Document: 485 U.S. 1 108 S.Ct. 849 99 L.Ed.2d Richard PENNELL and Tri-County Apartment House Owners Association, Appellantsv.CITY OF SAN JOSE City Council of San Jose. No. 86-753. Argued Nov. 10, 1987. Decided Feb. 24, 1988. Syllabus Under a Jose, Cal., rent control ordinance (Ordinance), landlord may automatically raise the annual tenant in possession by as much eight percent, but if objects to higher increase, hearing is required determine whether landlord's proposed increase "reasonable under circumstances," officer directed consider specified factors, including "the hardship tenant." Appellants, an individual Association (Association), which represents owners lessors real property located filed state-court action seeking declaration that Ordinance, particularly "tenant hardship" provision, facially invalid Federal Constitution. The court entered judgment on pleadings appellants' favor, California Court Appeal affirmed. However, Supreme reversed, rejecting arguments Takings Clause Fifth Amendment Equal Protection Due Process Clauses Fourteenth Amendment. Held: 1. Appellants have standing challenge Ordinance's constitutionality, even though they did not allege either appellant or Association's members "hardship tenants" who might trigger process, been will be aggrieved officer's determination certain unreasonable ground hardship. When challenged basis pleadings, all material allegations complaint must taken true, construed favor complaining party. alleged their properties are subject stated at oral argument "most residential unit city [has] many tenants." Thus, likelihood enforcement with concomitant probability reduced below what would otherwise able obtain, sufficient threat actual injury satisfy Art. III's requirement plaintiff challenges law demonstrate realistic danger sustaining direct result law's operation enforcement. Pp. 6-8. 2. Appellants' contention application provision violates Clause—since reducing, because hardship, "reasonable" other, objective factors Ordinance relating costs rental market's condition, accomplishes taking transfer tenants—is premature. There no evidence has fact ever relied upon reduce figure it set other factors. In addition, does require grounds only makes mandatory considered. takings cases, constitutionality laws should decided except factual setting such decision necessary. 8-11. 3. mere tenant's finally fixing reasonable render Clause. purpose preventing increases caused city's housing shortage legitimate exercise appellees' police powers. Moreover, there merit arbitrary, discriminatory, demonstrably irrelevant for appellees attempt accomplish additional goal reducing burden low-income tenants requiring tenant" considered determining amount excess circumstances." protection consumer welfare rational price rate regulation. scheme accommodate conflicting interests protecting from burdensome while same time ensuring landlords guaranteed fair return investment. 11-14. 4. its face, violate Its classification rationally related tenants. It irrational treat differently 14-15. 42 Cal.3d 365, 228 Cal.Rptr. 726, 721 P.2d 1111 (1986), REHNQUIST, C.J., delivered opinion Court, BRENNAN, WHITE, MARSHALL, BLACKMUN, STEVENS, JJ., joined. SCALIA, J., concurring part dissenting part, O'CONNOR, joined, post, p. ----. KENNEDY, took consideration case. Harry D. Miller, Oakland, appellants. Joan R. Gallo, appellees. Chief Justice REHNQUIST Court. This case involves enacted California, allows consider, among when approve landlord. Pennell sued Superior Santa Clara County ordinance, particular provisions, "facially unconstitutional therefore . illegal void." appellants, claim provisions violated Amendment, made applicable States affirmed this judgment, 154 Cal.App.3d 1019, 201 728 (1984), each divided vote. majority rejected Amendment; dissenters thought were "forced subsidy imposed landlord" violation Id., 377, Cal.Rptr., 734, P.2d, 1119. On appeal we postponed question jurisdiction, 480 905, 107 1346, 94 517 (1987), now having heard affirm California. 2 Jose (Ordinance) 1979 3 "alleviat[ing] some more immediate needs created Jose's situation. These include limited prevention excessive increases, alleviation undue hardships tenants, assurance value property." Municipal 19696, § 5701.2.1 4 At heart mechanism charge A entitled possession2 percent; greater than before "Mediation Hearing Officer" sets forth number making determination, 5703.28(c)(7). Because appellants concentrate attack factor, relevant full: 5 "5703.29. Hardship Tenants. any portion thereof exceeds standard Section 5703.28(a) (b), then respect allow allowed Chapter, Officer shall economic financial present units apply. If, balance, determines constitutes unreasonably severe tenant, he order subparagraph (c) 5703.28, thereof, disallowed. Any whose household income monthly expense meets [certain requirements] deemed suffering weighed Officer's determination. proof establishing 6 If dissatisfied officer, provides binding arbitration. attempts receives maximum established provided criminal civil penalties. 