Appellants Norman T. Larson, San Francisco Apartment Association, San Francisco Association of Realtors, Coalition for Better Housing, Round Hill Pacific, and John Zanghi (appellants) challenge provisions of Proposition M, a voter-approved initiative amending San Francisco's Residential Rent Stabilization and Arbitration Ordinance (hereafter, the Rent Ordinance). Proposition M augmented the antiharassment provisions of the ordinance by
The trial court upheld the decrease in housing services provisions of Proposition M, except for one phrase which is no longer at issue, but invalidated the attorney fees provision. Appellants appeal as to the decrease in housing services provisions of the proposition. The City and County of San Francisco (City) cross-appeals as to the attorney fees provision. We reverse, in part, and affirm, in part.
In November 2008, San Francisco voters approved Proposition M, an initiative measure that amended the City's Rent Ordinance (S.F. Admin. Code, § 37.1 et. seq.).
Prior to the passage of Proposition M, the City's Rent Ordinance defined "housing services" as follows: "services provided by the landlord connected with the use or occupancy of a rental unit including, but not limited to: repairs, replacement, maintenance; painting; light; heat; water; elevator service; laundry facilities and privileges; janitor service; refuse removal; furnishings; telephone; parking; rights permitted the tenant by agreement, including the right to have a specific number of occupants . . . and any other benefits, privileges or facilities."
New section 37.10B lists more than a dozen prohibited acts of "harassment." It provides: "No landlord, and no agent, contractor, subcontractor or employee of the landlord, shall, do any of the following, bad faith or with ulterior motive or without honest intent. [¶] (1) Interrupt, terminate or fail to provide housing services required by contract or by State, County or local housing health or safety laws; [¶] (2) Fail to perform repairs and maintenance required by contract or by State, County or local housing, health or safety laws. [¶] (3) Fail to exercise due diligence in completing repairs and maintenance once undertaken or fail to follow appropriate industry repair containment or remediation protocols designed to minimize exposure to noise, dust, lead paint, mold, asbestos, or other building materials with potentially harmful health impacts. [¶] (4) Abuse the landlord's right of access into a rental housing unit as that right is provided by law; [¶] (5) Influence or attempt to influence a tenant to vacate a rental housing unit through fraud, intimidation or coercion; [¶] (6) Attempts to coerce the tenant to vacate with offer(s) of payments to vacate which are accompanied with threats or intimidation; [¶] (7) Continue to offer payments to vacate after tenant has notified the landlord in writing [that] they no longer wish to receive further offers of payments to vacate; [¶] (8) Threaten the tenant, by word or gesture, with physical harm; [¶] (9) Violate any law which prohibits discrimination based on actual or perceived race, gender, sexual preference, sexual orientation, ethnic background, nationality, place of birth, immigration or citizenship status, religion, age, parenthood, marriage, pregnancy, disability, AIDS or occupancy by a minor child. [¶] (10) Interfere with a tenants right to quiet use and enjoyment of a rental housing unit as that right is defined by California law; [¶] (11) Refuse to accept or acknowledge receipt of a tenant's lawful rent payment; [¶] (12) Refuse to cash a rent check for over 30 days; [¶] (13) Interfere with a tenant's right to privacy, [¶] (14) Request information that violates a tenant's right to privacy, including but not limited to residence or citizenship status or social security number. [¶] (15) Other repeated acts or omissions of such significance as to substantially interfere with or disturb the comfort, repose, peace or quiet of any person lawfully entitled to occupancy of such dwelling unit and that cause, are likely to cause, or are intended to cause any person lawfully entitled to occupancy of a dwelling unit to vacate such dwelling unit or to surrender or waive any rights in relation to such occupancy." (§ 37.10B, subd. (a).)
The proposition further specified any conduct violating new section 37.10B constitutes a "substantial and significant decrease in services as defined in Section 37.2[, subdivision] (g) and tenants may file a petition with the Rent Board for a reduction in rent." (Underscoring omitted; see § 37.10B,
Proposition M also provided for a civil remedy. A lawsuit can be initiated by "[a]ny person, including the City" against "[a]ny person who violates or aids or incites another person to violate" the provisions of section 37.10B. (Underscoring omitted; see § 37.10B, subd. (c)(3)(5).) In such action, "[a]ny person who violates or aids or incites another person to violate the provisions of this . . . Section is liable for each and every such offense for money damages of not less than three times actual damages suffered . . . (including damages for mental or emotional distress) . . . ." (Underscoring omitted; see id., subd. (c)(5).) In addition, the proposition provided any violation of section 37.10B is a misdemeanor, punishable by a fine of up to $1,000 and six months in the county jail. (Id., subd. (c)(2).)
Proposition M also added a mandatory cost and attorney fees provision to the Rent Ordinance, which states: "In any action to recover possession of a rental unit subject to the Chapter, unless the sole basis of the notice to quit is Section 37.9[, subdivision] (b),
Appellants filed a combined petition for writ of ordinary mandamus and complaint for declaratory relief challenging Proposition M on a number of grounds, including that the expanded decrease in housing services provisions violates the judicial powers clause of the California Constitution (Cal. Const., art. VI, § 1) and infringes on constitutionally protected speech rights, and the mandatory, tenant-only cost and attorney fees provision violates equal protection rights.
