27 F.4th 1377
8th Cir.2022Background
- Minneapolis Ordinance No. 244.2030 (2019) requires landlords to use either "inclusive screening criteria" (bars rejecting applicants for specified criminal, credit, or rental history) or an "individualized assessment" (permits rejection but mandates consideration of applicant-supplied supplemental evidence and written explanations for denials).
- Owners/managers of multi-unit residential buildings sued, alleging violation of the Fifth Amendment Takings Clause and the Fourteenth Amendment Due Process Clause (and state constitutional analogues).
- The district court denied a preliminary injunction, finding no irreparable harm or likelihood of success on the merits; landlords appealed to the Eighth Circuit.
- The landlords argued the ordinance effects either a physical-invasion taking (compelling landlords to rent to certain individuals) or a regulatory taking under Penn Central, and that the individualized-assessment option is illusory and burdensome.
- The City defended the ordinance as a permissible regulation (not a physical occupation), pointed to Yee and Penn Central framework, and argued the ordinance survives rational-basis review on due process claims.
- The Eighth Circuit affirmed the denial of the preliminary injunction, concluding no likely success on Takings or substantive due process claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Physical-invasion taking | Ordinance forces landlords to accept tenants they would otherwise disqualify—a permanent physical invasion requiring compensation | Ordinance regulates use; landlords voluntarily rent and may avoid regulation by exiting market; individualized-assessment option prevents compelled occupation | Not a physical-invasion taking: individualized-assessment option means regulation of use, not compelled physical occupation |
| Regulatory (Penn Central) taking | Even under individualized-assessment, procedural burdens are onerous and economically harmful—Penn Central factors support a taking | Landlords offered no concrete evidence of economic impact or interference with investment-backed expectations; character of action is regulatory public program | No Penn Central taking: landlords failed to show economic harm or frustrated expectations; character favors regulation rather than physical invasion |
| Individualized-assessment is illusory/procedurally void | The required review of broad supplemental materials is time-consuming, costly, and creates exposure to penalties and civil suits | Burdens are speculative; plaintiffs produced only conclusory assertions, not evidence of increased costs or volume of supplemental materials | Court rejects illusory-ness claim at injunction stage for lack of evidentiary support |
| Substantive due process (right to exclude) | Ordinance infringes landlords' fundamental property right to exclude tenants without process | Right to exclude is not shown to be a fundamental right for substantive due process; ordinance only requires procedures before exclusion and is rationally related to legitimate housing goals | No substantive due process violation: not a fundamental-right infringement; ordinance survives rational-basis review |
Key Cases Cited
- Cedar Point Nursery v. Hassid, 141 S. Ct. 2063 (2021) (distinguishes physical appropriation from regulatory use restrictions and frames Penn Central analysis)
- Penn Cent. Transp. Co. v. New York City, 438 U.S. 104 (1978) (establishes multi-factor regulatory-taking test)
- Yee v. City of Escondido, 503 U.S. 519 (1992) (renting voluntarily limits per se physical-taking claims based on tenant-selection rules)
- Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982) (statute requiring physical installation held a per se physical taking)
- Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 535 U.S. 302 (2002) (distinguishes temporary moratoria from per se physical takings)
- Horne v. Dep’t of Agric., 576 U.S. 350 (2015) (rejects voluntariness defense to physical taking in context of compelled commodity surrender)
- PruneYard Shopping Ctr. v. Robins, 447 U.S. 74 (1980) (rejects substantive due process claim based on restrictions on private property speech)
- Lingle v. Chevron U.S.A. Inc., 544 U.S. 528 (2005) (clarifies takings vs. due process analysis)
- Iowa Assur. Corp. v. City of Indianola, 650 F.3d 1094 (8th Cir. 2011) (applies voluntariness rationale in takings context)