The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
:
I.B.I.D. ASSOCIATES LIMITED :
PARTNERSHIP d/b/a I.B.I.D. :
ASSOCIATES, L.P., INC., :
: Case No. 2:22-cv-00954-JDW
:
:
v. :
:
COUNCILMEMBER JAMIE :
GAUTHIER and THE CITY OF :
PHILADELPHIA, :
:
:
:
MEMORANDUM
Philadelphia City Council adopted two zoning laws that, taken together, target a
single parcel at 3900 Market Street for special treatment in an effort to prevent
redevelopment of an affordable housing site. The site’s owner, I.B.I.D. Associates Limited
Partnership, thinks the laws target it unfairly, so it channels Kent Brockman and tells the
Court, “Democracy simply doesn’t work.”1 But while there might be unseemly sides to the
democratic process, the reality is more Winston Churchill than Kent Brockman:
“Democracy is the worst form of government—except for all the others that have been
tried.”2 In a democracy, if a legislator like Councilmember Jamie Gauthier targets I.B.I.D.
1 (Fox television broadcast Feb. 5, 1995).
2 Churchill By Himself 574 (Richard Langworth, ed. 2011 reprint).
with legislation, I.B.I.D.’s remedy is generally at the ballot box, not in the courts. For that
reason, the Court will dismiss I.B.I.D.’s claims against Councilmember Gauthier and most
of its claims against the City of Philadelphia. However, the Court will permit I.B.I.D. to
pursue an equal protection claim against the City to try to show that the City treats it
differently than everyone else.
I. BACKGROUND
A. I.B.I.D.’s Property And The Overlay Laws
In 1982, I.B.I.D. acquired the property at 3900 Market Street (the “Property”). That
year, I.B.I.D. contracted with the Department of Housing and Urban Development for a
mortgage to construct townhomes on the Property and offer them at subsidized rents.
I.B.I.D. constructed 70 units and rented them pursuant to the terms of the HUD contract.
I.B.I.D.’s original HUD contract had a twenty-year term, and I.B.I.D. has renewed it several
times, most recently for a one-year term in April 2021. The Property is, and at all relevant
times has been, zoned CMX-4 (Core Commercial Mixed-Use) under the Philadelphia
Zoning Code, a designation that allows for high-density commercial office, research and
development, and residential uses.
Between September 2021 and March 2022, however, the Philadelphia City Council
introduced and passed the pair of zoning overlay laws (the “Overlay Laws”) that impact
the Property and are at issue in this case. According to I.B.I.D., the Overlay Laws resulted
from Councilmember Gauthier’s exercise of “councilmanic prerogative.” Under this
unwritten Philadelphia tradition, councilmembers who represent geographic districts
have final say on land-use decisions in their districts and other councilmembers vote along
with the preference of the member whose district is impacted by a particular land-use
decision.
First, the City enacted the Mixed-Income Neighborhoods Overlay District (the “MIN
Overlay”). This is a zoning overlay that applies in parts of West and North Philadelphia
and requires, with limited exceptions, any newly constructed “Residential Housing Project”
within its boundaries to maintain twenty percent of all dwelling and sleeping units as
affordable on the same site as all other dwelling and sleeping units. Phila. Code § 14-
533(1), (3). The Property is located within the MIN Overlay.
Second, Councilmember Gauthier introduced, and City Council passed by a 15-1
vote, the Affordable Housing Preservation Overlay District (the “AHP Overlay”). When
introduced, the AHP Overlay applied exclusively to the Property, but as amended, it
encompasses a single additional lot at 3901 Market Street. The AHP Overlay provides that
all non-residential uses must be on the ground floor of a building, and it imposes a twelve-
month demolition moratorium that applies only to the Property. Under the AHP Overlay,
after the demolition moratorium ends, a covered property’s owner may build a high-rise-
residential structure with commercial use on the first floor. Finally, nothing in the
Overlay Laws prevents the Property’s owner from continuing to rent the current units to
tenants or from selling them as townhomes.
According to I.B.I.D., Council’s adoption of the Overlay Laws had several procedural
irregularities. Councilmember Gauthier made a presentation to the Planning Commission,
which is “unusual.” (ECF No. 1, ¶ 65.) Then, Council’s Rules Committee considered the AHP
Overlay bill even though it did not attach zoning maps or provide substantive language
explaining the demolition moratorium, which according to I.B.I.D. deprived the public of
full notice of the bill’s consequences. During its pendency, Council adopted amendments
to the AHP Overlay bill without public presentation or debate.
