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Certification from United States District Court v. City of Seattle

Supreme Court of Washington, En Banc

November 14, 2019

CERTIFICATION FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WASHINGTON IN CHONG and MARILYN YIM, KELLY LYLES, EILEEN, LLC, and RENTAL HOUSING ASSOCIATION OF WASHINGTON, Plaintiffs,
v.
CITY OF SEATTLE, Defendant.

          YU, J.

         This case concerns the facial constitutionality of Seattle's Fair Chance Housing Ordinance, which provides in relevant part that it is an unfair practice for landlords and tenant screening services to "[r]equire disclosure, inquire about, or take an adverse action against a prospective occupant, a tenant, or a member of their household, based on any arrest record, conviction record, or criminal history," subject to certain exceptions. SEATTLE MUNICIPAL CODE (SMC) 14.09.025(A)(2). The plaintiffs claim that on its face, this provision violates their state constitutional right to substantive due process and their federal constitutional rights to free speech and substantive due process. WASH. CONST, art. I, § 3; U.S. Const, amends. I, V, XIV.

         The merits of the plaintiffs' claims are not before us. Instead, we have been certified three questions by the federal district court regarding the standard that applies to the plaintiffs' state substantive due process claim:. (1) "What is the proper standard to analyze a substantive due process claim under the Washington Constitution?" (2) "Is the same standard applied to substantive due process claims involving land use regulations?" and (3) "What standard should be applied to Seattle Municipal Code [chapter] 14.09 ('Fair Chance Housing Ordinance')?" Order, No. CI8-0736-JCC, at 2-3 (W.D. Wash. Feb. 5, 2019).

         This court has not previously adopted heightened standards for substantive due process challenges to laws regulating the use of property as a matter of independent state law, and we are not asked to do so in this case. Therefore, we answer the district court's questions as follows: Unless and until this court adopts heightened protections as a matter of independent state law, state substantive due process claims are subject to the same standards as federal substantive due process claims. The same is true of state substantive due process claims involving land use regulations and other laws regulating the use of property. Therefore, the standard applicable to the plaintiffs' state substantive due process challenge to the Fair Chance Housing Ordinance is rational basis review.

         FACTUAL AND PROCEDURAL BACKGROUND

         In 2014, the mayor of Seattle and the Seattle City Council convened an advisory committee "to evaluate potential strategies to make Seattle more affordable, equitable, and inclusive." Doc. 33-12, at 59 (Stipulated R.). The committee recommended "a multi-pronged approach of bold and innovative solutions to address Seattle's housing affordability crisis," particularly as related to "barriers to housing faced by people with criminal records." Id. at 59-60. Based on the committee's report and its own findings, the Seattle City Council enacted the Fair Chance Housing Ordinance, chapter 14.09 SMC.

         Several Seattle landlords and the Rental Housing Association of Washington (which provides tenant screening services) challenged the ordinance's facial constitutionality in King County Superior Court. Their challenge focuses on SMC 14.09.025(A)(2), which makes it an unfair practice for landlords and tenant screening services to "[r]equire disclosure, inquire about, or take an adverse action against a prospective occupant, a tenant, or a member of their household, based on any arrest record, conviction record, or criminal history," subject to certain exceptions. The plaintiffs claim that this provision facially violates their federal free speech rights and their state and federal substantive due process rights.

         Defendant city of Seattle (City) removed the case to federal district court, and the parties filed cross motions for summary judgment based on stipulated facts and a stipulated record. The district court has not yet ruled on the summary judgment motions because the parties dispute the standard of review that applies to the plaintiffs' state substantive due process claim. The plaintiffs contend that the Fair Chance Housing Ordinance deprives property owners of "a fundamental property interest" and is therefore subject to heightened scrutiny. Doc. 23, at 21. The City contends that rational basis review applies.

         The district court noted that another pending case involving a different Seattle ordinance, Chong Yim v. City of Seattle, No. 95813-1 (Wash. Nov. 14, 2019) (Yim I), raises a similar dispute regarding the standard that applies to state substantive due process claims in Washington. Therefore, "wary about applying a potentially inaccurate standard under state law," the district stayed this case and certified to us three questions regarding the applicable standard of review. Order at 2.

         ISSUES

         A. "What is the proper standard to analyze a substantive due process claim under the Washington Constitution?" Id.

         B. "Is the same standard applied to substantive due process claims involving land use regulations?" Id.

         C. "What standard should be applied to Seattle Municipal Code [chapter] 14.09 ('Fair Chance Housing Ordinance')?" Id. at 3.

