Dean Hotop v. City of San Jose, 982 F.3d 710

Background

In 2017 San Jose adopted an ordinance and implementing regulations amending its Apartment Rent Ordinance to require landlords of rent-stabilized units to disclose business and tenancy information to the City (annual registration, re-registration on vacancy, and submitted buyout agreements).
Required disclosures include unit address, landlord names and addresses, tenant names, tenancy start dates, rent history, security deposit, metering status, and copies of rental or buyout agreements; noncompliance carries civil penalties and possible misdemeanor charges and can bar rent increases for unregistered units.
Plaintiffs (individual landlords and a landlords’ trade association) sued under 42 U.S.C. § 1983 asserting Fourth, Fifth, and Fourteenth Amendment violations and a Contracts Clause violation; the district court dismissed the first amended complaint without prejudice and plaintiffs stood on that pleading.
The complaint alleged only that the required disclosures were private business records not publicly available and did not plead facts distinguishing the challenged disclosures from other information landlords already must submit to the City under existing regulations.
The Ninth Circuit reviewed de novo and affirmed dismissal, holding plaintiffs failed to plausibly allege a Fourth Amendment search or viable Fifth Amendment, Contracts Clause, equal protection, or due process claims; Judge Bennett concurred in result and argued there was simply no Fourth Amendment search.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Ordinance effects a Fourth Amendment search by compelling disclosure of business records	The mandatory disclosures invade landlords’ reasonable expectation of privacy in their business records	The City contends either no search occurs (information collection via regulatory process) or, at minimum, plaintiffs lack a reasonable expectation of privacy because similar information is already submitted under other rules	Affirmed dismissal: plaintiffs failed to plausibly allege a reasonable expectation of privacy in the disclosed information; Judge Bennett would have held no search occurred at all
Whether the Ordinance effects a per se Fifth Amendment taking or a regulatory taking	The Ordinance effectively takes property by restricting rent increases and conditioning them on disclosures	The City argues it effects no per se taking and plaintiffs plead no facts satisfying Penn Central factors for a regulatory taking	Affirmed dismissal: not a per se taking; complaint alleges no facts to support a Penn Central regulatory-taking claim
Whether the Ordinance substantially impairs contracts in violation of the Contracts Clause	The disclosure rules impair landlords’ contracts with tenants	The City argues plaintiffs do not identify how specific contractual rights are substantially impaired	Affirmed dismissal: plaintiffs’ allegation is vague and fails to plead how contracts are affected
Whether the Ordinance violates equal protection, substantive/procedural due process, or the unconstitutional-conditions doctrine	Ordinance discriminates and forces unconstitutional choices (privacy vs. penalties); conditions rent increases on surrendering rights	The City argues distinctions survive rational-basis review, plaintiffs plead no protected interest deprivation, and there is no unconstitutional condition absent an underlying constitutional violation	Affirmed dismissal: distinctions rationally related to legitimate objectives; no pleaded liberty/property interest deprivation; unconstitutional-conditions claim fails because no underlying constitutional violation

Key Cases Cited

United States v. Jones, 565 U.S. 400 (search requires physical trespass or equivalent)
Katz v. United States, 389 U.S. 347 (reasonable-expectation-of-privacy framework)
Penn Central Transp. Co. v. New York City, 438 U.S. 104 (multi-factor regulatory takings test)
Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (per se physical-invasion taking)
Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (per se total-loss-of-use taking)
Patel v. City of Los Angeles, 738 F.3d 1058 (en banc) (administrative on-site inspections of business records can be Fourth Amendment searches)
City of Los Angeles v. Patel, 576 U.S. 409 (same; Supreme Court emphasized need for precompliance judicial review for such inspections)
San Francisco Apartment Ass’n v. City & Cnty. of San Francisco, 881 F.3d 1169 (no reasonable expectation of privacy where similar business information is routinely submitted to government)
Carpenter v. United States, 138 S. Ct. 2206 (government compelled production of certain records can be a search when obtained via process)
United States v. Morton Salt Co., 338 U.S. 632 (compelled production under process can constitute a constructive search)