DEAN HOTOP; KEN SCHNEEBELI; JEFF ZELL; SHERMAN ZELL; LOIS ZELL; LOUISE PETER; SEIGI TADOKORO; PAT CREMA; SEAN RHINEHART; SHUCHUN HUANG; JAMES CAMPAGNA; SAL RUIZ; ISAAC AGAM; STEVE MAHL; LLOYD KIP; ROBERTA MOORE; DENG LIU; SHASHA CHEN; SMALL PROPERTY OWNERS ASSOCIATION - SAN JOSE; ZHONGHUA PEI; XIAOCONG YE; XIAODONG LI, Plaintiffs-Appellants, v. CITY OF SAN JOSE, a municipal corporation, Defendant-Appellee.
No. 18-16995
United States Court of Appeals for the Ninth Circuit
December 7, 2020
D.C. No. 5:18-cv-02024-LHK. Appeal from the United States District Court for the Northern District of California, Lucy H. Koh, District Judge, Presiding. Argued and Submitted January 9, 2020, Pasadena, California.
Before: Paul J. Watford, Mark J. Bennett, and Kenneth K. Lee, Circuit Judges.
Per Curiam Opinion; Concurrence by Judge Bennett
SUMMARY*
Civil Rights
The panel affirmed the district court‘s dismissal of an action alleging that certain
The challenged provisions and regulations require landlords to disclose information about rent stabilized units to the City and condition landlords’ ability to increase rents on providing that information. Specifically, landlords are required to complete an annual registration of their rent stabilized units, re-register whenever a tenant vacates a rent stabilized unit, and comply with certain requirements when offering to buy out a tenant‘s lease.
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 at issue. The panel noted that the complaint did not contain any factual allegations distinguishing the information at issue in this case from the similar information landlords already provide to the City in other contexts under regulations whose validity has not been challenged. Because plaintiffs had not plausibly alleged that the challenged provisions effected a search, their Fourth Amendment claim failed.
The panel held that the ordinance did not work any type of per se taking, for example 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 enunciated in Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978). 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 failed to state a Contacts Clause claim. The panel further rejected plaintiffs’ equal protection claim and the substantive and procedural due process claims. Finally, the panel determined that the 2017 Ordinance did not violate the “unconstitutional conditions” doctrine, as enunciated in Koontz v. St. Johns River Water Management District, 570 U.S. 595 (2013).
Concurring in part II and concurring in the result, Judge Bennett stated that he would deny plaintiffs’ Fourth Amendment claim because the City had conducted no Fourth Amendment search. The Supreme Court‘s Fourth Amendment jurisprudence has consistently found that government collection of information effects a search only when it involves some physical intrusion or its functional equivalent. Judge Bennett fully concurred with the majority‘s opinion that the remaining claims also lacked merit.
COUNSEL
Frank A. Weiser (argued), Los Angeles, California, for Plaintiffs-Appellants.
Barbara J. Parker, City Attorney; Maria Bee, Chief Assistant City Attorney; Erin Bernstein, Supervising Deputy City Attorney; Jaclyn Harris, Neighborhood Law Corps Attorney; Kent Qian, Deputy City Attorney; Office of the City Attorney, Oakland, California; for Amicus Curiae League of California Cities.
Whitty Somvichian and Brandon V. Stracner, Cooley LLP, Palo Alto, California; Nadia Aziz, Law Foundation of Silicon Valley; for Amici Curiae Law Foundation of Silicon Valley and Sacred Heart Community Service.
OPINION
PER CURIAM:
In 2017, the City of San Jose passed Ordinance 30032 (“Ordinance“) to amend the City‘s Apartment Rent Ordinance, and adopted Resolution 78413 to establish regulations for implementing the Ordinance (“Regulations“). Certain provisions of the Ordinance and Regulations require landlords to disclose information about rent stabilized units to the City and condition landlords’ ability to increase rents on providing that information. These provisions are challenged by individual apartment owners subject to the Ordinance and by the Small Property Owners Association-San Jose, an unincorporated trade association of San Jose landlords. Plaintiffs sued under
I
Plaintiffs’ Fourth Amendment claim is predicated on their theory that the Ordinance and Regulations violate the prohibition against unreasonable searches by requiring landlords to provide certain information to the City through the Director of the Department of Housing. The claim implicates three different disclosure requirements applicable to rent stabilized units.1
First, plaintiffs point to the required annual registration of rent stabilized units under San Jose Municipal Code (“SJMC“)
Landlords violating the Ordinance face civil penalties and misdemeanor criminal charges punishable by up to six months in jail.
