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San Francisco Apartment Association v. City & County of San Francisco

United States Court of Appeals, Ninth Circuit

February 8, 2018

San Francisco Apartment Association; Coalition for Better Housing; Small Property Owners of San Francisco Institute; San Francisco Association of Realtors; Norman T. Larson, Plaintiffs-Appellants,
City and County of San Francisco, Defendant-Appellee.

          Argued and Submitted September 14, 2017 San Francisco, California

         Appeal from the United States District Court for the Northern District of California No. 4:15-cv-01545-PJH, Phyllis J. Hamilton, Chief District Judge, Presiding

          Christopher E. Skinnell (argued), James W. Carson, and James R. Parrinello, Nielsen Merksamer Parrinello Gross & Leoni LLP, San Rafael, California, for Plaintiffs-Appellants.

          Jeremy M. Goldman (argued) and Wayne Snodgrass, Deputy City Attorneys; Dennis J. Herrera, City Attorney; Office of the City Attorney, San Francisco, California; for Defendant-Appellee.

          Before: Eugene E. Siler, [*] Richard C. Tallman, and Carlos T. Bea, Circuit Judges.

         SUMMARY [**]

         Civil Rights

         The panel affirmed the district court's judgment on the pleadings in an action brought by an individual property owner and several landlord organizations challenging a San Francisco City Ordinance that limits the rights of landlords to commence and conduct buyout negotiations.

         The panel first held that plaintiffs' contention that the Ordinance prevents them from initiating buyout negotiations unless tenants sign the disclosure form failed under the plain language of the Ordinance. The panel then held that the Ordinance's disclosure provision, which requires landlords to disclose contact information for tenants' rights organizations prior to the commencement of buyout negotiations, did not violate plaintiffs' First Amendment rights. In so holding, the panel determined that the Ordinance pertains to commercial speech, that the asserted government interest in enacting the Ordinance was substantial, and that the Ordinance was sufficiently narrowly tailored because the speech restrictions applied only until the landlord provided the disclosures to the tenant.

         The panel held that the Ordinance's Database Provision, which creates a publicly searchable database of buyout agreements, did not violate the landlords' right to privacy under the California Constitution because landlords do not have a legally protected privacy interest or reasonable expectation of privacy in the information made publicly available by the Ordinance. The panel further held that the Ordinance does not violate the landlords' rights to equal protection or due process because the requirement that the Rent Board publish landlords' contact information and rental unit address, already publicly available, was rationally related to the City's legitimate interest in improving the inferior bargaining position of tenants in buyout negotiations while protecting tenant privacy. Finally, the panel held that the condominium conversion provision survived rational basis review and did not violate plaintiffs' liberty to contract.


          BEA, Circuit Judge

         We must determine whether a San Francisco city ordinance limiting the rights of landlords to commence and conduct buyout negotiations is consistent with the federal and state constitutions. We do not, as we must not, evaluate the policy merits of the ordinance. Appellants-an individual property owner and several organizations that represent landlords' interests in San Francisco-present us with assertions but no authority which suggests the ordinance runs afoul of either constitution. We therefore affirm the district court's decision to grant the City and County of San Francisco's ("the City's") motion for judgment on the pleadings.


         On October 21, 2014, the San Francisco Board of Supervisors enacted Ordinance No. 225-14 (the "Ordinance"), titled "Tenant Buyout Agreements." See S.F. Admin. Code § 37.9E. The "Findings and Purpose" section provides context for the enactment of the Ordinance:

Instead of evicting tenants, some landlords offer cash buyouts to tenants in exchange for the tenants vacating rental units. . . . Unlike no-fault evictions, these buyouts are unregulated, and can enable landlords to circumvent many of the restrictions that apply when a landlord executes a no-fault eviction. For example, a landlord who executes some types of no-fault evictions must give tenants a certain amount of time to move out, provide funds to tenants to cover relocation costs, and allow tenants to move back into the unit under specified circumstances. Two types of these no fault evictions-the Ellis Act and owner move-in evictions-contain restrictions on how much rent a landlord can charge if the units are re-rented following eviction. Analogous regulations do not exist for tenant buyouts.
Anecdotal evidence indicates that many buyout agreements are not conducted at arms-length, and landlords sometimes employ high-pressure tactics and intimidation to induce tenants to sign the agreements. Some landlords threaten tenants with eviction if they do not accept the terms of the buyout. The frequency of these buyout offers increased significantly following passage of a San Francisco law in 1996 which restricted, and in many cases prohibited, condominium conversions following no fault evictions. By threatening a specific no fault eviction and then convincing a tenant to vacate rather than receiving the eviction notice, a landlord will avoid restrictions on condominium conversion as well as restrictions on renovations, mergers, or demolitions. . . . Disabled, senior, and catastrophically ill tenants can be particularly vulnerable, and can face greater hurdles in securing new housing.
The main purpose of this Section 37.9E is to increase the fairness of buyout negotiations and agreements by requiring landlords to provide tenants with a statement of their rights and allowing tenants to rescind a buyout agreement for up to 45 days after signing the agreement . . . . Another goal of this ordinance is to help the City collect data about buyout agreements. The City lacks comprehensive information about the number, location, and terms of buyout agreements. This dearth of information precludes the City from understanding the true level of tenant displacement in San Francisco.

S.F. Admin. Code §37.9E(a). The Ordinance defines "Buyout Agreement" as "an agreement wherein the landlord pays the tenant money or other consideration to vacate the rental unit, " and it excludes from the definition agreements "to settle a pending unlawful detainer action." Id. § 37.9E(c). The Ordinance defines "Buyout Negotiations" as "any discussion or bargaining, whether oral or written, between a landlord and tenant regarding the possibility of entering into a Buyout Agreement." Id.

         The Ordinance has six provisions relevant to this appeal: (1) the "Disclosure Provision, " (2) the "Notification Provision, " (3) the "Rescission Provision, " (4) the "Database Provision, " (5) the "Penalty and Fee Provision, " and (6) the "Condominium Conversion Provision." Id. § 37.9E; S.F. Subdivision Code § 1396.

         The Disclosure Provision states that, prior to the commencement of buyout negotiations for a rental unit, landlords must provide each tenant in that unit with a written disclosure form written by the Rent Board. S.F. Admin. Code § 37.9E(d). The form states that a tenant has a right not to enter into buyout negotiations or a buyout agreement, may choose to consult with an attorney before entering into negotiations or an agreement, has a right to rescind any buyout agreement for up to forty-five days after the agreement's execution, and may visit the Rent Board for information about other buyout agreements in the tenant's neighborhood. The form also includes a description of the ...

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