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 non-student residential development in the Stanford Community Plan Area and requires 16% of the resulting units to meet specified affordable-housing requirements. Stanford alleged that the County had singled out its property even though the affordable-housing shortage was a countywide problem. Stanford also alleged that it had produced a large share of the affordable housing developed within the County’s jurisdiction and that the County adopted the ordinance to gain leverage in negotiations over Stanford’s pending General Use Permit application.

The first amended complaint asserted three claims: (1) a federal and California constitutional equal-protection claim under 42 U.S.C. § 1983, based on a “class of one” theory; (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 under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim.

Equal-Protection Claim

A class-of-one equal-protection claim requires allegations that the government intentionally treated the plaintiff differently from similarly situated property owners without a rational basis for the difference. The court held that Stanford had not identified a specific similarly situated property owner. Stanford pointed generally to non-Stanford land and planned housing units, but the court found those allegations did not show that any particular property owner intended to undertake comparable development. The court therefore granted the motion to dismiss Claim 1 on this basis, with leave to amend.

The court also held that Stanford’s allegations did not satisfy the rational-basis pleading requirement. Although the County offered rationales for the ordinance, including that housing concerns were particularly acute around Stanford and that the ordinance could address Stanford’s planned growth, Stanford disputed those rationales. The court stated that it could not resolve those factual disputes on a motion to dismiss. However, Stanford had not adequately alleged why the County lacked a rational basis for taking an incremental approach to the countywide affordable-housing shortage. The court granted the motion to dismiss Claim 1 on this basis, 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 directly naming Stanford. The court found that the ordinance applied only to property owned by Stanford on the record before it, and that its application to anyone who might later purchase land in that area did not make it neutral. This was the portion of the motion that the court denied.

State-Law Claims and Judicial Notice

The court concluded that Stanford’s claims for a writ of mandate and declaratory relief 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 granted the motion to dismiss Claims 2 and 3 with leave to amend as well.

The court also granted the County’s request for judicial notice as to the existence and contents of the submitted documents, but not the truth of the factual assertions within them. The court also determined that it could consider the ordinance under the incorporation-by-reference doctrine.

Order

Judge Beth Labson Freeman ordered that the County’s motion to dismiss was GRANTED IN PART AND DENIED IN PART, 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 order and barred Stanford from adding new parties or claims without express permission from the court.