San Francisco Apartment Ass'n v. City & County of San Francisco , 881 F.3d 1169 ( 2018 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
SAN FRANCISCO APARTMENT No. 15-17381
ASSOCIATION; COALITION FOR
BETTER HOUSING; SMALL PROPERTY D.C. No.
OWNERS OF SAN FRANCISCO 4:15-cv-01545-
INSTITUTE; SAN FRANCISCO PJH
ASSOCIATION OF REALTORS;
NORMAN T. LARSON,
Plaintiffs-Appellants, OPINION
v.
CITY AND COUNTY OF SAN
FRANCISCO,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of California
Phyllis J. Hamilton, Chief District Judge, Presiding
Argued and Submitted September 14, 2017
San Francisco, California
Filed February 8, 2018
2 S.F. APARTMENT ASS’N V. CITY & CTY. OF S.F.
Before: Eugene E. Siler, * Richard C. Tallman,
and Carlos T. Bea, Circuit Judges.
Opinion by Judge Bea
SUMMARY **
Civil Rights
The panel affirmed the district court’s judgment on the
pleadings in an action brought by an individual property
owner and several landlord organizations challenging a San
Francisco City Ordinance that limits the rights of landlords
to commence and conduct buyout negotiations.
The panel first held that plaintiffs’ contention that the
Ordinance prevents them from initiating buyout negotiations
unless tenants sign the disclosure form failed under the plain
language of the Ordinance. The panel then held that the
Ordinance’s disclosure provision, which requires landlords
to disclose contact information for tenants’ rights
organizations prior to the commencement of buyout
negotiations, did not violate plaintiffs’ First Amendment
rights. In so holding, the panel determined that the
Ordinance pertains to commercial speech, that the asserted
government interest in enacting the Ordinance was
substantial, and that the Ordinance was sufficiently narrowly
*
The Honorable Eugene E. Siler, Senior United States Circuit Judge
for the U.S. Court of Appeals for the Sixth Circuit, sitting by designation.
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
S.F. APARTMENT ASS’N V. CITY & CTY. OF S.F. 3
tailored because the speech restrictions applied only until the
landlord provided the disclosures to the tenant.
The panel held that the Ordinance’s Database Provision,
which creates a publicly searchable database of buyout
agreements, did not violate the landlords’ right to privacy
under the California Constitution because landlords do not
have a legally protected privacy interest or reasonable
expectation of privacy in the information made publicly
available by the Ordinance. The panel further held that the
Ordinance does not violate the landlords’ rights to equal
protection or due process because the requirement that the
Rent Board publish landlords’ contact information and rental
unit address, already publicly available, was rationally
related to the City’s legitimate interest in improving the
inferior bargaining position of tenants in buyout negotiations
while protecting tenant privacy. Finally, the panel held that
the condominium conversion provision survived rational
basis review and did not violate plaintiffs’ liberty to contract.
COUNSEL
Christopher E. Skinnell (argued), James W. Carson, and
James R. Parrinello, Nielsen Merksamer Parrinello Gross &
Leoni LLP, San Rafael, California, for Plaintiffs-Appellants.
Jeremy M. Goldman (argued) and Wayne Snodgrass,
Deputy City Attorneys; Dennis J. Herrera, City Attorney;
Office of the City Attorney, San Francisco, California; for
Defendant-Appellee.
4 S.F. APARTMENT ASS’N V. CITY & CTY. OF S.F.
OPINION
BEA, Circuit Judge:
We must determine whether a San Francisco city
ordinance limiting the rights of landlords to commence and
conduct buyout negotiations is consistent with the federal
and state constitutions. We do not, as we must not, evaluate
the policy merits of the ordinance. Appellants—an
individual property owner and several organizations that
represent landlords’ interests in San Francisco—present us
with assertions but no authority which suggests the
ordinance runs afoul of either constitution. We therefore
affirm the district court’s decision to grant the City and
County of San Francisco’s (“the City’s”) motion for
judgment on the pleadings.
FACTUAL AND PROCEDURAL BACKGROUND
On October 21, 2014, the San Francisco Board of
Supervisors enacted Ordinance No. 225-14 (the
“Ordinance”), titled “Tenant Buyout Agreements.” See S.F.
