Case 2:18-cv-00743-RAJ Document 31 Filed 10/18/18 Page 1 of 11 Hon. Richard A. Jones 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON RENTBERRY, INC., a Delaware Corporation, and Delaney Wysingle, an individual, Plaintiffs, 9 11 CITY OF SEATTLE’S REPLY IN SUPPORT OF SUMMARY JUDGMENT vs. 10 CITY OF SEATTLE, a Washington Municipal Corporation, 12 No. 2:18-cv-00743-RAJ Defendant. NOTE ON MOTION CALENDAR: October 19, 2018 13 14 A. This case is not justiciable. 15 Plaintiffs have not met their burden to demonstrate that this case is justiciable. Sumanti v. 16 Strange, 2017 WL 6492679, at * 3 (W.D. Wash. Dec. 19, 2017) (Jones, J.). “Because plaintiffs seek 17 declaratory and injunctive relief only, there is a further requirement that they show a very significant 18 possibility of future harm; it is insufficient for them to demonstrate only a past injury.” San Diego 19 County Gun Rights Comm. v. Reno, 98 F.3d 1121, 1126 (9th Cir. 1996). With respect to Mr. 20 Wysingle, there is no dispute that (1) he is not, nor has he ever been, a member of Rentberry; (2) did 21 not have a house to list on Rentberry at the time this Complaint was filed; and (3) does not currently 22 have a house to list on Rentberry. While plaintiffs quibble with the City’s characterization of this 23 undisputed evidence, the evidence speaks itself. The most Mr. Wysingle can muster is a “someday” REPLY IN SUPPORT OF SUMMARY JUDGMENT 1 (18-cv-00743 RAJ) Peter S. Holmes Seattle City Attorney 701 5th Avenue, Suite 2050 Seattle, WA 98104-7097 (206) 684-8200 Case 2:18-cv-00743-RAJ Document 31 Filed 10/18/18 Page 2 of 11 1 intentions to utilize Rentberry to rent his home. Such speculative intentions fail as a matter of law. See, 2 e.g., Lopez v. Candaele, 630 F.3d 775, 787-88 (9th Cir. 2010); see also Sumanti, 2017 WL 6492679 3 at * 3 (injury must be “real and immediate, not conjectural or hypothetical”) (quotations omitted). 4 Even assuming Mr. Wysingle had standing at the time he filed his Complaint, his claims are 5 now moot. Plaintiffs’ reliance on the “capable of repetition but evading review” doctrine is misplaced. 6 The exception is applied “sparingly, and only in exceptional situations.” Protectmarriage.com—Yes 7 on 8 v. Bowen, 752 F.3d 827, 836-37 (9th Cir. 2014) (quotations omitted). The “exception is concerned 8 not with particular lawsuits, but with classes of cases that, absent an exception, would always evade 9 judicial review.” Id. at 836 (citing abortion, injunction, and election cases). Certain types of 10 controversies are “‘inherently limited in duration, because they will only ever present a live action until 11 a particular date, after which the alleged injury will either cease or no longer be redressable.” Id. 12 (quotation omitted); see also Hamamoto v. Ige, 881 F.3d 719, 722 (9th Cir. 2018) (per curiam). The 13 present case does not fit within this mold. If, for example, the City extends the moratorium another 14 year (which is entirely speculative), then a challenge can be brought by a plaintiff with actual standing 15 at that time. Likewise, if Mr. Wysingle’s tenant leaves before his lease expires, and Mr. Wysingle signs 16 up for Rentberry, this Court could quickly address the matter via injunction practice.1 Importantly, the 17 question of mootness arises not because of anything the City did, but rather because of the actions of 18 Mr. Wysingle. Court do not, however, “apply the exception where the party’s own action . . . has 19 rendered the action moot.” N.E. v. Seattle Sch. Dist., 2017 WL 2119317, at * 6 (W.D. Wash. May 16, 20 2017) (Robart, J.). Even if plaintiffs could demonstrate that this case falls within the limited class of cases that are 21 22 23 1 This lawsuit is a case in point, as plaintiffs filed a motion for injunctive relief, yet, inexplicably chose to strike the motion shortly after Mr. Wysingle’s deposition. REPLY IN SUPPORT OF SUMMARY JUDGMENT 2 (18-cv-00743 RAJ) Peter S. Holmes Seattle City Attorney 701 5th Avenue, Suite 2050 Seattle, WA 98104-7097 (206) 684-8200 Case 2:18-cv-00743-RAJ Document 31 Filed 10/18/18 Page 3 of 11 1 inherently of limited duration, they cannot satisfy the exception’s second requirement: “a reasonable 2 expectation that the same complaining party will be subjected to the same action again.” U.S. v. 3 Sanchez-Gomez, 138 S. Ct. 1532, 1540 (2018) (quotation omitted). Aside from baldly stating that “it 4 is easily foreseeable that the moratorium will be extended by another year,” plaintiffs provide no 5 concrete evidence to support any such statement. Dkt. # 29 at p. 11. It equally speculative that Mr. 6 Wysingle’s tenant will leave before the moratorium expires. For example, it is undisputed that Mr. 7 Wysingle’s former tenant rented the home for almost three yearlong terms. See Dkt. # 27-8 at pp. 11- 8 16. Thus, if history is any indication, Mr. Wysingle’s tenant will be around when the moratorium is 9 set to be lifted several months from now. Consequently, even if this Court concludes Mr. Wysingle 10 had standing at the time he filed his Complaint, Mr. Wysingle’s decision to rent his home during the 11 pendency of this case has mooted this action because he no longer has a personal stake in the outcome 12 of this case. 13 As for Rentberry’s standing, it is undisputed that the Ordinance does not restrict Rentberry 14 from doing anything. See also infra Part B. In fact, the Ordinance cannot even be enforced against 15 Rentberry, as it only applies to landlords and potential tenants. See Dkt. # 28 at ¶ 6 (“SDCI lacks that 16 authority to enforce the Ordinance against Rentberry[.]”). Thus, unlike the property owners in Epona 17 v. County of Ventura, this is not a case in which Rentberry would be “subject to sanction” if it failed 18 to comply with the law because the law simply does not apply to it. 876 F.3d 1214, 1220 (9th Cir. 19 2017). 20 While Rentberry claims it can assert the “injury” of “countless landlords and tenants” in 21 Seattle, see Dkt # 29 at p. 12; there is no evidence to support the notion that Rentberry has any landlord 22 or tenant members in Seattle. All Rentberry’s declaration says is that “Seattle is one of the key markets 23 for Rentberry since 42% of residents rent their homes.” Dkt. # 22-5 at ¶ 10. Nothing in the declaration REPLY IN SUPPORT OF SUMMARY JUDGMENT 3 (18-cv-00743 RAJ) Peter S. Holmes Seattle City Attorney 701 5th Avenue, Suite 2050 Seattle, WA 98104-7097 (206) 684-8200 Case 2:18-cv-00743-RAJ Document 31 Filed 10/18/18 Page 4 of 11 1 says how many paid customers Rentberry has in Seattle, nor does Rentberry provide a single name of 2 a member who wants to utilize Rentberry’s services in the Seattle market. Indeed, Rentberry cannot 3 even claim its fellow plaintiff in this case, Mr. Wysingle, as one of its members. In a related standing 4 context, an association claiming standing through its members must identify at least one member with 5 an Article III injury and support that identification with affidavits establishing that member’s injury. 6 See Summers v. Earth Island Inst., 555 U.S. 488, 498 (2009); Legal Aid Soc. of Hawaii v. Legal Servs. 7 Corp., 145 F.3d 1017, 1030-31 (9th Cir. 1998). There is no dispute that Rentberry failed to do this and 8 therefore has not discharged its burden to demonstrate that it has standing in this case. See, e.g., 9 Associated Gen. Contractors of Am., San Diego Chapter, Inc. v. Cal. Dep’t of Transp., 713 F.3d 1187, 10 1194-95 (9th Cir. 2013) (dismissing appeal for lack of jurisdiction because associational standing not 11 shown when group failed to “identify any affected members by name” or to “submit[ ] declarations by 12 any of its members attesting to harm they have suffered or will suffer under [the challenged] 13 program.”). At base, Rentberry’s claim amounts to little more than a generalized grievance that it 14 cannot operate its business in a way that maximizes its economic potential. 15 B. The Ordinance prohibits nonexpressive conduct, not speech. 