         ANALYSIS

         Article I, section 3 of the Washington State Constitution provides, "No person shall be deprived of life, liberty, or property, without due process of law." Our state due process protection against "the arbitrary exercise of the powers of government" has both procedural and substantive components. State v. Cater 's Motor Freight Sys., Inc., 27 Wn.2d 661, 667, 179 P.2d 496 (1947). The procedural component provides that "[w]hen a state seeks to deprive a person of a protected interest," the person must "receive notice of the deprivation and an opportunity to be heard to guard against erroneous deprivation." Amunrud v. Bd. of Appeals, 158 Wn.2d 208, 216, 143 P.3d 571 (2006). Meanwhile, the substantive component of due process "protects against arbitrary and capricious government action even when the decision to take action is pursuant to constitutionally adequate procedures." Id. at 218-19. This case concerns only the substantive component.

         In a substantive due process claim, courts scrutinize the challenged law according to "a means-ends test" to determine if "a regulation of private property is effective in achieving some legitimate public purpose." Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 542, 125 S.Ct. 2074, 161 L.Ed.2d 876 (2005) (emphasis omitted). The level of scrutiny to be applied depends on "the nature of the right involved." Amunrud, 158 Wn.2d at 219. "State interference with a fundamental right is subject to strict scrutiny," which "requires that the infringement is narrowly tailored to serve a compelling state interest." Id. at 220. Meanwhile, "[w]hen state action does not affect a fundamental right, the proper standard of review is rational basis," which requires only that "the challenged law must be rationally related to a legitimate state interest." Id. at 222.

         The plaintiffs characterize the right involved here as a "fundamental property interest[ ]," specifically, "the right of each residential landlord to rent her property to a person of her own choice." Pis.' Resp. Br. at 15-16. They do not contend that this right requires the application of strict scrutiny, but they do not concede that rational basis review applies either. Instead, the plaintiffs argue that there is a third type of review, which applies in substantive due process challenges to laws restricting "fundamental property rights" or "traditional 'old property' rights." Id. at 15 n.6. This third type of review, the plaintiffs contend, is "some form of intermediate scrutiny," which exceeds rational basis review by requiring that laws regulating the use of property must either substantially advance a government interest (the "substantially advances test") or not be unduly oppressive on the property owner (the "unduly oppressive test"). Id. at 39.

         The level of scrutiny that applies to the plaintiffs' state substantive due process claim is a constitutional question that we decide as a matter of law. Amunrud, 158 Wn.2d at 215. We hold that rational basis review applies, and we clarify that the cases cited by the plaintiffs can no longer be interpreted as requiring heightened scrutiny because their "legal underpinnings" have "disappeared." W.G. Clark Constr. Co. v. Pac. Nw. Reg'l Council of Carpenters, 180 Wn.2d 54, 66, 322 P.3d 1207 (2014).

         A. In answer to the first two certified questions, independent state law does not require heightened scrutiny in article I, section 3 substantive due process challenges to laws regulating the use of property

         "[T]he protection of the fundamental rights of Washington citizens was intended to be and remains a separate and important function of our state constitution and courts that is closely associated with our sovereignty." State v. Coe, 101 Wn.2d 364, 374, 679 P.2d 353 (1984). Therefore, this court has a duty to recognize heightened constitutional protections as a matter of independent state law in appropriate cases. O'Day v. King County, 109 Wn.2d 796, 801-02, 749 P.2d 142 (1988). Nevertheless, "[t]his court traditionally has practiced great restraint in expanding state due process beyond federal perimeters." Rozner v. City of Bellevue, 116 Wn.2d 342, 351, 804 P.2d 24 (1991). Accordingly, we have never before required heightened scrutiny in substantive due process challenges to laws regulating the use of property as a matter of independent state law. In light of the arguments presented in this case, we decline to do so now.

