This Week At The Ninth: Money, Money, Money, Money

• Published date: 07 February 2022
• Subject Matter: Employment and HR, Real Estate and Construction, Retirement, Superannuation & Pensions, Employee Benefits & Compensation, Landlord & Tenant - Leases
• Law Firm: Morrison & Foerster LLP
• Author: Mr Zachary Fuchs

This week the Court addresses the constitutionality of Oakland's Uniform Residential Tenant Relocation Ordinance's "relocation fee," and the proper method for calculating an employer's "withdrawal liability" under ERISA.

BALLINGER v. CITY OF OAKLAND

The Court holds that money may be the subject of a physical taking claim, but relocation fee under Oakland's Uniform Residential Tenant Relocation Ordinance is not an unconstitutional taking.

Panel: Judges Clifton, N.R. Smith, and Nelson, with Judge Nelson writing the opinion.

Key highlight: "[E]ven though money can be the subject of a physical, also called a per se, taking, the relocation fee required by the Ordinance was a regulation of the landlord-tenant relationship, not an unconstitutional taking of a specific and identifiable property interest."

Background: Plaintiffs Lyndsey Ballinger and Sharon Ballinger own property in Oakland, California. In 2016, they moved to the East Coast and decided to rent out their house. When they returned to the Bay Area, they wanted to move back in to their Oakland home. Under Oakland's Residential Tenant Relocation Ordinance ("Ordinance"), landlords moving back in to their homes after the expiration of a lease are required to pay tenants a relocation fee. Accordingly, the Ballingers gave their tenants sixty days' notice to vacate the property and paid them $6,582.40 in relocation fees.

The Ballingers then filed suit against the City of Oakland under the Declaratory Judgment Act and 42 U.S.C. ' 1983. They alleged that the relocation fee is an unconstitutional physical taking, an unconstitutional exaction, and an unconstitutional seizure under the Fourth and Fourteenth Amendments. The district court dismissed each claim under Federal Rule of Civil Procedure 12(b)(6).

Result: The Ninth Circuit affirmed. First, the Court held that the relocation fee is not an unconstitutional taking but rather "a regulation of the landlord-tenant relationship[.]" The Court compared the Ordinance to other lawful housing regulations, including rent control and zoning regulations, and other obligations to pay in relation to property use, including property and estate taxes. The Court acknowledged that money can be the subject of a physical taking, but not when a law "imposes a general obligation to pay money and does not identify a specific fund of money." Second, the Court held that the relocation fee is not an exaction, or an unconstitutional condition on the Ballingers' use of their Oakland...