Tuesday, April 24, 2018

Another attack on Rent Ordinance Registration Requirement--This Time In San Jose

I must start with repeating an old joke. As a train arrived to the station, a passenger asked a conductor: "will this train take me to the Main Street?"  "No," replied the conductor, "of course not, we don't even have the tracks laid in that direction." Another eager passenger standing behind the first one then asks, "would this train take me there?"

This anecdote came up when I've read the news yesterday, announcing that the San Jose landlords seek court's help in preventing the San Jose's rent ordinance new requirement for landlords to register with the board and provide specific information on each rent-controlled tenancy. We wish these landlords luck, wholeheartedly, and check on where all prior trains took landlords on this argument.

The "registration of rents" is a recognized concept, reflected in our statutes, see, Cal. Civ. Code, Sections 1947.7, 1947.8, 1947.10, 1947.11. It is another question, what that "registration" may entail.

On municipal level, the registration is required by many Rent Ordinances in California, most recently I have encountered it in Richmond. It is enforced in Los Angeles, as the decision in Lyles v. Sangadeo-Patel (2014) 225 Cal.App.4th 759, 763, informs.  San Jose's registration form for landlords is similar to the Richmond's one.

I would however start with Berkeley, where the rent board amasses perhaps the most detailed database of this kind. When I went to check for my clients a rental history of a given unit last year, the folder had all possible information going back to 70s, still with original notices, typed and handwritten, with envelopes and all. If you think Berkeley landlords bellied up on this requirement without fight, read Fisher v. City of Berkeley (1984) 37 Cal.3d 644, aff'd sub nom. Fisher v. City of Berkeley, Cal. (1986) 475 U.S. 260.  It went up all the way to Supreme Court.  The result: the registration requirement was held as one "reasonably related to achieving the legitimate purposes of the ordinance." Id. at 702. See also, Searle v. City of Berkeley Rent Stabilization Bd. (1988) 197 Cal.App.3d 1251.

In San Francisco, interestingly enough, S.F. Board's registration requirements were minimal (see, e.g., Sec. 37.9(c)), only lately enlarging to include the buyout database and (since 1-1-18) an extensive self-reporting set of requirements and declarations for owner- and relative-move-ins. A recent updated of the Board's database now masks tenants (and, surprisingly, tenants' attorneys) information from the search.

Also, the S.F. Rent Board destroys most of the records after a certain time (I believe it is 6 years, but can be shorter).  What is recorded in the S.F. computer database remains saved, but the physical records are gone without trace. As a practitioner, each time I hit the dead-end and can't see that record, it is a disappointment, and that disappointment is more often to happen to me when I represent landlords, rather than tenants. This is because a tenant usually benefits from lesser record, while a landlord usually is in a better position when evidence is preserved.

Despite my personal views, the 9th Circuit just this February had ruled on a similar argument against the S. F. Buyout ordinance, requiring landlords to make certain disclosures to tenants and register buyout information with the board, where the database redacts tenant's information, but keeps landlords' information publicly available. (S.F. Admin. Code, Sec. 37.9E). The case is San Francisco Apartment Association v. City and County of San Francisco (9th Cir. 2018) 881 F.3d 1169, and it found that recording landlord's information is "rationally related to the City's legitimate interest in reducing information asymmetry between tenants and landlords and improving the inferior bargaining position of tenants in buyout negotiations while protecting tenant privacy," Id. at 1180. Because, you know, "[l]andlords are also not a protected class." Id. at 1179.

Back to the San Jose case coming up in the news, the case No. is 5:18-cv-02024-LHK, it is titled Hotop, et al. v. City of San Jose, filed on April 3, 2018. The case is in its initial stage, the summons just got issued. I downloaded the complaint and its copy is available here. The list of the complained-about disclosures is stated in Paragraph 12 (page 5) of the complaint. The way the current set of the claims is stated, I predict it would end against the plaintiffs, because it is currently fashioned for protection of speech and privacy of the landlords, which, if any of the above-cited decisions can be used as a hint, courts are not excited to protect.