The first question raised by plaintiffs’ Fourth Amendment claim is whether the challenged provisions effect a “search.” A Fourth Amendment search occurs when the government either physically intrudes upon “persons, houses, papers, [or] effects” or invades “a person‘s ‘reasonable expectation of privacy‘” in one of the constitutionally enumerated areas. United States v. Jones, 565 U.S. 400, 405-06 (2012) (quoting Katz v. United States, 389 U.S. 347, 360 (1967)). With respect to searches of “papers,” we need not decide whether the Fourth Amendment is implicated only by a physical inspection of the documents themselves. Even if the Fourth Amendment is implicated by certain non-physical intrusions, in that context the plaintiff must have a reasonable expectation of privacy in the contents of the documents before the government‘s conduct can be deemed a Fourth Amendment “search.” And here, as the district court held, plaintiffs failed to adequately allege that they have a reasonable expectation of privacy in the information contained in the business records at issue.3
Plaintiffs’ sole substantive allegation regarding privacy is that the information they must disclose under the challenged provisions “constitute plaintiffs’ private business records that is not found in the public domain.” The district court found this lone allegation, without additional factual matter, insufficient to establish a reasonable expectation of privacy in the information subject to disclosure. The court noted that San Jose landlords are already required to provide similar information
Confronted with this overlap, the district court concluded that plaintiffs’ lone allegation concerning privacy does not “explain how the information implicated by the Ordinance disclosure requirements differs meaningfully from” the information landlords already disclose in other contexts. The court thus dismissed plaintiffs’ Fourth Amendment claim with leave to amend. As noted, however, plaintiffs did not amend their complaint, and they rely on the same lone allegation on appeal.
We agree with the district court that plaintiffs’ complaint fails to allege facts plausibly suggesting that they have a reasonable expectation of privacy in the information that must be disclosed under the challenged provisions. The complaint does not contain any factual allegations distinguishing the information at issue in this case from the similar information landlords already provide to the City in other contexts under regulations whose validity has not been challenged.
The district court‘s ruling is supported by our recent decision in San Francisco Apartment Association v. City and County of San Francisco, 881 F.3d 1169 (9th Cir. 2018). In that case, landlords in San Francisco argued that a similar ordinance, which required landlords to provide tenant buyout agreements to the city for inclusion in a publicly searchable database, violated their right to privacy under the California Constitution. See id. at 1173-75. Affirming the district court‘s grant of judgment on the pleadings, we held that the landlords had no “reasonable expectation of privacy in the information” because they “offer no explanation why” the information at issue “is more sensitive or private than other financial information routinely submitted to the government and made publicly available” in other contexts. Id. at 1178; see also In re Facebook, Inc. Internet Tracking Litigation, 956 F.3d 589, 604 n.7 (9th Cir. 2020) (treating as comparable the reasonable expectation of privacy under the California Constitution and the Fourth Amendment). The district court applied the same rule here: As in San Francisco Apartment Association, plaintiffs in this case offered no factual allegations plausibly suggesting that they maintain a reasonable expectation of privacy in information
Our decision in Patel v. City of Los Angeles, 738 F.3d 1058 (9th Cir. 2013) (en banc), aff‘d, 576 U.S. 409 (2015), on which plaintiffs rely, is not to the contrary. The ordinance challenged in Patel permitted police officers to perform warrantless, on-demand inspections of hotel owners’ guest registries. Id. at 1061. But in that case no one contested that the information contained in the guest registries was private, for it was undisputed that hotel owners “do not ordinarily disclose, and are not expected to disclose, the kind of commercially sensitive information contained in the [guest registries].” Id. at 1062. Because there was no indication in Patel that the hotel owners provided their guest registries or similar information to the government in other situations, the plaintiffs did not need to allege additional facts concerning the private nature of the information contained in the registries. Here we confront the opposite situation. As a result, for the reasons discussed above, additional factual allegations were necessary before the district court could plausibly infer that plaintiffs maintained a reasonable expectation of privacy in the information contained in the business records at issue. And despite being afforded an opportunity to allege additional facts in support of their claims, plaintiffs declined to do so.
As we hold that plaintiffs have not plausibly alleged that the challenged provisions effect a search, their Fourth Amendment claim fails.
II
Plaintiffs’ remaining claims also lack merit.
A. Fifth Amendment Takings Claim
Plaintiffs contend the Ordinance effects a per se taking of private property, in violation of the Fifth Amendment. But the Ordinance does not work any type of per se taking, for example by a physical invasion, Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982), or by depriving the property owner of all beneficial use of the property, Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992). Thus, any takings claim must be judged under the multi-factor test enunciated in Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978). These factors include (1) “[t]he economic impact of the regulation on the claimant,” (2) “the extent to which the regulation [interferes] with distinct investment-backed expectations,” and (3) “the character of the government action.” Id. at 124.
