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A City’s Decision To Lease Property To A Private Entity Does Not – In And Of Itself – Subject The City To Liability For The Discretionary Decisions Of Its Lessee
Pasadena Republic Club (Club) contracted with Western Justice Center (WJC), a private nonprofit organization, to rent space in WJC’s building for a speaking event. WJC leased the space from the City of Pasadena (City). Shortly before the event, WJC learned the speaker for the Club’s scheduled event led a politically active organization that, as WJC explained, holds “positions on same-sex marriage, gay adoption, and transgender rights [that] are antithetical to [its] values.” WJC canceled the rental agreement with the Club and, in response, the Club filed suit against WJC and the City alleging viewpoint discrimination and other violations of the Club’s First Amendment rights. Relying on Burton v. Wilmington Parking Auth. (1961) 365 U.S. 715 (Burton), the Club claimed that WJC’s leasing arrangement with the City constituted sufficient grounds to bring constitutional claims against WJC, a private section 501(c)(3) nonprofit organization dedicated to civic improvement. WJC moved to dismiss the action, and the City moved to have the court decide in its favor, without a trial. The district court held that “the undisputed facts show that the City did not delegate to WJC any final policy-making authority of the City that caused the Club’s alleged constitutional violation.” The Club appealed.
The Ninth Circuit Court of Appeal analyzed the facts under the Burton case. In Burton, the United States Supreme Court held that, in certain circumstances, a private actor may be considered a state actor subject to constitutional restraints, under a joint action or “symbiotic relationship” test if the private entity’s conduct is inextricably intertwined with that of the government. Here, the Ninth Circuit found that WSJ’s lease agreement with the City did not transform WSJ into a state actor. First, the City and WSJ managed their operations independently. Second, the City did not profit financially from WSJ’s alleged discrimination. Third, the City did not participate in WSJ’s cancellation of the Club’s speaking event. Although the City derived benefit from its relationship with WSJ, namely that the lease required WSJ to furnish the community with nonprofit legal services and other resources, any exchange of mutual benefit fell short of the substantial interdependence required for state action.
Finally, in upholding the City’s motion, the Ninth Circuit found that the City’s policy or practice did not cause the Club’s alleged harm. Further, contrary to the Club’s claims, the City did not delegate policy-making authority over political speaking events in the City to WSJ. The lease between the City and WSJ conveyed a possessory interest in the underlying property that allowed WSJ to rent space at its discretion. The Ninth Circuit affirmed that, without more, the City is not vicariously liable for the discretionary decisions of WSJ.
Pasadena Republican Club v. Western Justice Center (2021) 985 F.3d 1161.