Admin. Code § 37.9E. The “Findings and Purpose” section
provides context for the enactment of the Ordinance:
Instead of evicting tenants, some landlords
offer cash buyouts to tenants in exchange for
the tenants vacating rental units. . . . Unlike
no-fault evictions, these buyouts are
unregulated, and can enable landlords to
circumvent many of the restrictions that
apply when a landlord executes a no-fault
eviction. For example, a landlord who
executes some types of no-fault evictions
must give tenants a certain amount of time to
move out, provide funds to tenants to cover
S.F. APARTMENT ASS’N V. CITY & CTY. OF S.F. 5
relocation costs, and allow tenants to move
back into the unit under specified
circumstances. Two types of these no fault
evictions—the Ellis Act and owner move-in
evictions—contain restrictions on how much
rent a landlord can charge if the units are re-
rented following eviction. Analogous
regulations do not exist for tenant buyouts.
Anecdotal evidence indicates that many
buyout agreements are not conducted at
arms-length, and landlords sometimes
employ high-pressure tactics and
intimidation to induce tenants to sign the
agreements. Some landlords threaten tenants
with eviction if they do not accept the terms
of the buyout. The frequency of these buyout
offers increased significantly following
passage of a San Francisco law in 1996 which
restricted, and in many cases prohibited,
condominium conversions following no fault
evictions. By threatening a specific no fault
eviction and then convincing a tenant to
vacate rather than receiving the eviction
notice, a landlord will avoid restrictions on
condominium conversion as well as
restrictions on renovations, mergers, or
demolitions. . . . Disabled, senior, and
catastrophically ill tenants can be particularly
vulnerable, and can face greater hurdles in
securing new housing.
The main purpose of this Section 37.9E is to
increase the fairness of buyout negotiations
and agreements by requiring landlords to
6 S.F. APARTMENT ASS’N V. CITY & CTY. OF S.F.
provide tenants with a statement of their
rights and allowing tenants to rescind a
buyout agreement for up to 45 days after
signing the agreement . . . . Another goal of
this ordinance is to help the City collect data
about buyout agreements. The City lacks
comprehensive information about the
number, location, and terms of buyout
agreements. This dearth of information
precludes the City from understanding the
true level of tenant displacement in San
Francisco.
S.F. Admin. Code §37.9E(a). The Ordinance defines
“Buyout Agreement” as “an agreement wherein the landlord
pays the tenant money or other consideration to vacate the
rental unit,” and it excludes from the definition agreements
“to settle a pending unlawful detainer action.” Id. § 37.9E(c).
The Ordinance defines “Buyout Negotiations” as “any
discussion or bargaining, whether oral or written, between a
landlord and tenant regarding the possibility of entering into
a Buyout Agreement.” Id.
The Ordinance has six provisions relevant to this appeal:
(1) the “Disclosure Provision,” (2) the “Notification
Provision,” (3) the “Rescission Provision,” (4) the “Database
Provision,” (5) the “Penalty and Fee Provision,” and (6) the
“Condominium Conversion Provision.” Id. § 37.9E; S.F.
Subdivision Code § 1396.
The Disclosure Provision states that, prior to the
commencement of buyout negotiations for a rental unit,
landlords must provide each tenant in that unit with a written
disclosure form written by the Rent Board. S.F. Admin.
Code § 37.9E(d). The form states that a tenant has a right not
S.F. APARTMENT ASS’N V. CITY & CTY. OF S.F. 7
to enter into buyout negotiations or a buyout agreement, may
choose to consult with an attorney before entering into
negotiations or an agreement, has a right to rescind any
buyout agreement for up to forty-five days after the
agreement’s execution, and may visit the Rent Board for
information about other buyout agreements in the tenant’s
neighborhood. The form also includes a description of the
Condominium Conversion Provision, the contact
information for the landlord, the contact information for
several tenants’ rights organizations, and a space for a tenant
signature.
The Notification Provision states that, prior to the
commencement of buyout negotiations, the landlord shall
provide the Rent Board with a declaration that the landlord
provided each tenant with the disclosure form required by
§ 37.9E(d). Id. § 37.9E(e). 1
The Rescission Provision provides tenants with a
unilateral right to rescind an executed buyout agreement for
up to and including forty-five days after the agreement’s
execution. Id. § 37.9E(g).
