Chong Yim v. City of Seattle

yFTPEv
IN CLERKS OFFICE X This opinion was
8UPRBE COURT,SHOE OF Va%SHHId.
After considering the committee's recommendations, the Seattle City Council
amended Seattle's Open Housing Ordinance, ch. 14.08 SMC. These amendments
included adoption ofthe FIT rule.
The FIT rule provides that when a Seattle property owner seeks to fill a
tenancy, the owner must first "provide notice to a prospective occupant" of"the
criteria the owner will use to screen prospective occupants and the minimum
threshold for each criterion," as well as "all information, documentation, and other
Yim etal. v. City ofSeattle,Ylo. 95813-1
submissions necessary for the owner to conduct screening." SMC
14.08.050(A)(l)(a)-(b). Next, the property owner must "note the date and time of
when the owner receives a completed rental application" and "screen completed
rental applications in chronological order." Id. at (A)(2)-(3). "If, after conducting
the screening, the owner needs more information than was stated in the notice," the
owner must "notify the prospective occupant in writing, by phone, or in person of
what additional information is needed." Id. at(A)(3). Finally, the property owner
must "offer tenancy of the available unit to the first prospective occupant meeting
all the screening criteria necessary for approval of the application." Id. at (A)(4).
The first qualified applicant has 48 hours in which to accept the offer of tenancy.
Id. If the applicant does not accept,"the owner shall review the next completed
rental application in chronological order until a prospective occupant accepts the
owner's offer of tenancy." Id.
There are a number of exceptions to these general procedures. No part of
the FIT rule applies "to an accessoiy dwelling unit or detached accessory dwelling
unit wherein the owner or person entitled to possession thereof maintains a
permanent residence, home or abode on the same lot." Id. at(F). In addition, an
owner does not have to offer tenancy to the first qualified applicant if the owner "is
legally obligated to" or "voluntarily agrees to set aside the available unit to serve
specific vulnerable populations." Id. at (A)(4)(a)-(b). The FIT rule also contains
Yim et al. v. City ofSeattle, No. 95813-1
procedures for potential occupants with disabilities to seek "additional time to
submit a complete rental application because ofthe need to ensure meaningful
access to the application." Id. at(B).
The FIT rule became effective on January 1, 2017, although compliance was
not required until July 1, 2017. Id. at(A),(E). On August 16, 2017, the plaintiffs
filed a first amended complaint,"seeking a declaration that the City's [FIT]
rule . . . violates the Takings, Due Process, and Free Speech Clauses of the
Washington State Constitution, and also seeking a permanent injunction forbidding
the City from enforcing its unconstitutional rule." CP at 19. The plaintiffs
challenge the FIT rule only "on its face," not as applied. Id. at 30, 33.
The parties filed cross motions for summary judgment based on a statement
of stipulated facts and a stipulated record. The trial court ruled in favor of the
plaintiffs on each of their claims, concluding that the FIT rule facially violates
article I, section 16 (the takings clause), section 3 (the due process clause), and
section 5 (the free speech clause) ofthe Washington State Constitution. The City
appealed, and we granted direct review. Order, No. 95813-1 (Wash. Nov. 28,
2018).
ISSUES
A. Does the FIT rule facially effect a regulatory taking for purposes of
article I, section 16?
Yim etal. v. City ofSeattle,Y\o. 95813-1
B. If the FIT rule does facially effect a regulatory taking, is it for private
use in violation of article I, section 16?
C. Does the FIT rule facially violate the plaintiffs' article I, section 3
right to substantive due process?
D. Does the FIT rule facially violate the plaintiffs' article I, section 5
right to free speech?
ANALYSIS
This case presents two important questions of state constitutional law that
will have consequences far beyond the particular claims at issue here. First, we
must define when a law regulating the use of property crosses the line into a
"regulatory taking" for purposes of article I, section 16. Second, we must
determine the standard of review that applies to article I, section 3 substantive due
process challenges to laws regulating the use of property.
As to the first issue, this court has always attempted to define regulatory
takings consistently with federal courts applying the takings clause ofthe Fifth
Amendment. U.S. CONST, amend. V. The federal definition of regulatory takings
has been substantially clarified since we last considered the issue, such that the
"legal underpinnings of our precedent have changed or disappeared altogether."
W.G. Clark Constr. Co. v. Pac. Nw. Reg'I Council ofCarpenters, 180 Wash. 2d 54,
66, 322 P.3d 1207(2014). It has not been shown that we should adopt a
Yim et al. v. City ofSeattle, No. 95813-1
Washington-specific definition as a matter of independent state law at this time,
and we therefore adopt the definition of regulatory takings set forth by the United
States Supreme Court in Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 125 S. Ct.
2074, 161 L. Ed. 2d 876 (2005), as discussed in more detail below. The following
precedent is disavowed to the extent that it defines regulatory takings in a manner
that is inconsistent with Chevron U.S.A.: Orion Corp. v. State, 109 Wash. 2d 621, 747
P.2d 1062(1987); Presbytery ofSeattle v. King County, 114 Wash. 2d 320, 787 P.2d
907(1990); Sintra, Inc. v. City ofSeattle, 119 Wash. 2d 1, 829 P.2d 765 (1992);
Robinson v. City ofSeattle, 119 Wash. 2d 34, 830 P.2d 318 (1992); Guimontv.
Clarke, 121 Wash. 2d 586, 854 P.2d 1 (1993); Margola Associates v. City ofSeattle,
121 Wash. 2d 625, 854 P.2d 23 (1993); and Manufactured Housing Communities of
Washington v. State, 142 Wash. 2d 347, 13 P.3d 183 (2000)(plurality opinion).
Regarding the second issue, as analyzed in more detail in our opinion for
Chong Yim v. City ofSeattle, No. 96817-9(Wash. Nov. 14, 2019){Yim II), this
court has always attempted to apply a standard of review to article I, section 3
substantive due process claims that is consistent with the standard used by federal
courts applying the due process clauses of the Fifth and Fourteenth Amendments to
the United States Constitution. As with defining regulatory takings, it has not been
shown that we should depart from federal law at this time, and we therefore apply
Yim et al. v. City ofSeattle, No. 95813-1
rational basis review to the plaintiffs' substantive due process challenge to the FIT
rule.
