Ninth Circuit Strikes Down Ban on Landlords' Inquiring About Prospective Tenants' Criminal History, But …

upholds the ban on landlords' taking adverse action based on that information.

From today's Ninth Circuit decision in Yim v. City of Seattle, written by Judge Kim McLane Wardlaw, joined in part by Judges Ronald M. Gould and Mark J. Bennett:

In 2017, the City of Seattle enacted the Fair Chance Housing Ordinance. The Ordinance prohibits landlords from inquiring about the criminal history of current or potential tenants, and from taking adverse action, such as denying tenancy, against them based on that information….

We conclude that the Ordinance's inquiry provision impinges upon the First Amendment rights of the landlords, as it is a regulation of speech that does not survive intermediate scrutiny. However, we reject the landlords' claim that the adverse action provision of the Ordinance violates their substantive due process rights. The landlords do not have a fundamental right to exclude, and the adverse action provision survives rational basis review….

[We need not decide] whether the Ordinance regulates commercial speech and calls for the application of intermediate scrutiny, or whether the Ordinance regulates non-commercial speech and is subject to strict scrutiny review …, because we conclude that the Ordinance does not survive the intermediate scrutiny standard of review….

"Any First Amendment interest … is altogether absent when the commercial activity itself is illegal, and the restriction on advertising is incidental to a valid limitation on economic activity." It is undisputed that the Ordinance does not prohibit misleading speech.  Rather, it prohibits inquiring about information that is of record, and most likely accurate. While criminal records may be "associated with unlawful activity," reviewing and obtaining criminal records is generally a legal activity. A prohibition on reviewing criminal records therefore is not speech that "proposes an illegal transaction" and does not escape First Amendment scrutiny under Central Hudson.

The City's stated interests—reducing barriers to housing faced by persons with criminal records and the use of criminal history as a proxy to discriminate on the basis of race—are substantial. The landlords do not challenge the importance of these interests. Therefore, we evaluate whether the Ordinance directly and materially advances the government's substantial interests, and whether it is narrowly tailored to achieve them….

To be sustained, the Ordinance must directly advance a substantial state interest, and "the regulation may not be sustained if it provides only ineffective or remote support for the government's purpose." A restriction "directly and materially advances" the government's interests if the government can show "the harms it recites are real and that its restriction will in fact alleviate them to a material degree." There is no dispute that the harms the City points to—a crisis of homelessness among the formerly incarcerated and landlords' use of criminal history as a proxy for race—"are real," or that the City's purpose was to combat racial discrimination….

[But] the Ordinance is [not] "narrowly drawn" to achieve the City's stated goals. Central Hudson, 447 U.S. at 565 (internal quotation marks and citation omitted).

"[I]f the governmental interest could be served as well by a more limited restriction on commercial speech, the excessive restrictions cannot survive." Courts therefore must consider "[t]he availability of narrower alternatives," which accomplish the same goals, but "intrude less on First Amendment rights." "In requiring that [the restriction] be 'narrowly tailored' to serve an important or substantial state interest, we have not insisted that there be no conceivable alternative, but only that the regulation not 'burden substantially more speech than is necessary to further the government's legitimate interests.'" In considering the "fit between the legislature's ends and the means chosen to accomplish those ends," the fit must not necessarily be the "least restrictive means," but "reasonable" and through "a means narrowly tailored to achieve the desired objective."

In order to conclude that the inquiry provision was "narrowly drawn" to achieve the City's goals related to housing access and racial discrimination, we therefore must find that the City "carefully calculated the costs and benefits associated with the burden on speech," and that the inquiry provision struck a "reasonable" balance between the interests of various parties. Here, the inquiry provision—a complete ban on any discussion of criminal history between the landlords and prospective tenants—is not "in proportion to the interest served" by the Ordinance in reducing racial injustice and reducing barriers to housing. Other cities have enacted similar ordinances to achieve the same goals of reducing barriers to housing and racial discrimination as Seattle. While we do not address the constitutionality of any of these ordinances, none of them forecloses all inquiry into criminal history by landlords, as does Seattle's blanket ban on any criminal history inquiry.