7 Before turn merits contentions lack Ordinance. original states "is owner lessor 109 Jose." Appellant (Association) said "an unincorporated association organized representing App. 2-3. also owned "subject terms of" But, point out, member nor specifically As put it, "[a]t time, speculative" injured provisions. contend, test standing, see, e.g., Valley Forge Christian College v. Americans United Separation Church & State, Inc., 454 464, 472, 102 752, 758, 70 700 (1982) (individual requires " 'actual redressable court' "), associational see Hunt Washington Apple Advertising Comm'n, 432 333, 343, 97 2434, 2441, 53 383 (1977) (an behalf "its sue own right").3 8 We keep mind, however, "application constitutional [is not] mechanical exercise," Allen Wright, 468 737, 751, 104 3315, 3324, 82 556 "accept true complaint, construe party," Warth Seldin, 422 490, 501, 95 2197, 2206, 45 343 (1975); Gladstone, Realtors Village Bellwood, 441 91, 109, 1601, 1612, 60 66 (1979). Here, tenants," Tr. Oral Arg. 42; id., 7; Reply Brief Accepting truth these statements, do contest, "unadorned speculation," Simon Eastern Kentucky Welfare Rights Organization, 426 26, 44, 96 1917, 1927, 48 450 (1976), conclude enforced against Association. enforcement, she obtain absence "[a] statute statute's enforcement." Babbitt Farm Workers, 442 289, 298, 2301, 2308, 895 (1979).4 9 said, recognize record leaves desired specificity purposes Undoubtedly least reflection originated state where proscription advisory opinions strongly suggest future cases parties litigating circumstances similar those here take pains supplement manner necessary enable us address precision possible raised. 10 Turning merits, first Amendments' prohibition private public use without just compensation. essence, follows: 5703.28 establishes seven into account increase. six objective, providing adequate unit, condition market. Application standards results reference contend control: elimination "excessive" rents shortage. takes pursuant 5703.28(c)(7) reduces objectively reduction "taking." impermissible serve eliminating rents—that already accomplished considering factors—instead, serves assistance short, tenants; forces individuals shoulder "public" subsidizing poor tenants' housing. "[i]t axiomatic Amendment's compensation 'designed bar Government forcing people alone bear burdens which, fairness justice, borne whole.' First English Evangelical Lutheran Glendale Los Angeles, 482 304, 318-319, 2378, 2388, 250 (1987) (quoting Armstrong States, 364 40, 49, 80 1563, 1569, 1554 (1960)). 11 think premature record. things stand, simply clause" nothing 5703.29 make considered—it tenant"—but goes increase" (emphasis added). Given "essentially ad hoc, inquir[y]" involved analysis, Kaiser Aetna 444 164, 175, 100 383, 390, 62 332 (1979), found important adhere our admonition statutes ought necessary." Hodel Virginia Surface Mining Reclamation Assn., 452 264, 294-295, 101 2352, 2369-2370, 69 (1981). Mining, example, Control Act 1977, 91 Stat. 447, 30 U.S.C. 1201 et seq., was "premature," U.S., 296, n. 37, S.Ct., 2370, "not ripe judicial resolution," 297, 2371, had identified allegedly Act, sought administrative relief Act's restrictions surface mining. Similarly, find enjoined rent, showing consequences injunction ultimate sufficiently concrete adjudication here. Cf. CIO McAdory, 325 475-476, 65 1395, 1397, 89 L.Ed. 1741 (1945) (declining validity show applied petitioner's members).5 12 urge renders invalid" Clauses, diminished one dollar provision. price-control regulation well established: "Price 'unconstitutional policy legislature free adopt. .' Permian Basin Area Rate Cases, 390 747, 769-770, 88 1344, 1361, 20 312 (1968) Nebbia New York, 291 502, 539, 54 505, 517, 78 940 (1934)). contexts recognized government intervene marketplace regulate rates prices artificially inflated existence monopoly near monopoly, FCC Florida Power Corp., 245, 250-254, 1107, 1111-1113, 282 (approving limits charged cable companies access telephone poles); FPC Texaco 417 380, 397-398, 2315, 2326-2327, 41 141 (1974) (recognizing federal natural gas market response pricing), discrepancy between supply demand product, supra, 530, 538, 513, 516 (allowing minimum milk offset "flood surplus milk"). Accordingly, dispute asserted "prevent[ing] increases" "growing increasing Jose," 5701.2, powers.6 Block Hirsh, 256 135, 156, 458, 459, 865 (1921) Washington, D.C., Congress' finding "monopolized"). They argue, "arbitrary, irrelevant," circumstances" 5703.28.7 "[t]he alleviating 'policy adopt' ordinance." 