Turning to the specific claims presented in this case, the constitutionality of
the FIT rule is a question of law reviewed de novo. Amunrud v. Bd. ofAppeals,
158 Wash. 2d 208, 215, 143 P.3d 571 (2006). The plaintiffs' facial takings and
substantive due process claims cannot succeed unless the plaintiffs show that "no
set of circumstances exists in which [the FIT rule], as currently written, can be
constitutionally applied." City ofRedmond v. Moore, 151 Wash. 2d 664, 669, 91
P.3d 875 (2004). They cannot meet that burden on the record presented, while the
City has met its burden ofjustifying the FIT rule for puiposes ofthe plaintiffs'
facial free speech claim. We therefore reverse and remand with instructions to
grant the City's motion for summary judgment.
A. The FIT rule does not facially effect a regulatory taking
The takings clause of the Fifth Amendment provides,"[N]or shall private
property be taken for public use, without just compensation." U.S. CONST, amend.
V. Likewise, article 1, section 16 provides,"No private property shall be taken or
damaged for public or private use without just compensation having been first
made." WASH. CONST, art. 1, § 16. Both the federal and state takings clauses allow
for "[cjlaims of inverse condemnation by excessive regulation," otherwise known
as "regulatory takings" claims. Orion Corp., 109 Wash. 2d at 642.
Yim et al. v. City ofSeattle, No. 95813-1
Regulatory takings claims are based on the premise that "while property may
be regulated to a certain extent, if regulation goes too far it will be recognized as a
taking." Pa. Coal Co. v. Mahon,260 U.S. 393, 415, 43 S. Ct. 158, 67 L. Ed. 322
(1922). When a regulation goes too far, it becomes "a de facto exercise of eminent
domain," even though the private individual still actually owns and possesses the
property. Orion Corp., 109 Wash. 2d at 645. Such regulatory takings, like traditional
exercises of eminent domain, require either just compensation (if the property is
taken for public use) or invalidation of the law (if the property is taken for private
use). Mfd. Hous., 142 Wash. 2d at 362.
Regulatory takings may be either "per se" or "partial." A per se regulatory
taking is found where a regulation's impact is necessarily so onerous that the
regulation's mere existence is, "from the landowner's point of view, the equivalent
of a physical appropriation." Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1017,
112 S. Ct. 2886, 120 L. Ed. 2d 798 (1992). As a matter of federal law, such
categorical treatment is appropriate for only "two relatively narrow categories" of
regulations—regulations that "require[]an owner to suffer a permanent physical
invasion of her property" and "regulations that completely deprive an owner of'all
economically beneficial us[e]' of her property." Chevron U.S.A., 544 U.S. at 538
Yim et al. v. City ofSeattle, No. 95813-1
(second alteration in original)(quoting Lucas, 505 U.S. at 1019).' All other
regulations are susceptible of partial regulatory takings claims, which federal
courts decide based on a multifactor test (the Penn Central factors) applied on a
case-by-case basis. Id. at 538-39 (citing Penn Cent. Transp. Co. v. New York City,
438 U.S. 104, 124, 98 S. Ct. 2646, 57 L. Ed. 2d 631 (1978)).
The plaintiffs here claim the FIT rule facially effects a per se regulatory
taking, but they do not contend that it fits into either of the per se categories
recognized by federal courts. Instead, they contend that Washington courts
recognize another category of per se regulatory takings, which includes any
regulation that "destroys one or more of the fundamental attributes of ownership
(the right to possess, exclude others and to dispose of property)." Mfd. Hons., 142
Wash. 2d at 355. The plaintiffs argue that the FIT rule falls into this per se category
"because it strips landlords of a fundamental attribute of property ownership—^the
right to choose to whom one will rent their property." Resp'ts' Br. at 1.
We now clarify that none of our regulatory takings cases have purported to
define regulatory takings (either per se or partial) as a matter of independent state
law. Instead, we have always attempted to discern and apply the federal definition
'There is another form of takings cases not relevant here that deals with "adjudicative
land-use exactions—specifically, government demands that a landowner dedicate an easement
allowing public access to her property as a condition of obtaining a development permit."
Chevron U.S.A., 544 U.S. at 546 (citing Dolan v. City ofTigard, 512 U.S. 374, 379-80, 114
S. Ct. 2309, 129 L. Ed. 2d 304 {\99Ay, Nollan v. Cat. Coastal Comm'n,483 U.S. 825, 828, 107
S. Ct. 3141, 97 L. Ed. 2d 677(1987)).
Yim et al. v. City ofSeattle, No. 95813-1
of regulatory takings. Since we last attempted to do so, the federal definition has
been clarified substantially and is now clearly inconsistent with the definitions set
forth in our precedent. Thus, the legal underpinnings of our precedent have
disappeared, and it has not been shown that we should now adopt a Washington-
specific definition of regulatory takings as a matter of independent state law.
Therefore, we disavow our precedent, adopt the federal definition of
regulatory takings, and hold that the plaintiffs cannot show the FIT rule facially
meets this definition on the record presented. We express no opinion as to whether
the FIT rule effects a regulatory taking as applied to any particular property.
