A property owner’s lawsuit against a San Francisco housing activist has been swatted down by the Ninth U.S. Circuit Court of Appeals. The court found, essentially, that the First Amendment protected the activist’s complaint about the property owners’ plans.

The owners of the Empress Hotel, in San Francisco’s tough Tenderloin district, filed the lawsuit. During the late 1970s, the city classified the Empress as a mixed-use hotel, with 58 tourist rooms and 30 residential rooms. Starting in the early 1980s, the Empress fell into disrepair, and it later closed for a number of years. Eventually, Vijay and Ramilaben Patel purchased the Empress from Vijay Patel’s parents. The new owners invested about $1.5 million to refurbish the facility for use as a tourist hotel and received permits from the city authorizing the tourist use.

However, Randall Shaw, executive director of the Tenderloin Housing Clinic, a nonprofit property management, social service and advocacy organization, protested the Patels’ plans. In a letter to the city’s zoning administrator, Shaw contended that the Empress’s tourist use had been abandoned and that, under the city’s ordinance, the Empress could reopen only for residential purposes. San Francisco has an extensive zoning scheme than seeks to preserve single-room occupancy hotels as affordable housing.

After investigating, Zoning Administrator Lawrence Badiner agreed with Shaw. Badiner concluded that the tourist use had been discontinued for more than three years and could be re-established only if the Patels complied with current regulations. Those regulations require development of replacement affordable housing units or the payment of in-lieu fees.

The Patels then sued the city, Badiner, Shaw and other parties under the Civil Rights Act (42 U.S.C. § 1983), arguing that the city and individual government officials had delegated zoning decisions to Shaw. District Court Judge Phyllis Hamilton dismissed the claims against everyone except Shaw. After the Patels amended their lawsuit, Hamilton ruled that Shaw’s actions were protected by the Noerr-Pennington doctrine and dismissed the lawsuit.

The Patels appealed the ruling for Shaw, and they won a minor victory at the Ninth Circuit. The three-judge appellate panel first ruled that Judge Hamilton incorrectly applied the “heightened pleading standard” to the Patels’ lawsuit. That standard requires the petitioner “to state with factual detail and particularity the basis for the claim.” Instead, the district court should have held the Patels to the lesser “notice pleading standard,” the Ninth Circuit ruled.

Nevertheless, even applying the more lenient standard, the Ninth Circuit ruled against the hotel owners.

“Under the Noerr-Pennington doctrine, those who petition all departments of the government for redress are generally immune from liability,” Judge Sidney Thomas wrote for the Ninth Circuit. “Although the Noerr-Pennington doctrine originally immunized individuals and entities from antitrust liability, Noerr-Pennington immunity now applies to claims under § 1983 that are based on the petitioning of public authorities.”

Thomas cited White v. Lee, 227 F.3d 1214, 1231: “Noerr-Pennington is a label for a form of First Amendment protection; to say that one does not have Noerr-Pennington immunity is to conclude that one’s petitioning activity is unprotected by the First Amendment.”

The Patels argued that Noerr-Pennington protection did not apply to Shaw because his activity was a sham and part of a conspiracy. The Ninth Circuit, however, ruled that the conspiracy exception to Noerr-Pennington could be applied only to government officials, not to private citizens. And, the court ruled, “[I]t appears beyond a doubt that they [the Patels] can prove no facts demonstrating that Shaw’s activities fall under the sham exception.”

The Ninth Circuit upheld the judgment against the Patels. But, because of its decision on the pleading standard, the Ninth Circuit reversed the lower court’s award of $13,109 in attorney fees to Shaw.

The Case:
Empress LLC v. City and County of San Francisco, No. 03-16706, 05 C.D.O.S. 7369, 2005 DJDAR 10081. Filed August 18, 2005.

The Lawyers:
For Empress: Andrew Zacks, (415) 956-8100.
For Tenderloin Housing Clinic: Stephen Collier, (415) 771-9850.