The Database Provision requires landlords to file a copy
of any buyout agreement with the Rent Board between the
forty-sixth and fifty-ninth day after the execution date of the
buyout agreement. Id. § 37.9E(h). A related provision
requires that the Rent Board create a searchable database
with information received from the buyout agreements filed
by landlords. Id. § 37.9E(i).
1
Appellants do not challenge the Notification Provision on appeal.
8 S.F. APARTMENT ASS’N V. CITY & CTY. OF S.F.
The Penalty and Fee Provision provides that a tenant
may bring a civil action against a landlord for “failure to
comply with the requirements set forth in subsections (d) and
(f).” 2 Id. § 37.9E(k). That section also provides that “[t]he
City Attorney or any organization with tax exempt status
under [Section 501(c)(3) or 501(c)(4)] with a primary
mission of protecting the rights of tenants in San Francisco
may bring a civil action against a landlord . . . for failure to
comply with subsection (h).” 3 Id.
Finally, the Condominium Conversion Provision
provides that any property subject to a buyout agreement
after the enactment of the Ordinance is ineligible for
conversion to a condominium for ten years where the tenant
involved in the buyout agreement was senior, disabled,
catastrophically ill, or where the owner entered into a buyout
agreement with two or more tenants in the same building. 4
S.F. Subdivision Code § 1396.
2
Subsection (d) is the Disclosure Provision. Subsection (f) lists
various requirements for buyout agreements, including that the
agreements be in writing, state in bold letters that tenants may rescind a
buyout agreement any time before the forty-fifth day after the
agreement’s execution date, a list of rights similar to those included on
the disclosure form, and a description of the Condominium Conversion
Provision. Neither subsection expressly requires that a tenant sign the
disclosure form prior to the commencement of buyout negotiations.
3
Subsection (h) is the Database Provision, which requires landlords
to file copies of executed buyout agreements with the Rent Board to
create a publicly searchable database of buyout agreements.
4
The Ordinance defines “senior” as “a person who is 60 years or
older and has been residing in the unit for ten years or more at the time
of [the] Buyout Agreement.” S.F. Subdivision Code § 1396. A
“disabled” tenant is defined as “a person who is disabled within the
S.F. APARTMENT ASS’N V. CITY & CTY. OF S.F. 9
Appellants commenced this action by filing a “petition
for writ of mandate” and a “complaint for injunctive and
declaratory relief” in the Superior Court of California in San
Francisco. Appellants alleged in their complaint that the
Ordinance violates free speech rights under the United States
and California Constitutions, equal protection and due
process rights under the United States and California
Constitutions, Appellants’ right to privacy under the
California Constitution, and “the right to enter into voluntary
settlement of disputes.” Appellants sought an order
declaring the Ordinance illegal and unenforceable. The City
removed the case based on the federal constitutional claims,
and filed a motion for judgment on the pleadings. The
district court granted the City’s motion for judgment on the
pleadings. Because the district court concluded that
amendment would be futile, the district court dismissed the
case with prejudice.
STANDARD OF REVIEW
We review de novo a district court’s order granting a
motion for judgment on the pleadings. See Heliotrope Gen.,
Inc. v. Ford Motor Co., 189 F.3d 971, 978 (9th Cir. 1999).
“A judgment on the pleadings is properly granted when,
taking all the allegations in the pleading as true, the moving
party is entitled to judgment as a matter of law.” Id. at 978–
meaning of [42 U.S.C. § 12102] and has been residing in the unit for ten
years or more at the time of [the] Buyout Agreement.” Id. A
“catastrophically ill” tenant is defined as “a person who is disabled
within the meaning of [42 U.S.C. § 12102] and who is suffering from a
life threatening illness as certified by his or her primary care physician
and has been residing in the unit for five years or more at the time of
[the] Buyout Agreement.” Id.10 S.F. APARTMENT ASS’N V. CITY & CTY. OF S.F.
79 (quoting Nelson v. City of Irvine, 143 F.3d 1196, 1200
(9th Cir. 1998)).
DISCUSSION
I. The Ordinance does not prevent Appellants from
commencing buyout negotiations if a tenant refuses
to sign the disclosure form.
Appellants argue that the Ordinance is a “Gag Rule” that
prevents landlords from commencing buyout negotiations
unless the tenant signs the required disclosure form.
