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First Amendment of the United States Constitution freedom of speech-Commercial speec
( Baba_v_S.F._Bd._Supervisors )

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First Amendment of the United States Constitution freedom of speech-Commercial speec
(Baba v S.F. Bd. Supervisors)

B. Section 37.10A(c)

Appellants challenge the trial court’s findings that section 37.10A(c) violates free speech guarantees and is vague. They contend that the speech which is regulated by this provision falls outside the protection of the First Amendment and that it is not vague because its language is “easily understood with resort to simple common sense.” Because we agree with the trial court that the provision suppresses constitutionally-protected speech, we need not address the void for vagueness doctrine.

1. Governing principles and issues presented

The First Amendment of the United States Constitution provides in part that “Congress shall make no law . . . abridging the freedom of speech . . . .” (U.S. Const. 1st Amend.) “Although by its terms this provision limits only Congress, the United States Supreme Court has held that the Fourteenth Amendment’s due process clause makes the freedom of speech provision operate to limit the authority of state and local governments as well. [Citation.]” (Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 951 (Kasky).) Article 1, section 2, subdivision (a) of the California Constitution states: “Every person may freely speak, write and publish his or her sentiments on all subjects, being responsible for the abuse of this right. A law may not restrain or abridge liberty of speech or press.” (Cal. Const. art. I, § 2, subd. (a).) “The state Constitution’s free speech provision is ‘at least as broad’ as [citation] and in some ways is broader than [citations] the comparable provision of the federal Constitution’s First Amendment.” (Kasky, supra, 27 Cal.4th at pp. 958-959; Gerawan Farming, Inc. v. Lyons (2000) 24 Cal.4th 468, 490 (Gerawan I).) Therefore, if section 37.10A(c) violates the First Amendment, it also offends our state constitution.

“‘As a general rule, laws that by their terms distinguish favored speech from disfavored speech on the basis of the ideas or views expressed are content based.’ [Citation.]” (People v. Hsu (2000) 82 Cal.App.4th 976, 986.) Section 37.10A(c) is a content-based regulation; it criminalizes communications made by or on behalf of a landlord based on the content of the communication. “A content based regulation is presumptively invalid. [Citation.] It may be upheld only upon a showing that it is necessary to serve a compelling state interest and has been narrowly tailored to serve that end.” (People v. Hsu, supra, at p. 986.)

Appellants have never attempted to show that section 37.10A(c) is a permissible content-based regulation which satisfies the test we have just quoted. In the lower court, appellants took the position that respondents failed to carry their burden of proving this ordinance is unquestionably unconstitutional. On appeal, respondents assert a new argument. They contend, for the first time on appeal, that this provision is constitutional because it penalizes false and misleading commercial speech which is not constitutionally protected at all.

“‘[T]he [federal] Constitution accords less protection to commercial speech than to other constitutionally safeguarded forms of expression.’ (Bolger v. Youngs Drug Products Corp. (1983) 463 U.S. 60, 64-65 (Bolger).)” (Kasky, supra, 27 Cal.4th at p. 952.) Because regulation of commercial speech based on content is viewed as “less problematic” (Bolger, supra, 463 U.S. at p. 65) than a content-based regulation of noncommercial speech, the United States Supreme Court crafted an intermediate-scrutiny test for determining the validity of a content-based regulation of commercial speech. That test is: “For commercial speech to come within [the First Amendment], it at least must concern lawful activity and not be misleading. Next, we ask whether the asserted governmental interest is substantial. If both inquiries yield positive answers, we must determine whether the regulation directly advances the governmental interest asserted, and whether it is not more extensive than is necessary to serve that interest.” (Central Hudson Gas & Electric Corp. v. Public Service Commission of New York (1980) 447 U.S. 557, 566 (Central Hudson); see also Kasky, supra, 27 Cal.4th at p. 952; Gerawan Farming, Inc. v. Kawamura (2004) 33 Cal.4th 1, 22 (Gerawan II).)

