Judge Keeps Ban on San Francisco’s Tenant-Payout Law

SAN FRANCISCO (CN) – A federal judge on Tuesday refused to vacate his judgment that the city of San Francisco had enacted an unconstitutionally burdensome ordinance requiring landlords to provide evicted tenants with massive lump-sum payouts.

The city wanted U.S. District Judge Charles Breyer to vacate a judgment barring enforcement of the law, since its board of supervisors later amended the ordinance to lower the payout amount.

But Breyer said the judgment needn’t be vacated because the city essentially repealed its own law.

“The court likewise concludes that the city’s voluntary action mooted this case,” Breyer wrote.

The dispute goes back to 2014, when property owners Daniel and Maria Levin sued the city after they found they were going to have to pay their tenant $117,000 to move out of a two-unit building they bought in 2008.

The Levins claimed they never wanted to be landlords and immediately informed the woman, who had been living in the first-floor unit since 1988, that they planned to remodel and use both units themselves.

They moved into the one-bedroom top floor and, after the tenant protested their attempts to remodel, the Levins decided to take the ground-floor apartment off the rental market through the 1985 Ellis Act. The act allows landlords to evict tenants if the landlord wants to get out of the rental business.

The Levins said they paid the tenant, Thina Holman, $8,000 under old tenant payment laws.

But because Holman was still living in the unit when a new rent ordinance took effect in June 2014, the Levins had to pay her the difference between her old rent of $2,479 a month and the price of comparable housing in the city, for two years.

The city appealed the injunction, but enacted a new ordinance the following year.

In March, a three-judge Ninth Circuit panel sent the case back to Breyer to consider vacating his 2014 judgment. The city argued an injunction still in place would hurt its chances of ever resurrecting the old ordinance.

“The city stresses that it is not trying ‘to have its cake and eat it too’ because it has scrupulously abided by the terms of injunctions issued here and in state court, and because it urged the Ninth Circuit to reach the merits on appeal,” Breyer wrote on Tuesday. “Fair enough, but not enough. Let’s have no illusions about what happened here. The city tried to repair some (but not all) of the original ordinance’s constitutional infirmities – and successfully requested a stay of the appeal to make those repairs.

“The city then sought review of the amended ordinance, which by its very design would have presented a closer question on the merits. Now, after being denied review, the city seeks vacatur based on mootness that it itself caused. The court sees no equitable reason to reward litigants for attempting to hedge their bets.”

Breyer also implied the city is also looking to avoid paying the Levins’ attorney fees. Having won an injunction, the Levins are entitled to attorney fees that a vacatur might prevent them from ever recovering.

“So while resolving whether plaintiffs are entitled to fees is a question for another day, the court is loathe to risk burying an inadvertent dagger in their chances,” Breyer wrote.

In an email, San Francisco City Attorney spokesman John Coté said, “We’re reviewing the court’s ruling.”

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