Case: 17-14254 Date Filed: 12/28/2018 Page: 1 of 23
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT ________________________
No. 17-14254 ________________________
D.C. Docket No. 6:16-cv-01005-RBD-GJK
OVIEDO TOWN CENTER II, L.L.L.P., a Florida Limited Liability Partnership, OVIEDO LHC I, L.L.C., a Florida Limited Liability Company, OVIEDO LHC II, L.L.C., a Florida Limited Liability Company, OVIEDO LHC III, L.L.C., a Florida Limited Liability Company, OVIEDO LHC IV, L.L.C., a Florida Limited Liability Company, OVIEDO TOWN CENTRE DEVELOPMENT GROUP, L.L.L.P., a Florida Limited Liability Partnership, OVIEDO TOWN CENTRE II PARTNERS, L.L.L.P., a Florida Limited Liability Partnership, OVIEDO TOWN CENTRE III, L.L.L.P., a Florida Limited Liability Partnership, OVIEDO TOWN CENTRE IV, L.L.L.P., a Florida Limited Liability Partnership, ATLANTIC HOUSING PARTNERS L.L.L.P., a Florida Limited Liability Partnership, CONCORD MANAGEMENT, LTD., a Florida Limited Partnership, SOUTH FORK FINANCIAL, L.L.C., CPG CONSTRUCTION, L.L.L.P., a Florida Limited Liability Partnership, Case: 17-14254 Date Filed: 12/28/2018 Page: 2 of 23
Plaintiffs - Appellants,
versus
CITY OF OVIEDO, FLORIDA,
Defendant - Appellee.
________________________
Appeal from the United States District Court for the Middle District of Florida ________________________
(December 28, 2018)
Before TJOFLAT, MARCUS, and NEWSOM, Circuit Judges.
PER CURIAM:
In this case, several real estate developers allege that skyrocketing water and
sewage bills have violated their rights to due process under the Fourteenth
Amendment and have brought the low-income housing complex they operate in
Oviedo, Florida to the brink of insolvency in violation of federal and state fair
housing laws. The developers claim that the City of Oviedo (“the City”)
unlawfully changed its utility rate policies in late 2012 and early 2013. The
developers brought their claims under the Fair Housing Act and the equivalent
Florida statute, urging that the rate increases cause a disparate impact on
minorities. They also leveled a due process claim under § 1983. The City argued,
however, that the rate increase essentially brought utility bills for appellants’
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complex, the Oviedo Town Center (“OTC”), in line with those being sent to the
rest of Oviedo.
The district court ruled for the City on all claims, granting summary
judgment to the City on the housing law claims and dismissing the § 1983 claim.
We agree. On this record, the appellants have failed to establish a prima facie case
of disparate impact under the Fair Housing Act or the Florida Fair Housing Act.
And they have failed to state a claim under § 1983 because the complaint itself
provides rational bases for the rate increases.
I.
The Oviedo Town Center is an affordable-housing apartment complex
located within the City of Oviedo. The appellants are 13 companies involved in
developing and managing the OTC. They received funding for the OTC through
“federal tax-exempt bond and tax credit resources” provided through the Orange
County Housing Finance Authority and the Florida Housing Finance Corporation.
These funding sources came with conditions: 70% of the units would have to be set
aside for tenants at or below 60% of the Area Median Income. The developers
agreed to these resident eligibility restrictions and, correspondingly, to limits on
how much their tenants could be charged.
Construction of the OTC was completed in 2008. It comprises twelve
buildings -- eight are residential and these are divided into 236 separate units.
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Each of the twelve buildings was connected to the City’s water distribution system,
and meters were installed to measure water usage. Each building had a master
meter that could measure how much water was used throughout a building, and
residential units had sub-meters that could measure each unit’s individual water
usage as well. The sub-metering of individual units was another requirement
placed on the OTC by its bond financing.
The terms of the OTC’s financing also constrained how rent and utility
billing would be structured. The developers had two options: if they paid the
OTC’s water and sewage bills, rather than passing them on to the tenants, they
would be free to charge tenants the total amount of gross rent permissible under
their funding agreements. Alternatively, the developers could pass along the water
and sewage bills to their tenants, but if they did this, they would be required to
reduce the tenants’ monthly rental fees in the amount of a “utility allowance,”
which would be “calculated and approved on an annual basis” by the State.