However, if the action could be re-fashioned on an amendment to address tenants' privacy rights (already stated in paragraphs 18-19), then there's hope, even if so little. The hope is there because tenants, unlike landlords, are members protected class, and the fresh decision in SFAA v. CCSF, supra, would stand to support protection of their privacy.  The hope is little only because the landlords's association would have an issue of standing to overcome: advocating for third-party privacy rights is not axiomatic, and the landlords are not always perceived as protectors of tenants' rights.  9th Circuit allowed disclosure of personal information when the purpose of law enforcement outweighs the personal privacy concern. Wiener v. F.B.I. (9th Cir. 1991) 943 F.2d 972, 984.

The case is not entirely without an argument, however, for the Supreme Court had "relaxed" its "self-imposed rule" allowing plaintiffs in some circumstances to argue for third-party rights. Eisenstadt v. Baird (1972) 405 U.S. 438, 444.  The examples cited in Eisenstadt include a real property case arriving from a California decision, Barrows v. Jackson (1953) 346 U.S. 249. There, for asserting third-party vendees' rights, the vendor was found having sufficient standing, because there was "a direct, pocketbook injury to [the vendor]." Id. at 256.  A similar connection might be made in the Hotop case, if (1) plaintiff landlords can show sufficient pocketbook injury related to disclosing tenants' information, and (2) that pocketbook interest could be shown in overcoming the interest in enforcing the ordinance (good luck on that one).

The standing to fight for privacy rights of third parties in California state courts is mostly brought up in connection with media and online services. See discussion in Yelp Inc. v. Superior Court (2017) 17 Cal.App.5th 1, 9,  review denied (Feb. 14, 2018). The discussed cases, however, included the element of an anonymous speaker, who is presumed in desire to remain anonymous. Here, it is hard to say upfront that tenants desire to remain anonymous, especially if their information is sought for the purposes of enforcing tenants' rights. What I may predict landlords might be electing to do in the future, is to have an opt-out form for tenants to sign, indicating their preference in being disclosed or remaining anonymous. Yet for the already existing information and in absence of the opt-out, a third-party's right to privacy is a tough cause to sue for.

Within the recent state-court decisions, the right is also hard to win on. See, e.g.,  In re Q.R. (2017) 7 Cal.App.5th 1231, 1237. The courts usually apply a balancing test of privacy interest vs. an purpose in disclosure [In re Clergy Cases I (2010) 188 Cal.App.4th 1224, 1235], and you may have noticed from the case above that the interest in furtherance of public policy in enforcing rental protections is usually given enough weight to overcome someone's individual privacy concerns. If still in doubt, read Department of Fair Employment and Housing v. Superior Court (2002) 99 Cal.App.4th 896, 903, as modified (June 26, 2002), where the tenants' information was found proper to be disclosed: "The Department's interest in prohibiting discrimination in housing outweighs any privacy interest of those applicants for housing with Keller and Mattox who were denied housing, or those who were accepted as renters." Id. at 904. This interest was found overcoming even the right to "autonomy privacy." However, an argument still might be made for the ""autonomy privacy” interest in choosing the persons with whom a person will reside," which worked in Tom v. City and County of San Francisco (2004) 120 Cal.App.4th 674, 680. Or perhaps, the plaintiffs could bolster their case by analogy with an employer-employee relationship, where the employer is charged with protecting employee's privacy: compare, Cal. Lab. Code § 1198.5 [own records] with requirements under CCP § 1985.6 for requesting someone else's records.

In any event, this San Jose case seems to be facing an Everest of a challenge to even get out from its initial stage. Ironically, the very landlords who petitioned for halting the registry might soon start appreciating its benefit in offering them the record evidence, assisting in rooting out bad actors and helping in assessing a purchase of a rental property.

More real property posts

If you are concerned about your rights and obligations in a landlord-tenant relationship, make your first step toward taking control over the circumstances, and call my office at (415) 987-7000. I will be glad to assist in guiding you through the jungle. The only thing you can't afford is to stay put and uninformed. My office provides a confidential assessment of your particular scenario, free of charge, and I will share with you the results of the analysis along with my thoughts on available solutions.

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