Government Liability Update

Eighth Amendment Claim for Excessive Fines May Be Ripe when the Fines are Imposed, Even if Not Yet Paid

In Thomas v. County of Humboldt, published December 30, 2024, the 9th Circuit Court of Appeals affirmed in part and reversed in part the district court's dismissal of a class action under 42 U.S.C. section 1983 challenging fines for illegal cultivation of cannabis.  Under the county code, illegal cultivation can carry daily fines of $6,000 to $10,0000.  Once a party is served with a Notice of Violation, the party has ten days to abate all violations or face penalties.  While the party can appeal, the penalties continue accruing during the appellate process. The county allegedly charged landowners based on imprecise data or the conduct of previous owners.  The class contended that the fines were barred by the Excessive Fines Clause of the 8th Amendment.  The district court dismissed the claims as unripe, because the class had not paid the fines, and untimely.

The 9th Circuit ruled that fines need not be paid to be ripe; under the circumstances, they were ripe when imposed.  The significant penalties caused the landowners emotional and psychological distress.  The landowners incurred engineering and legal expenses attempting to abate the violations.  The landowners therefore suffered concrete injury due to the imposition of the fines.  With one exception (where the landowner waited four years after a Notice of Violation to sue, and suffered no penalty in the meantime), the claims were timely.  The facial claims did not accrue when the ordinance was passed, but when the plaintiffs knew or had reason to know they had actual injury.  The as-applied challenges continued to accrue as daily penalties were applied.  The 9th Circuit further determined that under the facts alleged, the 8th Amendment excessive fines claims were plausible.  The fines, which could reach millions of dollars, and the demolition orders that could be granted under the code, could plausibly be alleged to be punitive rather than remedial.  The circumstances that the fines were in some cases for violations that predated the plaintiffs' ownership, that they were inaccurately charged or were the fault of previous owners, that lesser penalties could accomplish the same goals, and that the alleged offenses caused no harm beyond technical lack of compliance supported the contention that the fines were excessive.

Because Cannabis is Illegal under Federal Law, Conditional Use Permit for Cultivation Cannot Be Granted over Servient Tenement Owner's Objection

In JCCrandell, LLC v. County of Santa Barbara, published October 29, 2024, the Second District Court of Appeal, Division 6 reversed a trial court decision denying a petition for administrative mandate.  A company applied to the respondent county for a conditional use permit to cultivate cannabis.  The holder of the land on which cultivation would take place consented to the cultivation.  The site is zoned for agriculture.  The only access to the parcel is an easement owned by the petitioner.  The petitioner objected to issuance of the CUP.  The county issued the CUP over the objection.  The petitioner sought a writ of administrative mandate on grounds including that the use of the easement for cannabis activities is prohibited by federal law.  The trial court denied the petition.  It ruled the county's decision did not involve a vested interest, and so was subject to substantial evidence review; and that substantial evidence supported the decision.

The appellate court ruled that the trial court applied the wrong standard of review.  The petitioner's right to exclude an unauthorized person from its property is a fundamental vested right.  Therefore, the independent judgment standard of review is the proper standard.  Under that standard, the county erred, because cannabis is illegal.  Under federal law, cannabis is illegal in every state and territory of the United States.  Under the Supremacy Clause of the US Constitution, federal laws  are the supreme law of the land.  Civil Code section 1550.5, subdivision (b) provides commercial activity relating to medicinal or adult-use cannabis is the lawful object of a contract, not contrary to law, and not contrary to public policy.  The court ruled that the subdivision defies the Supremacy Clause.   "No matter how much California voters and the Legislature might try," the court ruled, "cannabis cultivation and transportation are illegal in California as long as it remains illegal under federal law."  It cannot be used to force a landowner to allow its property to be used for cannabis cultivation.

Because Suit against Individual Defendants for Relief only Entity Can Provide Does Not Serve Public Interest, Public Interest Exemption from Anti-SLAPP Does Not Apply

In Howard Jarvis Taxpayers Association v. Powell, published October 11, 2024, the Fourth District Court of Appeal, Division 2 reversed an award of fees under the Anti-SLAPP statutes and reversed denial of a special motion to strike under Anti-SLAPP.  The plaintiff sued a water district and three of its board members, alleging aquifer replenishment charge assessments violated the law.  The petition and complaint included causes of action against the board members for writ of mandate, conversion, civil conspiracy, and declaratory relief.  All of the defendants demurred, and the individual defendants filed an anti-SLAPP motion.  The trial court denied the motion under Code of Civil Procedure section 425.17's special interest exemption.  The plaintiff was awarded fees under Code of Civil Procedure section 425.16 for an anti-SLAPP motion that was frivolous or solely intended to cause delay.

