A Tale of Two Courts: Differences in Eviction Moratorium Rulings

Eviction Moratorium Rulings

Article by

Share This Post

The U.S. Supreme Court and the Ninth Circuit Court of Appeals each handed down recent rulings on the permissibility of tenant eviction moratoriums, with very different results. The Supreme Court found a national ban on tenant evictions to be unlawful, while the Ninth Circuit upheld Los Angeles’ tenant eviction moratorium against constitutional challenge.

So, what’s the deal with how these two courts approached the eviction moratorium?

If you look closely, the legal arguments that were brought before these two courts were quite different. Read on to understand these differences and why the outcomes of these cases landed on opposite sides of the road.

The Supreme Court – What Happened?

The Alabama Association of Realtors and other plaintiffs won a judgment from the U.S. District Court for the District of Columbia. Under this judgment, the District Court struck down a nationwide moratorium imposed by the Centers for Disease Control and Prevention (“CDC”). The moratorium prevented landlords from evicting tenants living in counties with high levels of COVID-19 transmission. The government appealed the ruling, and the District Court stayed its order during the appeal. The D.C. Circuit agreed with the stay.

The Public Health Service Act of 1944

The CDC justified its authority to adopt the moratorium by relying on a federal law that dates back to 1944. This law, the Public Health Service Act, authorizes the Surgeon General to make regulations necessary to prevent the spread of diseases by ordering inspection, fumigation, pest extermination, and other necessary measures. The Surgeon General’s authority was delegated to the CDC in 2020. It is important to recognize that regulations have rarely been issued under this law. Those few issued regulations were limited to quarantining infected persons and prohibiting the sale of animals known to transmit disease.

The Alabama Association of Realtors and other plaintiffs argued that the 1944 law didn’t authorize the CDC to impose the moratorium. In agreeing with the plaintiffs, the Supreme Court found that Congress, and not the CDC, has the authority to order a nationwide eviction moratorium. The Court noted that Congress passed a 120-day eviction moratorium for certain rental properties in March of 2020, but deliberately rejected calls to renew that moratorium when it expired. The CDC then stepped in and imposed a much broader eviction moratorium, which was scheduled to expire in December 2020. The CDC then extended its moratorium on three different occasions.

The Supreme Court’s Ruling on the Eviction Moratorium

While the Supreme Court initially agreed with the plaintiffs, it declined to vacate the stay on the order to strike down the moratorium because the moratorium was going to expire in a few weeks. Moreover, it was necessary to use that time to allow for the distribution of Congressionally appropriated rental assistance funds. Ignoring the Supreme Court’s finding, the CDC reimposed its moratorium upon expiration, and the plaintiffs eventually found themselves back at the Supreme Court. This time, the Supreme Court agreed to vacate the stay and allow the moratorium to be struck down. The Court based its decision on the following two reasons.

Reason 1

First, the government was unlikely to succeed on the merits of its legal arguments. The Supreme Court noted that the law relied on by the CDC is intended to prevent the interstate spread of disease by destroying the disease itself. The CDC’s moratorium, on the other hand, prohibits evictions, which is only indirectly related to the interstate spread of disease. The Supreme Court concluded that if Congress intended to provide the CDC with the “breathtaking amount of authority” to subject 80% of the country to an eviction moratorium, Congress would have clearly said so.

Reason 2

Second, “[t]the moratorium has put millions of landlords across the country, at risk of irreparable harm by depriving them of rent payments with no guarantee of eventual recovery. Despite the CDC’s determination that landlords should bear a significant financial cost of the pandemic, many landlords have modest means. And preventing them from evicting tenants who breach their leases intrudes on one of the most fundamental elements of property ownership—the right to exclude.” The Supreme Court also noted that the Government had additional time to distribute rental-assistance funds to help ease the transition away from the moratorium, and that vaccine assistance has also improved.

The Supreme Court concluded that, while the public has a strong interest in fighting the spread of the COVID-19 Delta variant, that interest does not allow a government agency to act unlawfully “even in pursuit of desirable ends. . . It is up to Congress, not the CDC, to decide whether the public interest merits further action here.”

The Ninth Circuit – What Happened in California?