1. We have never defined regulatory takings as a matter of independent
state law
The plaintiffs emphasize that their takings claim is based on the Washington
State Constitution and contend that "[t]he federal approach to takings therefore
does not offer a relevant comparison because this Court can interpret its own state
constitution as it sees fit—so long as its inteipretation does not go below the floor
of protection guaranteed by the Federal Constitution." Id. at 20-21. It is certainly
true that we have the authority to interpret article I, section 16 independently of the
Fifth Amendment's takings clause. However, it is incorrect to suggest that we
have already done so for purposes of defining regulatory takings. To the contrary,
for over 30 years, we have attempted to define regulatory takings in a manner that
is consistent with federal law. Unfortunately, for many years, federal regulatory
10
Yim et al. v. City ofSeattle, No. 95813-1
takings cases were complex and occasionally inconsistent, making our task
extremely challenging and giving the inaccurate impression that this court was
attempting to set forth a Washington-specific doctrine based on independent state
law.
a. Our pvQ-Manufactured Housing cases did not define regulatory
takings based on independent state law
Although we have never defined regulatory takings based on independent
state law, our precedent may appear to have done so. See, e.g., Laurel Park Cmty.,
LLC V. City ofTumwater, 698 F.3d 1180, 1191-93 (9th Cir. 2012)(analyzing state
regulatory takings claim separately from federal regulatory takings claim); Lemire
V. Dep't ofEcology, 178 Wash. 2d 227, 242, 309 P.3d 395 (2013)("The parties and
amici strenuously debate the framework on which this court should rest a taking
analysis, including whether and to what extent our state constitutional takings
provision may offer greater protection than its federal counterpart."); Roger D.
Wynne, The Path out of Washington's Takings Quagmire: The Casefor Adopting
the Federal Takings Analysis, 86 WASH.L. Rev. 125, 136(2011)(pointing to
"three unique elements" of Washington takings law). Regrettably, this court has
added to the confusion by occasionally characterizing our cases as setting forth a
"state 'regulatory takings' doctrine." Robinson, 119 Wash. 2d at 47. We resolve this
confusion now.
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Yim et al. v. City ofSeattle, No. 95813-1
The reason our precedent appears unusual is because this court was
attempting to set forth "a doctrinally consistent, definitive test" for regulatory
takings, which "has proved an elusive goal, sometimes characterized as 'the
lawyer's equivalent of the physicist's hunt for the quark.'" Orion Corp., 109
Wash. 2d at 645 (internal quotation marks omitted)(quoting Williamson County Reg'I
Planning Comm'n v. Hamilton Bank, 473 U.S. 172, 199 n.l7, 105 S. Ct. 3108, 87
L. Ed. 2d 126 (1985), overruled in part by Knickv. Township ofScott, 588 U.S.
, 139 S. Ct. 2162, 204 L. Ed. 2d 558 (2019)). It should not be surprising that
our pursuit of such an elusive goal left this court as something of an outlier.
However, our attempts to articulate a test for when regulations cross the line into
regulatory takings have always attempted to achieve consistency with federal law,
not to set forth an independent state law doctrine.
Achieving consistency with federal regulatory takings law proved difficult
due to "unresolved tensions between divergent lines of authority." Id. Even
though the United States Supreme Court held in 1922 that a police power
regulation becomes a taking if it goes too far, the United States Supreme Court
(and this court, following its lead) continued to state that "an exercise of the police
power protective ofthe public health, safety, or welfare cannot be a taking
requiring compensation." Id. at 646(emphasis added)(citing Keystone Bituminous
Coal Ass'n v. DeBenedictis, 480 U.S. 470, 107 S. Ct. 1232, 94 L. Ed. 2d 472
12
Yim et al. v. City ofSeattle, No. 95813-1
(1987); Miller v. Schoene, 276 U.S. 272, 48 S. Ct. 246, 72 L. Ed. 568 (1928);
Muglerv. Kansas, 123 U.S. 623, 8 S. Ct. 273, 31 L. Ed. 205 (1897); Cougar Bus.
Owners Ass'n v. State, 97 Wash. 2d 466, 647 P.2d 481 (1982); Markham Advert. Co.
V. State, 73 Wash. 2d 405, 427,439 P.2d 248 (1968)). Thus, it appeared that some
regulations of private property were categorically incapable of being regulatory
takings, but it was not clear which ones.
Moreover, regulatory takings cases suffered from a "doctrinal blurring that
has occurred between due process and regulatory takings." Id. at 647. Federal and
state cases held that "a police power action must be reasonably necessary to serve a
legitimate state interest" to survive a substantive due process challenge. Id. at 646-
47(citing Goldblattv. Town ofHempstead, 369 U.S. 590, 594-95, 82 S. Ct. 987, 8
L. Ed. 2d 130 (1962); Lawton v. Steele, 152 U.S. 133, 137, 14 S. Ct. 499, 38 E. Ed.
385 (1894); W. Main Assocs. v. City ofBellevue, 106 Wash. 2d 47, 52, 720 P.2d 782
(1986); Cougar Bus. Owners, 97 Wash. 2d at 476). Meanwhile,"[a] regulatory
taking also hinges on whether the challenged regulation is 'reasonably necessary to
the effectuation of a substantial public purpose,' or 'does not substantially advance
legitimate state interests.'" Id. at 647 (citation omitted)(internal quotation marks
omitted)(quoting Penn Central, 438 U.S. at 127; Keystone, 480 U.S. at 485). It
was thus difficult to determine whether and to what extent substantive due process
principles were relevant to the regulatory takings analysis.
13
Yim et al v. City ofSeattle, No. 95813-1
As a result of such confusion, courts were left to determine when a
regulation crosses the line into a regulatory taking based on '"essentially ad hoc,
factual inquiries.'" Keystone, 480 U.S. at 495 (internal quotation marks omitted)
{(yyolmg Kaiser Aetna V. United States, 444 U.S. 164, 175, 100 S. Ct. 383,62
L. Ed. 2d 332(1979)). In an effort to bring some uniformity to the regulatory
takings analysis, this court "ventur[ed] where other courts had feared to go,[and]
began the painful process of developing coherent legal doctrine to supplant vague
or nonexistent principles and intuitive determinations." Richard L. Settle,
Regulatory Taking Doctrine in Washington: Now You See It, Now You Don't, 12
U.PUGET Sound L. Rev. 339, 341 (1989). After revising and clarifying our
analysis several times, we ultimately settled on the following multistep test:
14
Yim etal. v. City ofSeattle, No. 95813-1
Does the regulation
compel the landowner to Yes
suffer a permanent Taking
"physical invasion" of the
property?
No
Does the regulation deny
all economically Yes
beneficial or productive Taking
use of the property?