The trial court granted the petition and complaint in part. The court struck from new section 37.10B the prefatory phrase "with ulterior motive or without honest intent" on the ground it was undefined and failed to give adequate notice as to the nature of the conduct prohibited. In all other respects, the court upheld the decrease in housing services provisions. The court invalidated the cost and attorney fees provision on the ground it violated the equal protection clause. Appellants filed a timely notice of appeal as to all adverse portions of the judgment. The City filed a cross-appeal as to that portion of the judgment invalidating the cost and attorney fees provision.
Appellants contend Proposition M unlawfully invested the Board with judicial power in violation of the judicial powers clause of the California Constitution (Cal. Const., art. VI, § 1.) Specifically, they assert the expanded definition of "decrease in [housing] services" embracing the list of prohibited acts set forth in new section 37.10B, combined with the authority of the Board to order a reduction in rent of an unspecified amount and for an unspecified duration, effectively invests the Board with the power reserved to the judiciary to adjudicate tortious conduct and award general damages. We agree in part.
San Francisco is not the only rent control jurisdiction to enact tenant antiharassment provisions in the wake of the Costa-Hawkins Act (Civ. Code, § 1954.50 et seq.), which allows owners to raise rents to market rates on vacated units. (See, e.g., Action Apartment Assn., Inc. v. City of Santa Monica (2007) 41 Cal.4th 1232, 1237-1238 [63 Cal.Rptr.3d 398, 163 P.3d 89] [invalidating certain provisions of Santa Monica's tenant antiharassment ordinance enacted after reports of increased tenant harassment following passage of the Costa-Hawkins Act].) However, the approach taken by San Francisco in Proposition M stands in marked contrast to the approach taken by other municipalities.
While other rent control jurisdictions have prohibited certain actions by landlords aimed at dislodging tenants in order to increase rents to market rates, no other municipality deems such conduct to constitute a "decrease in [housing] services" for which a rent board can order a reduction in rent. Rather, other municipalities define a decrease in housing services as a type of harassment—not vice versa. (E.g., West Hollywood Mun. Code, § 17.52.090; Santa Monica Mun. Code, §§ 4.56.010, 4.56.020 [harassment includes an interruption, termination, or failure to provide housing services if done with malice]; Berkeley Rent Stabilization Bd. Regs., reg. No. 10, 1013(G)(2)(c)(iii) [harassment includes a "[r]eduction in housing services under circumstances evidencing the landlord's purpose to cause the tenant to vacate a controlled rental unit"].) Moreover, any such harassment is actionable in a court action,
The court held the rent board could adjudicate excess rent claims and order restitution of any excess rent since such actions were authorized by the city ordinance and reasonably necessary to accomplish the board's legitimate regulatory purposes—the setting and regulating of maximum rents in the local housing market. (McHugh, supra, 49 Cal.3d at p. 375.) The board could not, however, order the immediate withholding of excess rent because such action effectively foreclosed judicial review and thus represented "an unwarranted intrusion into the power of the courts to `check' administrative
The Supreme Court elaborated further on the judicial powers clause in Walnut Creek Manor v. Fair Employment & Housing Com. (1991) 54 Cal.3d 245 [284 Cal.Rptr. 718, 814 P.2d 704] (Walnut Creek Manor). In Walnut Creek Manor, the court considered whether the Fair Employment and Housing Commission could, under the then operative statutory scheme, award general compensatory damages, including for emotional distress. (Id. at pp. 251, 255.) The court first observed it was "apparent from McHugh that [a] judicial powers analysis contemplates a somewhat higher level of scrutiny than rational basis." (Id. at p. 257.) A court must "`closely scrutinize the agency's asserted regulatory purposes in order to ascertain whether the challenged remedial power is merely incidental to a proper, primary regulatory purpose, or whether it is in reality an attempt to transfer determination of traditional common law claims from the courts to a specialized agency whose primary purpose is the processing of such claims.'" (Id. at p. 256, quoting McHugh, supra, 49 Cal.3d at p. 374.)