Plaintiffs complain of a regulatory taking on appeal, but as the district court correctly found, the operative complaint alleges no facts that would plausibly assert a regulatory taking. Indeed, the only allegation even arguably relevant to a regulatory taking claim is that landlords “cannot increase rents on their tenants” if they fail to comply with the Ordinance and Regulations.
B. Contracts Clause Claim
“The threshold issue [in a Contracts Clause analysis] is whether the state law has ‘operated as a substantial impairment of a contractual relationship.’ In answering that question, the Court has considered the extent to which the law undermines the contractual bargain, interferes with a party‘s reasonable expectations, and prevents the party from safeguarding or reinstating his rights.” Sveen v. Melin, 138 S. Ct. 1815, 1821-22 (2018) (citation omitted). As the district court correctly found, “Plaintiffs include only the vague allegation that the Ordinance and Regulations affect plaintiffs’ contracts with their tenants, but plaintiffs do not specify how the Ordinance disclosure requirements affect those contracts.”5 Plaintiffs have not stated a Contracts Clause claim.
C. Equal Protection
We review plaintiffs’ equal protection claim under the rational basis test, as they are not members of a suspect class. Dandridge v. Williams, 397 U.S. 471, 485 (1970).6 Plaintiffs allege no facts that even arguably show the Ordinance‘s various distinctions (including between unit types) are irrational, nor do they argue this on appeal. That alone is reason to reject their equal protection claim. That said, we agree with the district court that the distinctions drawn by the Ordinance appear easily to survive rational basis review. For example, the set of units covered by the Apartment Rent Ordinance was not expanded to include duplexes because the City would need to expend significant resources to transition thousands of new owners into the program. See Woods v. Miller Co., 333 U.S. 138, 145 (1948) (“[A legislative body] need not control all rents or none. It can select those areas or those classes of property where the need seems the greatest.“); see also Equity Lifestyle Properties, Inc. v. County of San Luis Obispo, 548 F.3d 1184, 1195 (9th Cir. 2008) (affirming dismissal of an equal protection challenge where the regulation of mobile home park rents satisfied rational basis review as the regulation was motivated by “distinguishing characteristics relevant to interests the State has the authority to implement” (citation omitted)).
D. Substantive and Procedural Due Process
Plaintiffs assert both substantive and procedural due process claims.7 But both require, as a threshold matter, that plaintiffs show they were deprived of a “constitutionally protected life, liberty or property interest.” Dressel” cite=“540 F.3d 1082” pinpoint=“1087” court=“9th Cir.” date=“2008“>Shanks v. Dressel, 540 F.3d 1082, 1087 (9th Cir. 2008) (discussing substantive due process); id. at 1090 (stating that to be entitled to relief under a procedural due process claim, a plaintiff must establish (1) a protected liberty or property interest, (2) the governmental deprivation of that interest, and (3) a “lack of process“); see also Bd. of Regents of State Colleges v. Roth, 408 U.S. 564, 569-70 (1972) (recognizing that the requirements of procedural due process apply only to those interests encompassed by the Fourteenth Amendment and that “the range of interests protected . . . is not infinite“).
We agree with the district court that the first amended complaint does not articulate how the Ordinance and Regulations harm plaintiffs’ own liberty and property interests.8 Plaintiffs argue that the Ordinance and Regulations infringe on their tenants’ privacy rights, thus forcing plaintiffs to choose between “disclosing the tenants’ personal information violating their due process rights (and possibly being sued)” or not complying with the Ordinance and “suffering severe . . . sanctions.” This argument does not identify any harm to plaintiffs’ own liberty or property interests. And we reject plaintiffs’ claim of a substantive due process violation flowing from the alleged “unconstitutional conditions.” As discussed below, there can be no “unconstitutional conditions” when there is no unconstitutionality.
E. Unconstitutional Conditions
Finally, plaintiffs contend that the Ordinance violates the “unconstitutional conditions” doctrine, as enunciated in Koontz v. St. Johns River Water Management District, 570 U.S. 595 (2013). “A predicate for any unconstitutional conditions claim is that the government could not have constitutionally ordered the person asserting the claim to do what it attempted to pressure that person into doing.” Id. at 612. But whether we view the Ordinance as pressuring or ordering, plaintiffs’
AFFIRMED.
HOTOP V. CITY OF SAN JOSE
No. 18-16995
United States Court of Appeals for the Ninth Circuit
December 7, 2020
BENNETT, Circuit Judge, concurring in part1 and concurring in the result:
The Fourth Amendment to the Constitution provides:
The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.