Although the disclosure form states that “[e]ach tenant must
sign this three-page Pre-Buyout Negotiations Disclosure
Form below and write the date the landlord provided the
tenant with the disclosure form,” the Ordinance makes clear
that landlords need not obtain the tenant’s signature prior to
the commencement of buyout negotiations.
The Ordinance imposes a number of specific
requirements on landlords before they can commence
buyout negotiations—none of which involve securing the
tenant’s signature. For example, the Ordinance provides that,
prior to the commencement of buyout negotiations,
landlords “shall provide each tenant in that rental unit a
written disclosure, on a form developed and authorized by
the Rent Board.” S.F. Admin. Code § 37.9E(d). Landlords
also must provide the Rent Board with “[a] statement signed
under penalty of perjury that the landlord provided each
tenant with” the required disclosure form. Id. § 37.9E(e).
There is no requirement that the landlord certify that the
tenant signed the form. There is also no requirement to
obtain a tenant’s signature prior to the commencement of
buyout negotiations. Moreover, tenants may sue landlords
who fail to provide that form prior to the commencement of
buyout negotiations. Id. § 37.9E(k). That subsection does
S.F. APARTMENT ASS’N V. CITY & CTY. OF S.F. 11
not provide a right of action to tenants or anyone else against
landlords who fail to obtain the tenant’s signature. Although
the Ordinance states that “[t]he landlord shall retain a copy
of each signed disclosure form for five years, along with a
record of the date the landlord provided the disclosure to
each tenant,” id. § 37.9E(d), that clause can easily be
understood to mean that landlords need only retain copies of
signed disclosure forms, and need not retain copies of
disclosure forms that tenants refuse to sign. In other words,
the requirement that the landlord retain copies of signed
disclosure forms does not condition the right to commence
buyout negotiations on the tenant having signed the form.
Thus, Appellants’ argument that the Ordinance prevents
them from initiating buyout negotiations unless tenants sign
the disclosure form fails under the plain language of the
Ordinance.
II. The Disclosure Provision does not violate Appellants’
First Amendment rights.
Appellants argue that the Disclosure Provision violates
the First Amendment because it restricts protected speech.
They claim it limits landlords’ ability to initiate buyout
negotiations and compels speech by requiring landlords to
disclose the contact information for tenants’ rights
organizations prior to the commencement of buyout
negotiations. The City argues that the Disclosure Provision
targets purely commercial speech and does not preclude or
limit any speech after the minimal requirements of the
Disclosure Provision and Notification Provision have been
met. The City also argues that the Disclosure Provision does
not unconstitutionally compel speech because the
requirement to disclose a list of tenants’ rights organizations
directly advances the City’s substantial interest in improving
12 S.F. APARTMENT ASS’N V. CITY & CTY. OF S.F.
the bargaining position of tenants, and includes no message
from or endorsement of those organizations.
Although Appellants urge that the commencement of
buyout negotiations constitutes commercial speech that is
inextricably intertwined with noncommercial, fully
protected speech, Appellants fail to identify the
noncommercial, fully protected speech at issue. The district
court did not err in concluding that a discussion between a
landlord and a tenant about the possibility of entering into a
buyout agreement is commercial speech, as it relates solely
to the economic interests of the parties and does no more
than propose a commercial transaction. See Am. Acad. of
Pain Mgmt. v. Joseph, 353 F.3d 1099, 1106 (9th Cir. 2004)
(citing Cent. Hudson Gas & Elec. Corp. v. Pub. Serv.
Comm’n of N.Y., 447 U.S. 557, 561 (1980); Va. State Bd. of
Pharmacy v. Va. Citizens Consumer Council, Inc., 425 U.S.
748, 752 (1976)).
We use the four-part test from Central Hudson to
evaluate restrictions on commercial speech:
(1) if the communication is neither
misleading nor related to unlawful activity,
then it merits First Amendment scrutiny as a
threshold matter; in order for the restriction
to withstand such scrutiny, (2) [t]he State
must assert a substantial interest to be
achieved by restrictions on commercial
speech; (3) the restriction must directly
advance the state interest involved; and (4) it
must not be more extensive than is necessary
to serve that interest.
