Federal judge upholds “Fair chance housing” ordinance

After a brief hearing this morning, today U.S. District Court Judge John Coughenour issued a ruling upholding the city’s “Fair Chance Housing” ordinance banning landlords from inquiring about or using a potential tenant’s criminal history.

In the past few weeks, both sides had notified the court of recent rulings in other courts that they believed should inform Coughenour’s decision in this case; this morning’s hearing was an opportunity for both sides to expand on those other cases and to respond to each other’s arguments. The hearing was short, the judge asked no questions, and when both sides were done he said “you’ll hear from us shortly” and adjourned the hearing — a clear sign that he had already written the opinion and didn’t hear anything that would change his mind.

Both sides had asked the court for summary judgment in their favor, stipulating that the facts of the case were not in question so there was no need for a trial to weigh evidence. Coughenour could take the facts as given, and decide the case on the legal questions.

The plaintiffs had argued that the ordinance violated their free speech rights under both the federal and state Constitutions, as well as their substantive due-process rights under the federal and state Constitutions. The case went sideways for much of 2019 as Coughenour asked the state Supreme Court what the standard of review was for substantive due-process cases under the state Constitution (it concluded that it is the same as the federal standard, which has been a moving target and has made a mess of state case law), then it was derailed again last year due to COVID. But earlier this year, the judge spun it back up again leading to today’s ruling.

Both halves of the case (free speech, and due process) at a high level come down to the same question: when is a government regulation allowed to restrict fundamental rights — known as the “standard of review.” The city made a fairly meager effort to argue that the ordinance didn’t in fact restrict those rights, but those arguments weren’t effective — it was pretty clear to everyone, including the judge, that the ordinance does restrict both (especially speech: the ordinance explicitly says that landlords may not “ask” about criminal history). But despite the fact that both rights are enshrined in the U.S. and state Constitutions, the standard of review is different for each. Much of the ruling is dedicated to a discussion of what the proper standard is for each.

Coughenour concluded that under federal case law, the standard of review for due process restrictions is “rational basis,” i.e. so long as there is a rational basis for the city’s restriction, it is acceptable. This is the lowest, most deferential standard the courts apply; it isn’t an automatic approval, but it’s awfully easy for the government to satisfy. In fact, it doesn’t even matter what the government’s actual reasons were for enacting the ordinance; so long as the judge can conceive of any rational basis for the restriction, it passes the test. In this case, however, Coughenour found that the city’s actual reasons were sufficient, and that the ordinance as written advances that purpose. So on the due-process claims, he ruled for the city.

For government restrictions on free speech, the logic proceeds down a different path. The courts distinguish between commercial and non-commercial speech: non-commercial speech (and especially political speech) is afforded the highest standard of review, called “strict scrutiny”; commercial speech however is squarely in the middle, a standard known as “intermediate scrutiny”: less than “strict scrutiny,” but more than “rational basis.” But before the rules were applied, there is some context that the judge needed to take into consideration.

The ordinance has two kinds of restrictions: the “inquiry” part that says landlords may not ask about criminal history, and the “use” part that says landlords may not use criminal history as part of tenancy decisions. The focus of the free speech claims is on the “inquiry” part, not the “use” part.  Also, the plaintiffs’ claims are “facial,” as opposed to “as applied,” which means that they are arguing that the ordinance is generally unconstitutional abstracted away from the specific details of any specific incident in which the city tries to enforce it; that forces the plaintiffs to argue in broad, general terms about the impacts of the ordinance, and presents some different challenges for them in showing that they have standing to challenge the law (they must show that they will suffer an injury by its application). Further, the judge distinguished between how the ordinance applies to current tenants versus prospective ones — and found that the plaintiffs don’t have standing to challenge the law as it applies to current tenants — only prospective ones.

To sum up:  commercial speech; intermediate scrutiny; only the “inquiry” part of the ordinance; only prospective tenants; facial challenge.

Under intermediate scrutiny, courts apply a four-part test (known as the “Central Hudson” test) to determine whether a restriction on speech is allowable:

  • Does the speech concern unlawful activity or is misleading? If so, then it’s not protected;
  • Does the government assert a “substantial interest” that it hopes to accomplish?
  • Does the restriction on speech advance that government interest?
  • Is the regulation “narrowly drawn” to accomplish the goal?

Coughenour walked through the test:

  • the ordinance doesn’t relate to unlawful or misleading speech;
  • the government asserted two interests: reducing barriers to housing for people with criminal records, and combating racial discrimination in housing;
  • the ordinance advances those interests;
  • the ordinance is a “reasonable fit” to the goals.

Coughenour has a reputation for being a tough, meticulous, but fair judge, and consistent with that he carefully walks through his logic in reaching the conclusion that the ordinance passes intermediate scrutiny. The one shaky part of his argument occurs when the plaintiffs argue that the ordinance is overbroad. And they have a strong argument: as written, it prohibits “any person” from inquiring about a renter’s criminal history: that includes journalists, firearm dealers, and employers. Coughenour (and the city) admit that the ordinance does in fact say that, but decides instead to simply take the city’s word that they will not interpret it that way:

The Court agrees that the inquiry provision, which applies to “any person,” could be interpreted to cover these inquiries. But, because the Court is construing a City ordinance, it may defer to the City’s plausible interpretation of the Ordinance, including any limiting construction the City has adopted. Sorrell v. IMS Health, Inc., 564 U.S. 552, 563 (2011); Vill. of Hoffman Ests. v. Flipside, Hoffman Ests., Inc., 455 U.S. 489, 494 n.5 (1982) (“In evaluating a facial challenge to a state law, a federal court must, of course, consider any limiting construction that a state court or enforcement agency has proffered.”); S.M.C. § 14.09.085 (providing that the City Attorney’s Office—the City’s counsel in this litigation—shall enforce the Ordinance). The City argues that the Ordinance applies only in the context of housing transactions because it is entitled the “Fair Chance Housing Ordinance.” (Dkt. No. 50 at 7.) Although the title of the Ordinance is a thin reed on which to rest a limiting construction, and the precise boundaries of the Ordinance under the City’s interpretation are not clear, the City’s interpretation is not implausible. See S.M.C. § 1.04.030 (“the names and headings of titles, chapters, subchapters, parts, . . . and sections of the Seattle Municipal Code [are] part of the law”). Therefore, the Court accepts the City’s limiting construction that the statute does not apply to journalists or firearm dealers or employers running background checks.

And with that, Judge Coughenour dismissed the free speech claims as well.

It’s almost certain that the plaintiffs will appeal the case to the Ninth Circuit Court of Appeals, though it’s hardly a sure thing that they will fare better there.  Coughenour’s ruling is consistent with a recent ruling from the Third Circuit related to whether employers can inquire into a potential employee’s wage history; that ruling is not binding on either Coughenour or the Ninth Circuit, but it is instructive as to how federal judges look at the issues.

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