The court recognized compensatory damages serve to deter discrimination. However, the issue, explained the court, was whether a substantial award of compensatory damages was "`reasonably necessary'" to accomplish the commission's regulatory purpose and "`merely incidental'" to its "primary regulatory purposes," or whether "in reality" the commission was exercising the judicial function to determine traditional common law claims. (Walnut Creek Manor, supra, 54 Cal.3d at pp. 258-259.) The court concluded only "minimal and limited" damages awards were incidental to the commission's primary role. (Id. at p. 261.) And "what once was an alternative or incidental adjunct to the primary relief of securing the same or comparable housing, ha[d] assumed an independent importance that potentially threaten[ed] to dominate the administrative hearing." (Id. at pp. 261-262.) The award of "unlimited general compensatory damages" was neither "necessary to . . . [the commission's] purpose nor merely incidental thereto; its effect, rather, is to shift the remedial focus of the administrative hearing . . . to compensating the injured party not just for the tangible detriment to his or her housing situation, but for the intangible and nonquantifiable injury to his or her psyche suffered as a result of the respondent's unlawful acts, in the manner of a traditional private tort action in a court of law." (Id. at p. 264.) However, "`[t]he power to award compensatory and punitive tort damages to an injured
The court explained that, although in McHugh it "rejected a rigid rule that would hold administrative agencies incompetent under the doctrine of judicial powers to award `damages' of any kind [citation], in upholding the administrative award of damages we repeatedly distinguished incidental, `restitutive' damages—permissible under the judicial powers clause—from the award of unlimited, nonquantifiable compensatory damages." (Walnut Creek Manor, supra, 54 Cal.3d at p. 262, quoting McHugh, supra, 49 Cal.3d at pp. 358-360, 374-375 & fn. 38.) The court further explained "restitutive damages" are "akin to special damages, i.e., they are quantifiable amounts of money due to an injured private party from another party to compensate for the pecuniary loss directly resulting from the second party's violation of law." (Walnut Creek Manor, at p. 263.) "General compensatory damages for emotional distress, by contrast, are not pecuniarily measureable, defy a fixed rule of quantification, and are awarded without proof of pecuniary loss. [Citations.] As the commission itself . . . recognized, in seeking to place a dollar value on a complainant's mental and emotional injuries there is little in legal authority to guide it, for the reason that `[i]t has traditionally been left to the trier of fact to assess the degree of harm suffered and to fix a monetary amount as just compensation therefor. [Citation.]' [Citations.]" (Ibid., quoting Dept. Fair Empl. & Housing v. Ambylou Enterprises (1982) No. 82-06, FEHC Precedential Decs. 1982-1983, CEB 3, p. 11.)
The court also pointed out taking on the adjudication of general damages was inconsistent with the commission's purpose to "provide a streamlined and economic procedure for preventing and redressing discrimination in housing as an alternative to the more cumbersome and costly procedure of a civil suit. The availability of alternate civil remedies underscores that the primary regulatory purpose of the act is to prevent discrimination in housing before it happens and, when it does occur, to offer a streamlined and economical administrative procedure to make its victim whole in the context of the housing . . . ." (Walnut Creek Manor, supra, 54 Cal.3d at p. 264, italics omitted.)
The court accordingly concluded that under the statutory scheme, the commission's award of general compensatory damages for emotional distress violated the judicial powers clause. (Walnut Creek Manor, supra, 54 Cal.3d at p. 265.) The court noted it was expressing "no opinion" concerning legislation that authorized the commission to "award nominal or minor general compensatory damages not to exceed a specified maximum amount." (Id. at fn. 12.)
In Ocean Park Associates v. Santa Monica Rent Control Bd. (2004) 114 Cal.App.4th 1050 [8 Cal.Rptr.3d 421] (Ocean Park Associates), the Court of Appeal considered a judicial powers challenge to regulations allowing rent reductions for construction activity that significantly impacted habitability, interfered with occupancy, and reduced or removed housing services for more than 24 hours. (Id. at pp. 1055-1056.) The regulations enumerated the factors to be considered by the board in acting on "construction [rent reduction] petitions," and also gave a range of percentage rent decreases allowable for some problems (such as noise, odor, dust) and specific dollar reductions for other problems (such as loss of parking space, laundry facilities, or security services). (Id. at pp. 1056-1057.) Thus, as the court explained, the regulations permitted "rent decreases based on `reduced base amenities of a unit,' including loss of parking; laundry facilities; security gates, doors and fencing; recreational facilities; yards; and landscaping, and on lack of maintenance including `[a]ccumulation of garbage, debris or other inappropriate materials in common areas.' [Citation.]" (Id. at p. 1069.) Since these services and facilities were used in the first instance "to justify the rent charged," their removal for an extended period of time warranted a commensurate reduction in rent—an action within the permissible purview of the rent board. (Id. at pp. 1069-1070.)
We now consider the decrease in housing services provisions of Proposition M. There is no question the Board has a legitimate regulatory purpose of "ensuring enforcement of rent levels." (McHugh, supra, 49 Cal.3d at p. 374.) "The Rent Ordinance was adopted in June 1979 in order to address problems created by a shortage of decent, safe and sanitary housing in the City and County of San Francisco." (Baba, supra, 124 Cal.App.4th at p. 509.) The stated purpose of the Board is therefore to "safeguard tenants from excessive rent increases and, at the same time, to assure landlords fair and adequate rents . . . ." (§ 37.1, subd. (b)(6).)
Prior to the enactment of Proposition M, the Rent Ordinance provided a tenant could petition the Board for a reduction in rent when "a landlord has
The City does not dispute Proposition M authorizes the Board to award "non-restitutive damages." Instead, it asserts a "facial challenge must fail if courts can conceive of a single situation in which the legislative enactment can be constitutionally applied," quoting Personal Watercraft Coalition v. Marin County Bd. of Supervisors (2002) 100 Cal.App.4th 129, 138 [122 Cal.Rptr.2d 425] (Personal Watercraft Coalition). The City maintains it is possible the Board might award "remedial damages for quantifiable harms" in connection with a section 37.10B rent reduction and therefore the proposition can be applied constitutionally and cannot be ruled facially invalid.
