National Housing Law Project Housing Law Bulletin

NINTH CIRCUIT UPHOLDS LANDLORDS’ RIGHT

TO EXCLUDE UNMARRIED COUPLES ON RELIGIOUS GROUNDS

A split panel of the Ninth Circuit Court of Appeals upheld an injunction against the State of Alaska and the City of Anchorage, precluding them from enforcing marital status anti-discrimination laws against owners who, on religious grounds, refused to rent to unmarried couples. In what appear to be an unprecedented decision, the court held that the anti-discrimination statutes constituted a substantial burden on the owners’ free exercise of religion and thus violated their rights under the First Amendment. Thomas v. Anchorage Equal Rights Commission, __ F.3d __, 1999 WL 11337 (9th Cir. Jan. 14, 1999).

The City of Anchorage and the State of Alaska respectively adopted an ordinance and a statute aimed at preventing discrimination in rental housing. The laws of both jurisdictions, which have been in effect since the 1970s, make it unlawful to refuse to rent to a person on the grounds of marital status, a term that extends to unmarried couples.

The plaintiffs, owners of an apartment building who believed on religious grounds that cohabitation between unmarried couples constitutes the sin of fornication and that facilitating cohabitation in any way is tantamount to facilitating sin, filed suit in federal district court seeking declaratory relief, claiming that the Alaska laws infringe on their rights under the Free Exercise Clause of the First Amendment and seeking injunctive relief to preclude the responsible agencies of each jurisdiction from enforcing the laws against them. In support of their complaint the couple declared that their beliefs have been long held and that they have refused and intend to continue to refuse to rent their apartments to unmarried couples. In fact, neither jurisdiction was aware of the couple’s beliefs or actions. No complaint had been filed against them by any applicant, and neither jurisdiction was planning to take action against the couple. Notwithstanding, the district court concluded that the couple had standing, that their claims were ripe for review and that application of the anti-discrimination laws to the couple would violate their rights under the Free Exercise Clause. The district court therefore permanently enjoined the State of Alaska and City of Anchorage from enforcing the laws against the couple.

On appeal, the court first reviewed whether the couple’s claim was ripe -- that it presented an actual controversy -- and that an adequate record existed upon which review could be held. It concluded affirmatively on both grounds. Conceding that no action had been taken or even threatened against the plaintiffs, the court found that they needed only to demonstrate a reasonable threat of prosecution for conduct allegedly protected by the Constitution. It found that the plaintiffs had met that standard by admitting past violations of the laws and by stating a future intention to violate the laws, by showing that the state has prosecuted individuals for violating the laws on two prior occasions and that it had another case under administrative review. Alternatively, the court found that the laws had not fallen into disuse because they had been commonly and notoriously violated, thus concluding that the couple’s apprehension concerning enforcement -- another basis for analyzing justiciability -- was sufficient to demonstrate a reasonable threat of prosecution. On the issues of the adequacy of the record, the court concluded that it was sufficiently complete to allow the court to make an informed decision. Specifically, it found that the basic facts were undisputed: the couple’s beliefs were sincere, they have refused and continue to refuse to rent to unmarried couples based on that belief and in violation of Alaska and Anchorage laws, and their options were to surrender surrendering their beliefs, violate the laws, or giving give up their livelihood. In so finding, the court dismissed as irrelevant the fact that no applicants who had been turned away had been identified and that the true motivations of the plaintiffs, which had not been disputed in the district court proceedings, had not been established.

Standard of review. The court began its analysis of the merits by deciding the standard by which the Alaska statutes had to be reviewed. It found that if the statutes were valid and neutral and of general applicability, the Supreme Court’s holding in Employment Division v. Smith, 494 U.S. 872 (1990), was applicable to the case. In Smith, the Supreme Court held that the "right of free exercise does not relieve an individual of the obligation to comply with a ‘valid and neutral law’ of general applicability on the ground that the law proscribes (or prescribes) conduct that his religion prescribes (or proscribes)." If, however, the statutes are not neutral or generally applicable, they must be reviewed in light of a stricter standard enunciated in Church of the Lukumi Babalu Ave. v. City of Hialeah, 508 U.S. 520 (1993). In that case the Supreme Court held that a law that fails the neutrality and general applicability standards must be justified by a compelling government interest and must be narrowly tailored to advance that interest.

The landlord plaintiffs argued that the Alaska statutes fell within the Lukumi exception because they did not prohibit all forms of marital status discrimination. They pointed out that the statutes were underinclusive because they explicitly sanctioned housing for singles or married couples only. Nonetheless, the court rejected their argument, finding that underinclusiveness is not a talisman of constitutional infirmity. Rather, it is significant only insofar as it indicates something more sinister. In this case, the court found that Alaska lawmakers had not been motivated by a desire to target or suppress religious exercise. It therefore concluded that, absent some other exception, Smith, not Lukumi, governs the landlords’ claims.