The appellate court ruled that the trial court erred in applying the public interest exemption, because the plaintiff sued the individual members of an official government body for relief only the government body can provide.  The writ of mandate cause of action sought a writ to direct the defendants to stop collecting charges, vacate resolutions imposing the charges, and returning all amounts collected as unlawful charges.  The conversion cause of action sought a return of those amounts.  All of these are acts only the water district can perform.  There is a distinction between action taken by a government body and the expressive conduct of individual representatives.  Including the individual defendants was gratuitous.  It did not serve the public interest.  It could only serve to expose the individuals to potential costs of having to provide for their own defense as well as the threat of personal liability.  That risk is enough to have a chilling effect, especially against public officials who often serve for little or no compensation.  Without the exemption, the elements of an anti-SLAPP special motion to strike are met:  the officials' acts were protected activity, and there was no probability of success on the merits of the claims.  The civil conspiracy cause of action failed against the board members because the board members were immune from liability under Government Code section 820.2.  The declaratory relief action fails against the individual defendants because it seeks a declaration that does not implicate the individual defendants' rights and duties.

Legislatively-Imposed Permit Conditions Must Meet the Nollan/Dolan Test

In Sheetz v. County of El Dorado, California, published April 12, 2024, the United States Supreme Court reversed the decision of a California Court of Appeal.  The plaintiff wanted to build a small prefabricated home on his residential parcel of land for his grandson to live in.  The General Plan that the county board of supervisors adopted--a legislative act--requires developers to pay a traffic impact fee as a condition of receiving a building permit.  The county uses the proceeds to fund road improvements.  The fee amount is determined by a rate schedule, rather than the cost specifically attributable to the particular project.  The plaintiff applied for a permit to build the home.  As a condition for receiving the permit, the county required the plaintiff to pay a traffic impact fee of $23,420, per the rate schedule.  The plaintiff paid the fee under protest.  He then filed suit in state court.  He asserted that conditioning the permit on paying the fee was an unlawful exaction under the Takings Clause of the U.S. Constitution.  He argued the Supreme Court's Nollan and Dolan decisions required the county to make an individualized determination the fee amount was necessary to offset traffic congestion attributable to his specific development.  The trial court rejected the claim.  The court of appeal affirmed.  The appellate court asserted that the Nollan/Dolan test applies only to permit conditions imposed on an individual and discretionary basis, and not those imposed on a broad class of property owners through legislative action.  The California Supreme Court denied review.  State courts have reached different conclusions on whether the Takings Clause recognizes a distinction between legislative and administrative conditions on land-use permits.

The Supreme Court unanimously concluded that the Takings Clause and the Nollan/Dolan test apply regardless of whether the permit condition is imposed generally by a statute, or individually upon a landowner by administrative action.  The concern behind the Nollan/Dolan test is avoiding abuse in imposing permit conditions.  It therefore requires that permit conditions have an "essential nexus" to the government's land-use interest, and have "rough proportionality" to the development's impact on that interest.  Neither the Constitution's text, the history of takings, nor Supreme Court precedent regarding regulatory takings support exempting legislatively-imposed permit conditions from this test.  Indeed, historically legislation was the conventional way that governments exercised their eminent domain power.  there is no basis for affording property rights less protection in the hands of legislators than administrators.  The Takings Clause applies equally to both—which means that it prohibits legislatures and agencies alike from imposing unconstitutional conditions on land-use permits. The county conceded at oral argument that legislative conditions on building permits are not exempt form Nollan/Dolan scrutiny.  The court vacated the court of appeal's decision and remanded the case for further proceedings.

