1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 8 FFV COYOTE LLC, et al., Case No. 22-cv-00837-VKD

9 Plaintiffs,

ORDER GRANTING IN PART AND

10 v. DENYING IN PART DEFENDANT'S

MOTION TO DISMISS

11 CITY OF SAN JOSE, Re: Dkt. No. 14 Defendant. 12

13 14 In this action, plaintiffs allege that defendant City of San Jose (“City”) violated their Fifth 15 Amendment rights by taking their property without compensation, as well as their Fourteenth 16 Amendment rights to equal protection of the laws and to substantive due process. Dkt. No. 1. The 17 City moves to dismiss the complaint for failure to state a claim for relief.1 Dkt. No. 14. The Court 18 held a hearing on the motion on June 21, 2022.2 Dkt. Nos. 18, 20. Having considered the parties’ 19 submissions and arguments made at the hearing, the Court grants in part and denies in part the 20 City’s motion to dismiss. 21 I. BACKGROUND 22 Unless otherwise noted, the following facts are based on the allegations of the complaint, 23 which, for present purposes, are deemed true. 24 Plaintiffs are members of three families who own 126.5 acres of land comprising four 25 adjacent parcels (“the land” or “NCV properties”) in North Coyote Valley, near the southern 26 1 All parties appearing have indicated their consent to magistrate judge jurisdiction. Dkt. Nos. 7, 27 9. 1 border of San Jose, California. Dkt. No. 1 ¶ 3. These families are legally organized as 2 individuals, trustees, and limited liability companies. Id. ¶¶ 3-4. Plaintiffs’ predecessors in 3 interest acquired the parcels of land in 1960, 1963, and 1969. Id. ¶¶ 26-28. At the time plaintiffs’ 4 predecessors purchased the land, it was undeveloped and used mainly for agriculture. Id. ¶¶ 30- 5 31. The current tenant of the land operated a seasonal pumpkin patch with hay rides, train rides, 6 and a corn maze, but this use is no longer permitted. Id. ¶ 32. 7 San Jose, like all California cities, has a “general plan.” Id. ¶ 18; Cal. Gov’t Code 8 § 65300. The first general plan, adopted in 1961, designated the NCV properties as “Light 9 Industrial” land use. Dkt. No. 1 ¶ 25. The next general plan in 1975 changed the land use 10 designation to “Agricultural.” Id. ¶ 36. According to plaintiffs, after “market pressures for further 11 urbanization of North Coyote Valley” grew, the City amended the general plan to designate the 12 NCV properties for “Campus Industrial” land use in 1983. Id. ¶¶ 36-37. The City adopted new 13 general plans in 1984 and 1994, and those plans continue to designate the NCV properties for 14 “Campus Industrial” land use. Id. ¶¶ 39, 40. 15 In 2011, the City adopted its current general plan, Envision San Jose 2040 (“GP 2040”), 16 which changed the land use designation of the NCV properties from “Campus Industrial” to 17 “Industrial Park.” Id. ¶ 51. The “Industrial Park” designation “allows a wide variety of industrial 18 uses.” Id. 19 According to plaintiffs, “[a]s development in North Coyote Valley appeared to be more 20 imminent, [various] interests lobbied the City to preserve North Coyote Valley and abandon the 21 longtime plan to allow industrial development there.” Dkt. No. 1 ¶ 55. In 2018, the City passed a 22 bond measure that included a project proposal to spend $50 million to purchase land in North 23 Coyote Valley. Id. ¶¶ 57-60. After the bond measure passed, the City partnered with Peninsula 24 Open Space Trust and Santa Clara Valley Open Space Authority to purchase land in North Coyote 25 Valley for the purpose of preserving it as open space. See id. ¶¶ 61-62, 64. The land in question, 26 like the NCV properties, was designated for use as “Industrial Park.” Id. ¶ 61. On November 6, 27 2019, the City approved the purchase of 937 acres owned by the non-party Brandenburg and 1 Concurrently, in 2019, the City began a review of the current general plan. Id. ¶ 69. As 2 part of the review, the City Council appointed a 40-member citizen task force to make 3 recommendations regarding the general plan to the San Jose Planning Commission which, in turn, 4 would make recommendations to the City Council about development and use of North Coyote 5 Valley. Id. ¶ 69-70. 