On February 24, 2021, five New York landlords filed a complaint in federal court, alleging that Part A of the state’s COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020 (the “Act”) violates their constitutional rights (Chrysafis, et al. v. James, Case No. 2:21-cv-00998). The suit challenges the extended statewide eviction moratorium and hardship declaration components of the Act on First Amendment and due process grounds. The landlord plaintiffs, whose tenants have refused to vacate or pay rent, have asked the court to declare the Act unconstitutional and to bar New York Attorney General Letitia James from enforcing the hardship declaration requirement, which allows tenants facing pandemic-related financial challenges (or for whom eviction would create a “significant health risk”) to stay their own eviction proceedings until May 1, 2021.
The complaint, filed in the Eastern District of New York, sets forth numerous claims arising under both the U.S. Constitution and the New York State Constitution. In particular, the plaintiffs assert that the Act:
As of March 4, 2021, New York State had not filed an answer to the complaint and the court had not yet addressed the plaintiffs’ accompanying request for a temporary restraining order and preliminary injunction.
We will continue to monitor this case and related developments, including a recent decision coming out of the Eastern District of Texas in a similar lawsuit brought by small property owners in September 2020. Their complaint alleged that the U.S. Centers for Disease Control and Prevention (CDC) issued a nationwide eviction moratorium order (the “Order”) that unconstitutionally deprived the plaintiffs of their property rights. The Order, which the CDC issued on September 4, 2020, makes it a crime for landlords to remove individual tenants with limited or no housing alternatives who (a) expect to earn less than $99,000 in 2021 (or $198,000, for joint tax return filers); (b) were not required to report income in 2020; or (c) received a stimulus check last year under the Coronavirus Aid, Relief and Economic Security (CARES) Act. For its part, the CDC has maintained that the Order is a valid exercise of the federal authority Congress granted to the organization to enact public health measures in the wake of COVID-19. An eviction freeze, in the CDC’s view, would help reduce the number of evicted people who may travel across state lines and spread the coronavirus.
But on February 25, 2021, U.S. District Judge John Barker rejected the CDC’s public health arguments (Lauren Terkel, et al. v. Centers for Disease Control and Prevention, et al., E.D. Tex., Case No. 6:20-cv-00564). The court instead found the Order unconstitutional, citing its view that Congress, and by extension the CDC, lacked the requisite authority under the Commerce Clause and the Necessary and Proper Clause to ban evictions nationwide. In so ruling, Barker described the Order as an impermissible intrusion into real estate, which he labeled an “inherently local” domain: “Residential buildings do not move across state lines, and eviction is fundamentally the vindication of the property owner’s possessory interest.”
Judge Barker ultimately stopped short of granting the plaintiffs’ motion for a preliminary injunction, so the Order will remain in place until March 31, 2021. But he shared an expectation consistent with his ruling that the CDC would withdraw its Order. Meanwhile, the U.S. Department of Justice (DOJ) intends to appeal the decision, which decision also conflicts directly with one that the Western District of Louisiana—another of the Fifth Circuit district courts—reached in December.
In Chambless Enterprises, LLC. v. Redfield (2020 WL 7588849, W.D. La. Dec. 22, 2020), the court, faced with plaintiffs’ contention that Congress had impermissibly delegated its lawmaking authority by empowering the CDC to ban evictions, rejected outright the Commerce Clause argument that underpins Terkel: “The Supreme Court has explicitly held that the commercial activity regulated here—‘rental of real estate’—is ‘unquestionably’ an activity that substantially affects interstate commerce” (Russell v. United States, 471 U.S. 858, 862 (1985)). Judge Doughty instead found that the CDC, in issuing its Order, acted with authority properly delegated to it by Congress. Notably, in yet another case, the Northern District of Georgia ruled along those same lines of administrative law in October 2020 to uphold the CDC’s Order in Brown v. Azar (No. 1:20-CV-03702-JPB, N.D. Ga. Oct. 29, 2020).
The DOJ’s appeal or a potential extension of the Order by President Biden notwithstanding, the conflict between Chambless and Terkel alone raises a strong possibility of review by the Court of Appeals for the Fifth Circuit. And while it rests primarily on constitutional arguments distinct from those the plaintiffs advanced in Brown and Chambless as discussed above, the Terkel case marks a departure from federal court decisions favorable to the Order—creating more for the Supreme Court to consider should the Order reach its docket. We will continue to assess these cases and will provide further updates as they become available.
Michael Machado, a Law Clerk in our New York office, contributed to the writing of this alert.