No
'
Does the regulation
destroy one or more
fundamental attributes of Yes Does the regulation
No
property ownership (the substantially advance a > Taking
right to possess, to legitimate state interest?
exclude others, or to
dispose of property)? Yes
No Is the state interest
outweighed by economic
burden on the owner in
Does the regulation seek
Yes light of the Penn Central
less to prevent a harm than
factors (economic impact, Yes
to require an affirmative Taking
interference with
public benefit?
investment-backed
expectations, and
character of the
No goveimment action)?
NoI
No taking No taking
Margola, 121 Wash. 2d at 643-46; Guimont, 121 Wash. 2d at 598-604; see also
Robinson, 119 Wash. 2d 34; Sintra, 119 Wash. 2d 1; Presbytery, 114 Wash. 2d 320; Orion
Corp., 109 Wash. 2d 621.
By the time we settled on this framework in 1993, it had been suggested that
our test was "undermined by language in Lucas questioning harm versus benefit
15
Yim et al. v. City ofSeattle, No. 95813-1
analysis." Guimont, 121 Wash. 2d at 603 n.5. However, we declined to address that
issue because "it would be premature to begin dismantling our takings framework,
carefully crafted in Presbytery, Sintra, and Robinson, without more definitive
guidance on this issue from the United States Supreme Court." Id.
While we continued to await more definitive guidance, this court decided
Manufactured Housing, which forms the basis of the plaintiffs' regulatory takings
claim in this case.
b. Manufactured Housing did not define regulatory takings based
on independent state law
Manufactured Housing's lead opinion cited only Presbytery to support its
holding that a regulation is "subject to a categorical 'facial' taking challenge"
when it "destroys one or more of the fundamental attributes of ownership (the right
to possess, exclude others and to dispose of property)."^ Mfd. Hous., 142 Wash. 2d at
355. The plaintiffs and allied amici contend that this category of per se regulatory
takings is based on independent state law and therefore cannot be disavowed
unless it is shown to be both incorrect and harmful. We clarify that this category
of per se regulatory takings is not based on independent state law.
^ The dissents challenged this holding as an incorrect application ofPresbytery. Mfd.
Hous., 142 Wash. 2d at 388 (Johnson, J., dissenting), 407-08 (Talmadge, J., dissenting). However,
because we hold that Manufactured Housing's legal underpinnings have disappeared, we assume
without deciding that it correctly applied Presbytery. We also assume without deciding that
Manufactured Housing's lead opinion was joined by a majority of the court on the issues
relevant to this case and that the facts of Manufactured Housing are not materially
distinguishable from the facts presented here.
16
Yim et al. v. City ofSeattle, No. 95813-1
Presbytery unambiguously applied 'fhe 'taking' analysis used by the United
States Supreme Court and by this court," drawing no distinction between the two.
114 Wash. 2d at 333 (emphasis added). Presbytery's approach was entirely
consistent with our prior explicit holding that"we will apply the federal analysis to
review all regulatory takings claims." Orion Corp., 109 Wash. 2d at 658; see also
Margola Assocs., 121 Wash. 2d at 642 n.6; Guimont, 121 Wash. 2d at 604. Thus, by
relying solely on Presbytery to define a per se regulatory taking. Manufactured
Housing necessarily relied on federal law.
Furthermore, when applying its definition to the facts presented.
Manufactured Housing's lead opinion cited Presbytery again, along with other
Washington cases, federal cases, and cases from other states. Mfd. Hous., 142
Wash. 2d at 364-68. Thus, it is clear from the range of authorities cited in
Manufactured Housing's lead opinion that its definition of a per se regulatory
taking was not based on independent state law but on an attempt to apply federal
law and, perhaps, to discern a national consensus.
It may appear that Manufactured Housing was applying a Washington-
specific definition of regulatory takings because the lead opinion included a
GunwalP analysis. Id. at 356-61. However, the Gunwall analysis was unrelated to
the definition of regulatory takings. Instead,"[wjhat is key is article I, section 16's
State V. Gunwall, 106 Wash. 2d 54, 61-62, 720 P.2d 808 (1986).
17
Yim et al. v. City ofSeattle, No. 95813-1
absolute prohibition against taking private property for private use." Id. at 357.
The court therefore concluded that the Washington State Constitution is more
protective than the federal constitution on the basis "that 'private use' under
amended article I, section 16 is defined more literally than under the Fifth
Amendment, and that Washington's interpretation of'public use' has been more
restrictive," Id. at 361. Nevertheless, the conclusion that article I, section 16
defines public and private use more protectively than the federal constitution does
not also establish that article I, section 16 has a more protective definition of
regulatory takings. Those are two separate questions implicating two different
parts of the regulatory takings analysis.
Regulatory takings cases involve a "remedial question of how compensation
is measured once a regulatory taking is established" and "the quite different and
logically prior question whether the . . . regulation at issue had in fact constituted a
taking." Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg'I Planning Agency, 535
U.S. 302, 328, 122 S. Ct. 1465, 152 L. Ed. 2d 517(2002). The definition of a
regulatory taking goes only to the initial determination of whether "'property' has
actually been taken." Mfd. Hous., 142 Wash. 2d at 363-64. Meanwhile, the
public/private use distinction goes only to the appropriate remedy once a taking
has been established—compensation or invalidation. See id. at 362.
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Yim et al. v. City ofSeattle, No. 95813-1
Thus, none of our cases, including Manufactured Housing, defined
regulatory takings based on independent state law. Instead, we have always tried
to ascertain and apply a definition that is consistent with federal law. Our
regulatory takings cases appear state-specific only because, for many years, the
federal definition was difficult to understand. The United States Supreme Court
has since provided definitive guidance on that issue, which "[a]n overwhelming
majority of states" have followed. Phillips v. Montgomery County, 442 S.W.3d
233, 240(Term. 2014). We now do the same.
2. The legal underpinnings of our definition of regulatory takings have
disappeared
Because our prior definition of regulatory takings was not based on
independent state law, we need not decide whether it is incorrect and harmful.