However, subdivision (a)(4) through (15) of new section 37.10B are of an entirely different character. Virtually any tenant loss compensated through a "rent reduction" under this subdivision will be nonquantifiable and nonrestitutive in character. There is no readily measured, quantifiable or pecuniary loss, for example, for "[a]buse the landlord's right of access," influencing or attempting "to influence a tenant to vacate . . . through fraud, intimidation or coercion," attempting "to coerce the tenant to vacate with offer(s) of payments," threatening a tenant with physical harm, violating any antidiscrimination law (race, gender, sexual preference, sexual orientation, ethnic background, nationality, place of birth, immigration or citizenship status, religion, age, parenthood, marriage, pregnancy, disability, or AIDS), interfering with the "right to quiet use and enjoyment," refusing "to accept or acknowledge receipt of a tenant's lawful rent payment" or failing to cash a rent check for 30 days, interfering with a tenant's "right to privacy" (including by requesting citizenship status or Social Security number), or any other "repeated acts or omissions of such significance as to substantially interfere with or disturb the comfort, repose, peace or quiet of any person lawfully entitled to occupancy of such dwelling unit." (§ 37.10B, subd. (a)(4)-(15).)
On the contrary, the "loss" associated with any of these acts is emotional peace and psychic well-being—in other words general damages, the award of which is "`a judicial function.'" (Walnut Creek Manor, supra, 54 Cal.3d at p. 262.) Moreover, Proposition M set forth no criteria for assessing such losses or translating them into a "reduced rent" figure. (Cf. Ocean Park Associates, supra, 114 Cal.App.4th at p. 1056.) Thus, new section 37.10B
That Proposition M impermissibly invested the Board with judicial power is underscored by the fact the measure also provides a tenant or the City can file a superior court action for any of the enumerated acts of "harassment" in new section 37.10B and recover damages therefore. (§ 37.10B, subd. (c)(5).) It is also underscored by the fact the other rent control jurisdictions with tenant "antiharassment" prohibitions similar to those in subdivision (a)(4) through (15) make such conduct actionable in court and compensable through judicially awarded damages. (E.g., Santa Monica Mun. Code, § 4.56.040; West Hollywood Mun. Code, § 17.68.010.) And it is further underscored by the fact similar tenant "antiharassment" legislation enacted in 2004 and codified as Civil Code section 1940.2, also makes such conduct actionable by way of a civil action. (Civ. Code, § 1940.2, subd. (b).)
The City's hypothetical instances in which the Board could permissibly award "restitutive" damages through a "reduction in rent" under new section 37.10B are a significant stretch and illustrate, as to section 37.10B, subdivision (a)(4) through (15), that such instances are not the "generality or great majority of cases." (San Remo, supra, 27 Cal.4th at p. 673, italics omitted.) The City suggests, for example, an owner's failure to cash a rent check within 30 days—one of the actions deemed "harassment" and thereby a "substantial and significant decrease in [housing] services—could result in quantifiable damages because a tenant might suffer overdraft fees if a rent check is not cashed immediately." While overdraft fees may be quantifiable, in the City's example they are not restitutive. Any such overdraft fee would not be a result of the owner's failure to cash the check within 30 days, but the tenant's failure to maintain a balanced checkbook. Furthermore, exploring such personal accounting issues is not reasonably within the Board's charge to "safeguard tenants from excessive rent increases." (§ 37.1, subd. (b)(6).) The City similarly speculates invasion of a tenant's privacy could result in quantifiable damages because the tenant might hire a lawyer "to cure the harms caused by the landlord's actions." If "curing the harms" took the form of a civil action, an award of attorney fees would be governed by the parameters of that action. If not, investing the Board with the power to determine entitlement to and a reasonable amount of attorney fees incurred in providing unspecified legal services not involving a court action and having nothing to do with the cost of housing, is so far afield from the Board's purpose to "safeguard tenants from excessive rent increases" it would be a patent exercise of judicial power.
In the preceding part, we concluded the judicial powers clause precludes the Board from ordering rent reductions under section 37.10B, subdivision (a)(4) through (15). Proposition M also provided this subdivision is enforceable in a civil action. (§ 37.10B, subd. (c)(3).) In addition, any violation of subdivision (a)(4) through (15) is a misdemeanor, punishable by a fine not exceeding $1,000 and six months in the county jail. (§ 37.10B, subd. (c)(2).)
Appellants contend even a court action is foreclosed as to section 37.10B, subdivision (a)(5), (6), and (7) because they impermissibly restrict constitutionally protected speech. Specifically, they claim these three subdivisions are content-based restrictions of ordinary speech which do not survive "strict scrutiny" analysis. Even assuming the provisions are content neutral, appellants alternatively contend the provisions are unconstitutionally vague and overbroad. The City maintains subdivision (a)(5) is a content-neutral, permissible limitation on the manner of speech and subdivision (a)(6) and (7) are restriction on "commercial speech," which pass muster under "intermediate scrutiny."