City Can Be Held Liable under California Coastal Act for Failing to Prevent Local Surfers from Harassing Outsiders

In Spencer v. City of Palos Verdes Estates, published February 27, 2023, the Second District Court of Appeal, Division 5 reversed an order granting judgment on the pleadings for the defendant city.  The complaint alleged that a group of local surfers kept outsiders from accessing a premier surfing spot by threats, intimidation and violence.  The complaint further alleged that the city allowed the group to build a masonry and wood structure on city property and use it as their "hangout"; and by allegedly being complicit in the group's activity and tacitly approving it.  The complaint alleged that the city was liable for conspiracy to deny access under the California Coastal Act, Public Resources Code section 30000 et seq.  The trial court concluded that merely allowing the structure to be built on city property was not actionable against the city, absent allegations the city itself performed the construction; and that neither the harassment nor the city's alleged condoning of the harassment is conduct reached by the Act.

The appellate court disagreed.  The Act, as interpreted by case law decided while this case was on appeal, establishes that a landowner, such as the city, that has the ability to remove a structure may violate the Act by allowing an unpermitted structure to be maintained on its property--here, for decades.  Further, while the trial court concluded that the alleged harassment by the group was not "development" under the Act, the appellate court deemed this interpretation of "development" too narrow.  The Act's definition of "development" in Public Resources Code section 30106 includes, on land, change in the intensity of use of water, or of access thereto.  Case law has applied the term "development" as used in the Act as applying to more than constructing physical impediments, including landowners hiring security guards to keep persons from accessing the coast.  Setting up headquarters on city property, physically obstructing trail access to the beach, and intimidating outsiders with word and deed, all with the effect of blocking access to the water, is "development" under the Act.  Finally, the city can be held liable for conspiracy with the group.  Parties can be held liable for Coastal Act violations under the doctrine of conspiracy.  Allegations that many city residents and the city council do not want outsiders in the city; that at least one city official stated that residents want to keep outsiders away; that the group has been blocking access to the coast for decades; that the city was aware of the conduct and was complicit in it; that the former police chief agreed to look into the situation, and then "backed off"; that the city did not enforce its laws against the group; and that the city instead acted to exclude outsiders from the beach by targeting them with traffic citations, parking tickets, and towing, adequately pleaded a cause of action for conspiracy.  

Pullman Abstention Applies to Regulatory Takings Suit in Federal Court Due to Eminent Domain Case in State Court

In Gearing v. City of Half Moon Bay, published December 8, 2022, the 9th Circuit Court of Appeals affirmed a district court decision granting the defendant city's motion to abstain under Railroad Commission of Texas v. Pullman Co. (1941)  312 U.S. 496 from hearing the plaintiffs' regulatory takings case while the city's eminent domain suit regarding the same property was pending in state court.  The plaintiffs own parcels of land in areas zoned for restricted land use.  The plaintiffs contended that under California's SB 330, intended to increase the stock of affordable housing, the city was required to approve their project.  The city contended that SB 330 did not require approval, because the plaintiffs had not met the city's development requirements.  Shortly after rejecting the plaintiffs' application, the city informed the plaintiffs that it intended to acquire their property through eminent domain.  The plaintiffs rejected the city's purchase offer.  The plaintiffs then filed their regulatory takings action in federal court.  A week later, the city filed an eminent domain action in state court.  The city then filed their motion to abstain.

The 9th Circuit agreed with the district court that Pullman abstention was appropriate.  The court rejected the arguments that the Supreme Court's decisions in Knick v. Township of Scott (2019) 139 S. Ct. 2162 (holding that landowners need not exhaust state judicial remedies before bringing a federal takings action) and Pakdel v. City and County of San Francisco (2021) 141 S. Ct. 2226 (holding that landowners need not exhaust administrative remedies before bringing a federal takings action) precluded abstention.  Those cases address when a takings claim is ripe, which goes to when a claim accrues for purposes of judicial review.  Abstention allows courts to stay cases that have already accrued.  It does not create a condition precedent to litigation.  It merely serves federalism by allowing a state court to decide state-law issues in the first instance.  There is not a danger of claim preclusion:  the state court can adjudicate the eminent domain action without reaching the regulatory takings issue.  The two suits compensate property owners for different injuries.  Eminent domain compensates for the forced sale of properties to the government by transferring the land to the government and paying the owner the property's fair market value as of the date the government made a deposit on the property.  A regulatory takings action compensates the owner for the economic impact of a regulation on distinct investment-backed expectations regarding property.  The landowners can defend the eminent domain action without addressing the constitutionality of the city's regulations, and recover the fair market value of the property as restricted by those regulations; then litigate their regulatory taking claim and recover ddamages for the economic impact of the regulation.  Further, the plaintiffs had made an England reservation in the state proceedings, reserving their right to litigate federal issues in their federal action.  The court of appeals also ruled that the Pullman abstention requirements were satisfied.  The complaint touched upon a sensitive area of social policy--land use planning.  The constitutional questions in the regulatory takings action could be narrowed by a ruling in the state case, because the state court will have to interpret the local regulation and SB 330 to ascertain the fair market value of the property.  Finally, the litigation involves an unclear question of state law: the interaction of SB 330 and the local regulation.