B. Procedural History
On March 14, 2022, I.B.I.D. sued the City and Councilmember Gauthier alleging that
the Overlay Laws, and the process that led to their enactment, violate several provisions
of the Constitution. These provisions include the Takings, Equal Protection, Substantive
Due Process, and Contract Clauses, as well as the Constitution’s prohibition on bills of
attainder. Also on March 14, I.B.I.D. filed a motion for a temporary restraining order and
preliminary injunction. Two weeks later, the Court held a hearing and then denied the
TRO. On April 6, 2022, the Defendants filed a motion to dismiss. And on April 14, 2022,
the Court entered a scheduling order that set dates for a preliminary injunction hearing
and associated briefing.
Throughout April and into May, the Parties submitted briefing on both I.B.I.D.’s
preliminary injunction request and on the Defendants’ Motion to Dismiss. I.B.I.D. cabined
its request for a preliminary injunction to the taking claims contained in the
Complaint, and the Court denied I.B.I.D.’s request on May 27, 2022. The Court now turns
its attention to the Defendants’ Motion to Dismiss.
II. LEGAL STANDARD
A. 12(b)(1)
Federal Rule of Civil Procedure 12(b)(1) provides that a court may dismiss a
complaint for “lack of subject-matter jurisdiction.” Fed. R. Civ. P. 12(b)(1). A motion to
dismiss under Rule 12(b)(1) therefore challenges the power of a federal court to hear a
claim or case. , 462 F.3d 294, 302 (3d Cir.2006). Courts in
the Third Circuit have construed ripeness arguments as arising under Rule 12(b)(1).
, 603 F. Supp. 2d 780, 788 n.10 (M.D. Pa. 2009), aff'd, 380
F. App'x 155 (3d Cir. 2010).
In evaluating a Rule 12(b)(1) motion, a court must first determine whether the
movant presents a facial or factual attack.
, 678 F.3d 235, 243 (3d Cir. 2012). When “reviewing a facial
challenge, which contests the sufficiency of the pleadings, the court must only consider
the allegations of the complaint and documents referenced therein and attached thereto,
in the light most favorable to the plaintiff.” (internal quotations omitted). When
presented with a 12(b)(1) motion, it is the plaintiff who has the burden to “convince the
court it has jurisdiction.” , 220 F.3d 169, 178 (3d Cir. 2000).
Finally, a court may dismiss a claim under Rule 12(b)(1) only if it “clearly appears to be
immaterial and made solely for the purpose of obtaining jurisdiction” or is “wholly
insubstantial and frivolous.”
B. 12(b)(6)
A district court may dismiss a complaint for failure to state a claim upon which
relief can be granted. Fed. R. Civ. P. 12(b)(6). Rather than require detailed pleadings, the
“[r]ules demand only a short and plain statement of the claim showing that the pleader is
entitled to relief[.]” , 809 F.3d 780, 786 (3d Cir. 2016). “To
survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted
as true, to state a claim to relief that is plausible on its face.” . In determining whether a
claim is plausible, the court must “draw on its judicial experience and common sense.” .
First, the court must identify the elements needed to set forth a particular claim. . at 787.
Second, the court should identify conclusory allegations, such as legal conclusions, that
are not entitled to the presumption of truth. Third, with respect to well-pleaded factual
allegations, the court should accept those allegations as true and “determine whether
they plausibly give rise to an entitlement to relief.” . The court must “construe those
truths in the light most favorable to the plaintiff, and then draw all reasonable inferences
from them.” . at 790.
In determining whether the complaint states a claim for relief, “a court must
consider only the complaint, exhibits attached to the complaint, matters of public record,
as well as undisputedly authentic documents if the complainant’s claims are based upon
these documents.” , 605 F.3d 223, 230 (3d Cir. 2010). The court may also
consider documents that are integral to or explicitly relied upon in the complaint without
converting the motion to dismiss into a motion for summary judgment. ,
770 F.3d 241, 249 (3d Cir. 2014) (quotation omitted). “[W]hat is critical is whether the
claims in the complaint are ‘based’ on an extrinsic document and not merely whether the
extrinsic document was explicitly cited.” (quotation omitted) (alterations in original).