In Katz v. United States, 389 U.S. 347 (1967), the Supreme Court famously held that “the Fourth Amendment protects people, not places.” Id. at 351. And the Court later adopted Justice Harlan‘s formulation: “[A] person has a constitutionally protected reasonable expectation of privacy; [and] electronic as well as physical intrusion into a place that is in this sense private may constitute a violation of the Fourth Amendment . . . .” Id. at 360 (Harlan, J., concurring); see Terry v. Ohio, 392 U.S. 1, 9 (1968). Katz, of course, involved a physical intrusion by government—the placement of a hidden listening device on a phone booth. 389 U.S. at 348.
Since Katz, the Court has afforded Fourth Amendment protection in a variety of situations, like a government agent‘s physical manipulation of a carry-on bag placed in an overhead compartment on a bus, Bond v. United States, 529 U.S. 334, 338-39 (2000), or the government obtaining an individual‘s cell-site location information through court orders obtained under the Stored Communications Act, Carpenter v. United States, 138 S. Ct. 2206, 2212, 2217 (2018). Part of the Court‘s analysis in these cases involved a person‘s “reasonable expectation of privacy.” But that analysis comes into play only if there is a search or seizure,
Governments (federal, state, and local) regularly collect information from citizens. See Whalen v. Roe, 429 U.S. 589, 605 (1977). These demands for information can be for statistical purposes, in relation to the collection of taxes and fees, to help determine whether government should or must provide a requested benefit, to make certain that those who hold licenses or permits are adhering to their terms, to monitor and maintain public health, or as part of a regulatory structure. These are only a few examples. Often the information is confidential, nonpublic, and not known or available to the government otherwise. And governments regularly impose sanctions for failing to transmit the information (like losing a benefit or facing a penalty). Other constitutional provisions regulate these types of information demands,4 but the Fourth Amendment does not. Though the Fourth Amendment has developed since Katz, nothing in the Court‘s jurisprudence is at odds with Katz‘s reminder that “the Fourth Amendment cannot be translated into a general constitutional ‘right to privacy.‘” 389 U.S. at 350; see id. (“Other provisions of the Constitution protect personal privacy from other forms of governmental invasion.“).
Rather, the Supreme Court‘s Fourth Amendment jurisprudence has consistently found that government collection of information effects a search only when it involves some physical intrusion or its functional equivalent. Cf. Bond, 529 U.S. at 337 (“Physically invasive inspection is simply more intrusive than purely visual inspection.“). Trespass on private property can obviously constitute a search. Jones, 565 U.S. at 404-05. Newer investigatory techniques, if they function like physical intrusions, can also constitute searches. So, in Katz, the government effected a search when it placed a hidden listening device that electronically intruded into a closed phone booth to overhear private conversations. 389 U.S. at 353; id. at 362 (Harlan, J., concurring). And in Kyllo v. United States, 533 U.S. 27 (2001), the government‘s collection of information using a sense-enhancing device “that is not in general public use, to explore details of the home that would previously have been unknowable without physical intrusion,” also constituted a search. Id. at 40. Such a result “assures preservation of that degree of privacy against government
When the Fourth Amendment was adopted, as now, to “search” meant “[t]o look over or through for the purpose of finding something; to explore; to examine by inspection; as, to search the house for a book; to search the wood for a thief.”
Id. at 32 n.1 (quoting N. Webster, An American Dictionary of the English Language 66 (1828) (reprint 6th ed. 1989)).
The government may also conduct a constructive search by collecting information through an “orderly taking under compulsion of process.” United States v. Morton Salt Co., 338 U.S. 632, 652 (1950); Hale v. Henkel, 201 U.S. 43, 76 (1906) (“While a search ordinarily implies a quest by an officer of the law . . . the substance of the offense is the compulsory production of private papers, whether under a search warrant or a subpoena duces tecum . . . .“). In this context, it is the government process effecting access to the protected papers and records that implicates the Fourth Amendment. Court orders directing the production of information fall in this category of searches, Carpenter, 138 S. Ct. at 2217; Boyd v. United States, 116 U.S. 616, 624 (1886), as do administrative subpoenas, Okla. Press Publ‘g Co. v. Walling, 327 U.S. 186, 209-10 (1946). But no Supreme Court case has found a search based on a requirement that a person transmit information as part of a regulatory process, even if there are penalties for noncompliance, and even if the person has a reasonable expectation of privacy in the requested information.