Appellants rely exclusively on the first prong of this so-called Central Hudson test which reflects the well-settled rule that “commercial speech that is false or misleading is not entitled to First Amendment protection and ‘may be prohibited entirely.’ [Citations.]” (Kasky, supra, 27 Cal.4th at p. 953.) But appellants overlook one aspect of this rule which is noteworthy here. “With regard to misleading commercial speech, the United States Supreme Court has drawn a distinction between, on the one hand, speech that is actually or inherently misleading, and, on the other hand, speech that is only potentially misleading. Actually or inherently misleading commercial speech is treated the same as false commercial speech, which the state may prohibit entirely. [Citations.] By comparison, ‘[s]tates may not completely ban potentially misleading speech if narrower limitations can ensure that the information is presented in a nonmisleading manner.’ [Citations.]” (Id. at p. 953.)

Therefore, in order to accept appellants’ claim that the speech suppressed by section 37.10A(c) is not constitutionally protected at all, we would have to find that this provision embraces only (1) commercial speech which is (2) false or inherently misleading. If appellants are wrong on either count, the First Amendment is implicated and we must consider whether the regulation’s infringement on the constitutional right to freedom of speech is justified.

2. Section 37.10A(c) regulates constitutionally protected speech

a. Commercial speech

“‘Commercial speech,’ at its core, is speech that does ‘no more than propose a commercial transaction’ [citation], and, more broadly, is speech that goes beyond proposing such a transaction but yet ‘relate[s] solely to the economic interests of the speaker and its audience’ [citations].” (Gerawan I, supra, 24 Cal.4th at p. 486.) Commercial speech has been distinguished from “‘political speech’ [which] is speech that deals with ‘“governmental affairs’” [citation], and ‘ideological speech’ [citation] [which] is speech that apparently concerns itself with ‘philosophical,’ ‘social,’ ‘artistic,’ ‘economic,’ ‘literary,’ ‘ethical,’ and similar matters [citation].” (Ibid.)

Section 37.10A(c) is not directed at “core” commercial speech; it does not regulate speech that does no more than propose a commercial transaction. Moreover, we find the speech that is regulated by this provision does not relate solely to the economic interests of the speaker and/or his or her audience. Section 37.10A(c) penalizes specified types of speech by a landlord regardless of whether that speech is motivated by economic considerations. It also applies to speech by one who “willfully assists a landlord.” A speaker who willfully assists a landlord in this context may not have any economic interest in the matter at issue at all. Further, this statute punishes a “threat[] to recover possession of a rental unit” regardless of the basis for that threat. And it applies even more broadly to any “request that a tenant move from a rental unit.” Any such threat or request subjects the speaker to criminal liability unless the landlord has the present intent to institute formal eviction proceedings against his or her tenant pursuant to section 37.9(a) or (b) and acts on that intent within five days. (§ 37.10A(c)(1)&(2).) Neither this broadly worded provision nor the penalty it imposes contain any language limiting their reach to speech that is motivated by or even related to the economic interests of the parties.

A few examples illustrate our point. During the course of a heated argument over a current political issue, an angry landlord “requests” that her tenant move out but does not have any present intent to evict him or her. That landlord violates the express terms of section 37.10A(c) and is subject to criminal prosecution. (§ 37.10A(i).) A forgiving landlord who feels an obligation to the tenant beyond that required by the Rent Ordinance threatens to evict that tenant in the future unless the tenant remedies his or her prior breach of the Rent Ordinance or refrains from committing future breaches. Under these circumstances, the landlord has violated section 37.10A(c) because he does not have the present intent to institute a formal eviction. Although, in these examples, the economic interests of the parties may be implicated, the speech which is penalized is not motivated by or even related to the economic interests of the parties.