Essentially, the developers could charge more in rent if they paid the utility bills
themselves.
There are two components to a monthly water bill assessed by the City.
Bills are comprised of a flat base fee charge plus a variable usage charge based on
actual water usage. OVIEDO, FLA., ORDINANCES ch. 54, art. II, § 54-23. The
Oviedo City Council sets base fees by resolution. Id. From 2008 through 2012,
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the City charged the OTC base fees pegged to the number of master meters in the
complex (twelve), rather than based on the number of sub-meters (236). This
meant that each month, the OTC collectively was billed in an amount
corresponding to its actual water usage plus twelve base fees, notwithstanding the
fact that it included 236 units. The City says that billing in this way was a mistake,
and that its longstanding practice had always been to bill multi-family master-
metered complexes on a per-unit basis. The developers’ claims arose out of a City
policy revision that resulted in their being charged per-unit.
In June 2011, the City contracted with a third-party consultant, Public
Resources Management Group, and commissioned a “revenue sufficiency and rate
study” that would evaluate the City’s utility services (the “2012 Study”). One
reason why the study was commissioned was that in 2009 the City had acquired a
new wastewater and reclaimed utility system and wanted to ensure it had
“adequate operational, capital funding and reserve funding of that system.” Other
goals identified in the study included that “rates should be based on full cost
recovery principles,” that “rates should be fair and reasonable,” and that “rates
should promote financial sustainability and creditworthiness.”
In December 2012, the City passed Resolution 2576-12 (the “2012
Resolution”), which set new utility rates based on the results of the 2012 Study.
The 2012 Resolution distinguished residential and commercial customers, as
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previous rate-setting resolutions had, but, notably, also added a new subcategory of
“master-metered multi-family” under the residential category, thus differentiating
single-family residential properties from master-metered multi-family residential
properties like the OTC. Under the new policy (the “2012 Policy”), master-
metered multi-family residences would be assessed base charges on a per-unit
basis under the 2012 Resolution. Shortly after passing the Resolution, the City
conducted an internal audit of its customer base and realized that it had been
“incorrectly” billing OTC by master meter instead of on a per-unit basis.
According to the City it had, since 1992, billed multi-metered facilities on a per-
unit basis, but it could not point to a written policy establishing this.
In 2013, the City began charging the Oviedo Town Center utility base rates
on a per-unit basis. This meant that instead of twelve base unit charges, the OTC
was charged 236 base unit charges -- one for each individual unit. The developers
asked the City to grant them an exception from the per-unit charge policy, but the
City said no.
This lawsuit followed. The appellants sued the City in the U.S. District
Court for the Middle District of Florida on June 9, 2016, seeking damages and
injunctive relief in four counts under the Fair Housing Act (“FHA”), 42 U.S.C. §§
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3604 and 3613, and the Florida Fair Housing Act 1 (“FFHA”), Fla. Stat. §§ 760.23
and 760.35 (collectively “the FHA claims”). The City moved to dismiss, the
appellants amended their complaint, and the City moved to dismiss again. The
motion was denied.
On April 18, 2017, the OTC filed a Second Amended Complaint (for our
purposes the operative complaint). The four FHA claims remained. The
appellants claimed that the City had increased the OTC’s base charge by over
2,000%, an increase that, they said, would make it impossible for the OTC to
continue operating as an affordable housing community if the City did not grant an
exception. The appellants did not challenge the 2012 Policy or the 2012
Resolution as a whole, but simply the City’s refusal to grant a requested exception
for the OTC. According to the appellants, the Policy would have “a clear and
negative disparate impact on protected classes, denying them their rights to
housing” because most “Heads of Households in the [OTC] are racial minorities.”
Moreover, the developers claimed that they too would be injured because the terms
of their funding prevented them from raising rents enough to keep pace with their
increased utility bills. The appellants said that it would be financially impossible
for the OTC to operate and, therefore, they would “be unable to continue to receive
1 “The Florida Fair Housing Act contains statutory provisions that are substantively identical to the federal Fair Housing Act.” Loren v. Sasser, 309 F.3d 1296, 1299 n.9 (11th Cir. 2002). 7 Case: 17-14254 Date Filed: 12/28/2018 Page: 8 of 23
the benefits of the various agreements they have entered into relating to the
operation of the [OTC].”