         We recognize that in a number of cases, this court has recited the "unduly oppressive" test, which appears to exceed rational basis review by asking "(1) whether the regulation is aimed at achieving a legitimate public purpose; (2) whether it uses means that are reasonably necessary to achieve that purpose; and (3) whether it is unduly oppressive on the landowner." Presbytery of Seattle v. King County, 114 Wn.2d 320, 330, 787 P.2d 907 (1990); see also, e.g., Tiffany Family Tr. Corp. v. City of Kent, 155 Wn.2d 225, 238, 119 P.3d 325 (2005); Orion Corp. v. State, 109 Wn.2d 621, 651, 747 P.2d 1062 (1987). We have never explicitly rejected the "unduly oppressive" test, although we have noted that it "has limited applicability even in land use cases." Amunrud, 158 Wn.2d at 226 n.5. We have also occasionally suggested that a "substantial relation" test applies and that this test requires heightened scrutiny by asking whether police power regulations bear a '"real or substantial relation'" (as opposed to a merely rational relation) to legitimate government purposes. Biggers v. City of Bainbridge Island, 162 Wn.2d 683, 694, 169 P.3d 14 (2007) (plurality opinion) (quoting State ex rel. Brislawn v. Meath, 84 Wash. 302, 313, 147 P. 11 (1915)); see also, e.g., Remington Arms Co. v. Skaggs, 55 Wn.2d 1, 5-6, 345 P.2d 1085 (1959).

         However, this precedent is based on opinions of the United States Supreme Court, not on independent state law. Hugh D. Spitzer, Municipal Police Power in Washington State, 75 WASH. L. Rev. 495, 513-15 (2000). The "unduly oppressive" test is derived from an 1894 opinion, Lawton v. Steele:

To justify the State in thus interposing its authority in behalf of the public, it must appear, first, that the interests of the public generally, as distinguished from those of a particular class, require such interference; and, second, that the means are reasonably necessary for the accomplishment of the purpose, and not unduly oppressive upon individuals.

152 U.S. 133, 137, 14 S.Ct. 499, 38 L.Ed. 385 (1894); see also Goldblatt v. Town of Hempstead, 369 U.S. 590, 594-95, 82 S.Ct. 987, 8 L.Ed.2d 130 (1962). Meanwhile, the "substantial relation" test is derived from an 1887 opinion, Mugler v. Kansas:

If, therefore, a statute purporting to have been enacted to protect the public health, the public morals, or the public safety, has no real or substantial relation to those objects, or is a palpable invasion of rights secured by the fundamental law, it is the duty of the courts to so adjudge, and thereby give effect to the Constitution.

123 U.S. 623, 661, 8 S.Ct. 273, 31 L.Ed. 205 (1887). We have never held that any form of heightened scrutiny is independently required by article I, section 3 of the Washington State Constitution, and the parties do not ask us to do so now.[1]

         Because the heightened scrutiny apparently required by some of our precedent derives from federal law, we need not consider whether such heightened scrutiny is "incorrect and harmful." W.G. Clark, 180 Wn.2d at 66. Instead, we may consider whether the federal "legal underpinnings of our precedent have changed or disappeared altogether." Id. As discussed below, the federal legal underpinnings of our precedent have disappeared because the United States Supreme Court requires only rational basis review in substantive due process challenges to laws regulating the use of property. In the absence of a Gunwal[2] analysis or any other principled basis for departing from federal law, we decline to do so at this time.

         The district court's first two certified questions are "What is the proper standard to analyze a substantive due process claim under the Washington Constitution?" and "Is the same standard applied to substantive due process claims involving land use regulations?" Order at 2. We answer that unless and until this court adopts a heightened standard as a matter of independent state law, article I, section 3 substantive due process claims are subject to the same standards as federal substantive due process claims. The same is true for substantive due process claims involving land use regulations. Our precedent suggesting otherwise can no longer be interpreted as requiring a heightened standard of review as a matter of independent state law.[3]

         B. In answer to the third certified question, we hold that rational basis review applies to the plaintiffs' state substantive due process challenge to the Fair Chance Housing Ordinance

         Because the plaintiffs do not advance an independent state law argument, the parties' primary dispute is the minimum level of scrutiny required by the federal due process clauses. Although this issue is arguably not a question of "local law," RCW 2.60.020, we exercise our discretion to address it because it is necessary to provide complete answers to the certified questions in this case. See Broad v. Mannesmann Anlagenbau, AG, 141 Wn.2d 670, 676, 10 P.3d 371 (2000). The plaintiffs contend that federal substantive due process law requires heightened scrutiny of laws regulating the use of property and that it does so because "fundamental attribute[s] of property" are recognized as "fundamental right[s] subject to heightened scrutiny" for substantive due process purposes. Pis.' Resp. Br. at 31. Therefore, the plaintiffs reason, their state substantive due process challenge to the Fair Chance Housing Ordinance cannot be subject to deferential rational basis review.