16 Plaintiffs do not dispute that if a law is “readily susceptible to a narrowing construction that 17 would make it constitutional, it will be upheld.” Virginia v. Am. Booksellers Ass’n, Inc., 484 U.S. 383, 18 397 (1988) (quotation omitted). Plaintiffs also do not dispute that an enforcing agency’s “reasonable 19 limiting interpretation merits [ ] deference.” Yamada v. Snipes, 786 F.3d 1182, 1190 n.2 (9th Cir. 20 2015). Nor do plaintiffs dispute that no one has a First Amendment right to operate their business in a 21 way that maximizes their profits. Wine & Spirits Retailers, Inc. v. Rhode Island, 418 F.3d 36, 47-48 22 (1st Cir. 2005). In all but conceding that the enforcement agency’s reading is consistent with the 23 Ordinance’s plain terms and history, plaintiffs instead lodge an ad hominin attack denigrating the REPLY IN SUPPORT OF SUMMARY JUDGMENT 4 (18-cv-00743 RAJ) Peter S. Holmes Seattle City Attorney 701 5th Avenue, Suite 2050 Seattle, WA 98104-7097 (206) 684-8200 Case 2:18-cv-00743-RAJ Document 31 Filed 10/18/18 Page 5 of 11 1 City’s declarant, referring to Ms. Long, who is a code compliance supervisor, as some “low-level 2 compliance officer who has worked at the City for less than a year[.]” Dkt. # 29 at p. 13. Plaintiffs’ 3 dismissive characterization notwithstanding, Ms. Long is speaking for the enforcing agency and her 4 declaration expressly states that the Ordinance only prohibits “the use, by either landlords or potential 5 tenants for the purposes of completing a rental transaction, of online or application-based” bidding 6 technology. Dkt. # 28, ¶ 7. Rather than address this binding interpretation of the Ordinance, plaintiffs 7 take a swipe at Ms. Long. 8 In attempting to shoehorn this case into accepted First Amendment territory, plaintiffs claim 9 they have “presented uncontroverted evidence that it is impossible to advertise properties on Rentberry 10 without the bidding feature.” Dkt. # 29 at p. 14. Remarkably, plaintiffs cite to Rentberry’s CEO’s 11 declaration to support this statement, which says only that “the bidding feature is an integral component 12 of the site.” Dkt. # 22-5, ¶ 5. This ambiguous statement says nothing about whether advertisements 13 can or cannot be placed on Rentberry’s website without actual bidding occurring, but that seems highly 14 unlikely unless Rentberry is saying that every landlord who advertises a listing, or every potential 15 tenant who signs up for its services, must use the bidding function.2 Rentberry’s declaration says no 16 such thing, and Rentberry did not provide an updated declaration in response to the City’s motion. See 17 generally Dkt. # 22-5. In any event, as a legal matter, Rentberry’s concerns are irrelevant because the enforcement 18 19 20 21 22 23 The City notes again that when it tried to depose Rentberry’s CEO in June, opposing counsel told the City that he had left the United States and would not be returning until October. See Dkt. # 27, ¶ 7. To the extent the Court is inclined to accept that “integral” means that Rentberry’s entire website will not work unless someone actually uses the rentbidding function, the City would request a continuance under Fed. R. Civ. P. 56(d) to depose Rentberry’s CEO. The City does not believe this will be necessary, however, because it is plaintiffs’ burden to demonstrate that the First Amendment applies to the conduct at issue, Clark v. Cmty. for Creative Non-Violence, 468 U.S. 288, 293 n.5 (1984); and, any ambiguity created by Rentberry’s CEO is of Rentberry’s own making. Put simply, plaintiffs should not be allowed to manufacture a dispute of material fact when they have refused to allow the City to depose one of their declarants. 2 REPLY IN SUPPORT OF SUMMARY JUDGMENT 5 (18-cv-00743 RAJ) Peter S. Holmes Seattle City Attorney 701 5th Avenue, Suite 2050 Seattle, WA 98104-7097 (206) 684-8200 Case 2:18-cv-00743-RAJ Document 31 Filed 10/18/18 Page 6 of 11 1 agency has stated in unequivocal terms that Rentberry is “free to enable its auctioneering technology 2 on its website when listing rental properties” in Seattle. Dkt. # 28, ¶ 5. Rentberry’s stated concerns are 3 hollow rhetoric, designed more to protect its chosen business model than to explain how its technology 4 actually functions. Because the Ordinance does not prohibit or regulate advertising rental properties in 5 Seattle, any First Amendment arguments on that score should be rejected. 