III. DISCUSSION
A. Ripeness
Facial challenges asserting that the “mere enactment of a regulation either
constitutes a taking without just compensation, or a substantive violation of due process
or equal protection” are ripe upon the enactment of the challenged ordinance.
, 442 F.3d 159, 164 (3d Cir. 2006). The Court reads
I.B.I.D.’s Complaint to assert a facial challenge. It complains about what the Overlay Bill
requires “on its face;” that “the Overlay Bill ‘goes too far’;” and that “the Overlay Bill
singles out the Property.” (ECF No. 1 at ¶¶ 95, 106, 111 (emphasis added).) Although the
City points to one paragraph discussing the effects of the bill “as applied to I.B.I.D.” (ECF
No. 1 at ¶ 99), that paragraph does not negate the overall context of the Complaint.
Because I.B.I.D. asserts that any application of the regulation is unconstitutional, its claims
are ripe for adjudication.
B. Immunity
Absolute immunity applies to official actions taken “in the sphere of legitimate
legislative activity” and shields legislators when they perform legislative functions.
, 523 U.S. 44, 54-55 (1998). The immunity includes “an entitlement not to
stand trial.” , 472 U.S. 511, 526 (1985). “[D]rafting, introducing, debating,
passing, or rejecting legislation” are examples of legislative functions that legislative
immunity protects. , 481 F.3d 187, 196 (3d Cir. 2007). And “acts of
voting for an ordinance [are], in form, quintessentially legislative.” , 523 U.S. at 55.
In determining whether legislators are acting legislatively, a court need only
consider the nature of the act. , 991 F.3d 180,
190-91 (3d Cir. 2021). Courts in the Third Circuit “making the determination of whether a
particular action was procedurally legislative or not … need only be satisfied that the
municipal body is acting pursuant to the basic legislative procedure.” ,
40 F.3d 597, 614 (3d Cir. 1994). “[F]ailure of the legislative body to follow state-mandated
procedures does not mean that, as a matter of federal law, the resulting action is
transformed from one that is procedurally legislative into one that is not.”
Councilmember Gauthier is entitled to legislative immunity for her role in the
introduction and enactment of the Overlay Laws. Her drafting, proposing, and voting for
the zoning overlay ordinances are examples of quintessentially legislative activity. Neither
her use of councilmanic prerogative nor any of the alleged procedural deficiencies
associated with the Rules Committee’s public hearing changes that fact.
Councilmanic prerogative it is not an “ultra vires” action, as I.B.I.D. contends. (ECF
No. 1 at ¶ 90). It’s just a longstanding, informal agreement among councilmembers to
support the land use legislation that each may propose within their respective districts.
As with any proposed legislation, when a councilmember invokes councilmanic
prerogative to pass legislation, no formal barrier prevents another councilmember from
supporting or opposing the proposed legislation. Councilmanic prerogative is just part of
the bargaining process among legislators, within the sphere of legitimate legislative
activity. (The Court expresses no opinion on the exercise of councilmanic prerogative
when legislation is not involved.)
As for the public hearing, nothing I.B.I.D. alleges would remove the shield provided
by legislative immunity. Even if the City Council Rules Committee held a public hearing
that was procedurally deficient by its own standards, nothing transforms Council’s actions
from ones that are procedurally legislative into ones that are not. Even if these deficiencies
were of the kind that would destroy legislative immunity, I.B.I.D. has not alleged why
Councilmember Gauthier is responsible for the Rules Committee’s actions.
Because Councilmember Gauthier is a legislator who was acting within the sphere
of legitimate legislative activity, she is entitled to absolute immunity for her actions
involving the Overlay Laws. That is true even if, as seems to be the case, she singled out
I.B.I.D. for special treatment. If I.B.I.D. thinks Councilmember Gauthier mistreated it, it must
make that case to voters, not to the Court. Having found that legislative immunity applies,
the Court will not address whether Councilmember Gauthier is also entitled to qualified
immunity for her actions. Accordingly, the Court will dismiss each of I.B.I.D.’s claims
against the Councilmember.