Plaintiffs rely on our en banc decision in Patel v. City of Los Angeles (Patel I), 738 F.3d 1058 (9th Cir. 2013) (en banc), aff‘d, 576 U.S. 409 (2015), discussing administrative searches. But Patel I serves only to confirm the Fourth Amendment‘s requirement of a physical intrusion or its equivalent. The challenged ordinance in Patel I “authorize[d] police officers to inspect hotel guest records at any time without consent or a search warrant.” Id. at 1061. Crucial to our application of the Fourth Amendment to the warrantless inspection scheme was the method used to obtain the record information:
A police officer‘s non-consensual inspection of hotel guest records plainly constitutes a “search” under either the property-based approach of Jones or the privacy-based approach of Katz. Such inspections involve both a physical intrusion upon the hotel‘s private papers and an invasion of the hotel‘s protected privacy interest in those papers for the purpose of obtaining information. Whether the officers rifle through the records in paper form, or view the records on a computer screen, they are doing so to obtain the information contained in the records.
Id. at 1062 (citation omitted). Inspection of the records intruded upon both the property rights and the privacy interests of the hotel, since the hotel‘s property rights in the records gave rise to its expectation of privacy. Id. at 1061. Thus, there was a search only because the ordinance authorized police officers to inspect, on demand, records physically kept at hotels.
The Supreme Court affirmed our Patel I decision and expressed no disagreement with our search analysis. See City of Los Angeles v. Patel (Patel II), 576 U.S. 409, 412 (2015). As the Supreme Court observed:
By contrast, the Ordinance here requires landlords to disclose information to the City‘s Department of Housing as part of a regulatory process. There is no inspection of any kind. Nothing in the Supreme Court‘s opinion in Patel II (or our en banc opinion in Patel I) suggests that there would have been a search had there been no physical inspection of private business records and, instead, a statutory requirement that hotels transmit information to the city under a regulatory scheme. But in the majority‘s view, the Ordinance does not violate the Fourth Amendment because there was no reasonable expectation of privacy in the information sought:
Even if the Fourth Amendment is implicated by certain non-physical intrusions, in that context the plaintiff must have a reasonable expectation of privacy in the contents of the documents before the government‘s conduct can be deemed a Fourth Amendment “search.” And here, as the district court held, plaintiffs failed to adequately allege that they have a reasonable expectation of privacy in the information contained in the business records at issue.
Majority Opinion at 7. First asking, as the majority does here, whether plaintiffs can show that they possess a reasonable expectation of privacy in the disclosed information puts the cart before the horse in a manner untethered from the language of the Fourth Amendment. See Entick v. Carrington, 19 How. St. Tr. 1029, 1066, 95 Eng. Rep. 807 (1765) (“[T]he eye cannot by the laws of England be guilty of a trespass, yet where private papers are removed and carried away, the secret nature of those goods will be an aggravation of the trespass.“). What first determines whether government action that obtains information implicates the Fourth Amendment is not the nature of the information requested; it is the method and manner of the collection.5 Cf. Grady v. North Carolina, 575 U.S. 306, 310 (2015) (“The State‘s program is plainly designed to obtain information. And since it does so by physically intruding on a subject‘s body, it effects a Fourth Amendment search.“).
Though the majority reaches the correct ultimate result, the harm in its approach is manifest. As noted above, government requires its citizens to provide information all the time. Sometimes it is part of a regulated activity scheme, like property rental. Sometimes it is part of obtaining a service or benefit (a driver‘s license, a business license, a title registration, a passport). Sometimes it is just part of everyday life. For most of its actions, the government, if challenged, need show only that its activities are “rationally related to legitimate government interests.” Washington v. Glucksberg, 521 U.S. 702, 728 (1997). But if other courts follow the majority‘s approach here, anyone who must provide information to government can lodge a Fourth Amendment challenge to the requirement based on their “reasonable expectation of privacy” in the information sought. Allowing a Fourth Amendment claim to proceed with such allegations of privacy, but with no plausible allegation of an actual Fourth Amendment search, will subject government at every level to inappropriate judicial scrutiny of its actions—especially when it “conditions” benefits on the reporting of information.6 And this, contrary to the very teachings of Katz, will cause the Fourth Amendment to be translated into a general constitutional right to privacy.
As there was no Fourth Amendment search here, irrespective of whether plaintiffs had an “actual (subjective) expectation of privacy . . . that society is prepared to recognize as ‘reasonable,‘” Katz, 389 U.S. at 361 (Harlan, J., concurring), we should have rejected plaintiffs’ Fourth Amendment claim on that ground. By failing to do so, we have saddled both government and judges with a constitutionally inappropriate burden. For that reason, I concur only in the result of Part I of the majority‘s opinion.