The ordinances adopted by those other jurisdictions fall into two main categories. The first type of ordinance ("Type I")—adopted  by  Cook  County,San  Francisco,  Washington, D.C., Detroit, and the State of New Jersey—requires landlords to conduct an initial screening of potential tenants without looking at their criminal history and to notify applicants whether they pass that initial screening. At that point, landlords are permitted to order a criminal background check, but must provide the applicant with a copy of the report, give them a chance to provide mitigating information, and may consider only a limited subset of offenses. Cook County permits landlords to consider any convictions within the last three years; San Francisco and Washington, D.C. permit landlords to consider any convictions sustained within the past seven years; and the State of New Jersey creates a sliding scale, allowing landlords to consider fourth degree offenses within the past year, second or third degree offenses within the last four years, first degree offenses within the last six years, and a short list of extremely serious offenses including murder and aggravated sexual assault no matter when they occurred.

The second type of ordinance ("Type II")—adopted by Portland and Minneapolis—allows landlords to either consider an applicant's entire criminal history, but complete a written individualized evaluation of the applicant, and explain any rejection in writing, or consider only a limited subset of offenses—misdemeanor convictions within the last three years or felony convictions within the last seven years—without any additional procedures.

The inquiry requirement in both types of ordinances imposes a significantly lower burden on landlords' speech. As amici assert, screening before the Ordinance often examined "the presence of violent offenses in a criminal history" and the "type of crime and length of time since the crime was committed." These ordinances would permit the landlords to ask a potential tenant about their most recent, serious offenses, which is the information a landlord would be most interested in. Neither ordinance imposes any additional costs on the City.

Indeed, the record demonstrates that Seattle considered a narrower version of the Ordinance, as well as many fair housing ordinances from other jurisdictions, and rejected those versions with little stated justification. The first version of the Seattle Ordinance permitted landlords to inquire about some criminal convictions, while still banning them from asking about: "arrests not leading to convictions; pending criminal charges; convictions that have been expunged, sealed, or vacated; juvenile records, including listing of a juvenile on a sex offense registry; and convictions older than two years from the date of the tenant's application." Yet, when it decided to broaden the inquiry provision to a blanket ban, the Council offered the tenuous explanation that landlords did not insist on background checks a decade ago, so therefore there was "no evidence that criminal history is an indicator of a bad tenant." A decade ago, however, the technology did not exist to readily screen potential tenants—much as routine credit checks on tenants did not exist a few decades ago.  Like with credit checks, as soon as the technology existed, landlords insisted on using it to screen tenants because they were concerned about tenants with a criminal history. From the record before us, Seattle offered no reasonable explanation why the more "narrowly tailored" versions of the bill could not "achieve the desired objective" of reducing racial barriers in housing.

Because a number of other jurisdictions have adopted legislation that would appear to meet Seattle's housing goals, but is significantly less burdensome on speech, we conclude that the inquiry provision at issue here is not narrowly tailored, and thus fails intermediate scrutiny….

The court rejected, however, the argument that the "adverse action provision" violated a substantive due process "right to exclude persons from their property"; no such right exists, the court held, in this situation:

[T]he Supreme Court has never recognized the right to exclude as a "fundamental" right in the context of the Due Process Clause. Cf. Cedar Point Nursery v. Hassid (2021) (referring to the right to exclude as "a fundamental element of the property right" in the context of a takings clause analysis)….

Judge Wardlaw joined the opinion but wrote a concurrence, just to explain why she thought that the speech regulated by the inquiry provision was indeed commercial speech. Judge Bennett joined most of the opinion, just to explain why he thought the opposite. And Judge Gould joined most of the opinion, but dissented as to the striking down of the inquiry provision:

First, the opinion's assertion that the alternative laws "appear[] to meet Seattle's housing goals" is all well and good, but there is nothing in the record (or otherwise) from which we could reasonably reach that conclusion. The fact that five cities, one county, and the State of New Jersey enacted these alternative measures in an attempt to address some of the same issues as Seattle does not mean that they will "accomplish the same goals[.]" In fact, the majority identifies no data or evidence that these alternatives have been, or will be, effective at all, let alone as effective as Seattle's inquiry provision. The opinion's reasoning rests entirely on one federal panel's take as to what works in housing policy based on summaries of statutes alone. How is this anything other than a federal court "second-guess[ing]" the considered judgment of a democratically elected local government?