6 Furthermore, the Ordinance does not tell people what they can or cannot say; it only tells them 7 what they can or cannot do. This critical distinction is lost on plaintiffs. If the distinction between 8 speech and nonexpressive conduct is to have meaning, plaintiffs’ challenge must fail. While plaintiffs 9 talk generally about the expressive nature of communicating prices at an intentionally high level, they 10 fail to explain how the use of bidding technology, which is indisputably conduct, is inherently 11 expressive or communicates any sort of message. This failure is fatal to plaintiffs’ First Amendment 12 claim. 13 In running to the safe harbor of generalities, plaintiffs sidestep the threshold question, and in 14 the process ignore controlling authority. The Ninth Circuit has held that the “threshold question is 15 whether conduct with a significant expressive element drew the legal remedy or the ordinance has the 16 inevitable effect of singling out those engaged in expressive activity.” Int’l Franchise Ass’n, Inc. v. 17 City of Seattle, 803 F.3d 389, 408 (9th Cir. 2015) (quotation omitted). This is so because “restrictions 18 on protected expression are distinct from restrictions on economic activity or, more generally, on 19 nonexpressive conduct, [and] the First Amendment does not prevent restrictions directed at commerce 20 or conduct from imposing incidental burdens on speech.” Sorrell v. IMS Health Inc., 564 U.S. 552, 21 567 (2011). The Ordinance is directed at economic conduct, not speech. 22 The Ordinance does not regulate speech but instead, merely regulates how a rental transaction 23 is conducted. More specifically, it targets one specific form of conduct occurring within that REPLY IN SUPPORT OF SUMMARY JUDGMENT 6 (18-cv-00743 RAJ) Peter S. Holmes Seattle City Attorney 701 5th Avenue, Suite 2050 Seattle, WA 98104-7097 (206) 684-8200 Case 2:18-cv-00743-RAJ Document 31 Filed 10/18/18 Page 7 of 11 1 transaction—using bidding technology to consummate the transaction. Any impact on speech is purely 2 incidental. It is not the alleged speech—talking about prices—that “drew the legal remedy,” rather it 3 is a specific form of conduct—the use of bidding technology—that drew the remedy. While plaintiffs 4 complain that the City is cutting off their ability to speak about prices, “[t]he severity of this burden is 5 dubious at best, and is mitigated by the fact that [plaintiffs] remain free” to discuss prices elsewhere 6 and through different mediums. Arcara v. Cloud Books, Inc., 478 U.S. 697, 705 (1986). “In any event, 7 this argument proves too much, since every civil or criminal remedy imposes some conceivable burden 8 on First Amendment protected activities.” Id. at 705-06; see also Rumsfeld v. Forum for Academic & 9 Institutional Rights, 547 U.S. 47, 62 (2006) (“[I]t has never been deemed an abridgment of freedom of 10 speech or press to make a course of conduct illegal merely because the conduct was in part initiated, 11 evidenced, or carried out by means of language, either spoken, written, or printed”) (quotation 12 omitted). Because the Ordinance targets nonexpressive conduct, not speech, the City is entitled to 13 judgment as a matter of law. 14 C. The Ordinance is proper under Central Hudson. 15 In arguing that the Ordinance fails intermediate scrutiny, plaintiffs misrepresent the 16 applicable law and mischaracterize the Ordinance. First, the evidence underpinning the Ordinance 17 easily meets the requisite standard, which is much less exacting than plaintiffs would have this 18 Court believe. Second, the inapplicability of the Ordinance to hypothetical forms of offline rent- 19 bidding does not render the Ordinance underinclusive. Third, even if the City were required to select 20 the least restrictive means available to advance its interests, plaintiffs’ suggested alternatives are 21 poor substitutes for the Ordinance. 