Zacks and Freedman Clients Prevail in Court of Appeal Against San Francisco’s Challenge to Housing Providers Associations’ Legal Standing to Sue on Behalf of their Members
May 29th, 2023
On May 2, 2023, Zacks & Freedman, PC’s clients claimed a victory on behalf of San Francisco housing providers in the Court of Appeal, First District, obtaining an affirmance of the trial court’s ruling that the housing provider associations had legal standing to challenge San Francisco’s unlawful amendments to its Rent Ordinance.
The Law: To establish legal standing to sue, a private litigant must meet what is called the “beneficial interest” test. The beneficial interest test is a fairly relaxed standard, generally requiring a showing that the litigant has a personal interest in the result sought in the litigation. Associations that wish to sue on behalf of their individual members may also do so, if the association can show that (1) at least one of their members would have standing to sue in their own right, (2) the interest the association seeks to protect is germane to the association’s purpose, and (3) no individual members’ participation is required.
The Case: On behalf of its clients, Zacks & Freedman, PC sued the City of San Francisco for the City’s recent amendments to the San Francisco Rent Ordinance concerning regulation of “buyout agreements” between landlords and tenants. The ordinance, originally enacted in 2014, regulates both substantive and procedural aspects of Buyout Agreement negotiation. The recent amendments to that ordinance in 2020, however, imposed additional onerous requirements on housing providers, interfered with housing providers’ rights under the Unlawful Detainer statutes and with the judicial process, and undermined courts’ authority to promote and enforce settlement agreements. The petitioners in that case, all of which are associations that represent either San Francisco residential rental property owners or realtors, therefore brought the underlying action challenging those amendments.
San Francisco preliminarily argued that the housing provider associations did not have standing to bring the challenge. In doing so, the City relied upon inapplicable legal standards and proposed an almost impossible test in order for an association to meet the “beneficial interest” criteria. The trial court rightly denied this argument, finding instead that since the association petitioners’ individual members would clearly have standing to sue in their own right, and were made up entirely of housing providers, the associations were beneficially interested for purposes of standing to challenge the ordinance. The City appealed this decision.
The Decision: On April 14, 2023, the Court of Appeal issued an opinion agreeing with ZF’s standing argument, and rejected the City’s argument that the housing provider associations did not have standing to challenge a law that effected their members exclusively. The Court further found that even under the City’s more stringent proposed standard, there was no question that “the associations of landlords had standing to bring this challenge” to an ordinance that expressly imposes requirements on this category of litigants. Based on these grounds, the Court of Appeal affirmed the trial court’s judgment finding that the associations had standing to bring this action.
This decision is an important affirmation of the right of an association to represent its members’ interests in litigation. Permitting associations to sue on behalf of their interested members allows legal challenges that their individual members otherwise may not have the resources (or courage) to bring. Notwithstanding the important policy behind allowing associational standing, and the relatively relaxed legal standard, San Francisco and other government agencies have continuously sought to significantly narrow this right through unmeritorious standing challenges, such as the one it brought here. The Court’s opinion here is a welcome confirmation that associations may continue to represent its members’ interests without being impeded by artificially narrowed standing criteria.
Zacks & Freedman, PC is a law firm dedicated to advocating for the rights of property owners. With experience and knowledge in rent control issues, zoning, permitting, transactional disputes and other real estate matters, Zacks & Freedman, PC has successfully advocated its clients’ positions before local administrative tribunals and at all levels of the State and Federal courts, including the U.S. Supreme Court. For more information, call (415) 956-8100 or visit www.zfplaw.com.
Click here to read the Court’s decision.