6 City staff working with the task force proposed a “new vision” for North Coyote Valley, 7 namely, that it be “preserved as a resource for the community.” Id. ¶ 70. In keeping with this 8 objective, the City’s staff recommended changing the land use designation of the NCV properties 9 from “Industrial Park” to “Agricultural.” Id. ¶ 72. The task force voted to accept the City’s staff 10 recommendations. Id. 11 In October 2021, when the task force’s recommendations were presented to the Planning 12 Commission, some commissioners noted that the designation change may be unfair to the North 13 Coyote Valley property owners, specifically because the City had purchased the Brandenburg and 14 Sobrato properties but was not offering to purchase the NCV Properties or to at least provide 15 compensation for any resulting reduction in land value. Id. ¶ 74. The Planning Commission voted 16 to deny the task force’s recommendations. Id. Nevertheless, San Jose City Council amended the 17 general plan to change the land use designation of plaintiffs’ properties to “Agricultural,” effective 18 December 31, 2021. Id. ¶ 79. “Sites in the Agriculture designation are intended for a variety of 19 agricultural uses, including grazing, dairying, raising of livestock, feedlots, orchards, row crops, 20 nursery stock, flower growing, ancillary residential uses, ancillary commercial use such as fruit 21 stands, and the processing of agricultural products.” Dkt. No. 14 at 4; Dkt. No. 14-1, Ex. 1 at 12. 22 This land use designation allows up to 1 dwelling unit per 20 acres. According to GP 2040, 23 “[b]uilding intensity in this designation will be greatly limited. The minimum parcel in areas 24 designated as Agriculture is 20 acres in size. This designation is intended to support existing and 25 future agricultural uses on properties.” Dkt. No. 14-1, Ex. 1 at 12. 26 Meanwhile, in January 2020, while the City’s general plan was under review, plaintiffs 27 entered into a contract with a developer to sell their land, then still designated as “Industrial Park” 1 use designation to “Agricultural,” the developer terminated its contract to buy plaintiffs’ land. 2 Dkt. No. 1 ¶ 82. 3 Plaintiffs bring three claims for relief, pursuant to 42 U.S.C. § 1983, based on the City’s 4 change of the land use designation to “Agricultural”: (1) a claim that the City’s action violates the 5 takings clause of the Fifth Amendment; (2) a claim that the City’s action violates the equal 6 protection clause under the Fourteenth Amendment; and (3) a claim that the City’s action violates 7 the substantive due process clause under the Fourteenth Amendment. 8 II. LEGAL STANDARD 9 A motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) of the Federal 10 Rules of Civil Procedure tests the legal sufficiency of the claims in the complaint. Navarro v. 11 Block, 250 F.3d 729, 732 (9th Cir. 2001). Dismissal is appropriate where there is no cognizable 12 legal theory or an absence of sufficient facts alleged to support a cognizable legal theory. Id. 13 (citing Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990)). In such a motion, 14 all material allegations in the complaint must be taken as true and construed in the light most 15 favorable to the claimant. Id. 16 However, “[t]hreadbare recitals of the elements of a cause of action, supported by mere 17 conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Moreover, 18 “the court is not required to accept legal conclusions cast in the form of factual allegations if those 19 conclusions cannot reasonably be drawn from the facts alleged.” Clegg v. Cult Awareness 20 Network, 18 F.3d 752, 754–55 (9th Cir. 1994). 21 Rule 8(a)(2) requires only “a short and plain statement of the claim showing that the 22 pleader is entitled to relief.” This means that the “[f]actual allegations must be enough to raise a 23 right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) 24 (citations omitted). However, only plausible claims for relief will survive a motion to dismiss. 25 Iqbal, 556 U.S. at 679. A claim is plausible if its factual content permits the court to draw a 26 reasonable inference that the defendant is liable for the alleged misconduct. Id. A plaintiff does 27 not have to provide detailed facts, but the pleading must include “more than an unadorned, the-