Some of the speech prohibited by this provision could be construed as commercial speech. For example, a landlord who requests that a tenant vacate a rental unit in exchange for a cash payment would violate this regulation to the extent he or she does not have the present intent to evict the tenant pursuant to a ground set forth in section 37.9(a) or (b) of the Rent Ordinance. However, such speech is suppressed not because this provision regulates commercial speech but rather because it applies to broad categories of speech regardless of their commercial nature. Absent any language limiting the reach of this provision to commercial speech we cannot reasonably interpret it as containing such a limitation.

Appellants contend that a test recently articulated by our Supreme Court in Kasky, supra, 27 Cal.4th at page 960, establishes that section 37.10A(c) is properly viewed as a commercial speech regulation.

In Kasky, the court held that statements allegedly made by defendant Nike about its labor practices and working conditions in its factories constituted commercial speech subject to regulation under the state’s false advertising and unfair competition laws. In reaching that decision, the Kasky court acknowledged that there is no “all-purpose test” to distinguish commercial from noncommercial speech under the federal or state constitutions and it expressly declined to propose any such test. Instead, the court formulated the following “limited-purpose test”: “[W]hen a court must decide whether particular speech may be subjected to laws aimed at preventing false advertising or other forms of commercial deception, categorizing a particular statement as commercial or noncommercial speech requires consideration of three elements: the speaker, the intended audience, and the content of the message.” (Kasky, supra, 27 Cal.4th at p. 960.) Applying this test, the Kasky court found that the statements at issue in that case were commercial speech because “Nike was acting as a commercial speaker, because its intended audience was primarily the buyers of its products, and because the statements consisted of factual representations about its own operations.” (Id. at p. 964.)

Kasky does not assist appellants for several reasons. First, the Kasky test is a “limited-purpose test.” It applies when the issue to be decided is “whether particular speech may be subjected to laws aimed at preventing false advertising or other forms of commercial deception . . . .” (Kasky, supra, 27 Cal.4th at p. 960.) The present case presents no such issue; here we must determine whether a particular law violates free speech guarantees. Beyond that, the law at issue here is a provision of a local rent control ordinance and does not have anything to do with false or misleading advertising which was the subject of Kasky.

Indeed, Kasky appears to undermine appellants’ position in this case to the extent the court there recognized that all of the United States Supreme Court’s commercial speech decisions have “involved statements about a product or service, or about the operations or qualifications of the person offering the product or service.” (Kasky, supra, 27 Cal.4th at p. 961.) The landlord-tenant relationship, though it surely has a commercial component, is more complex, personal and permanent than the relationship between the seller of goods or services and his or her potential buyer. We simply are not comfortable manipulating the Kasky test to fit this very different situation.

Finally, to the extent the Kasky test can and should be adapted to fit this context, it does not support appellants’ claim that section 37.10A(c) is purely a commercial speech regulation. As noted, the Kasky test requires consideration of the speaker, the intended audience and the content of the message. (Kasky, supra, 27 Cal.4th at p. 960.) This test helps to identify common characteristics of commercial speech which include: (1) a speaker who is engaged in commerce; (2) an audience of persons who may be influenced by the speech to engage in a commercial transaction with the speaker or the person on whose behalf the speaker is acting; and (3) a message which is commercial in character such as a representation of fact about the speakers business operations, products or services. (Kasky, supra, 27 Cal.4th at pp. 960-961.)

Appellants contend that the speech subject to section 37.10A(c) has these commercial speech characteristics because “[t]he landlord is a commercial speaker, the tenant is a consumer of the landlord’s services, and the eviction threat asserts a fact -- the present intent to evict -- about the landlord’s business operations that the landlord can verify but the tenant cannot.” To the contrary, and as already noted, section 37.10A(c) applies regardless of whether the landlord is acting as a commercial speaker and it also applies to individuals who willfully assist landlords and may have no commercial relationship with the tenant at all. Furthermore, section 37.10A(c) does not regulate factual representations about the landlord’s business; it applies to any threat to evict and any request that a tenant vacate a unit regardless of the basis for the threat or request or of the context in which it is made. Thus, Kasky does not alter our conclusion that section 37.10A(c) is not purely a commercial speech regulation.

b. False or inherently misleading speech

As noted above, the First Amendment protects commercial speech which is not false or inherently misleading. Thus, to the extent that section 37.10A(c) can properly be analyzed as a commercial speech regulation, the First Amendment affords some level of protection against governmental suppression of commercial speech unless this provision regulates only false or inherently misleading speech.

