President's weekly report — December 18, 2015
Victory for contracting rights
This week, in DirectTV v. Imburgia, the Supreme Court overturned, again, a California rule limiting freedom of contract. You can read the decision here. California courts have had an unfortunate habit of throwing out arbitration clauses in contracts, despite ample Supreme Court precedent holding that state courts cannot toss out arbitration clauses in light of the Federal Arbitration Act. The signers of the arbitration clauses in this case also signed a clause saying that they would be bound by California law in interpreting the contracts. Because California courts had previously adopted a rule essentially negating arbitration clauses, the class action lawyers here argued that the arbitration clauses were void. But that argument was too clever by half — with the other half being the fact that the U.S. Supreme Court had previously thrown out California’s anti-arbitration rule. The lawyers’ attempt to bootstrap onto an invalid rule was rejected in this week’s opinion. In other words, the signers of the contracts are not going to be bound by a void and inoperative California rule against arbitration. Instead, they are bound by the terms of the contract that they actually signed. PLF filed an amicus brief supporting the freedom of contract. For more, see our blog post here.
Oral argument in economic liberty and free speech case
We had oral argument before the Eighth Circuit in Young v. Ricketts, our challenge to the Nebraska rule that forbids our client from posting online for sale by owner advertisements unless she obtains a real estate brokers license in that state. We’re arguing that Nebraska cannot restrict free speech by relabeling it as “professional conduct.” For more on this see our blog post here. You can listen to the argument here.
Housing subsidy mandates defended
Our challenge to the City of San Jose’s extortionate affordable housing mandates in California Building Industry Association v. City of San Jose continues. This week we received the briefs from the City and its supporters who are arguing, (here and here) that the housing subsidy ordinance is just an ordinary exercise of police power—the sort of everyday regulatory restriction that should evade constitutional scrutiny. According to them, the government should be allowed to demand that developers build new houses for low-income buyers without compensating the owners for lost income. We think this is simply a ruse to distract from the real cause of a shortage of affordable housing — the near impossibility of building any kind of housing development in the bay area without being saddled with extraordinary delays, reviews, and fees. The solution is not an unconstitutional piling on of even more fees and costs. Our blog post is here.
Procedural victory in air resources board waiver case
In this order issued today, the D.C. Circuit agreed with our argument that Dalton Trucking v. EPA should be argued in the 9th Circuit and not in the D.C. Circuit. The case involves our challenge to EPA’s grant of waiver from federal preemption under the Clean Air Act for the California Air Resources Board’s nonroad diesel engine rules, which established stringent emissions limitations for particulate matter and nitrogen oxides. Those CARB regulatory requirements, which cannot go into effect without EPA’s approval, have had and will continue to have devastating impacts on California’s trucking and construction firms, especially the smaller ones. Today’s decision sends the case to the Ninth Circuit instead of the D.C. Circuit. As strange as it may seem, it makes a lot more sense for this case to be heard in the Ninth — where the underlying issues are unfolding.