Landlords File Federal Lawsuit to Invalidate Registry

Beverly Hills landlords never liked the city’s rental unit registry. They fought tooth-and-nail against this ledger of landlords, properties and tenancies because this must-have rent-stabilization tool would hold landlords accountable to the law. Last year the Apartment Association of Greater Los Angeles brought a Superior Court lawsuit to tank it. Now they are back again with their federal case and a new local landlord plaintiff.

The Apartment Association of Greater Los Angeles (AAGLA) has filed a federal lawsuit that alleges Beverly Hills violates the constitutional rights of landlords by requiring them to register their properties in the city’s rental unit registry. AAGLA (“The Voice of Multifamily Housing”) claims the city is demanding confidential and proprietary business information and subjecting landlords to disparate treatment by imposing a licensing regime without the necessary due process.

The press release announcing the action calls “monthly rental amounts paid by tenants, unit numbers, utility payments and onsite parking availability” (among other things) as sensitive and proprietary. The press release also calls the rental unit registry a “fishing expedition.”

AAGLA’s lawsuit is a near verbatim copy of a federal suit last year to block the City of Los Angeles registry. This suit names a co-plaintiff, Ms. Orit Blau, who owns rental property in Beverly Hills (and is married to the AAGLA executive director Dan Yukelson).

The suit seeks a jury’s injunctive relief to put a stop to rental unit registration and also damages and court costs. In response, Beverly Hills City Council has bumped up its legal spend to defend the registry and the Rent Stabilization Program against such actions.

A Look at the Claims

Specifically the suit calls out rental unit registration as a violation of Fourth Amendment protection against unlawful search and seizure:

On January 24, 2017 and February 21, 2017, the City passed and adopted revised regulations ("ordinance) amending the RSO to require that a property owner subject to the RSO, as a condition of permitting a Property Owner to rent units in the city, provide to the City, without consent of the property owner, or consent of the property owner's tenants, or a court order as required under the Fourth Amendment of the United States Constitution, among other information, a list of sensitive tenant rental information for each unit rented, including the amount of rent charged, unit numbers, utility payments, and onsite parking availability.

AAGLA and named plaintiff Blau also argue that rental unit registration contravenes the “fundamental liberty and property interest” of tenants under the state Constitution. Landlords, then, by providing that information, has breached their tenants’ privacy under the Fourteenth Amendment:

The Ordinance in requiring that AAGLA's members divulge their tenant's [sic] sensitive rental information without requiring notice [sic] and consent from the tenants or a court order infringes on their tenants [sic] fundamental privacy rights protected under the Due Process Clause of the Fourteenth Amendment of the United States Constitution and subjects AAGLA's members to liability from such tenants both under state and federal law.

The lazy grammar and poor punctuation of the complaint suggests the work of a poorly-trained paralegal rather than high-powered counsel!

The crux of the lawsuit is that the city acted “under color of law” (which is to say pursuant to official policy but nevertheless unlawful) to unconstitutionally seize business records; to infringe the privacy of AAGLA members and tenants; and to subject landlords that rent rent-stabilized units to disparate treatment without due process.

Disparate treatment? The city treats hotels differently, the complaint says, which is true! Hotels are much more tightly regulated. They must obtain a conditional use permit in addition to a business license and any other permits; and since we’re talking about tenant privacy, hotels are required to open their registration book at any time simply when a cop asks. A landlord is under no such obligation. But whatever!

Relief from Registration is Sought

So what are the landlords asking from a jury? AAGLA and named plaintiff Blau seek injunctive relief to put a halt to the registration process and invalidate the rental unit registry. Additionally they seek attorney’s fees, filing costs, and “other and further relief as the court deems just and proper.”

Our Take

The AAGLA lawsuit alleges civil rights violations and official actions “under color of law” that are more likely to crop up in racial discrimination cases than in a court action to tank rent stabilization. Most rent control cities in California require the same information as a condition of renting housing.

In fact, they use a rental unit registry because state law requires it! State courts have said that if a locality is to impose a price control on rents, then each rent has to be documented and recognized (“certified”) as the lawful rent. How else could a landlord be held to account for an overcharge?

What most irks Yukelson and his fellow landlords is regulation. He has frequently attacked the city in letters to the editor and AAGLA editorials. He sees Red Scare ghosts in rent control everywhere he looks.

Not surprisingly, Yukelson doesn’t hold back in the association’s press release announcing the amended filing:

The City of Beverly Hills has undertaken a vicious campaign against small residential income property owners by forcing them to comply with burdensome administrative reporting requirements. The Tenant Rental Registry is just one aspect of the City’s high cost, rent stabilization infrastructure, which at last count has added nearly a dozen new rent stabilization employees to the City’s already bloated headcount, and is costing taxpayers of the City upwards of two million dollars a year.

Let’s be clear: the city has not created a “tenant registry.” There is no information collected about tenants — not even a name. As for his braying about “high cost,” the Rent Stabilization Program is costing the city less than $800,000 this fiscal year; that will go to an estimated $1.5 million next fiscal year (not $2 million).

Moreover, the program is entirely cost-recovered: the taxpayer is not on the hook because tenants and landlords will likely split the program cost 50-50. For landlords that would mean about $50 per year per unit more than they pay today under the longstanding RSO program.

Yukelson gets other facts wrong too: the city has hired no more than six employees (and some are part-time) and only one (the director) is a permanent position. Maybe Yukelson’s hand is behind the poorly-crafted federal complaint too?

Yukelson brings passion to his polemic because he has some skin in the game: along with wife Blau he is the new owner of a fourplex on Olympic Boulevard. They don’t like the reduced cap on the allowed rent increase and the new relocation fees! He summed up his perspective at City Council just last week. Enjoy the video!