III. DISCUSSION

1 A. The Parties’ Requests for Judicial Notice 2 The parties ask the Court to take judicial notice of several documents in connection with 3 their papers. 4 A court generally may not consider any material beyond the pleadings when ruling on a 5 Rule 12(b)(6) motion. Documents appended to the complaint, incorporated by reference in the 6 complaint, or which properly are the subject of judicial notice may be considered along with the 7 complaint when deciding a Rule 12(b)(6) motion. Khoja v. Orexigen Therapeutics, 889 F.3d 988, 8 998 (9th Cir. 2018); see also Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 9 1542, 1555 n.19 (9th Cir. 1990). A document not attached to a complaint “may be incorporated 10 by reference into a complaint if the plaintiff refers extensively to the document or the document 11 forms the basis of the plaintiff’s claim.” United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 12 2003). And, “a defendant may seek to incorporate a document into the complaint if the plaintiff 13 refers extensively to the document or the document forms the basis of the plaintiff’s claim.” 14 Khoja, 899 F.3d at 998, 1002 (internal quotation marks omitted) (emphasis added). “[U]nlike 15 judicial notice, a court may assume [an incorporated document’s] contents are true for purposes of 16 a motion to dismiss under Rule 12(b)(6).” Khoja, 899 F.3d at 1003. But “it is improper to assume 17 the truth of an incorporated document if such assumptions only serve to dispute facts stated in a 18 well-pleaded complaint. This admonition is, of course, consistent with the prohibition against 19 resolving factual disputes at the pleading stage.” Id. A court may take notice of public records, 20 but not of disputed facts stated in public records. Khoja, 899 F.3d at 999 (citing Lee v. City of Los 21 Angeles, 250 F.3d 668, 689 (9th Cir. 2001)). In addition, a court may take judicial notice of a fact 22 not subject to reasonable dispute because it either is generally known within the trial court’s 23 territorial jurisdiction, or readily can be determined from sources whose accuracy cannot 24 reasonably be questioned. Fed. R. Evid. 201(b). 25 Plaintiffs request that the Court take judicial notice of San Jose Municipal Code 26 §§20.50.010 and 20.50.100. Dkt. No. 16, Ex. A. City ordinances are proper subjects of judicial 27 notice under Fed. R. Evid. §201(b). Joseph v. City of San Jose, 2019 WL 3997482 at *1 (N.D. 1 Cal. 2019) (taking judicial notice of city ordinances); see also see Newcomb v. Brennan, 558 F.2d 2 825 (7th Cir. 1977) (“[C]ity ordinances fall within the category of ‘common knowledge’ and are 3 therefore proper subjects for judicial notice.”). The particular facts that plaintiffs ask the Court to 4 judicially notice are that (1) The City’s industrial zoning districts include the IP Industrial Park 5 zone, the LI Light Industrial zone, and the HI Heavy Industrial zone (§§20.50.010(C)(3), (C)(4), 6 (C)(5); and (2) “Warehouse/distribution facility” is a permitted land use in each of these three 7 industrial zones. Because these facts are the proper subject of judicial notice, the Court will take 8 notice of them. 9 The City requests that the Court take notice of the Envision San Jose 2040 general plan 10 (Dkt. No. 14-1, Ex. 1), two City ordinances (Dkt. No. 14-1, Exs. 2, 3), a City Council meeting 11 synopsis (Dkt. No. 14-1, Ex. 4), a City Council resolution (Dkt. No. 14-1, Ex. 7) and two City 12 memoranda (Dkt. No. 14-1, Ex. 5, 6). Plaintiffs generally object to the Court taking notice of any 13 disputed facts contained in any of the City’s proposed documents. Dkt. No. 15-1. Nevertheless, 14 plaintiffs do not object to the Court taking notice of the existence of these public documents. Id. 15 at 1. The Court will take notice of the existence only of these documents. 16 Plaintiffs further object to the Court taking notice of the two City memoranda as subject to 17 dispute, hearsay, and irrelevant. Id. at 2-3. Plaintiffs’ objections are well-taken, and the Court 18 will not take notice of the two City memoranda (Dkt. No. 14-1, Ex. 5, 6), as these documents are 19 not necessary to resolution of the present motion. 