Instead,"we can reconsider our precedent not only when it has been shown to be
incorrect and harmful but also when the legal underpinnings of our precedent have
changed or disappeared altogether." W.G. Clark, 180 Wash. 2d at 66. We do so now
because two United States Supreme Court cases decided after Manufactured
Housing establish that the federal legal underpinnings of our precedent have
disappeared, and it has not been shown that there is a principled basis on which to
depart from federal law at this time.
First, in 2002, the United States Supreme Court held that categorical rules
are rarely appropriate in regulatory takings cases. Tahoe-Sierra, 535 U.S. 302.
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Yim et al. v. City ofSeattle, No. 95813-1
The regulations at issue in Tahoe-Sierra were two temporary development
moratoria "that, while in effect, denie[d] a property owner all viable economic use
of her property." Id. at 320(emphasis added). A number of property owners
brought a facial takings claim, arguing that the regulations "g[ave] rise to an
unqualified constitutional obligation to compensate [them] for the value of its use
during that period." Id.
The United States Supreme Court rejected their claim, cautioning that"we
still resist the temptation to adopt per se rules in our cases involving partial
regulatory takings." Id. at 326. Instead, categorical rules for regulatory takings
claims are appropriate only in an "'extraordinary circumstance,'" such as when a
permanent regulation provides that '''no productive or economically beneficial use
of land is permitted.'" Id. at 330(quoting Twcaj', 505 U.S. at 1017).
In such extraordinary circumstances, there is no need for a case-specific
inquiry because the regulation will "always force individuals to bear a special
burden that should be shared by the public as a whole." Id. at 341 (emphasis
added). However, absent extraordinary circumstances,"the default rule remains
that, in the regulatory taking context, we require a more fact specific inquiry." Id.
at 332. To determine whether there were extraordinary circumstances requiring a
categorical rule, Tahoe-Sierra considered "the concepts of'fairness and justice'
20
Yim et al. v. City ofSeattle, No. 95813-1
that underlie the Takings Clause" and held that the temporary moratoria at issue
could not be deemed per se regulatory takings. Id. at 334.
Tahoe-Sierra thus deeply undermines Manufactured Housing''s view that a
categorical rule is appropriate whenever a property owner is deprived of any part
of"the 'bundle of sticks' representing the valuable incidents of ownership." Mfd.
Hous., 142 Wash. 2d at 366. Instead, according to Tahoe-Sierra, categorical rules for
regulatory takings claims are appropriate only in extraordinary circumstances.
It is unlikely that Tahoe-Sierra would recognize extraordinary circumstances
are present whenever a regulation limits "the right to choose to whom one will rent
their property." Resp'ts' Br. at 1. If that were so, every antidiscrimination law that
prohibits a landlord from rejecting a tenant based on protected characteristics
would be a per se regulatory taking requiring either compensation or invalidation.
E.g., RCW 49.60.222(l)(f); SMC 14.08.040(A). Tahoe-Sierra would likely not
allow such a holding because it "would render routine government processes
prohibitively expensive," if not impossible. 535 U.S. at 335.
Although Tahoe-Sierra cautioned that categorical rules are rarely
appropriate in regulatory takings cases, it left open the question of when
regulations present such extraordinary circumstances that categorical rules are
appropriate. That question was resolved in 2005, when Chevron U.S.A.
definitively held that there are only "two relatively narrow categories" of
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Yim et al. v. City ofSeattle, No. 95813-1
"regulatory action that generally will be deemed per se takings for Fifth
Amendment purposes." 544 U.S. at 538.
One per se category applies "where government requires an owner to suffer
a permanent physical invasion of her property." Id. The other "applies to
regulations that completely deprive an owner of'all economically beneficial us[e]'
of her property." Id. (alteration in original)(quoting 505 U.S. at 1019).
Any other alleged regulatory taking must be analyzed on a case-by-case basis
according to the Penn Central factors. Id. at 538-39. The United States Supreme
Court has since consistently applied these standards when defining regulatory
takings, such that Chevron U.S.A. is clearly the Court's final, definitive statement
on this issue at this time. See Murr v. Wisconsin, 582 U.S. , 137 S. Ct. 1933,
1942-43, 198 L. Ed. 2d 497(2017); Home v. Dep't ofAgric., 576 U.S. , 135
S. Ct. 2419, 2429, 192 L. Ed. 2d 388 (2015); Ark. Game & Fish Comm 'n v. United
States, 568 U.S. 23, 31-32, 133 S. Ct. 511, 184 L. Ed. 2d 417(2012); Stop the
Beach Renourishment, Inc. v. Fla. Dep't ofEnvtl. Prot., 560 U.S. 702, 713, 130
S. Ct. 2592, 111 L. Ed. 2d 184(2010)(partial plurality opinion).
Chevron U.S.A. nan"owly defines per se regulatory takings that trigger
categorical rules. By contrast. Manufactured Housing''s, definition of per se
regulatory takings broadly applies a categorical rule to any regulation that destroys
any fundamental attribute of ownership. Tahoe-Sierra strongly indicates such a
22
Yim et al. v. City ofSeattle, No. 95813-1
categorical rule would be rejected by the United States Supreme Court and
Chevron U.S.A. confirms it. Therefore, Manufactured Housing's definition of per
se regulatory takings is no longer a valid application of the federal law on which it
was based. And because it has not been shown that we should now depart from the
federal definition of regulatory takings as a matter of independent state law, we
disavow Manufactured Housing's definition."^
In addition. Chevron U.S.A. clarified the Penn Central factors for evaluating
partial regulatory takings claims that do not fit within either per se category. Those
factors are intended to shed light on "the magnitude or character ofthe burden a
particular regulation imposes upon private property rights" and to provide
"information about how any regulatory burden is distributed among property
owners." Id. at 542. The factors explicitly do not ask "whether a regulation of
private property is effective in achieving some legitimate public purpose." Id.
By contrast, our prior regulatory takings cases allow a regulation to be
"insulated from a 'takings' challenge" if it "protects the public from harm" and
require courts to consider whether the challenged "regulation substantially
Some amici appear to contend that we should now adopt Manufactured Housing'?,
definition of per se regulatory takings as a matter of independent state law. However, amici's
arguments are all based on Washington's more protective definitions of public and private uses,
which, as discussed above, are relevant only to the appropriate remedy once a taking has been
established. No party or amicus performs a Gunwall analysis or provides any other principled
basis on which to define regulatory takings broadly as a matter of independent state law. See
Gunwall, 106 Wash. 2d 54. We therefore decline to do so.