Appellants contend that section 37.10A(c) punishes only two specific types of speech: (1) insincere threats of legal evictions and (2) sincere threats of illegal evictions. Appellants further contend that, by limiting its scope to these two categories of speech, section 37.10A(c) only penalizes speech which is false or misleading. We simply cannot accept appellants’ strained interpretation of this regulation.

Section 37.10A(c) expressly applies both to threats to recover possession of a rental unit and requests that a tenant move from a rental unit. Appellants not only ignore this broad language, they also read into this section “sincerity” limitations that simply are not there. They move even further from solid ground by arguing that these illusory sincerity limitations somehow ensure that only false and misleading speech will be suppressed by this regulation. By definition, a threat refers to some future action and the absence of a present intent to immediately act on that threat does not render it either false or inherently misleading. By the same token, the sole fact that a landlord does not presently intend to force a tenant to vacate a unit obviously does not render that landlord’s request that he or she do so either false or misleading.

Again, a few examples help illustrate our point. A landlord who requests that a tenant move out but also expressly acknowledges that the tenant has a legal right to stay has not made a false or misleading statement. However, if that landlord does not have the present intent to evict the tenant, he or she has violated section 37.10A(c) and is subject to criminal prosecution. Furthermore, a landlord’s threat that he or she will evict a tenant if or when a proper ground for eviction arises is neither false nor misleading. However, a landlord who makes such a threat violates the express language of section 37.10A(c) and is subject to criminal prosecution because he or she has threatened eviction without having the present intent to evict.

Thus, we reject appellants’ contention that the speech regulated under section 37.10A(c) is not protected by the Constitution for two reasons. First, even if the commercial speech doctrine applies to communications between a landlord or his agent and a tenant, section 37.10A(c) necessarily regulates both commercial and noncommercial speech. Second, this provision also regulates speech which is neither false nor inherently misleading. Therefore, contrary to appellants’ position in this court, section 37.10A(c) suppresses speech which is protected by the First Amendment.

3. The suppression of protected speech has not been justified

The trial court found that “[t]he harm that the City seeks to redress with this statute cannot justify the infringement on the right of free speech guaranteed by the First Amendment and by Article 1 & 2 of the California Constitution.” Appellants ignore this finding because, as already noted, their limited defense of section 37.10A(c) is premised on the erroneous notion that the speech subject to this provision is not constitutionally protected at all. Thus they do not even attempt to justify the impingement on free speech rights. On this record, we agree with the trial court that the suppression of constitutionally protected speech cannot be justified.

We focus our analysis on the remaining prongs of the Central Hudson test applicable to commercial speech because, if section 37.10A(c) cannot satisfy this intermediate-scrutiny test, it necessarily fails under a strict scrutiny analysis. The second prong of the Central Hudson test requires that the government assert an interest that is substantial. (Central Hudson, supra, 447 U.S at p. 566.) To satisfy the final two prongs of Central Hudson, the challenged regulation must directly advance the asserted substantial interest and must be no more extensive than necessary to serve that interest. (Ibid.)

The record before us contains very little evidence relating to any of these considerations. The only evidence appellants offered in the trial court was a declaration by assistant district attorney Brian Bringardner and a transcript of a public hearing conducted by a committee of the San Francisco Board of Supervisors prior to the adoption of the Daly Amendments.

