301, 712, 2103 & 3151 LLC v. City of Minneapolis, Civ. No. 20-1904 (PAM/BRT)
| Decision Date | 06 November 2020 |
| Docket Number | Civ. No. 20-1904 (PAM/BRT) |
| Parties | 301, 712, 2103 and 3151 LLC; 12 Twenty-Second and 1827 LaSalle LLC; 137 East Seventeenth Street LLC; 1522 LaSalle Avenue LLC; 1728 Second Avenue and 1801 Third Avenue LLC; 1806 and 1810 Third Avenue LLC; 1816, 1820 and 1830 Stevens Avenue LLC; 1817 Second Avenue LLC; 1900 and 1906 Clinton Avenue LLC; 1924 Stevens Avenue LLC; 2020 Nicollet Avenue LLC; 2101 Third Avenue LLC; 2323 and 2401 Clinton Avenue LLC; 2417, 2423 and 2439 Blaisdell Avenue LLC; 2427 Blaisdell and 2432 First Avenue LLC; 25 Twenty-Fifth Street LLC; 2535 Clinton Avenue LLC; 2545 Blaisdell Avenue LLC; 2609 Hennepin Avenue LLC; 2633 Pleasant Avenue LLC; 2720 Pillsbury Avenue LLC; 2738 and 2750 Pillsbury Avenue LLC; 2809 Pleasant Avenue LLC; 600 Franklin Avenue LLC; Amy Smith; Blaisdell 3322, LLC; Bloomington 4035, LLC; Bryant Avenue Properties LLC; Colfax Apartments LLC; Dupont Properties LLC; Fletcher Properties, Inc.; Franklin Villa Partnership, L.L.P.; Fremont Apartments, LLC; Freemont Terrace Apartments, L.L.C.; Garfield Court Partnership, L.L.P.; Gasparre New Boston Square, LLC; Gateway Real Estate, L.L.C.; JEC Properties, LLC; Lagoon Apartments, LLC; LL LLC; Northern Gopher Enterprises, Inc.; Patricia L. Fletcher, Inc.; and Ray Peterson; Plaintiffs, v. City of Minneapolis, Defendant. |
| Court | U.S. District Court — District of Minnesota |
This matter is before the Court on Plaintiffs' Motion for Preliminary Injunction. For the following reasons, the Motion is denied.
In September 2019, the Minneapolis City Council enacted the Minneapolis Fair Chance Housing Ordinance, Minneapolis City Ordinance § 244.2030. The ordinance provides that landlords in the City must provide prospective renters with "the landlord's rental screening criteria in as much detail as feasible." Id. § 244.2030(b). And, as relevant to this matter, the ordinance prescribes two alternatives for landlords to use when screening potential tenants.
The first alternative, set forth in subdivision (c), prohibits landlords from considering factors such as vacated or expunged convictions, id. § 244.2030(c)(1)(c); misdemeanor convictions for which the date of sentencing is more than three years old, id. § 244.2030(c)(1)(f), and certain felony convictions for which the dates of sentencing are more than a certain number of years old, id. § 244.2030(c)(1)(g)-(h). The subsection also provides that a landlord cannot decline to rent to a tenant solely because of that tenant's credit score, although the landlord can consider "information within a credit report directly relevant to fitness as a tenant . . . ." Id. § 244.2030(c)(2)(a). Finally, the subsection prohibits landlords from considering certain rental history and from refusing to rent to individuals with income less than three times the rent if the prospective tenant "can demonstrate a history of successful rent payment with an income less than three (3) times the rent." Id. § 244.2030(c)(3)(c).
The second alternative allows a landlord to "appl[y] screening criteria that are more prohibitive than the inclusive screening criteria set forth in subdivision (c)." Id. § 244.2030(d). To do so, however, the landlord must conduct an "individualized assessment for any basis upon which the landlord intends to deny an application." Id. This individualized assessment requires the landlord to "accept and consider all supplemental evidence provided with a completed application to explain, justify, or negate the relevance of potentially negative information revealed by screening." Id. The subsection also requires the landlord to consider several factors, including the nature and severity and the number and type of the incidents that would lead to a denial, the time elapsed since those incidents, and the age of the prospective tenant at the time of the incidents. Id.
Finally, the ordinance mandates that landlords set forth their denials in writing within 14 days, specifically identifying the criteria on which the applicant was denied. Id. § 244.2030(e). If the denial is based on the applicant's criminal history, the ordinance requires the landlord to "consider supplemental evidence provided by the applicant if provided at the time of application submittal." Id. § 244.2030(e)(1). If the landlord instead conducts an individualized assessment under subsection (d), the landlord is required to include in the denial the supplemental evidence considered, if any, "and an explanation of the reasons that the supplemental evidence did not adequately compensate for the factors that informed the landlord's decision to reject the application." Id. § 244.2030(e)(2).