20 B. Claim 1: Fifth Amendment Taking 21 Plaintiffs allege that by changing the land use designation of the NCV properties from 22 “Industrial Park” to “Agricultural,” the City violated the takings clause of the Fifth Amendment. 23 The takings clause of the Fifth Amendment provides that private property shall not “be 24 taken for public use, without just compensation.” U.S. Const. Amend. V. “A classic taking 25 occurs when the ‘government directly appropriates private property or ousts the owner from his 26 domain.’” Bridge Aina Le’a, LLC v. Land Use Comm’n, 950 F.3d 610, 625 (9th Cir. 2020), cert. 27 denied sub nom. Bridge Aina Le’a, LLC v. Hawaii Land Use Comm’n, 141 S. Ct. 731 (2021) 1 government appropriation of property. “[A] regulatory taking occurs when the value or usefulness 2 of private property is diminished by a regulatory action that does not involve a physical 3 occupation of the property.” Hotel & Motel Ass’n of Oakland v. City of Oakland, 344 F.3d 959, 4 965 (9th Cir. 2003); see also Cedar Point Nursery v. Hassid, 141 S. Ct. 2063, 2072 (2021) (a 5 regulatory taking “imposes regulations that restrict a property owner’s ability to use his own 6 property”). 7 “Courts determine whether a regulatory action is functionally equivalent to the classic 8 taking using ‘essentially ad hoc, factual inquiries, designed to allow careful examination and 9 weighing of all the relevant circumstances.’” Bridge Aina Le’a, 950 F.3d at 625 (quoting Tahoe- 10 Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 535 U.S. 302, 322, (2002). In Penn 11 Central Transportation Company v. City of New York, 438 U.S. 104 (1978), the Supreme Court 12 addressed whether a regulation imposed by the City of New York affecting Grand Central 13 Terminal constituted a taking. In holding that the City’s regulation was not a taking, the Supreme 14 Court evaluated three factors: (1) “[t]he economic impact of the regulation on the claimant,” (2) 15 “the extent to which the regulation has interfered with distinct investment-backed expectations,” 16 and (3) “the character of the governmental action.” Id. at 124. 17 “Certain regulatory actions, however, are treated categorically as a taking without the 18 necessity of the Penn Central inquiry.” Bridge Aina Le’a, 950 F.3d at 625-26. In Lucas v. South 19 Carolina Coastal Council, 505 U.S. 1003 (1992), the Supreme Court considered a regulatory 20 taking in which a property owner was “deprived of all economically beneficial use” of his 21 property. Id. The Supreme Court held that a regulation that has such an effect necessarily 22 constitutes a per se taking. Id. at 1020. Thus, the Lucas rule applies to a relatively narrow and 23 relatively rare takings category, and is generally limited to the “extraordinary circumstance when 24 no productive or economically beneficial use of land is permitted.” Id. at 626. 25 Plaintiffs allege that the City’s actions are a per se taking under Lucas because they have 26 been deprived of all economically beneficial use of their land. Dkt. No. 1 ¶ 86. In the alternative, 27 they allege that the City’s actions constitute a taking under the Penn Central factors. Id. ¶ 87. As 1 these issues is heavily dependent upon disputed facts. Dkt. No. 15 at 3; see also DoorDash, Inc. v. 2 City and Cnty. of San Francisco, No. 21-cv-05502-EMC, 2022 WL 867254, at *19 (N.D. Cal. 3 Mar. 23, 2022) (denying dismissal of takings claims where factual questions existed as to two out 4 of three Penn Central factors). The City acknowledges that both Lucas and Penn Central depend 5 on fact-specific analysis, but it argues that plaintiffs’ allegations are merely conclusory and do not 6 plausibly allege a taking under either theory. Dkt. No. 14 at 8; Dkt. No. 17 at 4-5. 7 Having considered the complaint, the Court concludes that, at the very least, plaintiffs have 8 sufficiently stated a claim for violation of the Fifth Amendment under the Penn Central factors. 