The Second Amended Complaint added a claim under § 1983, alleging that
“[t]he [2012] Policy and the City’s process of implementing the [2012] Policy,
deprived Plaintiffs of their due process interests under the Fourteenth
Amendment.” The appellants charged that “[t]he [2012] Policy is largely
inconsistent with the Report on which [it] was to be based,” that the charges
imposed by the 2012 Policy “are neither pro-rata nor relevant to the City’s costs
upon which the charges are intended to cover,” and, most fundamentally, that
“[t]here is no rational nexus for the charges imposed on Plaintiffs by way of the
Policy.” In supplemental briefing the developers urged that the City had violated
“a state-created right to be free from fees imposed by a municipality (i) that exceed
the pro rata share of the reasonably anticipated costs with respect to the purpose of
the fee, or (ii) that are otherwise unreasonably excessive as to deny the property
owner all reasonable use of the property.”
The appellants moved for summary judgment on the fair housing claims
only; the City in turn moved the district court for dismissal of the new § 1983
claim along with an application for summary judgment on all claims. The district
court ruled across the board for the City -- dismissing the § 1983 claim and
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granting final summary judgment to the City on the FHA claims. This timely
appeal followed.
II.
“We review the grant or denial of a motion for summary judgment de novo.
In so doing we draw all inferences and review all evidence in the light most
favorable to the non-moving party.” Mais v. Gulf Coast Collection Bureau, Inc.,
768 F.3d 1110, 1119 (11th Cir. 2014) (citation omitted). We will affirm if “there is
no genuine dispute as to any material fact and the movant is entitled to judgment as
a matter of law.” Fed. R. Civ. P. 56(a). Both parties had moved for summary
judgment here, but the presence of cross motions does not affect our standard of
review. See, e.g., Ft. Lauderdale Food Not Bombs v. City of Ft. Lauderdale, 901
F.3d 1235, 1239 (11th Cir. 2018).
We also review de novo a district court’s dismissal of a claim, accepting the
factual allegations in the complaint as true and construing them in a light most
favorable to the plaintiff. Boyd v. Warden, 856 F.3d 853, 863–64 (11th Cir. 2017).
In order 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. . . . Determining [this] is a context-specific task that requires the reviewing
court to draw on its judicial experience and common sense.” Id. at 864 (citations,
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alterations, and quotations omitted). “We also review questions of constitutional
law de novo.” Kentner v. City of Sanibel, 750 F.3d 1274, 1278 (11th Cir. 2014).
III.
The district court offered three independent reasons why the City was
entitled to summary judgment on the FHA claims. First, the developers had not
demonstrated that their injuries were proximately caused by the 2012 Policy.
Second, and even more basic, even if they had established proximate cause the
developers had not made out a prima facie case of disparate impact on racial
minorities. Finally, even if proximate cause and a prima facie case had been
established, the appellants failed to rebut the City’s “legitimate, nondiscriminatory
interest in implementing the 2012 Policy.” Because we agree that the appellants
failed to establish a prima facie case of disparate impact, we affirm on those
grounds; we therefore have no occasion to address the other reasons offered by the
district court.
In the course of filing an FHA action, “[a] plaintiff can demonstrate a
discriminatory effect in two ways: it can demonstrate that [a defendant’s] decision
has a segregative effect or that it makes housing options significantly more
restrictive for members of a protected group than for persons outside that group.”
Hallmark Developers, Inc. v. Fulton Cty., Ga., 466 F.3d 1276, 1286 (11th Cir.
2006) (quotations omitted). Here, the appellants only relied on the second theory.
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They argued that “[t]he [OTC] cannot remain economically viable if the City
continues to impose the additional base charges” and that “[t]he majority of the
Heads of Households in the [OTC] are racial minorities.” Consequently, “if the
City does not make an exception to the Policy there will be a clear and negative
disparate impact on protected classes, denying them their rights to housing.” In
order to establish disparate impact, the appellants presented a survey and census
data showing that the percentage of racial minority heads of households in the
OTC is greater than the percentage of racial minority households throughout the
City of Oviedo. That was the extent of their proffer.