World Wide Rush, LLC v. City of Los Angeles, 606 F.3d 676,
684 (9th Cir. 2010) (alteration in original) (quotation
S.F. APARTMENT ASS’N V. CITY & CTY. OF S.F. 13
omitted). First, the Ordinance triggers First Amendment
scrutiny because it restricts commercial speech that is neither
misleading nor related to unlawful activity. Second, the
asserted government interests in enacting the Ordinance are
substantial. As the Ordinance states, its main purpose is “to
increase the fairness of buyout negotiations and agreements”
in response to San Francisco’s “housing crisis.” S.F. Admin.
Code § 37.9E(a). It also seeks to “reduc[e] the likelihood of
landlords pressuring tenants into signing buyout agreements
without allowing the tenants sufficient time to consult with
a tenants’ rights specialist,” and to “collect data about buyout
agreements.” 5 Id.
The final two steps of the Central Hudson analysis
“basically involve a consideration of the ‘fit’ between the
legislature’s ends and the means chosen to accomplish those
ends.” Rubin v. Coors Brewing Co., 514 U.S. 476, 486
(1995) (quotation omitted). The Ordinance purports to
advance the City’s stated interest in the fairness of buyout
negotiations by placing targeted restrictions on landlord-
tenant communication before the landlord discloses certain
pertinent information. As the district court held, the
Ordinance is sufficiently tailored because the speech
restrictions apply only until the landlord has provided the
disclosures to the tenant, which “could take less than half a
day.” See Edenfield v. Fane, 507 U.S. 761, 767 (1993)
(holding that restrictions on commercial speech “need only
be tailored in a reasonable manner to serve a substantial state
5
Whether bolstering the bargaining posture of tenants will indeed
ameliorate the “housing crisis” in San Francisco depends on an economic
theory that interferes with free market forces. It is a policy chosen by the
City’s representatives, the effectiveness of which is not for this court to
either accept or reject.
14 S.F. APARTMENT ASS’N V. CITY & CTY. OF S.F.
interest”). Thus, these restrictions do not violate the First
Amendment.
Neither do the Disclosure Provision’s compelled
disclosures run afoul of the First Amendment. “[T]he
government may compel truthful disclosure in commercial
speech as long as the compelled disclosure is ‘reasonably
related’ to a substantial governmental interest.” CTIA-The
Wireless Ass’n v. City of Berkeley, 854 F.3d 1105, 1115 (9th
Cir. 2017) (citing Zauderer v. Office of Disciplinary Counsel
of the Supreme Ct. of Ohio, 471 U.S. 626, 651 (1985)). Here,
the City requires landlords to provide tenants with a form
that describes tenants’ rights with respect to buyout
negotiations and agreements, and lists the contact
information for tenants’ rights organizations. Both
disclosures are “purely factual,” and do not include any
message whatsoever from the tenants’ rights organizations
listed on the disclosure form. Id. Moreover, the required
disclosure advances the City’s purported substantial interest
in increasing the fairness of buyout negotiations (by
informing tenants of their rights) and reducing the likelihood
that tenants will accept “unfair” buyout agreements (by
providing tenants with a list of organizations that can
advance their rights). Therefore, the Disclosure Provision
does not violate the First Amendment.
III. The creation of a publicly searchable database of
buyout agreements does not violate landlords’
right to privacy under the California
Constitution.
Appellants argue that the Database Provision of the
Ordinance violates landlords’ right to privacy under the
California Constitution. The Database Provision makes
publicly available landlords’ business contact information,
the address of any rental unit subject to a buyout agreement,
S.F. APARTMENT ASS’N V. CITY & CTY. OF S.F. 15
the certification of compliance with the Disclosure
Provision, and copies of executed buyout agreements. S.F.
Admin. Code § 37.9E(h). The City argues that landlords
have no legally protected privacy interest in their names,
business contact information, or address of the rental unit at
issue, because ownership of property is a matter of public
record. 6 The City also argues that landlords have no legally
protected privacy interest or reasonable expectation of
privacy in the transactional information included in buyout
agreements, as that information is not the type of private
financial information held to be protected by the right to
privacy under the California Constitution.
“[A]rticle I, section 1 of the California Constitution
creates a right of action against private as well as
government entities.” Hill v. Nat’l Collegiate Athletic Ass’n,
7 Cal. 4th 1, 20 (1994). To state a claim for a violation of the
right to privacy under the California Constitution,
Appellants must allege facts sufficient to raise a plausible
inference that they have a legally protected privacy interest,
a reasonable expectation of privacy under the circumstances,
and a “serious invasion” of privacy by the City that
constitutes “an egregious breach of the social norms
underlying the privacy right.” Id. at 35–37.