Not all speech, however, is protected by the First Amendment or the liberty of speech clause of the California Constitution. "`The First Amendment
In addition to these limited categorical exclusions from First Amendment protection, speech may also be controlled through content-neutral regulations. Such a regulation is subject to review under an "intermediate scrutiny" standard, and will be upheld as a "reasonable time, place, and manner regulation so long as it is (i) narrowly tailored, (ii) serves a significant government interest, and (iii) leaves open ample alternative avenues of communication." (Los Angeles Alliance for Survival v. City of Los Angeles (2000) 22 Cal.4th 352, 364-365 [93 Cal.Rptr.2d 1, 993 P.2d 334] (Los Angeles Alliance); see Snatchko v. Westfield LLC (2010) 187 Cal.App.4th 469, 491 [114 Cal.Rptr.3d 368] (Snatchko).)
Like ordinary speech, commercial speech that is misleading, fraudulent, or concerns unlawful activity is not protected at all by the First Amendment.
With this preliminary overview of the applicable law, we turn to section 37.10B, subdivision (a)(5), (6), and (7).
Section 37.10B, subdivision (a)(5), provides "[n]o landlord, and no agent, contractor, subcontractor or employee of the landlord, shall . . . [in] bad faith . . . [¶] . . . [¶] (5) [i]nfluence or attempt to influence a tenant to vacate a rental housing unit through fraud, intimidation or coercion . . . ." (§ 37.10B, subd. (a)(5).)
Appellants contend section 37.10B, subdivision (a)(5) is a content-based restriction on ordinary speech that cannot survive "strict scrutiny." They further contend even if subdivision (a)(5) is "content neutral," it is unconstitutionally vague and overbroad. The City does not dispute subdivision (a)(5) applies to ordinary speech. It asserts, however, the provision is "content neutral" and a constitutionally permissible regulation of the manner in which a landlord can attempt to influence a tenant to vacate a rental unit.
We reach the same conclusion as to the remainder of section 37.10B, subdivision (a)(5). It does not restrict all speech attempting to influence a tenant to vacate a rental unit, but only speech that is fraudulent, intimidating, or coercive. The City's interest in prohibiting such fraudulent, intimidating or coercive speech is also justifiable for noncontent reasons, i.e., to prevent the subversion of its Rent Ordinance.
"The standard for unconstitutional vagueness is whether the statute `provide[s] a person of ordinary intelligence fair notice of what is prohibited, or is so standardless that it authorizes or encourages seriously discriminatory enforcement.'" (Maldonado v. Morales, supra, 556 F.3d at p. 1045, quoting Williams, supra, 553 U.S. at p. 304.) "A law is unconstitutionally vague if it fails to meet two basic requirements: (1) The regulations must be sufficiently definite to provide fair notice of the conduct proscribed; and (2) the regulations must provide sufficiently definite standards of application to prevent arbitrary and discriminatory enforcement." (Snatchko, supra, 187 Cal.App.4th at p. 495; accord, Chicago v. Morales (1999) 527 U.S. 41, 56 [144 L.Ed.2d 67, 119 S.Ct. 1849].) "`Only a reasonable degree of certainty is required, however.' (Tobe [v. City of Santa Ana], supra, 9 Cal.4th at p. 1107.) If a
Given the specific context of section 37.10B, subdivision (a)(5) and the limited conduct it addresses, we conclude a reasonable person would understand the conduct it prohibits. Indeed, there are many statutory prohibitions similar to those of subdivision (a)(5). (See, e.g., Pen. Code, §§ 31 [all persons "who, by threats, menaces, command, or coercion, compel another to commit any crime, are principals"], 95, subd. (c) [felony to corruptly influence a juror by "[a]ny threat, intimidation, persuasion, or entreaty"], 146a, subd. (a)(2) [unlawful to impersonate law enforcement officer and "intimidate[] any person"], 236.1, subds. (a), (d)(1) [prohibiting human trafficking by depriving the personal liberty of another "through fraud, deceit, coercion, violence, duress, menace, or threat"], 266g [prohibiting enforced prostitution of wife through "force, intimidation, threats, persuasion, promises, or any other means"], 311.4, subd. (b) [anyone who "knowingly promotes, employs, uses, persuades, induces, or coerces a minor" to engage in conduct for sexual exploitation commits a felony], 594.3, subd. (b) [vandalizing place of worship "for the purpose of intimidating and deterring persons" from religious observance is a felony], 602.1, subd. (a) [intentionally interfering with lawful business "by obstructing or intimidating" customers and refusing to leave upon request is a misdemeanor], 686.2 [court can order removal of spectator in court who "is intimidating" a witness], 1387, subd. (a)(2) [terminating criminal proceeding does not bar new prosecution if termination resulted from "direct intimidation of a material witness"], 6129, subd. (a)(2) [prohibited "retaliation" of Department of Corrections and Rehabilitation employee means "intentionally engaging in acts of reprisal, retaliation, threats, coercion, or similar acts"]; see also Lab. Code, §§ 139.45, subd. (b)(4) [prohibiting advertisements transmitted "in any manner that involves coercion, duress, compulsion, intimidation, threats, or vexatious or harassing conduct"], 922 [person who "coerces or compels" any person to enter into an agreement not to join a labor organization commits a misdemeanor].) We therefore conclude there is a social consensus as to the kind of conduct that is "intimidating" or "coercive."