In 2015, when the Supreme Court confirmed for the first time that disparate
impact claims are cognizable under the FHA, it promulgated detailed causation
requirements as a means of cabining disparate-impact liability. Thus, in Texas
Department of Housing and Community Affairs v. Inclusive Communities Project,
Inc., 135 S. Ct. 2507 (2015), the Court considered a Texas nonprofit corporation’s
allegation that a state agency responsible for distributing federal low-income
housing tax credits had done so in a manner that “caused continued segregated
housing patterns by its disproportionate allocation of the tax credits.” Id. at 2514
(alleging that there were “too many credits for housing in predominantly black
inner-city areas and too few in predominantly white suburban neighborhoods”).
Disparate-impact liability, the Court explained “is consistent with the FHA’s
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central purpose” of eliminating discrimination, since it can help ameliorate
practices that unfairly exclude minorities from certain neighborhoods, can protect
property rights, and can help uncover discriminatory intent. Id. at 2521; see id. at
2521–22.
This theory of liability, however, would create substantial difficulties if
applied too expansively. Specifically, the Court wrote, “serious constitutional
questions . . . might arise . . . if such liability were imposed based solely on a
showing of a statistical disparity.” Id. at 2522. If a disparate impact claim could
be founded on nothing more than a showing that a policy impacted more members
of a protected class than non-members of protected classes, disparate-impact
liability undeniably would overburden cities and developers. See id. at 2522–23.
The Court explained that it was important to allow “housing authorities and private
developers . . . to maintain a policy [that might implicate the FHA] if they can
prove it is necessary to achieve a valid interest.” Id. at 2523; see id. at 2522–23
(drawing a comparison to Title VII’s business necessity standard). Because “[t]he
FHA is not an instrument to force housing authorities to reorder their priorities,”
id. at 2522, and because it “does not decree a particular vision of urban
development,” id. at 2523, “[c]ourts should avoid interpreting disparate-impact
liability to be so expansive as to inject racial considerations into every housing
decision,” id. at 2524.
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The Supreme Court’s solution was to impose “[a] robust causality
requirement ensur[ing] that ‘[r]acial imbalance . . . does not, without more,
establish a prima facie case of disparate impact.’” Id. at 2523 (quoting Wards
Cove Packing Co. v. Atonio, 490 U.S. 642, 653 (1989) (alteration in original),
superseded by statute on other grounds, 42 U.S.C. § 2000e-2(k)). Without this
kind of requirement, a disparate impact claim could be leveled whenever a city or a
developer decided “to build low-income housing in a blighted inner-city
neighborhood instead of a suburb, . . . or vice versa,” because disproportionate
numbers of members of racial minorities or majorities inevitably would be
impacted. Id. Unbounded disparate-impact claims would push governments and
private entities towards erecting “numerical quotas,” a deeply troubling event. Id.
Although it left space for the lower courts to elaborate on what could meet this
causality requirement, the Court was crystal clear that some allegations would fall
far short: “[a] plaintiff who fails to allege facts at the pleading stage or produce
statistical evidence demonstrating a causal connection cannot make out a prima
facie case of disparate impact.” Id. at 2523.
Even before the Supreme Court spoke to this question, this Court had arrived
at similar conclusions, entirely consistent with Inclusive Communities, about the
need for a relevant statistical showing in order to support a disparate-impact claim
under the FHA, in Schwarz v. City of Treasure Island, 544 F.3d 1201 (11th Cir.
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2008). There, the plaintiff, who operated halfway houses for recovering substance
abusers in the City of Treasure Island, Florida, had been cited by the City for
violating a zoning ordinance that limited occupancy turnover. Id. at 1205. He
sued the city under the FHA, alleging, among other things, that the zoning
ordinance had a disparate impact on the rights of the disabled (the recovering
substance abusers). Id. The claim failed because the plaintiff provided no
comparative data to support his prima facie case. Id. at 1217–18. We held that in
order to show disparate impact, the plaintiff must provide evidence comparing
members of the protected class affected by the ordinance with non-members
affected by the ordinance. See id. at 1217. If the percentage of members of the
protected class (recovering substance abusers) affected was higher than the
percentage of nonmembers impacted, this disproportionality could form the basis
for a prima facie case of disparate impact. The plaintiff in Schwarz had failed to
provide an adequate statistical foundation because he presented “no comparative
data at all,” but instead simply offered what we termed a “bald assumption” that
the ordinance’s effect on his houses meant that the handicapped had necessarily
been disparately impacted. Id. at 1218.