C. Plausibility
1. Takings
I.B.I.D. asserts both and regulatory takings claims. When the Court denied
I.B.I.D.’s preliminary injunction motion, it held that I.B.I.D. was not likely to succeed on its
takings claims. ( ECF No. 33.) For the same reasons, the Court also finds I.B.I.D.
has not stated a plausible taking claim. I.B.I.D. also asserts a regulatory takings claim
under , 438 U.S. 104 (1978). But it doesn’t defend
that claim in its Opposition, even though the City devoted several pages to the issue in
its opening Memorandum. When a plaintiff does not respond to a portion of a motion to
dismiss, courts treat that portion of the motion as unopposed. ,
, Civ. A. No. 20-5145, 2022 WL 837207, at * 2 (E.D. Pa. March 21, 2022);
, No. 18-cv-1675, 2018 WL 5839701, at * 2 (E.D. Pa. Nov. 8,
2018); , Civ. A. No. 08-cv-4754, 2009 WL 3217183, at * 10 (E.D.
Pa. Sept. 30, 2009); , -- F. Supp.3d --, 2022 WL 1557779, at *
15 (E.D. Pa. May 17, 2022) (same for summary judgment). Because I.B.I.D. did not respond
to the City’s argument about its takings claim, the Court treats that argument
as unopposed and will dismiss it.
2. Bill of attainder
Although I.B.I.D. claims in the Complaint that the Overlay Laws constitute Bills of
Attainder, they do not defend that claim in the face of the City’s Motion. So the Court will
treat the argument as unopposed and dismiss the Bill of Attainder claim.
3. Equal protection
The Fourteenth Amendment dictates that a state may not “deny to any person
within its jurisdiction the equal protection of the laws.” U.S. Const. amend. XIV. “The
purpose of the equal protection clause of the Fourteenth Amendment is to secure every
person within the State's jurisdiction against intentional and arbitrary discrimination,
whether occasioned by express terms of a statute or by its improper execution through
duly constituted agents.” , 528 U.S. 562, 564 (2000) (internal
quotations and citations omitted).
A plaintiff may assert a ‘class of one’ Equal Protection challenge, where the plaintiff
alleges that it, “and not a particular group, was the subject of discriminatory treatment
under a particular law.” , 705 F.3d 91, 114 (3d Cir. 2013). When
bringing a ‘class of one’ claim, the Third Circuit requires the plaintiff to allege “that she
has been intentionally treated differently from others similarly situated and that there is
no rational basis for the difference in treatment.” , 553
U.S. 591, 601-02 (2008); , 705 F.3d 91, 114 (3d Cir. 2013).
Under this theory, the plaintiff must allege three elements: "(1) the defendant treated [it]
differently from others similarly situated, (2) the defendant did so intentionally, and (3)
there was no rational basis for the difference in treatment." ,
455 F.3d 225, 239 (3d Cir. 2006). “Even if the underlying legislation is rational, a class of
one plaintiff may make out a claim if the defendant has no rational basis to enforce the
law selectively.”
, 376 F. Supp. 3d 476, 507 (E.D. Pa. 2019), .
, 808 F. App'x 86 (3d
Cir. 2020); , Civ. A. No. 08-
2429, 2008 WL 4399025, at *7 (E.D. Pa. Sept. 25, 2008).
I.B.I.D.’s Complaint alleges all three required elements. First, I.B.I.D. refers to
adjacent properties as well as to others “in the community and City whose use includes
affordable housing.” (ECF No. 1 at ¶ 112.) The City demands more specificity, but the
Federal Rules don’t require it. The City can learn about the properties in discovery and try
to distinguish them in a summary judgment motion. Second, as originally written, the AHP
Overlay applied exclusively to I.B.I.D.’s property, and as amended, it only encompasses a
single additional lot. Its history and structure demonstrate that Council intended the
Overlay Laws to treat I.B.I.D. differently. Third, even though the Overlay Laws might have
the legitimate purpose of preserving affordable housing, only I.B.I.D.’s property is subject
to the full panoply of restrictions in those laws. The City provides no reason for that
different treatment. Construed in the light most favorable to I.B.I.D., the same concerns
that sustain an Equal Protection claim when the government selectively enforces rational
legislation against a single party also support a claim when what would otherwise be
rational legislation selectively targets a party.
