Check out the U.S. Court of Appeals' opinion in Peace Ranch, LLC v. Bonta, No. 22-16063 (Feb. 13, 2024), where the court concluded that the owner of a mobilehome park could bring a federal court challenge to a California statute, even before the state applied the statute and enforced it.
There's a mobilehome park in Southern California -- Rancho La Paz -- that straddles the line between two separate municipalities, Anaheim and Fullerton. When the owner of the park upped the rent, the municipalities undertook efforts to impose a form of rent control. But those efforts ultimately failed.
Not to be outdone, the state representative from the area pushed for, and got adopted a state statute that seems curiously tailored to cover only Rancho La Paz: certain "qualified" mobilehome parks can only raise the rent a certain amount. The definition of a "qualified" park in the statute is limited to those parks which are within two or more incorporated cites. Gee, what a coincidence!
The owners sued in federal court, alleging a host of constitutional violations, including takings. The district court dismissed, concluding that the statute does not apply to Rancho La Paz because it is not a "qualified" mobilehome park. Hold on, how so? Turns out that the owner of the park alleges that it is not a single park split between two municipalities, but that it is instead two separate parks -- one in Anaheim and one in Fullerton. But what was important, the owner asserted, was that the State believes that the property is a single park that is a "qualified" park and therefore subject to the state's rent controlled statute. The court concluded that it was going to accept the owner's pleaded facts as true, and thus held that there was no "realistic danger of sustaining an injury" by the state's enforcement.
The owner tried to amend around this, emphasizing that its injury was due to the state wrongly believing that Rancho La Paz is subject to the statute. But to no avail, and the district court dismissed with prejudice. In short, because the owner continued to maintain that it was not covered by the statute, it could only sue if and when the state moved to actually enforce the law. Until then, no claim.
The Ninth Circuit reversed. It focused on the question as one of pre-enforcement standing. Can a plaintiff bring an action challenging a law when the government has not yet formally applied that law to the plaintiff? As the court noted:
Pre-enforcement injury is a special subset of injury-in-fact. Typically, plaintiffs must allege an injury at the time of filing. For pre-enforcement plaintiffs, the injury is the anticipated enforcement of the challenged statute in the future. One need not violate a criminal law and risk prosecution in order to challenge the law’s constitutionality.
Slip op. at 8.
The entire opinion is worth your time to read. But here's some highlights. First, a plaintiff "need not plan to break the law." Slip op. at 11. Second, the court noted that resolving a standing question does not require "mini litigation of the claims." The court must take as true the allegations in the complaint. Slip op. at 12. Third, the Ranch's conduct need not be definitively within the statutory proscription, merely "arguably" covered. The court noted:
In an effort to preserve future arguments, both parties dance around whether Rancho La Paz is a single mobilehome park straddling two cities or two mobilehome parks, one in each city. Hedging its bets, Peace Ranch alternatively claims that it is a single park (and thus is subject to AB 978) or two parks (and thus escapes the confines of AB 978). The amended complaint describes Rancho La Paz as a “park straddl[ing] two cities” and also alleges that “Peace Ranch believes [Rancho La Paz] is actually two separate parks (one in Anaheim and the other in Fullerton).” In its opening brief, Peace Ranch explains that these allegations “preserve an alternative argument for a future enforcement or other proceeding.” For its part, Peace Ranch is clear on one point—it wants to raise the rents.The Attorney General maintains that Peace Ranch’s allegation of two parks destroys its standing. There can be, the argument goes, no pre-enforcement standing if the statute does not apply to Peace Ranch.
Slip op. at 13.
As the court notes, there's a logical trap there. The owner ultimately argues that it isn't covered by the statute, but claiming that is the very thing that the state pointed to as saying "ah hah, no standing." Addressing this, the court noted that there's no need to resolve this question at this stage -- for indeed, this is the core merits question:
We can avoid this pickle—an inquiry that seems to unavoidably tangle standing with the merits. One purpose of pre-enforcement standing is to ensure that no law is practically unchallengeable. The risk of being sued by the state will deter many plaintiffs from testing their luck. Thus, the relevant question is whether Peace Ranch plausibly alleged that it refrained from raising rents because of the Attorney General’s interpretation of AB 978.
Slip op. at 14.
Read that again: "plausibly alleged."
That, the court held, coupled with the "substantial threat of enforcement" is enough. Has the government disavowed enforcement? If not, that should be enough. Slip op. at 15. "Here, the Attorney General not only refuses to disavow its intent to enforce but also admits that the law targets Peach Ranch." Id.
This case reminds us of another recent Ninth Circuit decision, Iten v. County of Los Angeles, where the issue was not presented as one of pre-enforcement standing, but plain-old standing.
Our question is this: why doesn't the court's approach here also rule the day when it comes to whether a regulatory takings claim is ripe? Remember that in many regulatory takings claims, the government claims it has not made a "final decision" applying its land use restrictions to the plaintiff's property. We might allow you to build, the government frequently claims. You have to ask us -- and keep asking us -- before any court can say that our actions are a taking.
To us, the court's analysis here -- looking at the facts as alleged in the complaint, the government's disavowal, vel non, of enforcement, and a clear line between pleadings and the ultimate merits question -- should be more widely applied.
Peace Ranch, LLC v. Bonta, No. 22-16063 (9th Cir. Feb. 13, 2024)