9 First, plaintiffs plausibly allege that the economic impact of the City’s actions is “severe.” Dkt. 10 No. 1 ¶ 87. They argue that the Agricultural designation precludes any economically viable use of 11 the NCV properties. Id. ¶ 32. They allege that the City’s actions were directly responsible for 12 termination of the $44.1 million purchase agreement plaintiffs had with third party developers. Id. 13 ¶ 82-83. Further, plaintiffs’ complaint references an expert report that supports their allegation 14 that agriculture is not an economically viable use of the NCV properties. Dkt. No. 1 ¶ 76. In 15 addition, they allege that even the most recent uses of the property, such as “hay rides, train rides, 16 a corn maze, and even launching pumpkins from giant cannons,” are not permitted under the new 17 land use designation. Id. ¶ 32. In sum, plaintiffs have plausibly alleged that the economic impact 18 of the regulatory change may be so severe as to constitute a taking. Moreover, the extent of the 19 economic impact on plaintiffs caused by the City’s actions remains a question of fact that cannot 20 be resolved at the pleadings. 21 Second, plaintiffs allege that the NCV properties were purchased as long-term investments. 22 Dkt. No. 1 ¶ 29. They further allege facts that support their contention that the land could 23 reasonably be sold for industrial development. Plaintiffs describe a trajectory that, but-for the 24 regulatory change, would have earned them a significant return on the purchases they made 50-60 25 years ago. Plaintiffs say that they purchased the NCV properties in 1960, 1963, and 1969. Id. 26 ¶ 26-28. When the City adopted its first general plan in 1961, the land was designated “Light 27 Industrial.” Id. ¶ 25. They allege that during the majority of the time they have owned the land it 1 land to a developer. Id. ¶¶ 29, 39, 40. Plaintiffs allege that, in the City’s most recent general plan, 2 of the three distinct planning areas that comprise Coyote Valley, only North Coyote Valley was 3 designated for development. Id. ¶ 24. Finally, they point to the fact that “an estimated $116 4 million” has been spent on “infrastructure improvements in the North Coyote Valley since the 5 1980s to facilitate the development of industrial uses there.” Id. ¶ 49. In light of these 6 expectations, they allege they have continued to invest in the properties “by payment of property 7 taxes and other expenses.” Id. ¶ 29. Whether plaintiffs’ expectations were reasonable is an “ad 8 hoc, factual inquir[y]” that cannot be decided at the pleadings stage. 9 Finally, plaintiffs allege that the City’s actions suggest that the regulatory change was 10 intended to “preserve” the NCV properties for the benefit of the public, and that acquisition of a 11 public resource through regulation necessitates just compensation. Dkt. No. 1 ¶¶ 70, 73, 87; Dkt. 12 No. 15 at 17. They allege that the City “set out to” preserve the land by instructing the planning 13 task force to consider a “new vision for Coyote Valley . . . as a resource for the community.” Dkt. 14 No. 1 ¶ 70. They further allege that the City accomplished its preservation aims by changing the 15 land use designation of the NCV properties to “Agricultural.” Dkt. No. 15 at 17. These 16 allegations support plaintiffs’ takings claim. 17 Because plaintiffs state a claim for violation of the Fifth Amendment under the Penn 18 Central factors, the Court does not consider whether plaintiffs also state a claim for a per se taking 19 under Lucas. The City’s motion to dismiss plaintiffs’ takings claim is denied. 20 C. Claim 2: Fourteenth Amendment Equal Protection 21 Plaintiffs allege that the City’s actions violate the equal protection clause of the Fourteenth 22 Amendment. Specifically, plaintiffs allege that the City intentionally treated their property 23 differently from other similarly situated properties, namely the Brandenburg East properties. The 24 City says plaintiffs’ claims fail because the properties are not similarly situated. Dkt. No. 17 at 7- 25 8. 