4. Substantive due process
When evaluating a substantive due process challenge, a court must first determine
whether the challenged act is legislative in character. Courts review non-legislative acts
under a “shocks the conscious” standard, but legislative acts must be “rationally related
to some legitimate government purpose.” , 227 F.3d
133, 142 (3d Cir. 2000). Legislative acts include a municipal body’s recommendation or
vote “for a change in the permitted uses in a zoning district.” , 442
F.3d at 169. Even if a zoning ordinance only impacts one entity, it is still a legislative act
subject to rational basis review. 169-70. And when a court engages in rational
basis review, it “is not entitled to second guess the legislature on the factual assumptions
or policy considerations underlying the statute.”
, 66 F.3d 639, 645 (3d Cir. 1995).
I.B.I.D. fails to allege facts that would allow the Court to conclude the Overlay Laws
violate substantive due process. The laws are legislative in character. They concern
changes in the permitted uses in the CMX-4 zoning district, and Council adopted them
via the legislative process. I.B.I.D. has not alleged that the introduction of or vote for the
laws violated any rules. Thus, the Overlay Laws are subject to rational basis review. Per
that standard, the changes are rationally related to the preservation of affordable housing
in Philadelphia, a legitimate governmental purpose.
I.B.I.D.’s arguments that the Overlay Laws violate substantive due process do not
comport with precedent and once again attempt to delve into the hotdog-making of the
legislative process. This is not a situation where I.B.I.D. satisfied established criteria for
development approval but was nevertheless rejected, as in
, 205 F.3d 118, 123-25 (3d Cir. 2000), nor are the Overlay Laws “unrelated to
land use planning,” as in , 442 F.3d at 170. I.B.I.D.’s reliance on
, Civ. A. No. 2:20-cv-16346, 2021
WL 1050230 (D.N.J. Mar. 19, 2021), is also misplaced because that case considered a
zoning ordinance that impeded a landowner’s “only economically viable business model.”
at * 2. I.B.I.D., in contrast, has an economically viable business model for its property,
even if it is not the most valuable business model. Finally, just because I.B.I.D. can point
to alternative methods by which the City could achieve its affordable housing goals, the
Court may not second guess the factual assumptions or policy considerations that
motivated City Council to vote for the Overlay Laws. Thus, even if all of I.B.I.D.’s allegations
are true, they do not support a plausible violation of substantive due process, so the Court
will dismiss this claim.
5. Contract Clause
The Contract Clause provides that no state shall pass any law “impairing the
Obligation of Contracts.” U.S. Const. art. I, § 10. The Clause only applies where a change
in law substantially thwarts a party’s legitimate expectations that arise from a contractual
relationship. , 145 F.3d 619, 621 (3d
Cir. 1998). “Contract Clause analysis requires three threshold inquiries: (1) whether there
is a contractual relationship; (2) whether a change in a law has impaired that contractual
relationship; and (3) whether the impairment is substantial.” (citations omitted).
I.B.I.D. has identified a contractual relationship, the 2021 HUD Contract. But the
Overlay Laws don’t impair that relationship. I.B.I.D. bases its argument on the termination
provision in the 2021 HUD Contract, a provision that gives I.B.I.D. the option to terminate
the agreement. The Overlay Laws do not forbid I.B.I.D. from exercising that option; they
just make it financially unpalatable to do so. That is, through the Overlay Laws, Council
applied economic pressure to force I.B.I.D. to refrain from the exercise of its termination
rights under the 2021 HUD Contract. But the application of economic pressure does not
constitute “impairment” of a contract under the Contract Clause. Because the Overlay Bills
leave I.B.I.D.’s contractual terms intact, they do not violate the Contract Clause. That is true
even if they undermine I.B.I.D.’s expectations about the value of its rights under the 2021
HUD Contract.
IV. CONCLUSION
As I.B.I.D.’s claims are ripe, the Court has subject matter jurisdiction, so it will not
grant the Defendants’ motion to dismiss on that basis. Councilmember Gauthier,
however, is entitled to legislative immunity, so the Court will dismiss all claims against
her. Against the City, I.B.I.D. has an equal protection, class-of-one claim, but the Court
will dismiss the rest of I.B.I.D.’s claims. An appropriate Order follows.
BY THE COURT:
HON. JOSHUA D. WOLSON
United States District Judge
July 22, 2022