Bringardner is responsible for prosecuting illegal rent increase and illegal eviction cases that rise to the level of a criminal offense. In his declaration, Bringardner stated: “[I]t came to my attention that some landlords were removing tenants from rent controlled units by buying out and/or threatening the tenants of such units in order to create vacancies that would allow them to raise the rent to market level. This included threatening tenants that if they did not ‘voluntarily’ vacate their rent controlled units, either with or without a financial payment by the landlord, they would be subjected to either an owner move-in or Ellis Act eviction. In some cases, tenants were further threatened that this would damage their credit record and make it very difficult for them to find replacement housing. It quickly became apparent that tenants without counsel were especially vulnerable to this sort of pressure, even where the facts and the law were on their side. . . .”

At the public hearing, Bringardner spoke about the purpose and need for the various amendments but he did not specifically address section 37.10A(c) or the problem of threats by landlords against their tenants. Further, in his concluding comment, Bringardner stated: “. . . I don’t think it can be said enough that it is a very small minority of landlords who are doing this sort of thing but the effect they are having on their tenants is terrible. Most of these people end up having to leave San Francisco and we are losing some of our most talented people, some of whom have lived in this city for years and the face of this city is changing because of this. So, thank you very much.”

Despite the meager record below, we have no trouble finding a substantial governmental interest in this case. Appellants have a substantial interest in preventing San Francisco landlords from evading regulation under the Rent Ordinance. However, the lack of evidence relating to the specific practice which allegedly implicates this important governmental interest certainly impacts the remainder of our Central Hudson analysis.

“The third step of Central Hudson concerns the relationship between the harm that underlies the State’s interest and the means identified by the State to advance that interest. It requires that ‘the speech restriction directly and materially advanc[e] the asserted governmental interest. “This burden is not satisfied by mere speculation or conjecture; rather, a governmental body seeking to sustain a restriction on commercial speech must demonstrate that the harms it recites are real and that its restriction will in fact alleviate them to a material degree.”’ [Citations.]” (Lorillard Tobacco Co. v. Reilly (2001) 533 U.S. 525, 555 (Lorillard Tobacco); see also, Gerawan II, supra, 33 Cal.4th at p. 23.)

Here, appellants have not satisfied this third prong of the Central Hudson test.

Notably absent from this record is any concrete data, studies or real-life examples of the harms the Daly Amendments were designed to address. Indeed, appellants have neglected to produce evidence of a single actual case in which a tenant vacated his or her unit pursuant to an owner-move in or Ellis Act “bluff.”[2] This lack of evidence is particularly disconcerting in light of Bringardner’s concession that “it is a very small number of landlords who are doing this sort of thing.” Further, appellants have also failed to produce any evidence that the harm they seek to redress, landlord bluffing, would be materially alleviated by imposing the speech restrictions at issue here.

Assuming appellants could fill this evidentiary void with respect to the third prong of Central Hudson, we would nevertheless find that section 37.10A(c) is invalid. “The last step of the Central Hudson analysis ‘compliments’ the third step, ‘asking whether the speech restriction is not more extensive than necessary to serve the interests that support it.’ [Citation.]” (Lorillard Tobacco, supra, 533 U.S. at p. 556.) Although this is not a “least restrictive means” test, there must be a “reasonable ‘“fit between the legislature’s ends and the means chosen to accomplish those ends, . . . a means narrowly tailored to achieve the desired objective.”’ [Citations.]” (Ibid.; see also Gerawan II, supra, 33 Cal.4th at p. 23.) As our analysis thus far demonstrates, section 37.10A(c) is more extensive than necessary and it is not narrowly tailored to serve the governmental interest in this case. If coerced “voluntary” evictions is the perceived harm, that is the conduct that should be penalized. Instead, this statute criminalizes a wide range of expressive First Amendment activity regardless whether that activity causes the harm that appellants seek to prevent or, indeed, any harm at all.

In summary, even if analyzed as a commercial speech regulation, section 37.10A(c) suppresses speech which is neither false nor inherently misleading. Appellants have not demonstrated that this provision directly advances a substantial governmental interest or that it is no more extensive than necessary to serve that interest. Therefore, we affirm the trial court’s finding that section 37.10A(c) in unconstitutional.

Baba v. S.F. Bd. Supervisors-A103446-11/29/04 CA1/2

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