301, 712, 2103 and 3151 LLC v. City of Minneapolis

Background

The Minneapolis City Council enacted the Minneapolis Fair Chance Housing Ordinance in September 2019. The ordinance requires landlords to provide prospective renters with their rental-screening criteria in as much detail as feasible. It provides two screening options.

Under the first option, landlords may not consider certain vacated or expunged convictions, older misdemeanor convictions, or certain older felony convictions. They also may not reject an applicant solely because of the applicant’s credit score, although they may consider credit-report information directly relevant to fitness as a tenant. The ordinance also restricts consideration of certain rental history and limits rejection based on income below three times the rent when the applicant can show a history of successful rent payments at that income level.

Under the second option, landlords may use more restrictive criteria, but they must conduct an individualized assessment for each reason they intend to deny an application. They must consider supplemental evidence from the applicant and factors such as the nature, severity, number, and type of incidents, the time elapsed, and the applicant’s age when the incidents occurred. The ordinance also requires written denials within 14 days that identify the criteria used and, when applicable, explain why supplemental evidence did not overcome the reasons for denial. Violations may result in fines, adverse rental-license action, and criminal prosecution.

The plaintiffs, described in the opinion as 43 rental-property owners in Minneapolis, sued the City in September 2020. They alleged that the ordinance violated the federal and Minnesota Constitutions by taking their property, denying substantive due process, compelling speech, and being impermissibly vague. They sought a preliminary injunction based on their takings, substantive-due-process, and vagueness claims. The opinion notes that their briefing gave only a brief argument concerning the First Amendment claim.

Preliminary-Injunction Standard

A preliminary injunction is an extraordinary remedy issued before final judgment. The court considered the four factors used for that remedy: likely irreparable harm, the balance of harms, the likelihood of success on the merits, and the public interest. The court emphasized that the absence of a likelihood of success strongly supported denying relief.

Takings Claim

The plaintiffs argued that the ordinance was a per se taking—a type of government action treated as a taking without requiring the usual broader economic analysis—because it interfered with their right to exclude people from their property. The court rejected that argument. It found that the ordinance did not deprive the plaintiffs of all economically beneficial use of their properties and did not physically invade them.

The court explained that the ordinance did not force the plaintiffs to open their properties to the public. Instead, it gave them two tenant-screening alternatives: one limiting consideration of certain factors and another allowing more restrictive criteria if the landlord performed an individualized assessment and explained the denial. The court therefore concluded that the ordinance was not a per se taking.

The court then considered the type of regulatory-taking analysis associated with the economic effect of a regulation and its interference with property rights. The plaintiffs had not relied on that analysis in seeking the injunction and offered no specific evidence of economic harm. Their declarations described compliance as time-consuming, onerous, and difficult, but did not show the number of additional materials applicants had submitted or increased charges from screening services. The court concluded that the plaintiffs had not shown likely success on the takings claim.

Substantive-Due-Process Claim

The plaintiffs argued that the ordinance interfered with a fundamental right to rent property to whomever they chose and therefore should be reviewed under strict scrutiny, the demanding constitutional test requiring a narrowly tailored law serving a compelling government interest.

The court found that the plaintiffs provided no legal authority recognizing a fundamental right to rent property for substantive-due-process purposes. It cited decisions stating that the right to rent property is not a recognized fundamental right. Because the court found no deprivation of a fundamental right, it applied the more deferential rational-basis standard, under which a regulation generally satisfies due process if it is reasonably related to a legitimate governmental interest.

The court held that access to affordable housing was a legitimate governmental objective. It also found that the ordinance was directed at problems that can prevent people from finding housing, including the effects of prior convictions and lack of housing on recidivism. Although the court expressed doubts about whether the ordinance would achieve the City Council’s purposes, it deferred at this stage to the Council’s stated findings and concluded that the plaintiffs had not shown likely success on their substantive-due-process claim.

Vagueness Claim

The plaintiffs argued that the ordinance was void for vagueness because it did not specify clearly enough what conduct it prohibited. The City responded that the plaintiffs’ facial challenge—an attack on the law as written in all applications—could not proceed because it did not involve First Amendment freedoms. The court explained that, outside the First Amendment context, vagueness challenges generally must be evaluated based on the specific facts of the challenger’s situation.

The plaintiffs said their complaint included a First Amendment claim, but the court noted that they had not argued that claim in the memoranda supporting the injunction and had expressly said they were not relying on it for the motion. The court also noted that their vagueness count invoked due process rather than the First Amendment. Because the plaintiffs did not argue that the ordinance was vague as applied to them, the court concluded that they had not shown likely success on the vagueness claim.

Other Injunction Factors and Disposition

The court concluded that the plaintiffs had not sufficiently shown that the ordinance violated their constitutional rights and therefore had not established irreparable harm. It stated that, when the validity of an ordinance is at issue, the balance of equities and public interest do not affect the analysis. The court added that, if those factors were considered, they would weigh against an injunction because the plaintiffs had not established a constitutional deprivation and the public interest favored ordinances legitimately enacted by elected representatives.

The court held that the plaintiffs had not sufficiently established a likelihood of success on the three claims supporting the motion and had not shown irreparable harm. Judge Paul A. Magnuson ordered that the plaintiffs’ Motion for Preliminary Injunction was DENIED. The opinion did not state that the underlying lawsuit was dismissed or that the constitutional claims were finally resolved.