Lamplighter Village Apartments LLLP v. City of St. Paul

Background

The plaintiffs are 19 rental-property owners in St. Paul. The St. Paul City Council enacted Ordinance 20-14 on July 8, 2020, and it took effect on March 1, 2021. The ordinance regulates landlord conduct in several ways, including by limiting the criminal-record, credit, and rental-history information landlords may consider; limiting security deposits; allowing tenants to extend leases unless the landlord proves specified just cause; requiring advance notice of property sales and ownership changes; and imposing fines, rental-license consequences, criminal prosecution, and possible civil liability for violations.

The plaintiffs claimed that the ordinance violated the United States and Minnesota Constitutions. Their claims included takings, substantive and procedural due process, compelled speech, impairment of contractual relationships, and vagueness. Their motion sought a preliminary injunction based on the alleged takings and substantive-due-process violations.

Preliminary-injunction standard

A preliminary injunction is temporary relief issued before a final trial decision. The court considered whether the plaintiffs had a fair chance of succeeding on the merits, whether they faced irreparable harm, the balance of harms, and the public interest.

Takings claims

The court concluded that the plaintiffs showed a possible likelihood of success on their claim that the ordinance operated as a per se taking. The plaintiffs argued that the screening rules required them to rent to people they otherwise would reject and that the lease-renewal provisions allowed tenants to remain indefinitely absent narrow just-cause circumstances. The court agreed that the ordinance appeared to single out private landlords to bear burdens associated with addressing housing needs.

The court also concluded that the plaintiffs showed a probable likelihood of success on a regulatory-takings claim under the framework from Penn Central Transportation Co. v. New York City. The court emphasized the ordinance’s economic effects, including restrictions on screening, limits on additional upfront payments, and the possibility that tenants who repeatedly pay rent late could renew their leases indefinitely. It also considered the ordinance’s interference with the owners’ investment-backed expectations and their claimed right to exclude people from their property.

Substantive due process

The plaintiffs argued that the ordinance deprived them of a fundamental right to exclude others from their properties. The court stated that the right to exclude others from property is fundamental. It concluded that the ordinance failed strict scrutiny because the City had not shown that its restrictions were narrowly tailored to serve a compelling governmental interest. The court also concluded that the ordinance failed rational-basis review because it did not show that the restrictions would accomplish the City’s stated objectives. The plaintiffs therefore demonstrated a likelihood of success on their substantive-due-process claim.

Other injunction factors

The court found irreparable harm because continued enforcement was likely to cause ongoing violations of the plaintiffs’ constitutional rights. It stated that, when the validity of an ordinance is at issue, the balance of equities and public interest do not weigh in the analysis. The court rejected the need for a substantial bond because the City had requested one without specifying an amount or providing legal justification. It found a $1 bond appropriate.

Order

Judge Paul A. Magnuson granted the plaintiffs’ motion for a preliminary injunction. The City of St. Paul was enjoined from enforcing Ordinance 20-14, section 193, pending a trial on the merits. The plaintiffs were required to post a $1 bond within five business days of the order. The order did not finally decide the plaintiffs’ claims after trial.