The district court did not err in its conclusion that
landlords do not have a legally protected privacy interest or
reasonable expectation of privacy in the information made
6
The court notes that the owner, whose name appears on the public
record, is not necessarily the landlord in all cases, and thus that the above
argument may not always apply. Property is often leased to a tenant
under a master lease; the tenant then leases spaces to subtenants.
However, this unique issue does not arise in this case and, in any event,
Appellants fail to argue that such a privacy issue would make a
difference.
16 S.F. APARTMENT ASS’N V. CITY & CTY. OF S.F.
publicly available by the Ordinance. As the City noted,
information already publicly available is not protected by the
right to privacy under the California Constitution. Moreover,
Appellants offer no explanation why the terms or
consideration for a buyout agreement is more sensitive or
private than other financial information routinely submitted
to the government and made publicly available. For
example, a landlord who seeks to impose a rent increase in
excess of the generally applicable limitations must file a
petition with the Rent Board that includes (among other
information) the landlord’s name and contact information,
the property address, information about proposed
expenditures where applicable, the current rent for each unit,
and the proposed increase. S.F. Admin. Code § 37.7, 37.8.
Landlords also must disclose similar information when they
apply for condominium conversions, including detailed
rental history, proposed sale prices of the condominiums
produced, and a copy of the condominium purchase
agreement. S.F. Subdivision Code § 1381. More broadly,
financial information relating to real estate and land use
transactions is regularly filed with government entities and
made publicly accessible, including records that involve
security interests or transfers of ownership or title, or
applications under the zoning laws. See, e.g., S.F. Planning
Code § 303, 305; Cal. Gov’t Code § 27280(a); Cal. Civ.
Code § 2932.5; Cal. Bus. & Prof. Code § 10233.2.
Appellants fail to provide any argument why the
consideration paid in a buyout transaction, or any other
information contained in a buyout agreement, is more
sensitive than the information described above.
S.F. APARTMENT ASS’N V. CITY & CTY. OF S.F. 17
IV. The Ordinance does not violate landlords’ rights
to equal protection or due process.
Appellants argue that the Ordinance violates their rights
to equal protection and due process because it applies only
to speech by landlords and requires the redaction of the
tenant’s identity, but not the landlord’s identity, from the
publicly searchable database of buyout agreements. 7 As
explained above, the Ordinance does not violate the First
Amendment, nor does it violate any other fundamental right
guaranteed by the Constitution. Landlords are also not a
protected class. Therefore, we review Appellants’ claim that
the Ordinance violates their right to equal protection under
the rational basis standard. See Sylvia Landfield Tr. v. City
of L.A., 729 F.3d 1189, 1191 (9th Cir. 2013). Under the
rational basis standard, “[t]he general rule is that legislation
is presumed to be valid and will be sustained if the
classification drawn by the statute is rationally related to a
legitimate state interest.” City of Cleburne v. Cleburne
Living Ctr., 473 U.S. 432, 440 (1985).
Here, the City could reasonably conclude that tenants are
in an inferior bargaining position relative to landlords, who
are generally more sophisticated and have more information
about the rental market and the rights and obligations of both
parties than are tenants. The City could also reasonably
conclude that landlords face unique incentives to pressure
tenants into accepting buyout agreements, such as the
avoidance of restrictions and regulations that apply to no-
fault evictions. A commercial disclosure requirement that
applies only to landlords and informs tenants of their rights
7
Appellants do not analyze their due process claims separately from
those based on equal protection. Therefore, we focus on Appellants’
equal protection claim.
18 S.F. APARTMENT ASS’N V. CITY & CTY. OF S.F.
with regard to buyout negotiations and agreements is
rationally related to the City’s legitimate interests in
improving the bargaining position of tenants in buyout
negotiations and ensuring that tenants are apprised of their
rights prior to the commencement of such negotiations. See
Levald, Inc. v. City of Palm Desert, 998 F.2d 680, 690 (9th
Cir. 1993) (“[T]he stated purposes of the ordinance were to
alleviate hardship created by rapidly escalating rents; to
protect owners’ investments in their mobile homes; to
equalize the bargaining position of park owners and tenants;
and to protect residents from unconscionable and coercive
changes in rental rates. These purposes are similar to those
advanced in support of other rent control ordinances; the
Supreme Court has held that these goals are legitimate.”)
