Keller v. City of Fremont

Fred H. Keller, Jr.; Juan Doe; Juana Doe #2 Plaintiffs - Appellants/Cross Appellees v. City of Fremont; Dale Shotkoski, in his Official Capacity;

Timothy Mullen, in his Official Capacity Defendants - Appellees/Cross Appellants

Mario Martinez, Jr.; Martin Mercado;

Paula Mercado; Jane Doe; Maria Roe;

Steven Dahl; ACLU Nebraska Foundation;

United Food and Commercial Workers

Union, Local 22; Blake Harper Plaintiffs - Appellants/Cross Appellees v. City of Fremont; Dale Shotkoski, in his Official Capacity as Fremont City

Attorney; Timothy Mullen, in his Official Capacity as Fremont Chief of

Police Defendants - Appellees/Cross Appellants

American Unity Legal Defense Fund;

Eagle Forum Education and

Legal Defense Fund Amici on Behalf of Appellees/ Cross Appellants

National Council of La Raza, Inc.;

Justice for our Neighbors - Nebraska; National

Fair Housing Alliance; The Major Cities Chiefs Association;

The National Latino

Peace Officers Association;

United States of America; Fair Housing Center of

Nebraska-Iowa; Apartment Association of Greater Omaha and Lincoln;

Nebraska Appleseed Center for Law in the Public Interest;

National Apartment Association Amici on Behalf of Appellants/Cross Appellees¹

No. 12-1702

No. 12-1705

No. 12-1708

United States Court of Appeals For the Eighth Circuit

Submitted: December 13, 2012

Filed: June 28, 2013

Appeal from United States District Court

for the District of Nebraska - Omaha

Before LOKEN, BRIGHT, and COLLOTON, Circuit Judges.

LOKEN, Circuit Judge.

In June 2010, voters in Fremont, Nebraska, adopted Ordinance No. 5165, which limits hiring and providing rental housing to "illegal aliens" and "unauthorized aliens," terms defined in the Ordinance. Two groups of landlords, tenants, and employers (collectively, "Plaintiffs," and separately, "the Keller Plaintiffs" and "the Martinez Plaintiffs") filed these actions in federal court to enjoin enforcement, contending that the Ordinance, on its face, is unconstitutional and violates federal and state laws. Ruling on cross-motions for summary judgment, the district court severed and enjoined enforcement of certain rental provisions, concluding they are preempted by the Immigration and Nationality Act ("INA"), 8 U.S.C. §§ 1101 et seq., and violatethe Fair Housing Act ("FHA"), 42 U.S.C. §§ 3601 et seq. Keller v. City of Fremont, 853 F. Supp. 2d 959 (D. Neb. 2012). Both sides appeal. Reviewing these issues de novo, we reverse the district court's preemption and FHA rulings, affirm in all other respects, vacate the court's injunction, and remand with directions to dismiss Plaintiffs' complaints.

I. Background

Located near Omaha, Fremont is a "city of the first class" with a population of approximately 26,000. See Neb. Rev. Stat. § 16-101. In recent years, as reflected in U.S. Census Bureau data, the City's Hispanic or Latino population nearly tripled, rising from 1,085 in 2000 (4.3% of the City's population) to 3,149 in 2010 (11.9%). According to the 2000 Census, Latinos then comprised about 80% of the City's foreign-born population. In a June 2010 special election, after the City Council declined to pass a nearly identical measure, voters adopted Ordinance No. 5165 amending the City's municipal code.

Shortly before the Ordinance was to take effect, Plaintiffs filed these facial challenges, later consolidated with the parties' consent. Plaintiffs alleged that the Ordinance is preempted by federal law; violates the Equal Protection, Due Process, and Commerce Clauses of the United States Constitution; violates the Fair Housing Act and 42 U.S.C. § 1981; and exceeds the City's municipal powers under Nebraska law. They initially sought preliminary as well as permanent injunctive relief. When the City Council passed a resolution not to enforce the Ordinance until 14 days after final decisions issue, Plaintiffs withdrew their preliminary injunction motions.

