CDC Moratorium Faces a “Flurry” of Legal Challenges

Published on: October 29, 2020

Four days after the Centers for Disease Control (CDC) announced its eviction moratorium, a Virginia landlord filed a suit challenging it. A suit by the New Civil Liberties Alliance, joined by the National Apartment Association, followed shortly after. Since then, the Washington Post reports a “flurry of law suits” from opponents who have launched “an all-out legal war” to block the rules.

The arguments in these actions echo those advanced by landlord plaintiffs in an unsuccessful effort to obtain an injunction blocking the Massachusetts eviction moratorium. Although the state moratorium ended October 17th when the Governor decided not to extend it, the Superior Court decision upholding the law (Matorin and Smith vs. Commonwealth of Massachusetts), suggests, but does not necessarily predict, how courts considering the federal moratorium may rule in those challenges.

The plaintiffs in the Massachusetts challenge (property owners and managers of Massachusetts apartments whose tenants had failed to pay rent since the state’s moratorium took effect), argued that the moratorium was:

  • An invalid exercise of the state’s police power, because it focused on economic rather than public health aspects of the pandemic; and
  • Unconstitutional, because it violated provisions of state law mandating separation of powers, guaranteeing access to the courts, and prohibiting a governmental taking of private property without compensation.

Although the plaintiffs actually withdrew the police powers argument, Superior Court Justice Paul Wilson addressed it anyway as background for his evaluation of the constitutional questions. Noting that the Massachusetts courts have defined the police power broadly as a tool to address economic as well as public health emergencies, he said he would consider the constitutional challenges to the eviction moratorium within the context of that case law.

In considering claims that a statute is discriminatory or “unfairly burdens the exercise of a fundamental right,” Justice Wilson explained, the courts apply a “strict scrutiny” review, upholding a law only if it is “narrowly tailored to further a legitimate and compelling governmental interest.” For claims that don’t affect fundamental rights, however, the courts apply a less stringent test that is less favorable to plaintiffs, requiring only that statutes must be “reasonably related” to the protection of a valid state interest. Because the Massachusetts Supreme Judicial Court has ruled that the right to use private property as an owner desires is not a “fundamental right,” Justice Wilson said, to successfully defend the moratorium, the state would have to demonstrate only that it served a legitimate state purpose. The moratorium, in his view, passed that constitutional test.

Focusing on the three specific constitutional arguments the plaintiffs advanced, Justice Wilson found no merit in any of them.

Separation of Powers

The plaintiffs argued that by temporarily prohibiting the courts from conducting hearings, accepting summons and complaints dealing with residential evictions the moratorium improperly interfered with the housing court’s jurisdiction over those matters. Justice Wilson disagreed. Recognizing that some overlapping of authorities among different branches of government is inevitable, he observed, the state Constitution prohibits only “interference by one department with the functions of another.”

The Legislature can not interfere with “inherent” judicial powers, he agreed. But the moratorium, he said, doesn’t regulate “how the Housing Court decides cases, but when” it decides them. “Plaintiffs have cited no authority for the proposition that the legislature cannot tell the judiciary when it can adjudicate a case,” he noted.

Access to the Courts

Plaintiffs argued that prohibiting the courts from considering eviction-related matters deprived landlords of their right to use the courts to resolve “their justiciable disputes.” Justice Wilson found this argument, too, lacking. The moratorium, he reasoned, “temporarily limits” one possible avenue landlords can use to resolve disputes with tenants who don’t pay their rent. But it doesn’t preclude landlords from using other means of pursuing these claims, such as filing breach of contract suits.

The right to access the courts is also not permanent, Justice Wilson observed, noting that the courts have found that “societal conditions occasionally require the law to change in a way that denies a plaintiff a cause of action available in an earlier day.” Because the Legislature has the authority to revise or repeal laws, he reasoned, “it is difficult to see how plaintiffs will prevail on the merits of a claim that the legislature lacks the power to delay a citizen’s right to one form of relief under a law that the legislature is neither altering nor repealing.”

Interestingly, the plaintiffs in this case based their ‘access to the courts’ argument in part on a federal district court decision overturning regulations adopted by the Massachusetts Attorney General temporarily banning debt collections during the pandemic. But Justice Wilson noted that the federal court ruled in that case that the collection ban violated the First Amendment right to free speech, a claim that plaintiffs challenging the eviction moratorium had “voluntarily abandoned.”