16. 13 reject contention, long welfare. See, 770, 1361; Hope Natural Gas Co., 320 591, 610-612, 64 281, 291-292, 333 (1944) ("The primary aim [the Act] protect consumers exploitation hands companies"). Indeed, Bowles Willingham, 321 503, 9, 641, 646, 892 (one "to persons relatively fixed incomes, consumers, wage earners impairment living"). considers reasonableness percent 5703.28(b). 5703.28(c) focus landlord—the examines history premises, costs, comparable 5703.28(c)(5) bring presumably regarding his status officer. context and, 5703.29, "balance[d]" out 5703.28(c). Within scheme, 648 (considering, rejecting, "landlord landlord, fashion utility rates"). accordingly so carefully both over above amounts reasonable, face Clause.8 14 Here again, deferential; need embodied "rationally interest." Orleans Dukes, 427 303, 2513, 2517, 49 511 (1976). Vance Bradley, 440 93, 939, 59 171 "we overturn [a suspect class fundamental interest] unless varying treatment different groups unrelated achievement combination can legislature's actions irrational." 97, 943. light conclusion designed hardly distinguishes doing furthers suffer "unreasonable" hardship; inconsistent factor hold could tailor redressed. Woods Cloyd W. Miller 138, 145, 68 421, 425, 92 596 (1948) (Congress "need none. select areas classes seems greatest"). recognize, general difficult say "causes" But beside point—if regardless reason why, 15 For foregoing reasons, facial 16 Affirmed. 17 KENNEDY 18 whom O'CONNOR joins, part. 19 I agree not, disagree, Court's decide effects Amendments. * effect uncompensated substantially advance improperly imposes landlords. understand how claim—that plaintiffs is, root branch, invalid—can readily merely noting applications lawful. possibly avoided "premature." Suppose, feature allowing race apartment deciding inconceivable await demonstration actually detriment plaintiffs. difference, me, facial, root-and-branch rests rather 21 confuses issue relying portions (as here) compensation, regulating severely constitute taking. context, suggests) generally, analysis inquir[y]," less year ago, surprising soon forgotten: 22 "In addressing petitioners' disregard posture comes us. District granted summary respondents Subsidence Act. explained '. enactment regulations taking.' 23 "The critical distinction impact specific piece payment illustrated 264 [101 1] (1981), preenforcement 1977. [there] explained: 24 ' "Because appellees" arose challenge, presented controversy concerning mining operations parcels land. properly turn, "mere enactment" straightforward. uses "denies economically viable land." 25 "Petitioners thus uphill battle taking." Keystone Bituminous Coal Assn. DeBenedictis, 470, 493-495, 1232, 1246-1247, 472 (1987). 26 While "uphill" Keystone, fought, declare 27 supra. remarkable support position, describing holding 28 'premature,' 'not resolution,' mining." Ante, 10. 29 Court," applied. Having premature, continued (in language quoted ): "Thus, 'mere enactment' 295, 2370. 31 That 295-297, 2370-2371, Agins Tiburon, 447 255, 260-263, 2138, 2141-2142, 106 (1980). 32 sum, entirely clear deprives land—a easier establish "as-applied" attack. possible, rest profit application. Agins, zoning "effects interests, denies 260, 2141. former sort. impecunious renters interest legitimately furthered property. Knowing nature character question, degree impairment, way assist inquiry. Such authorizing permanent physical invasion See Loretto Teleprompter Manhattan CATV 458 419, 3164, 73 868 (1982). So explicitly overrule lie forcefully attack, still why proceed. 33 Today's equity precedent. Since specification attributable various account, quite none affected meet "showing factor] rent." shield injustice scrutiny. merits. II 34 Constitution, through Chicago, B. Q.R. Co. 166 226, 239, 581, 585, 979 (1897), "private [shall use, compensation." repeatedly observed whole." (1960); Angeles County, (1987); Webb's Fabulous Pharmacies, Inc. Beckwith, 449 155, 163, 446, 452, 358 (1980); 2141; Penn Central Transportation York City, 438 104, 123, 98 2646, 2658, 57 631 (1978); Monongahela Navigation 148 312, 325, 622, 625, 37 463 (1893). 