23
Yim et al. v. City ofSeattle, No. 95813-1
advances legitimate state interests." Presbytery, 114 Wash. 2d at 330, 333; see also
Margola Assocs., 121 Wash. 2d at 645-46; Guimont, 121 Wash. 2d at 603-04; Robinson,
119 Wash. 2d at 49-50; Sintra, 119 Wash. 2d at 14-17; Orion Corp., 109 Wash. 2d at 658.
That precedent can no longer be valid because it may provide less protection for
private property rights than the federal constitution does. See Orion Corp., 109
Wash. 2d at 652, 657-58.
In sum,today we continue our long-standing practice of following federal
law in defining regulatory takings and explicitly adopt the definition set forth in
Chevron U.S.A. Pursuant to Chevron U.S.A., there are only two categories of per
se regulatory takings:(1)"where government requires an owner to suffer a
permanent physical invasion of her property" and (2)"regulations that completely
deprive an owner of'all economically beneficial us[e]' of her property." 544 U.S.
at 538 (alteration in original)(quoting Lucas, 505 U.S. at 1019). If an alleged
regulatory taking does not fit into either category, it must be considered on a case-
by-case basis in accordance with the Penn Central factors. Id. at 538-39.
3. The plaintiffs do not show that the FIT rule facially effects a
regulatory taking
The plaintiffs do not argue that the FIT rule fits into either of the per se
categories set forth in Chevron U.S.A., and it clearly does not. On its face, the FIT
rule does not require any property owners to suffer any permanent physical
invasion of their properties, and the plaintiffs do not contend that the FIT rule
24
Yim et al. v. City ofSeattle, No. 95813-1
deprives them of any economically beneficial uses of their properties, let alone
every economically beneficial use. The plaintiffs also do not contend that the FIT
rule is a regulatory taking pursuant to the Penn Central factors.^ We therefore
reverse the trial court and hold that the plaintiffs have not shown the FIT rule
facially effects a regulatory taking of their property.
B. Because the plaintiffs have not shown that the FIT rule effects a taking, we
do not reach the issue of whether it is for private use
The plaintiffs contend that the regulatory taking effected by the FIT rule is
for private use, rather than public use, and is therefore invalid. Because we hold
that the plaintiffs do not show the FIT rule effects a taking at all, we decline to
consider the public/private use distinction. As discussed above, that distinction is
relevant only to the appropriate remedy where a taking has been shown, and no
taking has been shown here.
C. The FIT rule does not facially violate substantive due process
The plaintiffs next claim that the FIT rule facially violates their article I,
section 3 right to substantive due process, contending that the FIT rule is subject to
heightened scrutiny because it regulates a fundamental attribute of property
ownership. We hold that the applicable standard is rational basis review, which the
FIT rule survives.
^ We express no opinion on whether application of the Penn Central factors would show
that the FIT rule effects a regulatory taking as applied to any particular property.
25
Yim et al. v. City ofSeattle, No. 95813-1
1. The FIT rule is subject to rational basis review
As discussed in more detail in our opinion in Yim II, we have never held that
independent state law requires a heightened standard of review for substantive due
process challenges to laws regulating the use of property. Instead, we have always
looked to federal law to discern the appropriate standard of review, and it has not
been shown that we should adopt a heightened standard now as a matter of
independent state law. We therefore hold that the plaintiffs' article I, section 3
substantive due process claim is subject to the same standard that would apply if
their claims were based on the due process clauses of the Fifth and Fourteenth
Amendments. That standard is rational basis review.
We recognize that some United States Supreme Court precedent might
suggest heightened scrutiny is required by stating that laws regulating the use of
property must not be '"unduly oppressive'" on the property owner, or must have a
'"substantial relation'" to a legitimate government purpose. Goldblatt, 369 U.S. at
595 (quoting Lawton, 152 U.S. at 137); Nectow v. City of Cambridge, 211 U.S.
183, 187, 48 S. Ct. 447, 72 L. Ed. 842(1928)(quoting Village ofEuclid v. Ambler
Realty Co., 272 U.S. 365, 395, 47 S. Ct. 114, 71 L. Ed. 303 (1926)). However,the
United States Supreme Court does not interpret this language as requiring
heightened scrutiny. Instead, the "unduly oppressive" test has been interpreted as
"applying a deferential 'reasonableness' standard." Chevron U.S.A., 544 U.S. at
26
Yim et al. v. City ofSeattle, No. 95813-1
541 (internal quotation marks omitted)(citing and quoting Goldblatt, 369 U.S. at
594-95; Lawton, 152 U.S. at 137). Likewise, it has long been acknowledged that
"the use of property and the making of contracts are normally matters of private
and not of public concern," but "[ejqually fundamental with the private right is that
of the public to regulate it in the common interest." Nebbia v. New York, 291 U.S.
502, 523, 54 S. Ct. 505, 78 L. Ed. 940 (1934).
Therefore, a law regulating the use of property violates substantive due
process only if it "fails to serve any legitimate governmental objective," making it
"arbitrary or irrational." Chevron U.S.A., 544 U.S. at 542; see also Kentner v. City
ofSanibel, 750 F.3d 1274, 1280-81 (11th Cir. 2014), cert, denied, 135 S. Ct. 950
(2015); Samson v. City ofBainbridge Island, 683 F.3d 1051, 1058 (9th dr.), cert,
denied, 568 U.S. 1041 (2012). This test con-esponds to rational basis review,
which requires only that "the challenged law must be rationally related to a
legitimate state interest." Amunrud, 158 Wash. 2d at 222. We therefore apply
rational basis review to the plaintiffs' substantive due process challenge to the FIT
rule.^
® Appended to our opinion in Yim II is a nonexclusive list of this court's precedent that
can no longer be interpreted as requiring heightened scrutiny in substantive due process
challenges to laws regulating the use of property.
