Supreme Court Declines to Hear Landlords’ Case Seeking to End Rent Control

The Supreme Court will not take up the latest attempt by landlord lobbyists to upend New York City’s 50-year-old rent control laws. But two other related cases may yet make it to the highest court.

The court denied the petition for writ of certiorari—a formal request to review a lower court decision—on Monday morning. The request was filed in May by Community Housing Improvement Program, a lobby for landlords with rent stabilized units, that argued that NYC’s 50-year-old rent control law violated their rights under the Fifth Amendment’s Takings Clause, which says that private property can not be “taken for public use, without just compensation.” The landlords believe that the Rent Stabilization Law’s requirement of lease renewal violates this clause. They were joined by individual building owners and the Rent Stabilization Association, another landlord lobby that represents owners of rent-stabilized units.

CHIP filed its initial lawsuit in the Eastern District for New York in July 2019 shortly after landmark rent reforms called the Housing Stability Tenant Protection Act (HSTPA) passed, which made it harder to deregulate units. CHIP and RSA, in response, argued that the underlying rent control law was unconstitutional to begin with.

“The law is not constitutional and punishes hard working tenants and small landlords alike. Allowing it to continue to harm New York is no longer acceptable,” RSA president Joseph Strasburg argued at the time.

When lower courts did not take up the complaint—on the basis that landlords had entered leases willingly—landlords asked the Supreme Court to review the case in May. CHIP argued that rent control forces landlords to subsidize tenants and provide a public benefit which should be provided by the government, something that Justices Scalia and O’Connor argued should not be the case in a 1988 dissent in a case regarding rent control in San Jose.

While the Supreme Court’s decision not to take up the CHIP and RSA petition marks the end of that particular petition, there are several more petitions to overturn the city’s rent laws that the Supreme Court could still take up. 74 Pinehurst LLC, a firm that, according to OpenIgloo, owns two properties in Manhattan, asked the Supreme Court to hear its case in May.

According to that petition, the petitioners own small apartment buildings and have no parent company. (This contrasts it with the RSA and CHIP which, while often invoking “mom and pop” landlords, also represent owners with hundreds of rent-stabilized properties). While it’s a separate complaint to the CHIP and RSA petition, both cases were rejected by the Second Circuit in the same opinion in February. Two high-profile libertarian think tanks—the Cato Institute and the Manhattan Institute—filed a joint amicus brief in support of the 74 Pinehurst LLC petition, arguing that the Supreme Court could resolve a split in the opinion between the Second and Eighth Circuits.

Another petition to the court filed in May is by 335-7 LLC, again arguing the Rent Stabilization Law violates the constitution’s takings clause. The petitioners in that case describe themselves as “the owners of small and midsize apartment buildings in New York City,” and own three properties in the West Village and Chelsea, according to OpenIgloo.  Both remaining cases were re-listed by the court for discussion on October 6, and an order could come on October 10.

In a press release, Jeff Hauser of the nonprofit Revolving Door Project argued that Supreme Court Justice Clarence Thomas should recuse himself from the two cases that could still go before the court, on the basis that a real estate lobbying group associated with his friend Harlan Crow had filed an amicus brief supporting the cases in a lower court.

“We call on Thomas to immediately recuse himself from two additional challenges to New York City’s rent control law relisted for the October 6th conference by the Court: 74 Pinehurst LLC v. New York (22-1130) and 335-7 LLC v. City of New York,” Hauser wrote. "Crow’s interest in these cases is unambiguous, as is the depth of Thomas’ relationship with his patron Crow.”