The evidence presented by the appellants in this case fails to establish a
prima facie case for similar reasons. The only statistical evidence presented in this
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case was a survey conducted by the plaintiffs, which their representative explained
this way:
In connection with this litigation Plaintiffs conducted a survey of its residents at the [OTC] to determine the racial composition of the project (the ‘Survey’), in which the residents self-reported their race . . . . The Survey evidenced that approximately 75% of the residents are racial minorities.
The Survey showed that 75.73% of heads of OTC households are members of
racial minorities and that 24.27% of heads of OTC households are white. By way
of comparison, the Survey cited census data indicating that only 32.7% of
households in Oviedo are racial minority households while 65.8% of households
are not.2
As the district court recognized, this data revealed only that more racial
minorities live in Oviedo Town Center than lived in the rest of the City of Oviedo.
It does not establish a disparate impact, let alone any causal connection between
the 2012 Policy and the disparate impact. If this were enough to make a prima
facie showing, we would face precisely the circumstance the Court sought to avoid
in Inclusive Communities, inappropriately injecting race into a city’s
decisionmaking process and creating “disparate-impact liability” that “might
2 The admissibility of the survey was a matter of dispute in the district court, since the developers argued that it was inadmissible hearsay. The district court was willing to consider it for purposes of summary judgment because it reflected easily ascertainable information and because it did not present the reliability risk that the hearsay rules are intended to prevent. 15 Case: 17-14254 Date Filed: 12/28/2018 Page: 16 of 23
displace valid governmental and private priorities.” See Inclusive Cmtys., 135 S.
Ct. at 2524.
As the district court observed, in order to establish a prima facie case of
disparate impact, the appellants would have needed to draw a comparison between
(a) the percentage of racial minorities occupying multifamily properties impacted
by the 2012 Policy throughout the City of Oviedo and (b) the percentage of non-
minorities living in such properties, again throughout the City of Oviedo. If this
citywide comparison demonstrated that a disproportionate percentage of racial
minorities in multifamily properties were impacted across the city, a prima facie
case of disparate impact might have been presented, and we would then proceed to
consider the causal relation. This kind of citywide comparative analysis would be
necessary because, since the policy impacts the whole city, the whole city would
need to be evaluated before we could determine that the claimed impact might
have disparately fallen on certain insular groups. See Schwarz, 544 F.3d at 1218.
But since all the appellants have shown us is that the OTC’s residents are
disproportionately racial minorities, we need go no further because this necessarily
fails to make out a prima facie case. Just as in Schwarz, the developers here have
“completely failed to present relevant comparative evidence” and “the district
court was right to reject [the] disparate impact claim.” Id.
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Significantly, in its briefing before this Court, the appellants failed to
directly challenge the district court’s holding that they had not established a prima
facie case of disparate impact, even though that was an independent ground for the
entry of summary judgment. In both their opening and reply briefs, the appellants
conflated the district court’s prima facie case holding with its proximate cause
holding, saying nothing about the foundations of their statistical presentation, let
alone addressing the district court’s reasoning. And when asked about the matter
at oral argument, the developers argued for the first time that the survey did
provide a relevant citywide comparison because the OTC was the only property
affected by the challenged policy. A suggestion to this effect does appear in their
briefing, but it was never presented, until oral argument, as a response to the
district court’s determination that the survey was inadequate to establish a prima
facie case. The argument that the survey was sufficient because only the OTC was
affected was, then, a new argument introduced for the first time at oral argument,
and we will not address it. See Access Now, Inc. v. Southwest Airlines Co., 385
F.3d 1324, 1330 (11th Cir. 2004) (“[T]he law is by now well settled in this Circuit
that a legal claim or argument that has not been briefed before the court is deemed
abandoned and its merits will not be addressed.”). 3
3 In any event, the argument does not create a triable issue of material fact. To support the claim that the OTC was the only building affected, the appellants cite the deposition of the City’s finance director who said in a deposition that he was “aware” of one customer impacted by the 17 Case: 17-14254 Date Filed: 12/28/2018 Page: 18 of 23
IV.
