By Jennifer Sarvadi and Erik Kosa

On March 21, a panel of the Ninth Circuit held in Yim v. Seattle that a provision in Seattle’s Fair Chance Housing Ordinance prohibiting landlords from inquiring into current or prospective tenants’ criminal history was an unconstitutional infringement on free speech.

Passed in 2017, the Ordinance prohibits landlords from (1) inquiring about arrest records, conviction records, or criminal histories or current or prospective tenants; and (2) taking adverse action against them based on that information.

There are four exceptions to these restrictions. First, landlords may inquire about criminal record information related to an applicant’s sex offender status. Second, to avoid potential preemption concerns, the adverse action provision does not apply to landlords of federally assisted housing that may have requirements for the denial of tenancy. Third, it does not apply to leasing a single-family dwelling in which the owner lives. Fourth, it does not apply to leasing a detached accessory dwelling unit of a single-family home in which the owner lives.

The landlords sued the City of Seattle, challenging this “inquiry provision” as an unconstitutional infringement on their First Amendment rights, and the “adverse action” provision as an unconstitutional infringement on their Substantive Due Process right to exclude others from their property.

On July 6, 2021, a federal district court granted summary judgment in favor of the City. In upholding the Ordinance, the district court found the law did not violate the First Amendment because, as “commercial speech,” it was sufficiently tailored to the City’s substantial interests to survive the intermediate level of scrutiny to which such speech is subject.

A panel of the U.S. Court of Appeals for the Ninth Circuit reversed in part and affirmed in part the district court’s opinion. In sum, the panel held that landlords can ask applicants about criminal history but cannot use the resulting criminal history information as a basis for taking adverse action against the applicant.

In its analysis, the panel held that the Ordinance’s inquiry provision impinged upon the First Amendment rights of landlords. The panel found that the City’s stated interests – reducing barriers to housing faced by persons with criminal records and the use of criminal history as a proxy to discriminate on the basis of race – were substantial. But the panel disagreed with the district court that the Ordinance was narrowly drawn to achieve the City’s stated goals. Here, the inquiry provision – a complete ban on any discussion of criminal history between the landlords and prospective tenants – was not in proportion to the interest served by the Ordinance in reducing racial injustice and reducing barriers to housing.

 The panel did not decide whether the Ordinance regulates commercial speech and calls for the application of intermediate scrutiny, or whether the Ordinance regulates non-commercial speech and is subject to strict scrutiny review, because it concluded that the Ordinance did not survive even the intermediate scrutiny standard of review.

The panel further held that the adverse action provision was not an unconstitutional infringement of the landlords’ Substantive Due Process rights to exclude others from their property. However, there is still some good news for consumer reporting agencies that provide criminal history screening reports.

The City has taken the position that the inquiry provision prevents a CRA from even producing a report in the first instance. However, in interpreting the statute’s language – which applies to any “person” –  the Ninth Circuit held that the Ordinance only applied to landlords, not literally any “person.” In other words, the Ordinance’s restrictions on what any “person” may and may not do does not apply to CRAs. Given that the inquiry provision has been held to only apply to landlords and not other persons, and further held to be unconstitutional, CRAs should not be subject to liability for having provided reports containing that information in the first instance – as previously threatened by the City.

In recognizing that “a complete ban of any discussion of criminal history between the landlord and prospective tenants – is not in proportion to the interests served by the Ordinance”, the panel then went on to cite various other jurisdictions’ inquiries into – and use of – criminal history information with approval as less intrusive means of achieving the stated interests. Citing these with approval – and seemingly as justification for the proposition that less restrictive laws could accomplish the same policy goals – the court explained “these ordinances would permit the landlords to ask a potential tenant about their most recent, serious offenses, which is the information a landlord would be most interested in.” Thus, the court recognized that a landlord would want to obtain and review this information in connection with an application for housing.

The decision leaves open the question of how — if one has a right to obtain the information and consider it, but cannot actually use it – whether that is in practical effect the same thing as restricting the inquiry itself. In other words, how does one receive information about criminal history, discuss it with the applicant, but then not be allowed to use it? These provisions are inexorably intertwined as it would be almost impossible for a landlord to receive the information and not make use of it. No party briefed whether the provisions are severable from one another to the district court below, or to the Ninth Circuit, so there will likely be another chance to address these issues.

Jennifer Sarvadi and Erik Kosa are attorneys at HudsonCook. Jennifer is a partner and Erik is a senior associate. CDIA filed a joint amicus before the U.S. District Cout for the District of Washington in 2018, and a joint amicus before the 9th Circuit in 2021. Jennifer was counsel of record (with partner Becki Kuehn) for that 9th Circuit brief.

The case is Yim v. Seattle, U.S.C.A. (9th Cir.) No. 21-35567. On March 22, 2023, the parties were granted a deadline of April 18, 2023, to file a petition for rehearing.