Yim I and II: Big Changes to Washington Takings Law

Chong Yim v. City of Seattle, –Wn.2d–, 451 P.3d 675 (2019), also called Yim I, made headlines for its holding that Seattle’s first-in-time rule, which required landlords to rent to the first qualified applicant, was not facially unconstitutional. But it also made a huge change to Washington regulatory takings law by adopting the federal definition of regulatory takings set forth in Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 125 S. Ct. 2074, 161 L. Ed. 2d 876 (2005) and abrogating its own regulatory takings precedent to the extent that it is inconsistent with Chevron. Then, Chong Yim v. City of Seattle, –Wn.2d–, 451 P.3d 694 (2019), or Yim II, considered Washington substantive due process in the context of the first-in-time rule, and also concluded that Washington substantive due process law as it relates to real property should be the same as federal law.

If you’re new to constitutional law or takings law, that’s a lot to unpack. This blog post breaks down what these changes mean.

Facial Constitutional Challenges

When a plaintiff argues that a law is always unconstitutional and that it can never be applied in a constitutional way, that is referred to as a “facial” constitutional challenge because the law is said to be unconstitutional on its face. Plaintiffs can also argue that a law is unconstitutional “as applied,” i.e., that it is unconstitutional as it is being applied to them, but may be constitutional in other situations. But here, the plaintiffs only alleged that the first-in-time rule was facially unconstitutional.

Yim I

Article I, Section 16 of the Washington State Constitution prevents the taking of private property for public or private use without just compensation. This is referred to simply as a “taking” in legal jargon. There is a similar provision in the Fifth Amendment of the US Constitution (which applies to the states via the Fourteenth Amendment), but Yim I deals only with Washington takings law. The plaintiffs argued that the first-in-time rule was a per se regulatory taking, or in other words, that is was so burdensome it had the effect of a physical appropriation of the landlords’ properties.

The plaintiffs’ argument highlighted the numerous and growing rifts between Washington and federal regulatory takings law. Federally, a per se regulatory taking only occurs when either a regulation requires a permanent physical invasion of the property or when a regulation completely deprives a property owner of all economically beneficial use of the property. The plaintiffs argued that in Washington, a per se regulatory taking could also occur when a regulation destroys one or more of the fundamental attributes of ownership, such as the right to exclude others from your property. They acknowledged that this argument would not have succeeded under a federal takings analysis.

The Court then did something unexpected. It disavowed thirty years of its own precedent to the extent that it is inconsistent with federal takings law and held that Washington regulatory takings law is the same as federal regulatory takings law. With this sudden clarity, the Court had no qualms about finding the first-in-time ordinance to be constitutional on its face.

So, in Washington, as federally, regulatory taking is a per se taking when a regulation authorizes the permanent physical invasion of property or when a regulation completely deprives a landowner of all economic use of their property. If neither of these has occurred, a taking may also be found if there is a significant economic impact, especially to investment-backed expectations or if the regulation does not support the common good.

Yim II

Yim II addressed substantive due process as related to a taking of real property. Both in Washington and federally, due process is required before someone’s property can be taken from them. Generally, courts apply different levels of scrutiny to government action depending on which rights a plaintiff alleges have been infringed upon. If a government’s action infringes on a fundamental right, courts examine whether the infringement is narrowly tailored to serve a compelling government interest. This is called “strict scrutiny.” If the action does not infringe on a fundamental right, the challenged action must only be rationally related to a legitimate state interest. This is called “rational basis review.” (Intermediate scrutiny is applied in some contexts, mostly those related to speech and sex discrimination, but that is not at issue here.)

The plaintiffs argued that their substantive due process rights were violated by the enactment of the first-in-time rule. In particular, they argued that under Washington law, regulations affecting real property are subject to a heightened level of scrutiny somewhere between strict scrutiny and rational basis review. The plaintiffs cited previous Washington cases suggesting that a heightened standard applied, but again, no federal case law would have supported their argument.

Again, the Court abandoned its previous cases to the extent they are inconsistent with federal substantive due process law. The Court held that state law does not require heightened scrutiny for substantive due process challenges to laws regulating the use of property. Now, it is clear that rational basis review applies to these cases.

This means that in general, Washington courts will presume legislation regarding property regulation to be valid, and will uphold that legislation as long as it is rationally related to a legitimate state interest. Plaintiffs can defeat this standard in several ways, the most common being by showing that the action was arbitrary and capricious. However, since this is such a high burden on a plaintiff, we should expect to see fewer successful substantive due process challenges of land use regulations in Washington in the wake of Yim II.

Conclusion

Yim I and II are bigger than landlord tenant law. The facts that Washington regulatory takings law is now consistent with federal takings law and that in Washington there is no heightened scrutiny for substantive due process for regulations affecting real property are huge developments for Washington land use attorneys. Many previous cases would have turned out differently had this always been the case. We at Carmichael Clark, PS are ready to help our clients navigate these changes in regulatory takings law.