And it is a dubious take at that. If anything, it is more reasonable to assume that the alternatives will be less effective. Both alternatives permit landlords to access at least some of a prospective tenant's criminal history. Taking seriously the notion that permitting landlords to access criminal history would make it "extremely difficult to enforce" the law's prohibition on discrimination—as the opinion does, albeit elsewhere—these alternatives open the door for more undetectable (and unenforceable) violations. How does the mere existence of less effective alternative laws demonstrate that there are "numerous and obvious less-burdensome alternatives" that would accomplish the same goals as the inquiry prohibition?

Second, the opinion's reasoning as to the inquiry provision's burden on speech is lacking. "In general, 'almost all of the [commercial speech] restrictions disallowed under [the narrow tailoring] prong have been substantially excessive, disregarding far less restrictive and more precise means.'" Courts have struck down only those laws that go "much further than is necessary to serve the interest asserted."

On this front, the opinion takes issue with the fact that the inquiry provision bars landlords from accessing records of a prospective tenant's recent or violent offenses. But one of Seattle's substantial interests is reducing discrimination against anyone with a criminal record—not just those with old or nonviolent records. Restricting access to records of recent or violent offenses is at the core of, and no less necessary to accomplishing, Seattle's aims than restricting access to older and less violent criminal records. How is restricting access to information at the heart of the discrimination that Seattle aims to eliminate "substantially excessive" in relation to Seattle's goals? How would excluding such records from the scope the inquiry provision make Seattle's law "more precise"?

Finally, the opinion's characterization of Seattle's reasoning in enacting the inquiry provision as "tenuous" is unfounded. The record before us links to a public recording of the hearing at which Seattle considered whether the inquiry provision should include recent offenses. At this hearing, the proponent of an amendment to include recent offenses in the provision's scope noted that (1) widespread access to criminal records is a modern phenomenon, yet (2) there was "no evidence" in the studies or other evidence before the city that this change in access led to better (or worse) outcomes for landlords or tenants. Accordingly, the proponent reasoned that access to criminal records—new or old—had only opened the door to unwarranted discrimination. The record shows that several other members of Seattle's city council endorsed this view. After a considered discussion, the change was adopted unanimously, as was the ultimate legislation later.

What exactly about Seattle's reasoning was "tenuous"? It (roughly) echoes a line of reasoning familiar to this Court: a conclusion reached after evaluating the results of a kind of "natural experiment" created by a change in circumstances. Here, Seattle reached its conclusion after comparing the evidence before it on the state of the rental market before, and after, the advent of widespread access to criminal records. The opinion may disagree with Seattle's read of this evidence, but it does not explain how it came to that conclusion. That is an unpersuasive basis for overruling Seattle's considered effort to tackle a vexing local issue….

I believe our precedent requires us to uphold the inquiry provision. There is a "reasonable" fit between the inquiry provision and Seattle's aims. And Seattle's version of the inquiry provision is not "substantially excessive" in relation to Seattle's goals. The inquiry provision restricts only landlords' access to prospective tenants' criminal records—the precise information upon which Seattle wants to stop landlord discrimination. It goes no further. It does not bar landlord inquiries into a prospective tenant's rental history, income history, character references, job history, etc. A landlord could ask for references from recent landlords. A landlord could ask previous landlords "Hey, did this tenant ever do anything to make you or your other tenants feel unsafe?" "These ample alternative channels for receipt of information about" prospective tenants' ability to safely and successfully lease an apartment demonstrate that the law's sweep is neither disproportionate nor imprecise….