Section 37.10B, subdivision (a)(6), provides "[n]o landlord, and no agent, contractor, subcontractor or employee of the landlord, shall . . . [in] bad faith . . . [¶] . . . [¶] (6) [a]ttempt[] to coerce the tenant to vacate with offer(s) of payments to vacate which are accompanied with threats or intimidation." (§ 37.10B, subd. (a)(6).)
Appellants contend section 37.10B, subdivision (a)(6) is also a content-based restriction on ordinary speech that cannot survive "strict scrutiny," and
It is also notable that the United States Supreme Court's commercial speech decisions have involved the advertising or sale of products and services. (E.g., Lorillard, supra, 533 U.S. 525 [tobacco advertisements]; 44 Liquormart, Inc. v. Rhode Island, supra, 517 U.S. at pp. 495-504 [reviewing history of court's commercial speech jurisprudence and considering liquor advertisements]; Florida Bar, supra, 515 U.S. 618 [attorney advertising]; Bolger, supra, 463 U.S. 60 [contraceptive advertisements]; Central Hudson, supra, 447 U.S. 557 [public utility advertisements].)
Appellants and the City both rely on Baba, supra, 124 Cal.App.4th 504, to support their respective positions on whether section 37.10B, subdivision (a)(6)—which addresses "offer(s) of payments to vacate" a rental unit—restricts commercial speech. As we have noted, in Baba, Division Two of this court invalidated a provision of the Rent Ordinance enacted to prevent threatened Ellis Act evictions to recover and rerent units at market rates. (Baba, at pp. 509-510.) The provision made it unlawful for a landlord or anyone assisting a landlord "`to request that a tenant move from a rental unit or to threaten to recover possession . . . unless . . . [t]he landlord in good faith intends to recover said unit under'" specific subdivisions and within five days of "`such request'" served the tenant with written notice of the basis of the request. (Id. at p. 510.) The court concluded this provision was not directed solely at "core" commercial speech—"it does not regulate speech that does no more than propose a commercial transaction." (Id. at
The court in Baba also pointed out "[t]he landlord-tenant relationship, though it surely has a commercial component, is more complex, personal and permanent than the relationship between the seller of goods or services and his or her potential buyer." (Baba, supra, 124 Cal.App.4th at p. 516.) Appellants seize on this language to support their assertion section 37.10B, subdivision (a)(6) does not restrict commercial speech, since it restricts speech between a landlord and a tenant. The court further observed, however, "[s]ome of the speech prohibited by [the] provision could be construed as commercial speech. For example, a landlord who requests that a tenant vacate a rental unit in exchange for a cash payment would violate this regulation. . . ." (Baba, at p. 515.) The City contends this language compels the conclusion subdivision (a)(6) is commercial speech since it prohibits "offer(s) of payments to vacate" a rental unit.
Section 37.10B, subdivision (a)(7), provides "[n]o landlord, and no agent, contractor, subcontractor or employee of the landlord, shall . . . [in] bad faith . . . [¶] . . . [¶] (7) [c]ontinue to offer payments to vacate after tenant has notified the landlord in writing [that] they no longer wish to receive further offers of payments to vacate." (§ 37.10B, subd. (a)(7).)
Appellants contend section 37.10B, subdivision (a)(7) is also a content-based restriction on ordinary speech that cannot survive "strict scrutiny," and
We have discussed the parties' contentions with respect to commercial speech in the preceding part. We need not, and do not, decide whether section 37.10B, subdivision (a)(7) restricts commercial speech, since we conclude it does not withstand even "intermediate scrutiny" under the standard applicable to commercial speech set forth in Central Hudson.
Because the speech in question is neither misleading nor unlawful, and because the City has a substantial interest in ensuring compliance with its Rent Ordinance (Baba, supra, 124 Cal.App.4th at p. 519), we address, specifically, the last of the Central Hudson inquiries—whether the "limitation on expression . . . [is] designed carefully to achieve the [City's] goal." (Central Hudson, supra, 447 U.S. at p. 564.)
"The second criterion recognizes that the First Amendment mandates that speech restrictions be `narrowly drawn.' In re Primus [(1978)] 436 U.S. 412, 438 [56 L.Ed.2d 417, 98 S.Ct. 1893, 1908] . . . . The regulatory technique may extend only as far as the interest it serves." (Central Hudson, supra, 447 U.S. at p. 565, fn. omitted.) Stated another way, the restriction must be "no more extensive than necessary to further the" government's substantial interest in regulating the commercial speech. (Id. at pp. 569-570, 572; see Lorillard, supra, 533 U.S. at pp. 555-556.) "The State cannot regulate speech that poses no danger to the asserted state interest, see First National Bank of Boston v. Bellotti[ (1978) 435 U.S. 765,] 794-795 [55 L.Ed.2d 707, 98 S.Ct. 1407], nor can it completely suppress information when narrower restrictions on expression would serve its interest as well." (Central Hudson, at p. 565.)