27
Yim et al. v. City ofSeattle, No. 95813-1
2. The FIT rule survives rational basis review on its face
Rational basis review requires that "the challenged law must be rationally
related to a legitimate state interest." Id. Rational basis review is highly
deferential because "a court may assume the existence of any necessary state of
facts which it can reasonably conceive in determining whether a rational
relationship exists between the challenged law and a legitimate state interest." Id.
The purpose of the FIT rule is to mitigate the impact of implicit bias in
tenancy decisions. The plaintiffs appear to suggest this is not a legitimate
government interest because "implicit bias can be both positive and negative."
Resp'ts' Br. at 41. However, the fact that implicit bias may work to some people's
advantage some of the time does not mean that mitigating its impact is an
illegitimate purpose. Indeed, this court has recognized the importance of
mitigating implicit bias in the context ofjury selection with the enactment of GR
37. The plaintiffs do not show that implicit bias must be allowed to continue in the
rental housing context.
The FIT rule's requirements are also rationally related to achieving its
purpose. A rational person could believe that implicit bias will be mitigated by
requiring landlords to offer tenancy to the first qualified applicant, rather than
giving landlords discretion to reject an otherwise-qualified applicant based on a
"gut check." Verbatim Report of Proceedings (Feb. 23, 2018) at 36. It is precisely
28
Yim et al. v. City ofSeattle, No. 95813-1
in such gut-check decisions where implicit bias is most likely to have influence
because bias is "often unintentional, institutional, or unconscious." State v.
Saintcalle, 178 Wash. 2d 34, 36, 309 P.3d 326(2013)(plurality opinion), abrogated
on other grounds by City ofSeattle v. Erickson, 188 Wash. 2d 721, 398 P.3d 1124
(2017).
Indeed, the FIT rule's requirements are based on best practices
recommended by industry associations, who advise that "[ujsing a set criteria also
helps show that you are screening all applicants alike and can help avoid claims of
discrimination by applicants not granted tenancy." CP at 315. Landlords are
therefore advised to offer tenancy to the first qualified applicant "as a best practice
when confronted with multiple, equally valid applications as a 'tie breaker.'" Br.
of Amicus Curiae Rental Hons. Ass'n of Wash, at 3. Appearing as amici, several
rental housing associations emphatically state that they do not support the FIT rule.
Nevertheless, the procedures required by the FIT rule are consistent with industry-
recommended best practices. Amici object only to making those practices
mandatory, contending that doing so is unwise and will prove ineffective.
Rational basis review does not invite a demanding inquiry by this court into
whether the FIT rule is good policy. Instead, our task is limited to deciding
whether mandating industry-recommended best practices for avoiding
29
Yim et al. v. City ofSeattle, No. 95813-1
discrimination in tenancy decisions is rationally related to reducing the influence of
implicit bias in tenancy decisions. The answer is clearly yes.
The plaintiffs further suggest that the FIT rule fails rational basis review
because it is overbroad, given that "non-legal approaches" could be used instead
and the FIT rule applies "even where a protected class is not among the landlords'
applicant pool." Resp'ts' Br. at 41. However,"[t]he overbreadth doctrine may not
be employed unless First Amendment activities are within the scope ofthe
challenged enactment." City ofSeattle v. Montana, 129 Wash. 2d 583, 598, 919 P.2d
1218 (1996)(plurality opinion); U.S. Const, amend. I. Thus, any assertion of
overbreadth is irrelevant to the plaintiffs' facial substantive due process claim. The
plaintiffs' free speech claim is addressed separately below.
It may well be that the FIT rule will prove ineffective or unwise as a matter
of policy. However,the plaintiffs do not carry their "'heavy burden'" of showing
that it facially violates substantive due process as a matter of law. Amunrud, 158
Wash. 2d at 215 (quoting Larson v. Seattle Popular Monorail Auth., 156 Wash. 2d 752,
757, 131 P.3d 892(2006)). We therefore reverse the trial court and hold that the
FIT rule survives rational basis review on its face.
D. The FIT rule does not facially violate free speech rights
Finally, the plaintiffs claim that the FIT rule facially violates their article I,
section 5 right to free speech. It is undisputed that the speech at issue here
30
Yim et al. v. City ofSeattle, No. 95813-1
(advertisements for vacant tenancies) is "commercial speech," that is,'"speech
proposing a commercial transaction.'" Zauderer v. Office ofDisciplinary Counsel,
471 U.S. 626, 637, 105 S. Ct. 2265, 85 L. Ed. 2d 652(1985)(quoting Ohralikv.
Ohio State Bar Ass'n, 436 U.S. 447, 455-56, 98 S. Ct. 1912, 56 L. Ed. 2d 444
(1978)). It is also undisputed that article I, section 5 and the First Amendment
provide identical protections for commercial speech. Bradburn v. N. Cent. Reg'I
Library Dist., 168 Wash. 2d 789, 800, 231 P.3d 166 (2010).
The main focus of the parties' dispute is the level of scrutiny that we must
apply to the FIT rule. The trial court agreed with the plaintiffs that the FIT rule is
subject to intermediate scrutiny and "cannot survive." CP at 520. We reverse.
The FIT rule is subject to, and survives, deferential scrutiny.
1. The FIT rule is subject to deferential scrutiny
"'[Cjommercial speech' is entitled to the protection of the First Amendment,
albeit to protection somewhat less extensive than that afforded 'noncommercial
speech.'" Zauderer, 471 U.S. at 637. The level of scrutiny applied to laws
governing commercial speech depends on whether the law at issue actually
restricts commercial speech or merely requires commercial speakers to include
factual disclosures. Id. at 650.
Where a law restricts truthful commercial speech proposing a lawful
transaction, the law is subject to intermediate scrutiny. Cent. Hudson Gas & Elec.