(citing Pennell v. City of San Jose, 485 U.S. 1, 13–14
(1988)).
Appellants’ argument that the Ordinance violates equal
protection because it requires the redaction of the tenant’s
identity from the publicly searchable database of buyout
agreements, but not the landlord’s identity, also fails. The
information collected from landlords concerns their
businesses, which is already a matter of public record
through the Office of the Assessor-Recorder and the San
Francisco Planning Department. By contrast, the inclusion
of a tenant’s name connects the tenant to his current or prior
residence. See, e.g., Cty. of L.A. v. L.A. Cty. Emp. Relations
Comm’n, 56 Cal. 4th 905, 927 (2013) (“Courts have
frequently recognized that individuals have a substantial
interest in the privacy of their home. . . . Accordingly, home
contact information is generally considered private.”
(quotation omitted)).
Because the Ordinance does not violate Appellants’ right
to privacy under the California Constitution, we review
S.F. APARTMENT ASS’N V. CITY & CTY. OF S.F. 19
Appellants’ equal protection claim under the rational basis
standard. The Ordinance’s requirement that the Rent Board
publish landlords’ contact information and rental unit
address—information that is already publicly available—is
rationally related to the City’s legitimate interest in reducing
information asymmetry between tenants and landlords and
improving the inferior bargaining position of tenants in
buyout negotiations while protecting tenant privacy. See
Levald, 998 F.2d at 690.
V. The Condominium Conversion Provision does not
violate landlords’ “liberty of contract.”
Appellants do not cite any case law or other precedential
authority to support their claim that the Condominium
Conversion Provision violates their “liberty of contract”
under the United States Constitution.8 Under California law,
regulation of condominium conversions lies within a
municipality’s police power and need only be reasonably
related to a legitimate governmental purpose. See Griffin
Dev. Co. v. City of Oxnard, 39 Cal. 3d 256, 262–66 (1985).
The City has a legitimate governmental purpose in
protecting what it sees as vulnerable tenants and maintaining
a form of price control which it theorizes will provide an
affordable rental housing inventory for its residents. See
Levald, 998 F.2d at 690; see also Cal. Gov’t Code
§ 65580(a) (“The availability of housing is of vital statewide
importance, and the early attainment of decent housing and
8
In any event, the Contracts Clause does not support Appellants’
claim that the Condominium Conversion Provision violates their “liberty
of contract” because the Ordinance applies only to buyout agreements
executed after the enactment date of the Ordinance, and “[t]he
Constitution protects freedom of contract only by limiting the states’
power to modify or affect contracts already formed.” McCarthy v. Mayo,
827 F.2d 1310, 1315 (9th Cir. 1987); see also U.S. Const. art. I, § 10.
20 S.F. APARTMENT ASS’N V. CITY & CTY. OF S.F.
a suitable living environment for every Californian . . . is a
priority of the highest order.”). The City could reasonably
believe that senior, disabled, or catastrophically ill tenants
face greater hurdles in securing new housing, and that
multiple buyouts within the same building have a greater
impact on the availability of affordable rental housing than
single-unit buyouts. Therefore, we hold that the
Condominium Conversion Provision survives rational basis
review and does not violate Appellants’ “liberty of
contract.” 9
CONCLUSION
For all of the foregoing reasons, we AFFIRM the district
court’s order granting the City’s motion for judgment on the
pleadings.
Costs are awarded to the Appellee.
9
See Day-Brite Lighting, Inc. v. Missouri, 342 U.S. 421, 423 (1952)
(“The liberty of contract argument pressed on us is reminiscent of the
philosophy of Lochner v. State of New York, 198 U.S. 45 [1905], which
invalidated a New York law prescribing maximum hours for work in
bakeries[.] . . . Our recent decisions make plain that we do not sit as a
super-legislature to weigh the wisdom of legislation nor to decide
whether the policy which it expresses offends the public welfare.”). For
all the recent academic discussion whether Lochner’s evaluation of
economic freedom requires greater judicial scrutiny, see, e.g., Randy E.
Barnett, Foreword: What’s So Wicked About Lochner?, 1 N.Y.U. J. L. &
LIBERTY 325 (2005), our governing precedent has not significantly
changed from that of Day-Brite.