The court next proceeded to determine whether another exception to Smith existed. The plaintiffs urged, and the district court found, that the language in Smith recognized a second exception, the so-called "hybrid rights" exception, by which neutral and generally applicable statutes are subjected to a higher standard of review if they implicate, in addition to the Free Exercise Clause, another constitutional protection such as freedom of speech and the press. Conceding that the Supreme Court has not been precise with the nature of the hybrid rights exception and that other courts of appeals have reached divergent views as to what exactly constitutes a hybrid-rights claim, the Thomas court found that such a right existed. After extensive analysis, it sided with the Court of Appeals for the Tenth Circuit in concluding that a plaintiff invoking the exception must make out a "colorable claim" that a companion constitutional right has been infringed. Accordingly, the court held that statutes that infringe upon the Free Exercise Clause may be subjected to stricter scrutiny even if they are neutral and of general applicability if the hybrid rights plaintiff shows a fair probability, a likelihood of success on the merits of the companion claim.

Taking claim. The court next proceeded to determine whether the plaintiffs demonstrated a colorable claim of infringement with respect to their so-called companion rights, namely that the Alaska laws infringed upon the plaintiffs’ Fifth Amendment right to exclude persons from their property and their First Amendment right of free speech. In both instances, the court found that a colorable claim had been made. With respect to the owners’ Fifth Amendment claim, the court first found that owners have a constitutionally protected right to exclude others from their property, and that forbidding them to exercise that right may give rise to a claim for an unconstitutional regulatory taking. Second, using a tripartite regulatory taking test set out by the Supreme Court in Eastern Enterprises v. Apfel, ___ U.S. ___, 118 S.Ct. 2135 (1998), the court found that, while the Alaska laws did not have an economic impact on the plaintiffs and did not interfere with their investment-backed expectations, the character of the government action, authorizes a sufficient physical invasion of the property to justify compensation. Having so found, the court concluded that the plaintiffs had made a colorable claim that their rights under the Takings Clause of the Fifth Amendment had been infringed and that this infringement served to hybridize their Free Exercise Clause challenge to the statutes.

Free speech claim. The court also concluded that the plaintiffs had made a colorable claim that the statutes infringed upon their First Amendment right of free speech, rejecting the defendants’ argument that the statutes merely regulated commercial speech which enjoys lesser protections under the Constitution than ordinary expression. It found that the statutes’ prohibitions on making any inquiries with respect to applicants’ marital status, making representations that the property is not available on the basis of a person’s marital status, or the making of any communication indicating a preference or discrimination based upon marital status, went beyond regulation of commercial speech to regulate fully protected religious speech. It reasoned that these communications do not further any economic interest of the landlords, indeed that they run counter to that interest, and instead express religious conviction. Moreover, it found that the statutes regulated landlords’ speech based upon its content in that they did not preclude the landlord from inquiring about other aspects of the prospective lessee’s life, such as income. Noting that content-based regulation of speech is presumptively invalid, the court concluded that the plaintiffs had also made a colorable claim that their free speech rights had been infringed and that their free exercise claim had therefore also been hybridized by their First Amendment free speech claim.

Substantial burden claim. Having concluded that the plaintiffs’ claims fell within the hybrid rights exception, the court proceeded to determine whether the Alaska laws placed a substantial burden on the observation of a central religious belief or practice and, if so, whether a compelling government interest justifies the burden. The plaintiffs argued that the laws created a substantial burden because their enforcement left them with a Hobson’s Choice of violating their religious beliefs, suffering punishment for violating the laws or abandoning their business as landlords. The defendants countered that the landlords’ religion does not require them to rent housing and that they do so as a matter of choice for personal profit. In addition, the defendants argued that a burden that arises from regulation of voluntary commercial activity is insubstantial. In support of this argument, the defendants relied on United State v. Lee, 455 U.S. 252 (1982), a case in which the Supreme Court stated that "[w]hen followers of a particular sect enter into commercial activity as a matter of choice, the limits they accept on their own conduct as a matter of conscience and faith are not to be superimposed on the statutory schemes which are binding on others in the activity."

The court rejected the defendants’ claim and their reliance on Lee. It rejected the defendants’ argument that Lee intimated that, because a free exercise dispute arises in a commercial context, it might in and of itself affect the substantiality of the claimed burden. According to the court, the Supreme Court found that the government regulation at issue in Lee interfered with the petitioner’s free exercise rights. It therefore proceeded immediately to consider whether or not the government could save the laws by demonstrating a compelling state interest in the maintenance of the challenged program.

The court also rejected the defendants’ argument that the plaintiffs’ burden was insubstantial because they could avoid having to compromise their religious belief by simply cashing out of the rental business and investing their money elsewhere. The court found no support for that argument because the alternatives presented did not marginally affect the plaintiffs’ business but rather totally banished them from the rental market and denied them their livelihoods as apartment owners and lessors. It thus concluded that the Alaska laws substantially burdened the plaintiffs’ religious rights.