Appellants contend section 37.10B, subdivision (a)(7) is a complete prohibition on offers of payments to vacate and therefore must be reviewed with "special care." The City asserts otherwise, pointing out a landlord is only prohibited from making such offers when a tenant provides written notice that he or she no longer wishes to receive them. That the subdivision has a trigger—written notification by a tenant—does not change the fact that any and all forms of communication about offers to vacate are thereafter completely prohibited, apparently until the end of the tenancy (which could be years, or even a decade or more). Accordingly, this subdivision warrants "review with special care." (Central Hudson, supra, 447 U.S. at p. 566, fn. 9.)
But even employing a marginally less exacting standard, we conclude the restriction is "more extensive than necessary to further the" City's interest in preventing the subversion of its rent control ordinance and in protecting any reasonable notion of the right to peaceful occupancy. For example, we cannot fathom how an offer of payment to vacate made six months after a tenant has declined such an offer, either undercuts the Rent Ordinance or impinges upon a reasonable understanding of the right to peaceful occupancy. Indeed, if general economic conditions, or a tenant's personal economic circumstances, were to change after an initial offer to vacate, the tenant might be interested in a new offer. Yet such an offer is absolutely prohibited by section 37.10B, subdivision (a)(7).
Florida Bar, supra, 515 U.S. 618, is illuminating in this regard. In that case, a lawyer and lawyer referral service challenged a state bar rule prohibiting lawyers from using direct mail to solicit personal injury or wrongful death clients within 30 days of the accident giving rise to the potential claim. (Id. at pp. 620-621.) The rule was adopted after hearings, surveys and public commentary, and intended to "forestall the outrage and irritation with the state-licensed legal profession that the practice of direct solicitation only days after accidents has engendered" and to curb activities that "`negatively affect[ed] the administration of justice.'" (Id. at pp. 631, 624.) The Supreme Court concluded the "30-day blackout period" on direct solicitations satisfied Central Hudson since the court did "not see `numerous
Pearson v. Edgar (7th Cir. 1998) 153 F.3d 397 (Pearson), is also instructive. In that case, real estate brokers challenged a statute restricting residential solicitations. The statute prohibited any solicitation to sell or list a residential property after the owner gave notice in the manner specified in the statute that he or she did not desire to sell. (Id. at p. 399.) The court of appeals recognized the importance of the state's significant interest in protecting residential privacy. (Id. at pp. 402-403.) However, the court concluded a prohibition against solicitation only by real estate brokers was not a "reasonable fit" to accomplish that interest. (Id. at pp. 403-405.) As the court observed, the specific prohibition against solicitation to list or sell residential properties was such a severely "underinclusive" means for the state to achieve its stated interest in residential privacy, the lack of congruence indicated "a lack of reasonable fit." (Id. at p. 404.) This analysis applies equally here to the City's assertion that section 37.10B, subdivision (a)(7) serves its interest in protecting the residential privacy interests of its citizenry.
In defense of section 37.10B, subdivision (a)(7), the City relies on the "do-not-call" and mail list cases, principally citing Mainstream Marketing Services, Inc. v. Federal Trade Commission (10th Cir. 2004) 358 F.3d 1228 (Mainstream Marketing). In Mainstream Marketing, the circuit court of appeals upheld the do-not-call registry established by regulations promulgated by the Federal Trade Commission and the Federal Communications Commission. During the course of enacting legislation to prevent telemarketing abuse, Congress had found consumers lose an estimated $40 billion each year due to telemarketing fraud. (Id. at p. 1235.) And by telemarketers' own estimates, they made billions of calls each year. (Id. at p. 1240.)
There are significant differences between the do-not-call registry upheld in Mainstream Marketing and section 37.10B, subdivision (a)(7). To begin with, the do-not-call registry is aimed at certain nameless and faceless telemarketers who make impersonal sales pitches to whoever happens to fit the demographic they are targeting. The landlord-tenant relationship is significantly different. The parties have a preexisting and ongoing relationship which "surely has a commercial component," but also is "more complex,
The City points out that in upholding the do-not-call registry, the court of appeals emphasized that "speech restrictions based on private choice (i.e.,—an opt-in feature) are less restrictive than laws that prohibit speech directly." (Mainstreet Marketing, supra, 358 F.3d at pp. 1242-1244.) This principle emerged in the context of unsolicited marketing and sales efforts. (See Rowan v. Post Office Dept. (1970) 397 U.S. 728 [25 L.Ed.2d 736, 90 S.Ct. 1484] [upholding federal law under which individual could require mailer to stop future mailings if he or she received advertisements that he or she believed to be erotically arousing or sexually provocative]; see also Schaumburg v. Citizens for Better Environ. (1980) 444 U.S. 620, 639 [63 L.Ed.2d 73, 100 S.Ct. 826] [concluding certain provisions of antisolicitation and peddling ordinance were not narrowly drawn, and noting other, nonchallenged provisions permitted citizens to post a sign reading "`No Solicitors or Peddlers Invited'"].) As we have discussed, the landlord-tenant relationship is significantly different.