26 “The Supreme Court has recognized that an equal protection claim can in some 27 circumstances be sustained even if the plaintiff has not alleged class-based discrimination, but 1 Lake Cnty., Mont., 637 F.3d 1013, 1021 (9th Cir. 2011) (internal quotation marks omitted); see 2 also Village of Willowbrook v. Olech, 528 U.S. 562 (per curiam)). In order to succeed on a “class 3 of one” claim, plaintiffs must show that the City (1) intentionally (2) treated them differently than 4 other similarly situated property owners, (3) without a rational basis. Willowbrook, 528 U.S. at 5 564; North Pacifica LLC v. City of Pacifica, 526 F.3d 478, 486 (9th Cir. 2008). Although 6 plaintiffs must show that the City’s “decision was intentional,” they need not show that the City 7 was “motivated by subjective ill will.” Gerhart, 637 F.3d at 1022 (citing Willowbrook, 528 U.S. 8 at 565). 9 Plaintiffs allege that the Brandenburg East properties, which the City purchased for 10 preservation purposes in partnership with the Peninsula Open Space Trust and Santa Clara Valley 11 Open Space Authority, are similarly situated to NCV properties. Dkt. No. 1 ¶ 97. They identify 12 many similarities between the two properties. For example, the two parcels of land are adjacent. 13 Id. They were both designated as “Industrial Park” land use in GP 2040. Id. The two parcels 14 were being used similarly and had similar accessibility at the relevant time. Id. And, developers 15 were interested in the two properties for similar purposes. Id. 16 Plaintiffs allege that the City intentionally treated the two parcels differently. See Gerhart, 17 637 F.3d at 1022 (“[Plaintiff] must show that [defendant] intended to treat him differently . . . .”). 18 For example, plaintiffs describe in detail the deliberative, extended processes the City employed 19 before purchasing the Brandenburg East properties and before changing the land use designation 20 of the NCV properties. Dkt. No. 1 ¶¶ 61-64, 69-81. And, plaintiffs allege that the City had no 21 rational basis for treating the NCV properties differently than the Brandenburg East properties, 22 when the City’s actions “accomplished the same objective of preservation and prevention of urban 23 development of the properties.” Id. ¶ 99. Plaintiffs argue that this dissimilar treatment of 24 similarly situated properties constitutes unlawful discrimination under the equal protection clause. 25 In challenging the pleadings, the City argues that the NCV properties and the Brandenburg 26 East properties are not similarly situated. Dkt. No. 17 at 7-8. They argue that the Brandenburg 27 East properties are located in the flood zone, and that this provides a basis for the City’s different 1 City’s actions is so obvious as to require dismissal of the claim. See Iqbal, 446 U.S. at 682 2 (inference of liability not plausible where allegations gave rise to an “obvious alternative 3 explanation” of legality). 4 The City’s reasons for treating the Brandenburg East properties and the NCV properties 5 differently, and whether the City had a rational basis for any different treatment, present issues of 6 fact. See Gerhart, 637 F.3d at 1023 (9th Cir. 2011) (question of rational basis presented a genuine 7 issue of material fact). Because plaintiffs’ allegations are adequate to state a plausible claim for 8 relief, dismissal is not appropriate at the pleading stage. See Levin Richmond Terminal Corp. v. 9 City of Richmond, 482 F. Supp. 3d 944, 967 (N.D. Cal. 2020) (denying dismissal where whether 10 defendant city acted with rational basis presented question of fact); Sacramento Cnty. Retired 11 Emps. Ass’n v. Cnty. of Sacramento, No. CIV S-11-0355 KJM, 2012 WL 1082807, at *6 (E.D. 12 Cal. Mar. 31, 2012) (in an equal protection case, “it is not the court’s task on a motion to dismiss 13 to determine whether defendant’s actions were rationally related to its legitimate interest; rather, 14 the court must determine whether plaintiffs have stated a claim for violation of the federal and 15 state Equal Protection clauses.”). 16 Accordingly, the City’s motion to dismiss plaintiffs’ equal protection claim is denied. 