The Apartment Association of Los Angeles County (the “L.A. Apartment Association”) brought a suit in the United States District Court for the Central District of California against the City of Los Angeles and others. The L.A. Apartment Association made a request for a preliminary injunction against the City’s enforcement of its eviction moratorium on the grounds that the moratorium violates the Contracts Clause of the United States Constitution. The District Court denied this request, and the L.A. Apartment Association appealed the ruling to the Ninth Circuit Court of Appeals.

The City justified the moratorium based on its finding that the COVID-19 pandemic threatens to undermine housing security, displace City residents, and cause instability of City business. It adding that the moratorium was necessary to protect public health and life.

The L.A. Apartment Association viewed the moratorium as “laying on their shoulders the burdens of maintaining affordable housing during the pandemic,” and argued that the moratorium harms landlords through the loss of rental income, inability to perform background checks on unauthorized occupants, and use of landlord retirement savings to cover expenses on the rental properties. Based on the foregoing, the L.A. Apartment Association argued that the moratorium violated the Contracts Clause.

Historically, the Contracts Clause was designed to prevent laws that repudiated or adjusted pre-existing lender-borrower relationships and other contractual relationships. However, in more modern times, courts have not used the Contacts Clause to invalidate laws that are addressed to the legitimate end of protecting a basic interest of society.

The Ninth Circuit’s Ruling on the Eviction Moratorium

In this case, the Ninth Circuit used the following two-step test:

  1. First, does the moratorium operate as a substantial impairment of a contractual relationship?
  2. Second, even if the moratorium operates as such an impairment, does the moratorium advance a significant and legitimate public purpose?

The Ninth Circuit affirmed the ruling by the District Court, saying that even if the moratorium was a substantial impairment of landlords’ contractual relations, the moratorium was likely reasonable and appropriate given the health crisis raised by the COVID-19 pandemic. The Ninth Circuit concluded that the provisions of the moratorium challenged by the L.A. Apartment Association could be viewed as the City’s reasonable attempts to address that valid public purpose.

Why Did the Courts Arrive at Different Conclusions Regarding the Nationwide Eviction Moratorium?

The answer appears to lie both with the authority of the government agency passing its moratorium and the nature of the legal challenges to the moratorium.

The Supreme Court’s Conclusion

The Supreme Court decided that the law relied on by the CDC did not grant to the CDC the broad authority necessary to impose its moratorium. Congress, not the CDC, has the authority to pass such a moratorium and Congress declined to do so. The Court believes that Congress is the proper governmental body to address this interest.

The Ninth Circuit’s Conclusion

The Ninth Circuit, on the other hand, found that Los Angeles had the authority to impose its moratorium and that the moratorium was a reasonable and appropriate means to address the health crisis raised by the COVID-19 pandemic. The plaintiff’s Contract Clause argument was held, in light of modern interpretation, to be inadequate to invalidate a moratorium intended to address a legitimate public health crisis.

Political Differences

Finally, it would be naïve to ignore the political views of the two courts. It is undeniable that the Supreme Court justices have a clear conservative majority. In contrast, 16 of the 29 judges of the Ninth Circuit are Democratic appointees. Although the balance tips by a single judge in the GOP’s favor when considering the 18 additional senior judges who participate on a part-time basis, the Ninth Circuit still retains its long-standing reputation as a liberal-leaning court.

What’s Next?

We will wait to see if individual states follow a similar argument as California for the underlying basis for enforcing an eviction moratorium and if, on appeal, other Circuits take a similar approach to upholding them. Based on the political makeup of the other Circuits, it may be that the moratoriums are struck down, leading to a new argument in front of the Supreme Court.

Questions about this article? Reach out to our team below.
Busted Construction Projects

Busted Construction Projects

Not all construction projects go as planned; construction projects are inherently risky.  A lender is literally providing funds to borrower who will “lego” together the

Too Regional to Fail? A 2023 Tale

Too Regional to Fail? A 2023 Tale

By the time I am publishing this article, there have been millions of words written about the failure of Silicon Valley Bank, why it failed, what controls it did or did not have, etc. Rather than focus on that, I would rather focus on the government’s actions post takeover, the timing, and everything in between.