Published on: March 18, 2013
The sky is not falling! I feel compelled to make that point in the wake of another in a series of recent court decisions concluding that community association rules must respect, at least to some degree, the Constitutional right to freedom of speech.
These decisions – three of them now in New Jersey and one in Massachusetts – have unnerved some association board members and industry executives, who have long assumed, correctly, that because associations are not governmental entities, they do not have the same obligation to guarantee and avoid interfering with the constitutionally-protected rights of their residents. To put it simply, this working assumption has been: While a city council could not legally prohibit residents from distributing political flyers in a public space, a community association board might well be able to restrict the distribution of those flyers or the posting of political signs in common areas.
A decision last year by the Massachusetts Appeals Court (Board of Managers of Old Colony Village Condominium v. Steven Preu) upended that comfortable perception. As we explained in a previous alert, the Preu decision was the first in Massachusetts to state unequivocally that free speech protections may apply in common interest ownership communities.
But Preu is as important for what it did not say as for what it said. What the court did not say in Preu is that community associations are the equivalent of municipal governments and are equally restrained by the First Amendment, which prohibits governmental entities from abridging the free speech rights of citizens. Industry practitioners had been anticipating (and fearing) that argument for years, convinced that the courts would one day use an association’s purported status as a “mini-municipality” as a battering ram to crash through community association doors and directly restrict their rulemaking authority.
A Back Door Approach
That didn’t happen. In Preu, the Appeals Court slipped through the back door instead, concluding that First Amendment protections applied not because the association itself was a state actor, but because asking the court to enforce the association’s rules constituted a “state action” that required Constitutional review.
The U.S. Supreme Court established the state action concept more than 60 years ago in Shelley v. Kraemer, which held that while private parties might voluntarily abide by a discriminatory covenant, they could not ask the courts to enforce it. That argument makes sense. It is easy to understand why the courts would be reluctant to allow governmental power to be used to support discriminatory policies or to deny due process or other rights guaranteed by the Constitution.
Since Kraemer, state action has been a legal ace-in-the-hole courts have held in reserve to use when necessary to avoid becoming complicit in Constitutional violations. And they have used it only rarely, in cases involving major freedom of speech issues (primarily freedom of the press) or invidious discrimination.
So it was surprising, to say the least, to see the Appeals Court apply the state action principle in Preu in order to impose a Constitutional test on restrictions a community association sought to enforce on the activities of one of its residents. The court found that some of those activities, (the posting of signs) were protected free speech but others (depositing bags filled with dog feces in common areas) were not. While the proverbial slinging of solid waste may constitute protected speech, the court suggested, the literal slinging of it does not.
Noteworthy but not Revolutionary
There is no question that its use of the state action argument makes Preu significant and deserving of the attention it has received. But the decision did not, as many have assumed, dramatically curb the rulemaking authority of boards. The court acknowledged, in fact, that community associations are free to adopt any rules they choose. But the court also said that if asked to enforce those rules, it will subject them to constitutional review. This is noteworthy but it is not revolutionary – at least, not for community associations.
As we noted in our previous alert, this decision has sweeping implications extending far beyond the bounds of community associations, affecting private enterprises of all kinds. Virtually any covenant or contract provision or policy businesses adopt ― from non-competition clauses to rules governing the language in company e-mails or restricting the use of company computers — might be found to illegally restrict free speech. The alert noted: “If all you need to trigger a ‘state action’ is an underlying statute and court action to enforce it, all bets are off. There is no way to predict where the limits on the authority of private entities might be drawn.” For that reason, Preu should make Massachusetts business executives more than a little nervous.
For Massachusetts community associations, however, Preu was close to a non-event. Although this was the first decision to conclude that First Amendment protections apply in a community association, it was by no means the first to suggest that this might be the case. In many decisions over the past 30 years, Massachusetts courts have walked up to the First Amendment threshold in condominium communities and stopped just short of it, declining to push the First Amendment through the door, but saying they would review challenged rules as if they had to pass a Constitutional test anyway.
A Reasonable Test
And the test the courts have applied has consistently been one of “reasonableness.” Are the restrictions reasonable? Do they fall within the scope of the board’s governing authority? Do they advance the legitimate purposes of the community? “Reasonableness” is the lowest, least onerous and most flexible level of constitutional scrutiny possible.
While the Appeals Court did not specify in Preu that this is how it will analyze future constitutional challenges to association rules, it is highly unlikely that the court would adopt a different standard, at variance with 30 years of jurisprudence. So we can assume with confidence, if not certainty, that the reasonableness test will apply.
This is not an unsettling prospect. Despite all the attention it has attracted and all the angst it has produced, Preu has not really altered the community association landscape at all. It has simply rung more loudly a Constitutional bell that had been chiming quietly but clearly in the distance for some time.
What the Appellate Court told community associations in Preu is what the courts in Massachusetts and other jurisdictions have been telling them for years: Boards have considerable authority and broad discretion, but their authority and discretion are not unlimited. Their decisions will be subject to challenge and to second-guessing by the courts — period. To withstand that scrutiny, association rules and policies, whether they involve constitutional principles or not, must be reasonable. This is not a revolutionary change – it is a statement of fact and a long-established fact of life for community associations.
The New Jersey Trio
Even the most recent decision by the New Jersey Supreme Court —Dublirer v. 2000 Linwood Avenue Owners, Inc. — can be viewed through this relatively benign and less than earth-shattering lens. This decision (that a regulation prohibiting a resident from distributing materials supporting his candidacy for the board violated the state constitution’s broad free speech guarantee) falls in a consistent line behind two decisions preceding it.
In Committee for a Better Twin Rivers v. Twin Rivers Homeowners Association, the New Jersey court held that rules restricting the size and location of signs and limiting access to a community newsletter passed constitutional muster because they were “reasonable as to time, place and manner,” and struck an acceptable balance between the property rights of the community and the free speech rights of its residents.
In Mazdabrook Commons Homeowners Assn. v. Khan, the court held that a regulation barring virtually all signs in the community went too far, because it unreasonably restricted the political speech of a resident seeking to advertise his candidacy for the City Council. The court argued here that the right to political free speech is “fundamental to a democratic society,” and trumped the property rights of the community. Significantly, the court applied the same balancing act as in Twin Rivers, but concluded that the balance tipped in favor of free speech.
In Dublirer, the court concluded that because the association’s rules barring the distribution of political pamphlets permitted no alternative means of expression, they created an unacceptable burden on freedom of political speech – again, questions of balance and reasonableness.
The Massachusetts “Declaration of Rights” (the state constitution), though less expansive in its protections than the New Jersey counterpart, highlights political activity, making it unconstitutional to interfere in a public election. So even without the “state action” trigger the Appeals Court found in Preu, the Massachusetts courts might well invalidate rules prohibiting the distribution of political pamphlets in condominium communities.
Where does this leave community associations? Pretty much where they were before the cascade of free speech decisions began making them nervous. Preu (the only one of the four court decisions I’ve discussed that applies in Massachusetts) did not say that boards can’t enact regulations; it just reminded them that they must do so reasonably, with an awareness that their decisions may be subject to challenge and judicial review. That prospect should make boards cautious, thoughtful and conscientious in their rulemaking. But it should not make them fearful, nor should it prevent them from enacting the rules they need to preserve, protect and enhance the value of their communities.