No compelling government interest. Having concluded that the laws burden the plaintiffs, the court next found that the state could not show a compelling governmental interest to justify the anti-marital-status discrimination laws. According to the court, the Supreme Court has recognized a compelling state interest in only two instances: laws prohibiting racial and gender discrimination. In both cases, the court found that the Supreme Court’s decision was rooted in a firm national policy against discrimination on the basis of race and gender. Turning to the instant case, the court discerned no similar national policy with respect to marital status. It found that the Supreme Court had never given marital status any heightened scrutiny under the Equal Protection Clause and that, indeed, it distinguished between the right to live with relatives as opposed to strangers in two cases in which zoning ordinances were challenged on substantive due process grounds. Similarly, the court found no congressional enactments that evince any legislative policy against marital status discrimination. It found significant that the Fair Housing Act, 42 U.S.C. §§ 3601-3631, makes no mention of marital status and that the overwhelming majority of federal civil rights laws is silent on the issue of marital status discrimination. Acknowledging that some federal statutes include prohibitions on marital status discrimination, the Court nonetheless concluded that "[a] ‘handful,’ however, do[es] not a ‘firm national policy’ make." Moreover, the court found that Alaska law could not serve to establish a national policy. Even if it could, the Alaska laws, including the very laws at issue, make exceptions for married-only housing.

Lastly, the Court examined whether, as the defendants suggested, there existed any independent bar to granting the plaintiffs an exemption from the laws under the Free Exercise Clause. Specifically, the defendants argued that granting the exemption would violate the First Amendment’s Establishment Clause because it would result in direct injury to other identifiable persons. The court rejected the argument finding that Establishment Clause jurisprudence concerns itself with only one kind of harm, the stigmatization of religious minorities. In the instant case, the only harm to a rejected prospective lessee is economic, not religious, and thus beyond the pale of the Establishment Clause. The court therefore upheld the relief accorded by the district court.

In a sharply critical dissent, Judge Hawkins, disagreed with practically every element of the majority’s opinion. He began by stating:

[The] approach of the majority ought to alarm any serious student of judicial restraint. It decides a controversy that does not exist, in favor of parties who have suffered no harm[,] and turns on its head the notion that state and local laws of uniform and general application are entitled to substantial deference. Tossed aside in the process is a statutory provision that has been widely upheld -- in the face of challenges far more firmly grounded in fact and law than this -- by state supreme courts throughout our circuit.

Judge Hawkins challenged the existence of a case in controversy because the plaintiffs did not provide a single name of a prospective tenant who had been turned away by them, the enforcing agencies had not heard of the plaintiffs, let alone threatened them with prosecution, and the statutes in question had only been enforced twice in the 20 years that the laws have been on the books. He thus questioned whether a realistic threat of prosecution existed to justify the court’s intervention. In addition, he severely criticized the majority for shoring up the record in the case by taking judicial notice of a state administrative proceeding that was totally outside the trial record below and the outcome of which was unknown.

He also questioned whether the hybrid-rights exception to Smith existed at all because the discussion of the exception in Smith is dicta, because Smith was not a hybrid rights case. While conceding that the Ninth Circuit had implicitly recognized such an exception, he did not believe that the Ninth Circuit had established the scope of the exception. He, like the D.C. and First Circuits, would have required that the companion claim be one capable of carrying its own weight, something he did not believe the plaintiffs in this case could demonstrate. Moreover, he questioned whether the Tenth Circuit embraced the exception and challenged support in case law for the majority’s application of strict scrutiny to hybrid-rights cases.

Judge Hawkins also challenged the majority’s Fifth Amendment taking analysis, arguing that the plaintiffs never possessed the right to exclude residents from their property since the Alaska laws in question had been enacted before they purchased the property. Accordingly, he concluded that the plaintiffs suffered no injury and lacked standing to bring suit. Moreover, he suggested that the majority analysis wrongfully relies on physical rather than regulatory taking cases to conclude that the plaintiffs’ rights were violated.

Judge Hawkins criticized the court’s First Amendment free speech analysis, contending that the court unnecessarily meandered through the minefields of commercial speech analysis and ignored a common sense evaluation of the context in which the speech occurs. Using that common sense analysis, he concluded that the anti-discrimination laws at issue do not proscribe speech beyond that directly involved with the rental transaction and do not squelch religious or political expression.

He concluded his dissent by stating:

The majority chooses the wrong set of facts to lead to an unprecedented and unnecessary result. In doing so, it addresses some of the murkiest areas of constitutional law. Its potential for harm will be seen when a landlord in this circuit refuses, on the basis of religious beliefs as honestly and firmly held as those [of the plaintiffs], to rent or sell housing to divorced individuals, interracial couples, victims of domestic abuse seeking shelter, or single men or women living together simply because they cannot afford to do otherwise, in spite of state and local laws forbidding such discrimination. Surely to say anything that would suggest such a proposition, we could wait for a case presenting a real controversy.

 

As Judge Hawkins pointed out, Thomas is an unprecedented decision that runs counter to at least two state supreme court decisions within the Ninth Circuit. The defendants are likely to seek review of the decision by the full panel of the Ninth Circuit and, if necessary, to seek review by the Supreme Court.

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