Paschal v. City and County of San Franisco

Background

Mark A. Paschal alleged that the City and County of San Francisco, Diego Sanchez, and Adrian Putra discriminated against him because of his race and violated his constitutional rights when the Office of Short-Term Rentals denied his application to operate a short-term rental business from his home. Paschal alleged that he is African American and owns a home on Hayes Street in San Francisco.

San Francisco’s rules required residents seeking a short-term-rental certificate to show that the home was their primary residence and that they occupied it for at least 275 days during the relevant calendar year. Paschal and his sister submitted renewal applications in 2019 and 2021 but did not receive responses. In February 2021, they briefly advertised the home for a lodger and removed the advertisement two weeks later. The Office of Short-Term Rentals denied the application in May 2021, stating that publicly available information suggested Paschal was not the permanent resident of the home. The denial letter referred to a rental listing and voter-registration information showing another address. Paschal denied moving from the home and alleged that Sanchez and Putra ignored his driver’s license, which listed the Hayes Street address.

Paschal also alleged that Sanchez asked retaliatory and harassing questions during an appeal, including whether a stove in the home was permitted. He filed this lawsuit after the defendants moved to dismiss his first amended complaint. The court had dismissed that complaint but allowed Paschal to amend most claims. Paschal then filed the second amended complaint, which defendants again moved to dismiss.

Legal standard

The defendants moved under Federal Rule of Civil Procedure 12(b)(6), which requires dismissal when a complaint does not state a legally sufficient claim. The court accepted factual allegations as true for purposes of the motion but did not accept conclusory allegations or unreasonable inferences. The court explained that amendment is ordinarily allowed unless the deficiencies cannot be cured by alleging additional facts. Here, the court concluded that amendment would be futile because Paschal had not made a substantive effort to fix the previously identified deficiencies.

Claims and analysis

Monell and First Amendment theories

Paschal asserted a municipal-liability claim under Monell v. Department of Social Services and section 1983. A Monell claim requires a plausible constitutional violation caused by a municipal policy, custom, or practice.

The court held that the short-term-rental rules regulated economic activity and nonexpressive conduct, not speech. Denying Paschal’s rental permit did not restrict what he could say or when, where, or how he could speak. The court found that Paschal’s proposed storytelling activities were at most incidentally connected to the rental rules and that the complaint did not show that the rules targeted speech.

The court also rejected Paschal’s argument that the denial violated a right to choose roommates. The complaint repeatedly described the proposed arrangements as a short-term-rental business, and the court distinguished a business transaction between a landlord and tenant from a protected roommate relationship. The Monell claim was dismissed because Paschal had not plausibly alleged a constitutional violation.

Section 1983 and equal protection

Section 1983 provides a way to seek relief for violations of federal constitutional or statutory rights by officials acting under government authority; it does not itself create a separate substantive right. Paschal based this claim on the Equal Protection Clause and alleged that Putra and Sanchez intentionally discriminated against him because of his race.

The court found that the complaint did not plausibly allege intentional racial discrimination or different treatment from similarly situated people. The allegation that Putra saw a photograph of Paschal and his sister did not support an inference that Putra flagged the application because of race. The court also found that the Airbnb founders were not a meaningful comparison because Paschal did not allege that they received short-term-rental certificates while he did not, and the complaint described them as operating a multibillion-dollar company rather than a small business.

The court considered Paschal’s allegations that Sanchez asked questions that were asked more often of Black people, appointed himself to hear Paschal’s appeal, and prevented a meeting with the mayor. It found that the complaint itself described Sanchez as hearing the permit appeal rather than the discrimination complaint, and that the questions about the stove appeared related to the rental office’s authority to check code compliance. The court also noted that Sanchez said he lacked the ability to schedule a meeting with the mayor. The section 1983 claim was dismissed.

Title VI

Title VI of the Civil Rights Act prohibits racial discrimination in a program or activity receiving federal financial assistance. The court noted that Paschal presented his claim as one for retaliation and that the Ninth Circuit had not expressly stated the elements of a Title VI retaliation claim. The court assumed for purposes of its analysis that such a claim could exist.

The claim focused on Sanchez, but an individual official is not a program or activity receiving federal financial assistance and therefore cannot be sued under Title VI on that basis. To the extent Paschal intended to assert the claim against the City or the Office of Short-Term Rentals, the court found his allegations too conclusory, particularly because the court had previously identified the same deficiency. The Title VI retaliation claim was dismissed.

California Government Code section 815.2

Paschal clarified that his public-entity-liability claim arose under California Government Code section 815.2. That statute can make a public entity liable for an employee’s act or omission within the scope of employment when the act or omission would independently support a claim against the employee, subject to statutory immunities.

The court found that Paschal had not plausibly alleged an act or omission by Sanchez or Putra that would support liability against the City. The court also discussed California Government Code section 818.4, which can shield a public entity from liability for injuries caused by issuing, denying, suspending, or revoking a permit or similar authorization when the entity or employee is authorized to make that decision. Paschal did not address the defendants’ argument concerning this provision in his opposition. The section 815.2 claim was dismissed.

Disposition

The court granted the defendants’ motion to dismiss. It dismissed Paschal’s Monell claim, section 1983 claim, Title VI retaliation claim, and California Government Code section 815.2 claim with prejudice. The court stated that the second amended complaint did not make a substantive attempt to cure the earlier deficiencies and that further amendment would be futile. The order was signed by Judge William H. Orrick.