The district court also ruled in the City’s favor on the appellants’ § 1983
claim. This claim was raised for the first time in the Second Amended Complaint
and comes before this Court only on a motion to dismiss. Although the parties
have completed discovery and made arguments on other claims based on the
evidence that has been presented, we may not consider, during our review of this
claim, anything beyond the four corners of the operative complaint and any
attachments thereto. Fin. Sec. Assurance, Inc. v. Stephens, Inc., 500 F.3d 1276,
1284 (11th Cir. 2007) (per curiam); see also Boyd v. Warden, 856 F.3d 853, 863–
64 (11th Cir. 2017) (setting out the standard of review for a motion to dismiss).
We may, as always, though, “draw on [our] judicial experience and common
sense.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).4
2012 resolution, the OTC. The fact that he was aware of only the OTC does not establish that no other customers were affected -- we would expect the director to be most familiar with the property whose developers asked for an exception and then brought a lawsuit for which he was being deposed. This tells us nothing about other multi-family properties in the City, and the appellants have identified no additional evidence to support their claim that no such properties exist. 4 The City had moved both to dismiss the § 1983 claim and for summary judgment on it. Because discovery had taken place and because other claims were being decided on a motion for summary judgment, the district court might have either entertained the motion for summary judgment or explicitly converted the motion to dismiss into a motion for summary judgment. See Michel v. NYP Holdings, Inc., 816 F.3d 686, 701 (11th Cir. 2016). But the district court only reviewed the motion to dismiss the claim, and did not look beyond the pleadings in its analysis. Neither party has suggested that anything other than the typical motion to dismiss standard of review applies in our review of the district court’s ruling on the appellants’ § 1983 claim. 18 Case: 17-14254 Date Filed: 12/28/2018 Page: 19 of 23
As for their § 1983 claim, the appellants argued that “[t]he Policy, and the
City’s process of implementing the Policy, deprived the developers of their due
process interests under the Fourteenth Amendment.” Notably, this claim does not
allege any racial discrimination, and the parties agree on how it ought to be
considered. They agree with the district court that “state-created rights are
generally not subject to substantive due process protection.” See McKinney v.
Pate, 20 F.3d 1550, 1556 (11th Cir. 1994) (en banc). They further agree that the
claim here falls into an exception to this rule, recognized in this Circuit, for
“legislative acts.” See id. at 1557 n.9. The parties even agree that the ultimate
standard applicable to this claim is rational basis review, because we have said that
“[w]here an individual’s state-created rights are infringed by [a] ‘legislative act,’
the substantive component of the Due Process Clause generally protects him from
arbitrary and irrational action by the government.” Lewis v. Brown, 409 F.3d
1271, 1273 (11th Cir. 2005) (per curiam) (citing McKinney, 20 F.3d at 1557 n.9);
see also Kentner v. Sanibel, 750 F.3d 1274, 1281 (11th Cir. 2014) (applying a
rational basis test when reviewing the dismissal of a substantive due process claim
to which the “legislative act” exception applied). The parties disagree only about
the application of rational basis scrutiny to this claim.
It is quite easy for a legislative act to survive rational basis scrutiny since the
standard is “highly deferential” and “proscribes only the very outer limits of a
19 Case: 17-14254 Date Filed: 12/28/2018 Page: 20 of 23
legislature’s power.” Williams v. Pryor, 240 F.3d 944, 948 (11th Cir. 2001).
Thus, a statute being measured against the template of rational basis review
“comes to us bearing a strong presumption of validity.” FCC v. Beach Commc’ns,
Inc., 508 U.S. 307, 314 (1993). There has been no suggestion that utility rates are
beyond the City’s power to regulate; therefore, we only ask “whether there is a
rational relationship between the government’s objective and the means it has
chosen to achieve it.” Blue Martini Kendall, LLC v. Miami-Dade Cty., Fla., 816
F.3d 1343, 1351 (11th Cir. 2016) (quotations omitted). And the rational basis we
identify need not even be the actual basis that motivated the legislature. See id.
