New York City Can’t Force Owners to Rent Their Property Forever

Thomas A. Berry and Nicholas DeBenedetto

New York City has maintained a system of rent control since the 1940s. Property owners in the City are subject to a thicket of regulations that affect their ability to rent and limit their right to exclude—arguably the most fundamental right in the “bundle” of property rights. The cornerstone of the City’s rent control regime is the Rent Stabilization Law (RSL) which was enacted in 1969 and has been amended on multiple occasions—most recently in June 2019. The RSL has been the subject of several lawsuits throughout the decades.

There are approximately one million units under the purview of the RSL, comprising half of all New York City apartments. The RSL authorizes a government board to set annual maximum rent increases for stabilized units. This board is required to consider tenants’ ability to pay as one factor in setting rents, alongside owners’ costs and housing affordability.

The RSL severely limits property owners’ rights to occupy, use, change the use of, and dispose of their property. The RSL requires owners to renew tenants’ leases in perpetuity with very few exceptions, and those exceptions are entirely within the tenants’ control. Additionally, these renewal rights may be passed on to any member of a tenant’s family who has lived in the tenant’s apartment for two years.

Once a tenant occupies a stabilized unit, an owner may not retake possession of the apartment for personal use. Only upon a demonstration of “immediate and compelling necessity” may an owner reclaim just one of his or her units. And buildings held in the name of a corporate entity have no personal use allowance at all.

The RSL also severely restricts owners’ rights regarding the buildings themselves. Owners may not withdraw their buildings from residential use, change their units to commercial rentals or cooperatives, leave their property vacant, or demolish their property.

A not‐​for‐​profit trade association representing many New York City apartment building owners sued to challenge the RSL in federal court, but the Second Circuit upheld the law. Now the owners are petitioning the Supreme Court to take their case. Cato, joined by the Manhattan Institute, has filed an amicus brief supporting that petition.

Our brief makes three key points. First, the Supreme Court’s recent opinion in Cedar Point Nursery v. Hassid (2021) casts serious doubt on the constitutionality of the RSL, since the City has appropriated building owners’ right to exclude and granted that right to third parties. All of the Supreme Court’s precedents addressing the constitutionality of rent‐​control statutes long predate the per se rule for physical takings articulated in Cedar Point, which calls for those precedents to be reexamined.

Second, there is already a circuit split between the Eighth and Second Circuits over whether property owners can allege that rent control effects a per se taking under Cedar Point. We argue that the Eighth Circuit correctly followed the Supreme Court when it held that a per se takings claim could proceed against an eviction moratorium, while the Second Circuit erred here in denying plaintiffs’ claim against New York City.

Finally, we argue that the Supreme Court should take this opportunity to reaffirm the foundational takings principle that government cannot require a subset of society to privately incur costs that should rightfully be borne by society as a whole. The RSL impermissibly imposes societal costs on property owners alone when it forces them to charge lower rental rates based on tenants’ ability to pay. For all these reasons, the Supreme Court should take the case and ultimately reverse the Second Circuit.

Public Schools Can’t Force Employees to Support Ideas They Oppose

Thomas A. Berry and Nicholas DeBenedetto

In the Fall of 2020, public schools in Springfield, Missouri implemented mandatory “equity” training. All employees of the school district were required to attend a session, not just teachers. The employees were told that if they did not participate, the school district would dock their pay and they could lose necessary professional development credit.

The training topics included “Oppression, White Supremacy, and Systemic Racism” and tools on “how to become Anti‐​Racist educators.” Training sessions included several interactive exercises that required participants to share reactions to videos, write down answers to instructor questions, answer multiple‐​choice questions, and fill out charts related to concepts presented by the training.

Brooke Henderson and Jennifer Lumley, two non‐​teacher employees, strongly disagreed with many of the views advanced by the school district through the training sessions. These sessions taught that believing in colorblindness is a form of white supremacy; that systemic racism is “woven into the very foundation of American culture, society, and laws”; and that American institutions all contribute to or reinforce “the oppression of marginalized social groups while elevating dominant social groups.” Participants were also told that being sufficiently “anti‐​racist” means not remaining “silent or inactive” because doing so constitutes “white silence”—a form of white supremacy.

During training sessions, employees were required to answer questions and give responses affirming these assertions. For example, some of the questions presented two answers, only one of which was correct in the eyes of the school district. In order to advance through the modules and receive credit, participants had to give the school district‐​approved answer. To complete their training, Henderson and Lumley both gave many answers that they did not actually believe.

Henderson and Lumley, represented by the Southeastern Legal Foundation, filed suit and raised several claims under the First Amendment including compelled speech, content and viewpoint discrimination, and unconstitutional conditions of employment. But the district court held in favor of the school district and ruled that Henderson and Lumley would have to pay the school district over $300,000 in legal fees and sanctions.

Henderson and Lumley have appealed to the Eighth Circuit, and Cato has filed an amicus brief supporting that appeal. Our brief focuses on two aspects of the district court’s decision that raise substantial First Amendment issues. First, the court’s analysis of the plaintiffs’ compelled speech claim conflicts with the Supreme Court’s foundational decision in West Virginia Board of Education v. Barnette (1943). Barnette makes clear that a person suffers a First Amendment injury at the moment he or she is required to affirm a belief to which he or she objects. Plaintiffs repeatedly had to provide the “correct” response and profess agreement with the school district’s ideas about equity, white supremacy, and racism, even though they strongly disagreed.

Second, the district court’s decision to award attorneys’ fees and sanctions violates the First Amendment right of the plaintiffs to participate in public‐​interest litigation. The district court justified its exorbitant award by referencing the​plaintiffs’ desire to advance a political cause in this litigation. But the Supreme Court explicitly held in NAACP v. Button (1963) and In re Primus (1978) that advancing a cause through good‐​faith public‐​interest litigation is an important First Amendment right, not something to be punished. Penalizing litigants for exercising their First Amendment freedoms will only chill future good‐​faith litigation.

If allowed to stand, the district court’s opinion would invite government employers to undermine key First Amendment principles and would chill legitimate public‐​interest litigation. The Eighth Circuit should correct these errors and reverse the decision of the district court.