Taking of Private Property

The plaintiffs also contended that the eviction represented both a physical and a regulatory taking, but Justice Wilson found that it represented neither. The moratorium resulted in a physical taking, the plaintiffs argued, because it “forces property owners to provide free housing to people with no legal right to occupy the property,” effectively converting privately owned rental housing “into a massive, long-term public housing program paid for by private property owners rather than the state.”

Justice Wilson found two flaws in this argument. First, he said, the moratorium is temporary, not permanent; and second, the government has not physically occupied plaintiffs’ property. Rather, “the possession, occupancy and control of … rests with plaintiffs’ tenants, whom plaintiffs invited in….Put bluntly,” Justice Wilson added, “no government has required physical invasion of petitioners’ property. Petitioners’ tenants were invited by petitioners, not forced upon them by the government.”

The court’s reasoning seems disingenuous. While it is true that the government didn’t force landlords to invite tenants into their property in the first place, the moratorium clearly impeded their ability to invite tenants to leave. Labeling the moratorium as “temporary” is also something of a stretch because the expiration date could be extended indefinitely at the Governor’s discretion. Although he has lifted the moratorium, he has the authority under the state law to reimpose it. If the pandemic continues for another year or two, the eviction moratorium could continue as well. Under that scenario, while the moratorium may not be permanent, the financial harm it could cause some landlords very well could be. These are among the arguments plaintiffs might have raised in an appeal had the moratorium not been lifted.

Evaluating the arguments in this case, Justice Wilson found that the plaintiffs failed to establish that the moratorium created a physical taking of their property. Nor did it meet the test for a regulatory taking, in his view, because it did not “deny all economically beneficial or productive uses of the land [or] so substantially restrict owners’ use of the property.” Rather, it forces landlords to bear “what is essentially a public burden. The temporary inability to collect rent from some tenants “does not deprive plaintiffs of all economically viable use of their land,” Justice Wilson noted. “In fact,” he added, “the law does not even relieve tenants of their obligation to pay…”

Betwixt and Between

When a government action falls in the definitional gap between a physical taking and one that deprives owners of all viable use of their property, courts must consider three issues in assessing its constitutionality: The economic impact on owners; the extent to which it interferes with “distinct investment-backed expectations; and the “character” of the action. Justice Wilson found that the moratorium did not trigger any of these legal trip wires.

To qualify as a compensable regulatory taking, he noted, the impact on the property’s value must be “severe.” Plaintiffs didn’t meet that test, Justice Wilson said. “While the temporary inability to evict a non-paying tenant may adversely affect a landlord’s stream of income,” he agreed, there was no evidence, in his view, that this loss of revenue resulted in “a diminution of property value severe enough to constitute a taking for which the government must compensate them.”

To establish interference with their investment expectations, plaintiffs would have to demonstrate that those expectations were reasonable. Because rental housing is heavily regulated, Justice Wilson noted, investors must recognize that they may not realize the profits they expect. While this does not mean owners could never prevail in a takings claim, Justice Wilson observed, “it does greatly reduce the reasonableness of expectations” that could be affected by government regulations.

The moratorium also passed muster under the third measure of this constitutional takings test: The “character” of the government action – whether it serves a legitimate public purpose. Justice Wilson found that it did. The moratorium’s purpose, he said, was to limit the spread of the virus that could result if evicted tenants become homeless or are forced into shared housing arrangements.

The plaintiffs’ final argument in favor of an injunction barring the eviction moratorium – that it would irreparably harm the landlords – fared no better in Justice Wilson’ analysis. The fact that some tenants will continue to pay rent will mitigate that potential damage, he noted. Moreover, he pointed out, the revenue losses the plaintiffs may suffer “are economic harms [that] can be remedied by money damages.” Injunctions are appropriate for preventing economic harm, he explained, “only when the potential harm is so severe it could threaten the survival of the business at issue.” The harm in this case, he said, “while certainly painful, falls far short of the showing required to justify an injunction over matters of money.”

On balance, Justice Wilson concluded, the public benefits of the eviction moratorium outweigh its potential damage to the plaintiffs. “The balance of harms and the public interest,” he said, “favor upholding the law to protect the public health and economic wellbeing of tenants and the public in general during this health and economic emergency.”