22 While the City is not “certain” as to the extent of the harm that online auction technology 23 would inflict on the rental housing market, the First Amendment does not require certainty—or REPLY IN SUPPORT OF SUMMARY JUDGMENT 7 (18-cv-00743 RAJ) Peter S. Holmes Seattle City Attorney 701 5th Avenue, Suite 2050 Seattle, WA 98104-7097 (206) 684-8200 Case 2:18-cv-00743-RAJ Document 31 Filed 10/18/18 Page 8 of 11 1 even “firm conclusion[s]”—as a prerequisite for regulating commercial speech. Dkt. # 29 at pp. 16- 2 17. The non-binding authorities plaintiffs cite for the notion that the City lacked “sufficient 3 evidence,” id. at 13, merely require something more than “speculation or conjecture”—a far cry 4 from the degree of certainty plaintiffs demand. See Sw. Bell Tel. L.P. v. Moline, 333 F. Supp.2d 5 1073, 1083 (D. Kan 2004) (order granting preliminary injunction where government had “not cited 6 any evidence that its theorized harm [was] real” and the “only evidence in the record refute[d]” 7 government’s position as to the need for the challenged regulation) (emphasis added); see also 8 IMDB.com, Inc. v. Becerra, 257 F.Supp.3d 1099, 1102 (N.D. Cal. 2017) (order denying discovery 9 motion where government “having failed to present any colorable argument or evidence in support 10 of the notion that its speech restriction [was] actually necessary” to achieve the stated goals 11 attempted to use discovery to “go fishing for a justification”) (emphasis added). Notably, in 12 suggesting that the City’s lack of certainty precludes it from regulating online auction technology, 13 plaintiffs make no attempt to distinguish binding authority permitting a prophylactic approach to 14 regulation under the First Amendment. See Dkt. # 29 at pp. 16-18; Dkt. # 26 at pp. 26-27; Burson 15 v. Freeman, 504 U.S. 191, 209 (1992); Minority Tel. Project, Inc. v. FCC, 736 F.3d 1192, 1207 16 (9th Cir. 2013) (en banc). 17 In arguing that the City’s evidence falls short of the applicable standard, plaintiffs 18 caricaturize the City’s position, describing the Ordinance as “patently speculative in nature.” Dkt. 19 # 29 at p. 16. In fact, as detailed in the City’s motion, the City had copious evidence that online 20 auction technology would raise rental housing costs—notwithstanding its lack of absolute certainty 21 on the subject and its desire to conduct further research. See Dkt. # 26 at p. 26. Indeed, plaintiffs do 22 not dispute that the government may rely on data from other jurisdictions, or even deductions, 23 inferences, or common sense. See Dkt. # 26 at pp 25-26. In relying upon data on online auction REPLY IN SUPPORT OF SUMMARY JUDGMENT 8 (18-cv-00743 RAJ) Peter S. Holmes Seattle City Attorney 701 5th Avenue, Suite 2050 Seattle, WA 98104-7097 (206) 684-8200 Case 2:18-cv-00743-RAJ Document 31 Filed 10/18/18 Page 9 of 11 1 technology from San Jose and San Francisco, studies on similar phenomena in other jurisdictions, 2 and the commonsense notion that regulating new technology is more effective before that 3 technology proliferates, the City did exactly that. Moreover, plaintiffs provide no evidence that 4 online auction technology would not impact the rental housing market. See generally Dkt. # 29. 