Board of Trustees of Leland Stanford Junior University v. County of Santa Clara…

Background

Stanford challenged Santa Clara County Ordinance No. NS-1200.368, adopted on September 25, 2018. The ordinance applies to qualifying residential development in the Stanford Community Plan area and requires 16% of the resulting dwelling units to satisfy specified affordable-housing requirements. The complaint alleged that the ordinance singled out Stanford even though the County recognized affordable housing as a countywide problem. Stanford also alleged that its property represented less than one-half of one percent of the land zoned for residential development in the unincorporated County and that Stanford had produced most of the affordable housing developed within the County’s jurisdiction during the periods discussed in the complaint.

The first amended complaint asserted three claims: (1) a federal and California constitutional equal-protection claim under 42 U.S.C. § 1983 based on treatment of Stanford as a "class of one"; (2) a California claim seeking a writ of mandate to vacate and set aside the ordinance; and (3) a California claim seeking a declaration that the ordinance was invalid and unlawful. The County moved to dismiss all claims under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint adequately states a legally sufficient claim.

Judicial Notice

The court granted the County’s request for judicial notice of the existence and contents of the submitted exhibits, including public records, government reports, the ordinance, a hearing transcript, and Stanford’s permit application. The court did not take judicial notice of the truth of factual assertions contained in those materials. The court also concluded that it could consider the ordinance under the incorporation-by-reference doctrine because the first amended complaint referred to it and made it central to the claims.

Equal-Protection Claim

A class-of-one equal-protection claim requires allegations that the defendant intentionally treated the plaintiff differently from other similarly situated property owners without a rational basis for the difference. The court held that Stanford had not identified a specific comparator. General references to non-Stanford properties, nearby parcels, or the combined planned construction on non-Stanford land did not identify an individual property owner that was comparable in all relevant respects. The court rejected Stanford’s argument that a specific comparator was unnecessary at the pleading stage.

The motion to dismiss Claim 1 was therefore granted with leave to amend based on the failure to adequately allege a similarly situated comparator. The court noted that Stanford’s counsel had indicated that an amended complaint might identify comparators by breaking Stanford’s broader development plan into smaller construction projects.

The County separately argued that Stanford had not adequately alleged the absence of a rational basis for treating Stanford differently. The court explained that, at this stage, Stanford had to allege facts sufficient to overcome the presumption that the government’s classification was rational. The County offered possible rationales, including that housing problems were particularly acute around Stanford, that Stanford generated substantial employment and planned growth, and that the ordinance could address the jobs-housing imbalance.

The court concluded that Stanford’s allegations, if proved, could establish that the affordable-housing problem and the factors contributing to it were not more severe around Stanford than elsewhere in the unincorporated County. The court also held that factual disputes about the County’s rationales could not be resolved on a motion to dismiss. However, Stanford had not sufficiently alleged why the County lacked a rational basis for taking an incremental approach to the countywide housing problem. The motion to dismiss Claim 1 based on the rational-basis requirement was granted with leave to amend.

The court rejected the County’s additional argument that the equal-protection claim failed because the ordinance applied neutrally to the Stanford Community Plan area rather than expressly naming Stanford. The court reasoned that the ordinance applied only to property owned by Stanford on the current record, and that the possibility that another person might purchase property in the area did not make the ordinance neutral for purposes of dismissal.

State-Law Claims

The court stated that Stanford’s writ-of-mandate and declaratory-relief claims appeared to be grounded entirely in the equal-protection claim, and neither party argued otherwise. Because Claim 1 was subject to dismissal with leave to amend, the court also granted the motion to dismiss Claims 2 and 3 with leave to amend.

Order

The court ordered that the County’s motion to dismiss was granted in part and denied in part, as discussed in the opinion, and that all claims were dismissed with leave to amend. Any amended pleading had to be filed by October 31, 2019. The court limited amendment to the deficiencies addressed in the opinion and prohibited Stanford from adding new parties or claims without express permission from the court.