17 D. Claim 3: Fourteenth Amendment Substantive Due Process 18 Plaintiffs allege that the City’s actions violate the due process clause of the Fourteenth 19 Amendment. Dkt. No. 1 ¶¶ 102-06. They say that the City’s decision to use its power of eminent 20 domain to purchase the Brandenburg East properties but not the NCV properties was arbitrary. Id. 21 ¶ 104. The City argues that plaintiffs cannot state a claim for violation of substantive due process 22 because any such claim is conduct covered by the takings clause. Dkt. No. 14 at 15-16. They 23 argue that because plaintiffs pursue a takings claim, they cannot also pursue a claim for violation 24 of substantive due process. See id. 25 Plaintiffs are correct that the rationality of land use regulations may be challenged under 26 the substantive due process clause. Action Apartment Ass’n, Inc. v. Santa Monica Rent Control 27 Bd., 509 F.3d 1020, 1024 (9th Cir. 2007); see also Lingle, 544 U.S. at 528. “An arbitrary and 1 the Due Process Clause.’” Id. at 1025 (quoting Lingle, 544 U.S. at 542). However, while “the 2 Fifth Amendment does not invariably preempt” a substantive due process claim, it does “preclude 3 a due process challenge . . . if the alleged conduct is actually covered by the Takings Clause.” 4 Crown Point Dev., Inc. v. City of Sun Valley, 506 F.3d 851, 855, 857 (9th Cir. 2007). “To the 5 extent a property owner’s complaint falls within one of the[] [Lucas or Penn Central takings] 6 categories (or some other recognized application of the Takings Clause), . . . the claim must be 7 analyzed under the Fifth Amendment whether or not it proves successful; but to the extent that the 8 conduct alleged cannot be a taking, . . . a due process claim is not precluded.” Id. at 855-56 (citing 9 Lingle, 544 U.S. at 542); see also Rancho de Calistoga v. City of Calistoga, 800 F.3d 1083, 1093 10 (9th Cir. 2015) (“Such an overlapping theory dooms the substantive due process claim.”); Colony 11 Cove Properties, LLC v. City of Carson, 640 F.3d 948 (9th Cir. 2011). 12 Here, plaintiffs allege:

13 The City violated Plaintiffs’ right to substantive due process by arbitrarily using its power of eminent domain to purchase certain 14 properties in lieu of condemnation in order to preserve them, while seeking to preserve the NCV Properties without purchasing them but 15 rather changing their land use designation from Industrial Park to Agriculture. 16 Dkt. No. 1 ¶ 104 (emphasis added). That plaintiffs were not offered compensation in exchange for 17 the change in land use designation is an integral element of the claim they bring pursuant to the 18 due process clause. Id. This is further supported by plaintiffs comparing their properties that were 19 not purchased by the City to those “certain properties” that were purchased by the City. Id. 20 Additionally, in their opposition, plaintiffs reiterate that their substantive due process claim “is 21 based on the City’s arbitrary decision to use its power of eminent domain to preserve some 22 properties by purchase but not others.” Dkt. No. 15 at 21 (emphasis added). 23 Because plaintiffs’ due process claim is based on acts or omissions related to compensation 24 for their property, and because the Court has already concluded that plaintiffs state a claim for 25 violation of the Fifth Amendment takings clause, plaintiffs cannot simultaneously maintain a 26 claim for violation of substantive due process. Crown Point Dev., 506 F.3d at 855-56. 27 Accordingly, the City’s motion to dismiss plaintiffs’ substantive due process claim is granted. 1 However, because it is not clear that plaintiffs could plead no facts that plausibly support a 2 separate and independent claim that arbitrary and irrational decisions by the City constitute a 3 substantive due process violation, the Court gives plaintiffs leave to amend the complaint with 4 respect to this claim. Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (court “should grant 5 leave to amend even if no request to amend the pleading was made, unless it determines that the 6 || pleading could not possibly be cured by the allegation of other facts”). 7 || IV. CONCLUSION 8 For the reasons explained above, the Court denies the City’s motion to dismiss plaintiffs’ 9 takings and equal protections claims, but it grants the City’s motion to dismiss plaintiffs’ 10 substantive due process claim, with leave to amend. If plaintiffs choose to amend the complaint, 11 the amended pleading must be filed no later than November 9, 2022. 12 IT IS SO ORDERED. 5 13 Dated: October 26, 2022

14 VarapvinB, LaMarche: 2 VIRGINIA K. DEMARCHI = 16 United States Magistrate Judge

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