         We disagree. As a matter of current federal law, the "unduly oppressive" and "substantial relation" tests are not interpreted as requiring heightened scrutiny, and the "substantially advances" test has been explicitly rejected. Instead, a law regulating the use of property violates substantive due process only if it "fails to serve any legitimate governmental objective," making it "arbitrary or irrational." Chevron U.S.A., 544 U.S. at 542; see also Kentner v. City of Scmibel, 750 F.3d 1274, 1280-81 (11th Cir. 2014), cert, denied, 135 S.Ct. 950 (2015); Samson v. City of Bainbridge Island, 683 F.3d 1051, 1058 (9th Cir.), cert, denied, 568 U.S. 1041 (2012). This test corresponds to rational basis review. In addition, the use of property has not been recognized as a fundamental right for substantive due process purposes. Therefore, the standard that applies to the plaintiffs' state substantive due process challenge to the Fair Chance Housing Ordinance is rational basis review.

         1. The "unduly oppressive" test is no longer interpreted as requiring heightened scrutiny

         The plaintiffs correctly point out that the United States Supreme Court has never explicitly overruled the "unduly oppressive" language that originated in Lawton and was repeated in Goldblatt. However, the plaintiffs fail to recognize that the United States Supreme Court does not interpret this language as requiring heightened scrutiny. To the contrary, the United States Supreme Court has made it clear in its 2005 Chevron U.S.A. decision that Lawton and Goldblatt should be interpreted as applying a deferential standard that corresponds to rational basis review.

         The reason Goldblatt may appear to require heightened scrutiny is that Goldblatt was decided during a period of "doctrinal blurring that has occurred between due process and regulatory takings." Orion Corp., 109 Wn.2d at 647. A "regulatory taking" occurs when a government restriction on the use of private property is so onerous that the regulation amounts to "a de facto exercise of eminent domain requiring just compensation." Id. at 645. For many years, United States Supreme Court cases did not clearly differentiate between the tests for determining (1) when a regulation is so burdensome that it effectively takes private property and (2) when a regulation arbitrarily interferes with the use of property in violation of substantive due process. See Chevron U.S.A., 544 U.S. at 541-42.

         Goldblatt was one such case. Its "unduly oppressive" test, which asks who must bear the economic burden of a regulation, Amunrud, 158 Wn.2d at 226 n.5, reflects concerns implicated by the takings clause, such as "the magnitude or character of the burden a particular regulation imposes upon private property rights" and "how any regulatory burden is distributed among property owners." Chevron U.S.A., 544 U.S. at 542. It does not reflect the core concern of substantive due process, which is "whether a regulation of private property is effective in achieving some legitimate public purpose." Id.

         While Goldblatt "does appear to assume that the inquiries are the same" for both regulatory takings and substantive due process claims, the United States Supreme Court has recognized that "that assumption is inconsistent with the formulations of our later cases." Nollan v. Cal. Coastal Comm'n, 483 U.S. 825, 834 n.3, 107 S.Ct. 3141, 97 L.Ed.2d 677 (1987). As such, Goldblatthas been cited most often for takings principles, not due process principles. E.g., Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1022, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992); Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470, 490, 107 S.Ct. 1232, 94 L.Ed.2d 472 (1987); Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 124-27, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978).

         To the extent Goldblatt does appear to require heightened scrutiny of laws regulating the use of property for substantive due process purposes, the United States Supreme Court has clarified that it does not. Instead, Goldblatt has been interpreted as "applying a deferential 'reasonableness' standard." Chevron U.S.A., 544 U.S. at 541 (internal quotation marks omitted) (quoting and citing Goldblatt, 369 U.S. at 594-95; Lawton, 152 U.S. at 137). This deferential standard protects against "arbitrary or irrational" restrictions on property use. Id. at 542; see also id. at 548 (Kennedy, J., concurring).

         The "arbitrary or irrational" standard is not heightened scrutiny. It corresponds to rational basis review, which requires only that "the challenged law must be rationally related to a legitimate state interest." Amunrud, 158 Wn.2d at 222. The plaintiffs do not cite, and we cannot find, any post-Chevron U.S.A. decision in which the United States Supreme Court has held the "unduly oppressive" test requires heightened scrutiny in substantive due process challenges to laws regulating the use of property.

         As we have already held, "[t]hat a statute is unduly oppressive is not a ground to overturn it under the due process clause." Salstrom 's Vehicles, Inc. v. Dep't of Motor Vehicles, 87 Wn.2d 686, 693, 555 P.2d 1361 (1976). Today, we reaffirm that holding and clarify that the "unduly oppressive" test recited in many of our cases can no longer be interpreted as requiring heightened scrutiny in substantive due process challenges to laws regulating the use of property.

         2. The "substantially advances" test has been rejected and the "substantial relation" test is no longer interpreted as ...


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