The Ordinance's employment provisions require "[e]very business entity . . . performing work within the City" to participate in the "E-Verify Program," a federal database that allows employers to verify the work-authorization status of prospective employees. This requirement does not apply to the hiring of independent contractorsor "to the intermittent hiring of casual labor for domestic tasks." Violators may lose their business licenses, permits, contracts, loans, or grants from the City. Relying on the Supreme Court's decision in Chamber of Commerce v. Whiting, 131 S. Ct. 1968 (2011), the district court concluded that this portion of the Ordinance is not preempted by federal law because it is "essentially a licensing or similar law" and thus falls within the savings clause in the Immigration Reform and Control Act of 1986 ("IRCA"), 8 U.S.C. § 1324a(h)(2). Keller, 853 F. Supp. 2d at 971. Plaintiffs do not appeal this ruling.

The Ordinance's prospective rental provisions are the primary focus of these appeals. These provisions make it unlawful for any person or business entity to rent to, or permit occupancy by, "an illegal alien, knowing or in reckless disregard of the fact that an alien has come to, entered, or remains in the United States in violation of law." An "illegal alien" is "an alien who is not lawfully present in the United States, according to the terms of United States Code Title 8, Section 1101 et seq." "The City shall not conclude that an individual is an illegal alien unless and until an authorized representative of the City has verified with the federal government, pursuant to United States Code Title 8, Section 1373(c), such individual's immigration status."

To implement this restriction, the Ordinance provides that prospective renters over the age of 18 must obtain an occupancy license from the City, and must obtain a new license if they move to different rental properties. Temporary guests need not obtain a license. To obtain a license, an applicant must pay a five-dollar fee and disclose basic identifying information, including citizenship and, if an alien,²immigration status. The City "shall immediately issue an occupancy license" upon receipt of a complete application. At this point, the renter may lease and occupy arented dwelling unit. The lessor must obtain a copy of the renter's occupancy license. An alien renter who is subsequently determined to be not lawfully present in the United States "shall be deemed to have breached" the lease.

Promptly after issuance of the occupancy license, the Fremont Police Department must ask the federal government to verify the immigration status of an alien renter. If the federal government reports that the renter is "unlawfully present," the police send the renter a deficiency notice; the renter then has sixty days to establish lawful presence. If the renter fails to do so, the police must contact the federal government again to verify the renter's immigration status. If the federal government again reports that the renter is "unlawfully present," the police send the renter and the landlord a notice revoking the occupancy license, effective forty-five days later. Violators may be fined $100 per violation per day. Renters and landlords receiving deficiency notices may seek judicial review.

The district court rejected Plaintiffs' preemption challenge to the occupancy licensing requirement, finding no conflict between federal immigration law and provisions of the Ordinance requiring prospective renters to disclose immigration information and requiring the police to verify that information with federal authorities. However, the court concluded:

To the extent that the Ordinance . . . provides penalties for the harboring of persons who have entered or remained in the United States in violation of law, or provides for the revocation of occupancy licenses and penalties for the lease or rental [of] dwelling units following the revocation of occupancy licenses, it conflicts with the INA, presenting an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.

Keller, 853 F. Supp. 2d at 972-73 (quotations omitted). The court also concluded that these preempted provisions, on their face, violate the FHA because they would havean unlawful disparate impact on Latino residents. Id. at 976-79. Finally, applying Nebraska law, the court concluded that the unlawful provisions are severable from the remainder of the Ordinance and permanently enjoined their enforcement, but not the non-preempted rental provisions.³

Plaintiffs appeal, contending the court erred in not invalidating all of the Ordinance's rental provisions as federally preempted or, alternatively, as not properly severable from the unlawful provisions. The Martinez Plaintiffs appeal the court's state law rulings and its conclusion that they did not plead disparate impact claims under the FHA. The City cross appeals, arguing the court erred in concluding that any provision of the Ordinance is federally preempted or violates the FHA.

II. Preemption

Four months after the district court's decision, the Supreme Court issued its decision in Arizona v. United States, 132 S. Ct. 2492 (2012), which significantly affects the issues before us on appeal. The Court in Arizona considered a facial challenge to four sections of an Arizona law commonly referred to as S.B. 1070. Section 3 imposed state criminal sanctions for an alien's willful violation of federal alien registration laws. Section 5(C) imposed criminal penalties on unauthorized aliens who seek work or work in Arizona. Section 6 authorized state officers to arrest a person, without a warrant, if the officer has probable cause to believe the person "has committed any public offense that makes [him] removable from the United States." Id. at 2505 (quotations omitted). Section 2(B) required that state officers make a "reasonable attempt . . . to determine the immigration status of any person they stop, detain, or arrest on another legitimate basis if reasonable suspicion existsthat the person is an alien and is unlawfully...