31
Yim et al. v. City ofSeattle, No. 95813-1
Corp. V. Pub. Serv. Comm 'n, 447 U.S. 557, 564, 100 S. Ct. 2343, 65 L. Ed. 2d 341
(1980). Meanwhile, if the law merely requires factual disclosures by commercial
speakers, review is deferential because a person's "constitutionally protected
interest in not providing any particular factual information in his advertising is
minimal." Zauderer, 471 U.S. at 651. Therefore,"an advertiser's rights are
adequately protected as long as disclosure requirements are reasonably related to
the State's interest in preventing deception of consumers." Id. The government
has the burden of proving its disclosure requirements are "neither unjustified nor
unduly burdensome." Nat'llnst. ofFamily & Life Advocates v. Becerra, 585 U.S.
, 138 S. Ct. 2361, 2377, 201 L. Ed. 2d 835 (2018)(NIFLA).
The plaintiffs contend that the FIT rule is a restriction on their commercial
speech because the FIT rule provides that "[IJandlords cannot decline to
communicate a minimum threshold or communicate a flexible standard and then
weigh the credit history against other positive or negative factors in the
application." Resp'ts' Br. at 43. Nothing in the text of the FIT rule supports the
plaintiffs' contention.
Washington law already provides that "[pjrior to obtaining any information
about a prospective tenant, the prospective landlord shall first notify the
prospective tenant" of the "types of information [that] will be accessed to conduct
the tenant screening" and "[wjhat criteria may result in denial of the application."
32
Yim et al. v. City ofSeattle, No. 95813-1
RCW 59.18.257(1)(a)(i)-(ii). The validity of that statute is not challenged here.
The FIT rule merely provides that if property owners have additional rental criteria
beyond what may result in a denial, they must "at the same time" give prospective
tenants notice of what those criteria are and how they may be met. SMC
14.08.050(A)(1).
On its face, the FIT rule does not impose any restrictions on what the
landlord's additional criteria may be or how they must be worded, and, contrary to
the trial court's finding, it does not facially preclude advertisements for vacant
tenancies from including phrases such as '"call to learn how to apply' or 'email me
for further details.'" CP at 518. If the FIT rule is interpreted to impose such
restrictions in the future, a property owner may bring an as-applied challenge that
might be subject to heightened scrutiny. However, on its face, the FIT rule
requires only that landlords disclose factual information about their own rental
criteria. It is therefore subject to deferential scrutiny in accordance with Zanderer.
2. The FIT rule survives deferential scrutiny
The plaintiffs analyze their free speech claim only in accordance with
intermediate scrutiny. However, it is still the City's burden to prove that the FIT
rule survives deferential scrutiny. NIFLA, 138 S. Ct. at 2377. We hold the City
has met its burden because on its face, the FIT rule is a justified disclosure
requirement that does not unduly burden the plaintiffs' free speech rights.
33
Yim et al. v. City ofSeattle, No. 95813-1
To prove that the FIT rule is justified, the City must show that it addresses
"a harm that is 'potentially real not purely hypothetical.'" Id. (quoting Ibanez v.
Fla. Dep'tofBus. & ProfI Regulation, 512 U.S. 136, 146, 114 S. Ct. 2084, 129
L. Ed. 2d 118 (1994)). The City has shown that the problem of implicit bias in
Seattle's rental housing market is (at least) potentially real, based on a 2014 study
that "showed evidence of differential treatment in over 60% of the tests" based on
"race, national origin, sexual orientation and gender identity." City of Seattle's
Opening Br. at 7; CP at 57. This differential treatment included subjecting
different applicants to different rental criteria:
African American and Latino testers were told about criminal
background and credit history checks more frequently than the white
testers. They also were asked more often about their spouses'
employment history (especially with Latino testers). They also were
shown and told about fewer amenities, provided fewer applications
and brochures, were shown fewer vacant units. In some cases, the
prices quoted were higher for the same unit.
Testers for sexual orientation and gender identity were shown fewer
amenities, provided fewer applications and brochures, and were
shown fewer vacant units. In some cases, the prices quoted were
higher for the same unit.
CP at 57. This is sufficient justification for the FIT mle's enactment.
To prove that the FIT rule does not "unduly burden[]protected speech," the
City must show that it does not impose "a government-scripted, speaker-based
disclosure requirement that is wholly disconnected from [the Cityj's informational
interest." NIFLA, 138 S. Ct. at 2377. It clearly does not. The landlords are
34
Yim et al. v. City ofSeattle, No. 95813-1
required to disclose only the rental criteria they set for themselves, so the FIT rule
does not impose any type of script. In addition, requiring landlords to disclose
their rental criteria is directly connected to the City's interest in ensuring that the
same rental criteria are applied to all applicants rather than subjecting some
applicants to more demanding criteria due to the influence of implicit bias.
We therefore reverse the trial court and hold that the FIT rule survives
deferential scrutiny on its face.
CONCLUSION
The FIT rule is unquestionably an experiment. This is clear from the rule
itself, which requires "the City Auditor to conduct an evaluation ofthe impact of
the program described in subsections 14.08.050.A-C to determine if the program
should be maintained, amended, or repealed." SMC 14.08.050(D). There is room
for substantial debate about whether such an experiment is likely to succeed.
However, the plaintiffs' facial challenges ask only whether the FIT rule is an
experiment that Seattle is constitutionally prohibited from conducting. It is not.
We clarify that Washington courts have always attempted to define
regulatory takings consistently with federal law, and we continue to do so now.
Therefore, we adopt the definition of regulatory takings set forth in Chevron U.S.A.
for purposes of article I, section 16 and hold that the plaintiffs have not met their
burden of showing the FIT rule facially meets this definition. We also clarify that
35
Yim et al. v. City ofSeattle, No. 95813-1
rational basis review applies in substantive due process challenges to laws
regulating the use of property and hold that the plaintiffs have not met their burden
of proving that the FIT rule fails rational basis review on its face. Finally, we hold
that on its face, the FIT rule requires only factual disclosures and the City has met
its burden of showing the FIT rule survives deferential scrutiny.
We therefore reverse the trial court and remand with instructions to grant the
City's motion for summary judgment.
36
Yim, etal., v. City ofSeattle,Y\o. 95813-1
WE CONCUR:
H2^('e-7
37