As a result, “the challenger bears ‘the burden to negative every conceivable basis
which might support [the law].’” Id. (quoting Beach Commc’ns, 508 U.S. at 315)
(alteration in original). “Only in an exceptional circumstance” will a challenger
succeed in showing that a legislative act cannot “be rationally related to a
legitimate government interest.” Id.
Our review is complicated only by the fact that on a motion to dismiss we
may consider only the facts presented in the complaint and accompanying exhibits.
Nonetheless, our opinion in Kentner v. City of Sanibel, 750 F.3d 1274 (11th Cir.
2014), demonstrates that a legislative act may satisfy rational basis scrutiny even at
the motion to dismiss stage. There, property owners in a waterfront area
challenged a local ordinance that the City of Sanibel said was intended to protect
20 Case: 17-14254 Date Filed: 12/28/2018 Page: 21 of 23
certain seagrasses, but which the plaintiffs alleged was truly motivated by aesthetic
preferences and desire to protect the property values of certain other property
owners. Id. at 1277. As is the case here, the question was whether plaintiffs had
properly plead that the ordinance lacked any rational basis. Id. at 1280–81. They
had not, we held, because “Plaintiffs themselves plead at least two rational bases
for the Ordinance in their Amended Complaint: (1) protection of seagrasses and (2)
aesthetic preservation.” Id. at 1281. By suggesting these rational foundations, the
plaintiffs had defeated their own argument that it could not possibly be rational.
Here, the plaintiffs have likewise offered a wholly rational basis for the
policy in their own complaint. Thus the Second Amended Complaint contains the
following averments:
28. On December 3, 2012, the City passed Resolution 2576-12, which amended the City's utility service charges to add a “Master-Metered Multi-Family (per unit)” charge (the “Policy”). ...
29. The City asserts the Policy was founded upon and designed to implement a City of Oviedo, Florida 2012 Water and Wastewater Rate and Capital Recovery Charge Study (the “Study”) performed by Public Resources Management Group, Inc. and dated December 2012, and is consistent with its historical actions in charging base utility fees.
The district court identified these paragraphs as providing a rational basis --
“generating sufficient funds to operate the City’s utility systems.” More
specifically, these paragraphs suggest two rational reasons for the policy: (1)
21 Case: 17-14254 Date Filed: 12/28/2018 Page: 22 of 23
capital recovery; and (2) a need to periodically update rate policy in a way
consistent with historical practice. The resolution, attached as an exhibit to the
complaint, provides context on both points. The City had recently required a new
sanitary system and was beginning a five year consolidation process. It would be
altogether rational to adjust utility fees in order to fund this process and to recover
capital. The resolution also indicates that it was intended to amend a previous
resolution. This places the Policy in its proper context and makes it abundantly
clear that adjusting rates was an ongoing, year-to-year process, and this resolution
was only the latest iteration.
Against this conclusion, the appellants argue that although the complaint
suggests that the policy might be justified in this way, “the allegations of the
Operative Complaint . . . specifically provide that ‘the Policy is largely inconsistent
with the study.’” The appellants acknowledge that they identified a rational basis
for the policy like the Kentner plaintiffs before them, but, they argue, the Court
cannot uphold the policy on that basis because the entirety of the Second Amended
Complaint suggests that the basis they identified cannot be the “true” reason for the
policy. In Kentner, though, the complaint had alleged that one of the rational bases
the court identified -- seagrass preservation -- did not actually motivate the
legislature. See Kentner, 750 F.3d at 1277. We still identified the allegedly
pretextual reason as a conceivable rational basis, and we do so here as well. We
22 Case: 17-14254 Date Filed: 12/28/2018 Page: 23 of 23
take the allegations in the Second Amended Complaint as true, and for our
purposes we assume that the appellants are correct that the 2012 Policy is
inconsistent with the study. Even so, the goals that the study ostensibly set form a
rational basis for the policy. See Blue Martini, 816 F.3d at 1351 (“[T]he
legislature need not have actually been motivated by the rational reason presented
to the court . . . .”).
In short, as we see it, the district court appropriately ruled in the City’s
favor, granting final summary judgment to the city on the FHA claims and
dismissing the § 1983 claim.
AFFIRMED