
supplemental brief says that Doe, much like
Monica Wolf, has not returned to Chicago since
the Ordinance went into effect.
None of this adds up to the clear, requisite showing of an
ongoing, concrete, and particularized injury caused by the
8 Nos. 17-1656 & 17-2846
Ordinance and capable of being redressed by a favorable
ruling in these appeals. No longer owning property in
Chicago, Benjamin Wolf’s claims have become moot; Maller,
McCarron, and Wonsey allege with no particularity how the
Ordinance (and not some other factor) is preventing or
hampering any of their own home-sharing activities in
Chicago; and the out-of-town renters, Monica Wolf and Doe,
do not convey with sufficient clarity or particularity whether
they still wish to visit Chicago and, if so, how the Ordinance
is chilling or inhibiting them from doing so.
Our conclusion is narrow—limited to and confined by the
information before us—and handicapped by neither party fo-
cusing on standing before these appeals. It may be on remand,
perhaps following additional briefing or upon the filing of a
second amended complaint, that at least one individual plain-
tiff is able to establish standing and thereby jumpstart this lit-
igation, as the plaintiffs so plainly wish to do. But Article III’s
case or controversy mandate does not allow us to take the
shortcut of moving to the merits of plaintiffs’ claims before
ensuring the presence of a plaintiff with standing. See Steel Co.
v. Citizens for a Better Env’t, 523 U.S. 83, 94–96 (1998).
B
We reach the same conclusion when turning our focus to
Keep Chicago Livable. The organization is an Illinois non-
profit corporation with the stated goal of educating Chicago
hosts about compliance with state and local home-sharing
laws. In its original and amended complaints, the
organization alleged that the Ordinance burdens its ability “to
perform its function of educating and advising hosts and
putative hosts as to their proper rights and duties under this
new law, while the aforementioned constitutional questions
Nos. 17-1656 & 17-2846 9
remain unresolved.” This allegation suggests that Keep
Chicago Livable brought its lawsuit to vindicate an injury to
the organization itself. But in its supplemental brief the
organization states that it is suing not only “on its own
behalf,” but also “as a representative association” on behalf of
its members. These distinctions matter.
If Keep Chicago Livable is suing to remedy an injury to the
organization, the allegations in the original and amended
complaints fall short of establishing standing. All Keep
Chicago Livable contends, and even then only generally, is
that the alleged uncertainty around the Ordinance’s
constitutionality burdens the organization’s education and
advocacy mission. But nowhere does the organization allege
that it owns or rents property or otherwise engages in activity
regulated or protected by the Ordinance. And none of the
claims advanced in the original or amended complaints are
cast in terms of injury to the organization; rather, and despite
Keep Chicago Livable’s insistence that it is suing for injuries
to the organization, each claim is advanced in terms of injury
to an individual’s constitutional rights (whether under the
First Amendment, Due Process Clause, or otherwise).
On these pleadings and this limited record, we cannot
conclude that Keep Chicago Livable has alleged a concrete
and particularized injury to the organization itself that would
be redressed by the declaratory judgment or injunction
sought in the original or amended complaints. It is not
enough to contend (at least at the level of abstraction at which
Keep Chicago Livable proceeds here) that the legal clarity that
may come from a judicial ruling on any individual plaintiff’s
claims challenging the Ordinance would redress an injury to
the organization itself.
10 Nos. 17-1656 & 17-2846
The Supreme Court’s decision in Havens Realty Corp. v.
Coleman affords Keep Chicago Livable no refuge. 455 U.S. 363
(1982). In Havens, a non-profit organization dedicated to
ensuring open housing brought claims under the Fair
Housing Act alleging injury on the basis of having expended
significant resources investigating and reporting racially-
discriminatory housing practices by a realty company in a
suburb of Richmond, Virginia. See id. at 369. The organization
specifically contended that the realty company’s practice of
steering apartments on the basis of race hindered its
institutional efforts to assist prospective tenants in realizing
equal access to housing. See id. at 379. The Court concluded
that these allegations were sufficient to confer standing on the
organization, reasoning that “[s]uch concrete and
demonstrable injury to the organization’s activities—with the
consequent drain on the organization’s resources—
constitutes far more than simply a setback to the
organization’s abstract social interests.” Id.
The organizational injury alleged by Keep Chicago
Livable is much less direct than the one before the Supreme
Court in Havens. The original and amended complaints sound
their contention of injury in no more than Keep Chicago
Livable finding it difficult to advocate and educate on home-
sharing in Chicago before a court rules on the individual
plaintiffs’ challenges to the constitutionality of the Ordinance.
Nary a word in either complaint tethers any particular
requirement of the Ordinance to a specific harm to the
organization. And the only time Keep Chicago Livable
mentioned a drain on its resources was in its supplemental
brief on appeal, but even then at a high level of generality and
without a clear nexus to any legally-protected right or interest
of the organization. On the record before us, Keep Chicago
Nos. 17-1656 & 17-2846 11
Livable has shown little more than a “mere interest in a
problem.” Sierra Club v. Morton, 405 U.S. 727, 739 (1972).
A different analysis would apply if Keep Chicago Livable
had brought suit on behalf of its members. The test for associ-
ational standing comes from the Supreme Court’s decision in
Hunt v. Washington State Apple Advertising Commission, 432
U.S. 333 (1977). To sue in a representative capacity, Hunt re-
quires Keep Chicago Livable to show that “(a) its members
would otherwise have standing to sue in their own right; (b)
the interests it seeks to protect are germane to the organiza-
tion’s purpose; and (c) neither the claim asserted nor the relief
requested requires the participation of individual members in
their lawsuit.” Id. at 343.
Even if we assume Keep Chicago Livable brought suit on
behalf of its members—an assumption at odds with the
allegations within the four corners of the original and
amended complaints—the organization cannot clear Hunt’s
first hurdle. The organization is unable to identify an
individual plaintiff with standing to bring any claim. See
Hope, Inc. v. DuPage Cnty., Ill., 738 F.2d 797, 814 (7th Cir. 1984).
Indeed, at an even more basic level, the record leaves unclear
whether any of the six named plaintiffs remain members of
Keep Chicago Livable. So the organization’s plea for
associational standing runs into the same barrier the
individual named plaintiffs cannot overcome on the present
pleadings and record: there is not enough before us to
conclude that any individual plaintiff presently has the
requisite injury to establish standing.
Here, too, Keep Chicago Livable may be able to close the
gap on remand. The organization, in a new round of pleading
or other submissions, may be able to identify an individual
12 Nos. 17-1656 & 17-2846
plaintiff with standing. And perhaps that will be enough to
satisfy Hunt when combined with Keep Chicago Livable’s
existing allegations (in the original and amended complaints)
about the organization’s mission as well as the sworn
statement submitted as part of the supplemental brief in this
court by the organization’s current president. All of this is
appropriately reserved to the district court’s assessment in the
first instance.
C
The proper course in these circumstances is to vacate the
district court’s decisions and remand for a determination of
standing. See, e.g., Tarpley v. Jeffers, 96 F.3d 921, 924 (7th Cir.
1996). The district court has ample discretion to structure the
proceedings in accordance with this opinion, including by
permitting substitutions of new parties and a second
amended complaint. Our sole observation is that the district
court, if it determines that a plaintiff has standing, should
afford the plaintiff one (and only one) opportunity to move
for a preliminary injunction, with the court from there
proceeding to final judgment as appropriate. We deny Keep
Chicago Livable’s request to reassign the case on remand.
For these reasons, we VACATE the district court’s deci-
sions and REMAND for further proceedings.