In a concise December 7, 2020 opinion, Hotop v. City of San Jose, __ F.3d __ (2020) (Case No. 18-16995), a 3-0 panel of the Ninth Circuit Court of Appeals affirmed the district court’s dismissal of an action alleging that portions of San Jose’s “Apartment Rent Ordinance” violated the Fourth, Fifth, Fourteenth, and Contracts Clause rights of individual apartment owners and an unincorporated trade association of San Jose landlords. The challenged regulations require landlords to disclose information about rent stabilized units to the City and condition landlords’ ability to increase rents on providing that information. In essence, the regulations limit rent increases on approximately 38,000 apartments in San Jose. Although the regulations have existed in various forms since 1979, San Jose remains one of the least affordable communities in the United States.
Skipping the question whether there had even been a “search” within the meaning of the Fourth Amendment’s prohibition against unreasonable searches, the panel first held that plaintiffs failed to adequately allege that they have a reasonable expectation of privacy in the information contained in the business records the City requires. The panel noted that the complaint did not contain any factual allegations distinguishing the information from the similar information landlords already provide to the City in other contexts under regulations whose validity has not been challenged.
The panel held that the ordinance did not cause any type of per se taking such as by a physical invasion or by depriving the property owner of all beneficial use of the property. Thus, any takings claim had to be judged under the multi-factor test established in Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978). Although the plaintiffs complained of a Penn Central taking on appeal, the panel agreed with the district court that the operative complaint alleged no facts that would plausibly assert a regulatory taking.
The panel determined that plaintiffs did not specify how the disclosure requirements affect contracts and thus failed to state a Contacts Clause claim. The panel further rejected plaintiffs’ equal protection claim because they are not members of a “suspect class” and their substantive and procedural due process claims because they failed to show they were deprived of a “constitutionally protected life, liberty, or property interest.” Finally, the panel determined that the regulations did not violate the “unconstitutional conditions” doctrine as explained in Koontz v. St. Johns River Water Management District, 570 U.S. 595 (2013) and held that “there can be no ‘unconstitutional conditions’ when there is no unconstitutionality.”