A violation of the ordinance is punishable by a fine, adverse rental license action, and criminal prosecution. Id. § 244.2030(g). Prior notice is not required to enforce a violation, and tenants "may seek redress in any court of competent jurisdiction" to enforcethe ordinance. Id. The ordinance became effective in June 2020 for rental properties of more than 15 units and will take effect as to smaller properties in December 2020.
Plaintiffs are 43 rental property owners in the City of Minneapolis. They filed this lawsuit in September 2020, nearly a year after the ordinance's enactment, contending that the ordinance violates their rights under the United States and Minnesota Constitutions. Specifically, they claim that the ordinance operates as a taking, deprives them of their right to substantive due process, constitutes compelled speech in violation of the First Amendment, and is void for vagueness. They seek a preliminary injunction for the alleged violations of the Takings Clause, substantive due process, and the vagueness doctrine, although their reply memorandum very briefly argues their First Amendment claim.
A preliminary injunction is "an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief." Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 22 (2008). When deciding whether to issue a preliminary injunction, courts consider four factors: "(1) the threat of irreparable harm to the movant;" (2) the balance of harm the injunction would have on the movant and the opposing party; "(3) the probability that movant will succeed on the merits; and (4) the public interest." Dataphase Sys., Inc. v. CL Sys., Inc., 640 F.2d 109, 113 (8th Cir. 1981). While no factor is dispositive, "the absence of a likelihood of success on the merits strongly suggests that preliminary injunctive relief should be denied." Barrett v. Claycomb, 705 F.3d 315, 320 (8th Cir. 2013) (quotation omitted).
To demonstrate a likelihood of success on the merits of their claims, Plaintiffs must establish that they have a "fair chance of prevailing" on those claims. Planned Parenthood of Minn., N. Dak., S. Dak. v. Rounds, 530 F3d 724, 732 (8th Cir. 2008) (en banc). This standard does not require "the party seeking relief [to] show 'a greater than fifty per cent likelihood that [it] will prevail on the merits.'" Id. at 731 (quoting Dataphase, 640 F.2d at 113). And if the other three factors "strongly favor[] the moving party," then "a preliminary injunction may issue if movant has raised questions so serious and difficult as to call for more deliberate investigation." Dataphase, 640 F.2d at 113.
Both the federal and Minnesota Constitutions prohibit the government from taking property "for public use, without just compensation." U.S. Const. Amend. V; see also Minn. Const. Art. I, § 13. "[G]overnment regulation of private property may, in some instances, be so onerous that its effect is tantamount to a direct appropriation or ouster." Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 537 (2005). However, "government regulation—by definition—involves the adjustment of rights for the public good." Andrus v. Allard, 444 U.S. 51, 65 (1979).
Plaintiffs contend that the ordinance constitutes a per se taking. The Supreme Court has "stake[d] out two categories of regulatory action that generally will be deemed per se takings for Fifth Amendment purposes." Lingle, 533 U.S. at 538. The first category involves a "permanent physical invasion" of property, no matter how minor. Id. The second "applies to regulations that completely deprive an owner of 'all economicallybeneficial us[e]' of her property." Id. (quoting Lucas v. S. C. Coastal Council, 505 U.S. 1003 1019 (1992) (emphasis in Lucas)).
The ordinance in question does not deprive Plaintiffs of all economically beneficial use of their properties, nor despite Plaintiffs' argument is it a permanent physical invasion of their property. See Iowa Assur. Corp. v. City of Indianola, 650 F.3d 1094, 1098 (8th Cir. 2011) (describing physical-invasion takings). Plaintiffs contend that the ordinance interferes with their right to exclude others, which they note is "perhaps the most fundamental of all property interests." Lingle, 544 U.S. at 539. But a per se taking is something that "eviscerates the owner's right to exclude others from entering and using her property," id., not something that merely defines criteria she may, but is not required to, use to determine who may rent the property.
Kaiser Aetna v. United States, 444, U.S. 164 (1979), on which Plaintiffs rely almost exclusively, is not to the contrary. In that case, the lessee of a private pond created a channel between the pond and the adjacent ocean. Id. at 167. Many years later, the federal government determined that the channel had turned the pond into a "navigable water" from which the public could not be excluded. Id. at 168. The Supreme Court held that this governmental action was a taking that could not be accomplished without compensation to the pond's owner. Id. at 180. In the Court's words, "the 'right to exclude,' so universally held to be a fundamental element of the property right, falls within this category of interests that the Government cannot take without...
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