5 Plaintiffs’ arguments as to underinclusivity are also unpersuasive. Plaintiffs concede that a 6 regulation is only underinclusive if it fails to regulate activity that “affects its stated interests in a 7 comparable way.” Dkt. # 29 at p. 18 (quoting Williams-Yulee v. Florida Bar, 135 S. Ct. 1656, 1668 8 (2015)). But plaintiffs’ attempts to equate the use of rent bidding platforms with other forms of rent 9 bidding are unavailing. Plaintiffs do not dispute the commonsense proposition that online auction 10 technology allows bidding to occur on a much larger scale than other potential forums for rent 11 bidding. Dkt. # 29 at p. 22; see Dkt. # 26 at p. 28. Instead, they merely argue that other forms of 12 rent bidding have existed longer than the use of online auction technology—a distinction that has 13 no bearing on the relative impact of these activities on the rental housing market. See Dkt. # 29 at 14 p. 18. If anything, the presence of alternative means of rent-bidding renders the Ordinance less 15 constitutionally suspect, in that it leaves open alternative channels for communication. See Arcara, 16 478 U.S. at 705. 17 Tellingly, plaintiffs make no attempt to distinguish the multitude of commercial speech 18 cases upholding regulations that apply unevenly to different aspects of a problem. See e.g., 19 Metromedia, Inc. v. City of San Diego, 453 U.S. 490, 512 (1981) (“It does not follow from the fact 20 that the city has concluded that some commercial interests outweigh its municipal interests in this 21 context that it must give similar weight to all other commercial advertising”); Dkt. # 26 at pp. 27- 22 28 (citing additional cases). Instead, they rely on a case involving non-commercial speech, which 23 is subject to a more stringent legal standard. See Dkt. # 29 at pp. 18-19 (citing The Florida Star v. REPLY IN SUPPORT OF SUMMARY JUDGMENT 9 (18-cv-00743 RAJ) Peter S. Holmes Seattle City Attorney 701 5th Avenue, Suite 2050 Seattle, WA 98104-7097 (206) 684-8200 Case 2:18-cv-00743-RAJ Document 31 Filed 10/18/18 Page 10 of 11 1 B.J.F., 491 U.S. 524 (1989)); see Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n of New 2 York, 447 U.S. 557, 562-63 (1980). 3 Finally, regardless of how one characterizes the ultimate purpose of the Ordinance, the “less 4 restrictive” alternatives that plaintiffs suggest are incomparable, because they have nothing to do 5 with the auction technology the City intends to study and potentially regulate. See Dkt. # 29 at pp. 6 19-20; see also Metro Lights, LLC v. City of Los Angeles, 551 F.3d 898, 906 (9th Cir. 2009) 7 (government need not select least restrictive means of advancing a given interest). 8 9 For each of these reasons, even if the Ordinance restricted commercial speech, which does not, it survives intermediate scrutiny. 10 DATED this 18th day of October, 2018 11 PETER S. HOLMES Seattle City Attorney 12 13 By: /s/ Michael K. Ryan Michael K. Ryan, WSBA# 32091 Erica R. Franklin, WSBA# 43477 14 15 Assistant City Attorneys E-mail: michael.ryan@seattle.gov E-Mail: erica.franklin@seattle.gov 16 17 18 Seattle City Attorney’s Office 701 Fifth Avenue, Suite 2050 Seattle, WA 98104 Phone: (206) 684-8200 19 20 Attorneys for Defendant City of Seattle 21 22 23 REPLY IN SUPPORT OF SUMMARY JUDGMENT 10 (18-cv-00743 RAJ) Peter S. Holmes Seattle City Attorney 701 5th Avenue, Suite 2050 Seattle, WA 98104-7097 (206) 684-8200 Case 2:18-cv-00743-RAJ Document 31 Filed 10/18/18 Page 11 of 11 CERTIFICATE OF SERVICE 1 2 3 I certify that on the 18th day of October, 2018, I caused a true and correct copy of this document to be served on the following via ECF electronic service: 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Attorneys for Plaintiffs: Attorneys for Plaintiffs: Brian T. Hodges, Ethan W. Blevins Pacific Legal Foundation 10940 Northeast 33rd Place, Suite 210 Bellevue, Washington 98004 Telephone: (425) 576-0484 Fax: (425) 576-9565 Email: BHodges@pacificlegal.org Email: EBlevins@pacificlegal.org Wencong Fa Pacific Legal Foundation 930 G Street Sacramento, California 95814 Telephone: (916) 419-7111 Fax: (916) 419-7747 Email: WFa@pacificlegal.org Attorneys for Plaintiffs: James Manley Pacific Legal Foundation 3217 East Shea Blvd., #108 Phoenix, Arizona 85028 Telephone: (916) 288-1405 Email: JManley@pacificlegal.org Dated this 18th day of October, 2018 18 s/Michael K. Ryan Michael K. Ryan 19 20 21 22 23 REPLY IN SUPPORT OF SUMMARY JUDGMENT 11 (18-cv-00743 RAJ) Peter S. Holmes Seattle City Attorney 701 5th Avenue, Suite 2050 Seattle, WA 98104-7097 (206) 684-8200