35 Traditional land-use (short totally destroys property) principle cause-and-effect relationship restricted social evil seeks remedy. owner's (or, regulation, be) source problem, cannot singled unfairly. common subdividers observe lot-size set-back restrictions, dedicate streets, accord traditions cause congestion. popularly justify emergency regulation: commodities priced level produces exorbitant returns, viewed responsible occurs. Whether accurate perception free-market economy operates, reap unique benefits situation singling them relieve regarded "unfair." justification apply case, apart single 36 contest general. acknowledge constitutionally rent" according statutory (cost debt servicing, changes services, information units). consistently based seventh defined 5703.29. right. Once property, receiving return, longer "cause" exorbitantly housing; reaping distinctively high profits "hardship" invoked problem: too afford reasonably problem exploited grocers sell needy food, department stores clothes, employers pay wages, citizens paying jobs excluded. And neediness general, remotely singles out—namely, happen future, current affluent decline category. 38 traditional American met privately sold necessities—a society large—has distribution funds raised large taxes, cash (welfare payments) goods (public housing, publicly subsidized food stamps). Unless abandon guiding "public whole," Armstrong, Constitution permits. acts landlord-tenant magically transform welfare, supported public, "economic regulation," disproportionately individuals. "regulating" sense excessive; rather, using occasion (accomplished Ordinance) program funded 39 Of course wealth transfer. forbidden, become poorer (or incumbent class) richer. Singling transferors within notions fairness, plausibly beneficiary high-rent problem. connection required, end transformations so-called "regulation," great democratic process. 40 politically attractive permits transfers achieved otherwise; "off budget," relative invisibility immunity normal processes. might, something like raising estate tax revenues acquired me doubtful, municipal treasury, wherever derived, distributed family four $32,400 year—the generous qualify Ordinance.* voters pressing, priorities. $32,400-a-year acquire spurious well. door opened expect businesses give special discounts senior (no matter affluent), students, handicapped, war veterans. Subsidies good idea, governmental system applied, process taxing spending, competing priorities evident. fostering intelligent happy prescription—perhaps accidental, perhaps not. unfairness citizen pay, remedy creation. Jersey displaying, defects, vice dispositive here: "A legislative category sound, proper sustainable classification. compelled subsidization live building improper method solving problem." Property North Bergen, 74 N.J. 327, 339, 378 A.2d 25, (1977). 43 consistent decisions below, refer throughout sections originally designated. note, Code recently recodified appears Chapter 17.23 new Code. 5703.3, rented after effect, 5703.3(a), voluntarily vacated, 5703.3(b)(1), vacant eviction acts, 5703.3(b)(2). Our impose two requirements representational standing: organization "germane organization's purpose," Hunt, "neither requested participation lawsuit," ibid. Automobile Workers Brock, 477 274, 281-282, 2523, 2529, (1986). Both satisfied "organized property" lawsuit, 3, Appellees argue lacks individually early 1987 filed. 8. submitted admits properties, repurchased owns buildings formerly owned. Declaration ¶ 7. Ordinance." jurisdiction appeal, unnecessary Pennell's sale repurchase affects due equal requirements. Indiana, 314, 335-336, 2376, 2388-2389, (1981) (dismissing "premature" penalty "appellees assessed penalties prepayment injury"). several amici lower power evict too, premised granting tenant. claim, amici, per se (1982), "consistently broad conditions injuries entails." 440, 3178 (citing, inter alia, 517-518, 648-649, (1944)). "statutes relations takings." 252, 1112. Despite urgings, reconsider se. noted above, 5, extent subsidize facts purpose, dislocation afford. Particularly during shortage, severe. By 5703.28(c), enables "fine tune" risk forced relocate (though to) "household [sic] criteria" existing Housing Community Development 1974, 1437f (1982 ed. Supp. III). Department Urban currently families area earn year. Memorandum Dept. Development, Assistant Secretary Housing-Federal Comm'r, Income Limits Lower Very Low-Income Families 1937 (Jan. 15, 1988).

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