We therefore conclude section 37.10B, subdivision (a)(7), even assuming it restricts "commercial speech," does not survive "intermediate" scrutiny under Central Hudson and cannot be enforced.
The City contends the trial court erred in invalidating on equal protection grounds the attorney fees provision Proposition M added to the Rent Ordinance. This provision states: "In any action to recover possession of a rental unit subject to the Chapter, unless the sole basis of the notice to quit is
The statutory scheme expressly addresses attorney fees in two contexts. The first is when a "habitability" claim is raised. Code of Civil Procedure section 1174.2 provides that a tenant may raise a "habitability" defense to an unlawful detainer action. (Code Civ. Proc., § 1174.2, subd. (a) [tenant can raise as affirmative defense "a breach of the landlord's obligations under Section 1941 of the Civil Code[
The second context in which the unlawful detainer statutes address attorney fees is when a claim of retaliatory eviction is raised. Code of Civil Procedure section 1174.21 provides that if a landlord institutes an unlawful detainer action for failure to pay rent, but is found to have violated the antiretaliatory eviction provisions of Civil Code section 1942.4, the landlord "shall be liable to the tenant" for "reasonable attorneys' fees and costs of the suit, in an amount to be fixed by the court." (Code Civ. Proc., § 1174.21.)
Locally imposed procedural constraints on the state statutory scheme are, however, in excess of a municipality's police power to regulate the substantive contours of private property rights and an intrusion upon the state legislative scheme to provide a "summary repossession procedure . . . intended to be a relatively simple and speedy remedy that obviates any need for self-help by landlords." (Birkenfield, supra, 17 Cal.3d at p. 151, citations omitted.)
There is also a startling lack of congruence between the asserted purpose of Proposition M—to ensure that owners do not "harass" tenants or otherwise abuse their rights under the Costa-Hawkins Act—and the sweep of the attorney fees provision. The fee provision mandates an award of attorney fees to a prevailing tenant in any unlawful detainer proceeding. Yet, because of the highly technical notice, service and timing requirements set forth in the unlawful detainer statutes, cases can, and often are, dismissed for procedural reasons that have nothing to do with tenant "harassment." Settlements are also strongly encouraged, sometimes resulting in dismissal of the case. In any of these instances, the tenant would be the "prevailing party" under Code of Civil Procedure section 1032, subdivision (a)(4), and Proposition M would compel a fee award—even though the owner engaged in no "bad faith" conduct, and indeed, may even have worked with the tenant to avoid an eviction. To paraphrase Bullard, Proposition M's fee provision is "a remarkably blunt instrument" to effectuate the measure's asserted purpose of punishing bad faith efforts to dislodge tenants to raise rents to market rates. (Bullard, supra, 106 Cal.App.4th at p. 491.)
The City has cited no case in which any court has suggested, much less held, that a municipality, by local ordinance, can mandate an award of attorney fees to successful tenants in unlawful detainer cases. In Rental Housing Assn. of Northern Alameda County v. City of Oakland (2009) 171 Cal.App.4th 741 [90 Cal.Rptr.3d 181] (Rental Housing Assn.), Division Three of this court upheld a provision in Oakland's rent control ordinance that provided for attorney fees in wrongful eviction actions, authorized by and brought pursuant to the ordinance after a tenant defeated an unlawful detainer case. (Id. at pp. 750, 760-761.) The appellants in that case argued Code of Civil Procedure section 1021 authorizes a fee award only when fees are allowed by "statute" and the rent control ordinance did not qualify as such. (Rental Housing Assn., at pp. 760-761.) As the court pointed out, it is well established that a city ordinance may authorize attorney fees in an action brought under the provisions of the ordinance, and the reference to "statute" in section 1021 is broad enough to include such ordinances. However, an action authorized by and brought pursuant to a local ordinance with a fee provision, as in Rental Housing Assn., is an entirely different proposition than
We therefore invalidate Proposition M's attorney fees provision set forth in section 37.10B, subdivision (c)(6), mandating an award of attorney fees to prevailing tenants in unlawful detainer actions.
The judgment is reversed, in part, and affirmed, in part. The judicial powers clause precludes the Board from making rent reductions under section 37.10B, subdivision (a)(4) through (15). Section 37.10B, subdivision (a)(7), is invalid in its entirety because, even assuming it restricts commercial speech, it does not survive "intermediate scrutiny" under Central Hudson and unconstitutionally infringes First Amendment speech rights. Section 37.10B, subdivision (c)(6), is invalid in its entirety because the City has no authority to mandate that attorney fees be awarded in unlawful detainer cases brought under state law. The trial court is therefore directed to grant appellants' writ petition, in part, and to issue a writ of mandate consistent with this opinion, and likewise to enter judgment consistent with this opinion as in appellants' declaratory judgment action. The parties shall bear their own costs on appeal.
Marchiano, P. J., and Margulies, J., concurred.