Hotel Did Not State Causes of Action against Public Entity for Inverse Condemnation or Nuisance Based on Railway Construction That Disrupted Hotel Operations

In Today's IV, Inc. v. Los Angeles County Metropolitan Transportation Authority, published October 5, 2022, the Second District Court of Appeal, Division 8 affirmed judgment in favor of the defendant authority after demurrer and motion for judgment on the pleadings.  The plaintiff owns the Bonaventure Hotel in downtown Los Angeles.  The only access to the hotel's parking garage and loading dock, and its main guest/invitee drop-off and pick-up point, is on Flower Street.  The authority's Regional Connector Transit Project runs along and under Flower Street, including under the hotel's location.  Although much of the project's tunnel is being built using an underground tunnel boring machine, which is less disruptive to surface traffic, the project called for a portion of the tunnel being built by the more disruptive cut-and-cover method, due to structural aspects of the street in the area. In 2012, the plaintiff sued under CEQA to halt construction of the project, challenging the Environmental Impact Report for the project.  The plaintiff lost the lawsuit, and the result was upheld on appeal.  In 2016, construction began, and the plaintiff instituted this lawsuit alleging causes of action against the authority for inverse condemnation and nuisance.  The trial court sustained a demurrer without leave to amend to the fourth amended complaint's cause of action for inverse condemnation.  It then granted a co-defendant's motion for judgment on the pleadings--which the authority joined--for nuisance, again without leave to amend.

The appellate court affirmed the resulting judgment.  The inverse condemnation action was based on an intangible intrusion theory.  This theory requires an intrusion that places a burden on the property that is direct, substantial, and peculiar to the property.  Such intrusions have been recognized only in limited circumstances.  The plaintiff asserted two types of intrusion.  The first was impairment of right of access.  Only an unnecessary and substantial temporary interference with rights of access during construction is actionable.  The plaintiff's argument that the use of cut-and-cover rather than the less-disruptive TBM method was barred by claim preclusion, since the previous CEQA litigation resolved the issue.  The plaintiff attempted to avoid claim preclusion by arguing that the method of cut-and-cover used caused unreasonable and unnecessary disruption.  But the construction causing traffic detours interfering with ingress and egress were the type of temporary interference from street construction that the law deems not unreasonable.  Traffic detours and delays are not such direct and substantial burdens peculiar to the hotel as would meet the legal standard:  not far removed from a physical intrusion.  The second theory was excessive noise and dust.  The complaint did not sufficiently plead the intrusion the hotel suffered was unique, special, or peculiar in comparison with other stakeholders in the area.  The plaintiff failed to explain on appeal how the complaint could be amended to save it from demurrer.  The complaint also failed to plead sufficient facts to state a cause of action for nuisance, because it failed to plead facts showing that the seriousness of the harm the hotel suffered outweighed the social utility of the project.  Further, Civil Code section 3482 barred the cause of action.  Under section 3482, nothing done or maintained under the express authority of a statute can be deemed a nuisance.  Public Utilities Code section 30631 provides that the authority may construct rail lines, stations, and any other facilities for rapid transit services, under or over public streets.  The complaint on its face pleaded facts sufficient to invoke section 3482.

Local Government Health Order Complies with Substantive Due Process if It Has a Rational Basis

In County of Los Angeles Department of Public Health v. Superior Court (California Restaurant Assoc.), published March 1, 2021, the Second District Court of Appeal, Division 4 issued a peremptory writ of mandate directing a trial court to vacate an order.  The petitioner county issued an order barring outdoor dining during a surge in the COVID-19 Pandemic.  An association of restaurants and an individual restaurant sued the county, seeking writ relief, declaratory and injunctive relief and relief for violation of due process, equal protection, and infringement of the right to liberty under the California Constitution. In the trial court, both sides submitted expert evidence for and against the restriction's relationship to preventing transmission of the virus. The trial court consolidated the actions, and issued an order enjoining the county from enforcing or enacting any county ban on outdoor dining, unless and until its public health officers conduct a risk-benefit analysis and articulate it for the public.  The county petitioned the court of appeal for writ relief.  The appellate court stayed the trial court's preliminary injunction order and issued an order to show cause.  While the writ was pending, the governor lifted a Regional Stay at Home Order that banned outdoor dining, and the county issued an order permitting outdoor dining with significant restrictions.

The appellate court determined the writ proceeding was not moot, because the county may reimpose the prohibition on outdoor dining if the region faces another surge.  The appellate court further determined that the trial court erred by failing to apply the proper deferential standard for evaluating state and local agencies' responses to public health emergencies.  The 1905 Jacobsen v. Massachusetts U.S. Supreme Court decision held that government action that purports to protect the public health will be upheld, unless it has no real or substantial relation to the object of public health, or beyond all question is a plain, palpable invasion of rights secured by the fundamental law.  The court analyzed recent decisions from the U.S. Supreme Court analyzing Pandemic restrictions on church services, and determined that the Jacobsen holding is still the rule as to secular businesses.  Therefore, the rational-relationship test for substantial due process claims applies; as does the rule of deference to administrative action, limiting that review to determining whether the agency's action has been arbitrary, capricious, or entirely lacking in evidentiary support.  The court cannot reweigh the evidence, or substitute its own judgment for the agency's.  Both the real parties' substantive due process claims and their contention that the county exceeded its emergency powers under Health & Safety Code section 101040 are analyzed under this rational relation test.  The trial court found the county's evidence provided a rational basis for the challenged order, but nevertheless adopted the opinion of the real parties' expert that a health order required a risk-benefit analysis.  Mandating such a nebulous requirement, the appellate court ruled, is inconsistent with the determination of whether the agency's actions were arbitrary, capricious, or entirely lacking in evidence.  Requiring public agencies to undertake such studies would take time and resources that may not be available when swift government action might be taking in response to surging infection, hospitalization, and death.  Because the real parties failed to meet their burden of showing the county's order was arbitrary, capricious, or without rational basis, they cannot ultimately succeed on the merits.  The trial court therefore erred in granting them injunctive relief.

The appellate court also rejected the individual restaurant's argument that the order violated freedom of assembly.  Even assuming the restaurant has a freedom of assembly, the county order does not regulate assembly based on expressive conduct, and is based on a legitimate and substantial government interest.  Further, it leaves open alternative channels for assembling, such as video conferencing and socially-distanced in-person gatherings.

Requiring Landlords to Provide Information about Rent-Controlled Units as Condition for Raising Rents Does Not Violate Fourth, Fifth, or Fourteenth Amendments

In Hotop v. City of San Jose, published December 7, 2020, the 9th Circuit Court of Appeals affirmed a district court decision dismissing a 42 U.S.C. section 1983 lawsuit after the court offered plaintiffs a chance to amend their complaint and the plaintiffs chose to stand on their unamended pleading.  The defendant city passed an ordinance requiring landlords to provide specified information about rent stabilized units to the city, and condition landlords' ability to increase rents on providing that information.  The landlords contended that the information is not in the public domain, and thus requiring the landlords to disclose the information is a search under the Fourth Amendment.  The landlords also contended requiring the information to be provided was a taking of property without just compensation, in violation of the Fifth Amendment; and violated procedural due process, substantive due process, and equal protection rights under the Fourteenth Amendment.

The panel rejected all of these contentions.  The panel majority ruled that requiring the landlords to provide the information was not a search under the Fourth Amendment, because the information required overlapped information landlords had to provide under other regulations which they did not challenge, and therefore did not violate expectations of privacy.  The court ruled there was no taking of property under the Fifth Amendment; that the due process protections were not triggered because the landlords had no property right at stake; and that the exemptions in the ordinance met equal protection requirements because they were rationally related to legitimate purposes.

A concurring/dissenting judge opined that the Fourth Amendment claim failed because there was no physical search, and so the majority did not have to address expectations of privacy.