1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 VW CREDIT LEASING LTD, Case No. 23-cv-02884-DMR

8 Plaintiff, ORDER ON CITY OF SAN MATEO'S 9 v. MOTION TO DISMISS

10 THE CITY OF SAN MATEO, et al., Re: Dkt. No. 18 11 Defendants.

12 In this action, Plaintiff VW Credit Leasing LTD (“VWCL”) challenges Defendant City of 13 San Mateo’s (“San Mateo”) alleged practice of turning over control of seized vehicles to private 14 tow companies, including Defendant Red Line Towing (“Red Line”), without providing due 15 process. San Mateo now moves to dismiss the claims asserted against it pursuant to Federal Rule 16 of Civil Procedure 12(b)(6). [Docket No. 18.] This matter is suitable for resolution without a 17 hearing. Civ. L.R. 7-1(b). For the following reasons, the motion is denied. 18 I. BACKGROUND 19 VWCL makes the following allegations in the first amended complaint (“FAC”), all of 20 which are taken as true for purposes of the motion to dismiss.1 VWCL is the titled owner of a 21 2020 Volkswagen bearing VIN 3VWCB7BUXLM068420 (the “vehicle”). It was a party to a 22 vehicle lease agreement with Anna Paley. [Docket No. 9 (FAC) ¶¶ 7, 10, 11, Exs. A, B.] Starting 23 in May 2021, Paley failed to make her monthly car payments. As a result, VWCL became entitled 24 to immediate possession of the vehicle under the terms of the lease agreement. FAC ¶¶ 12, 13. 25 On September 15, 2021, San Mateo took custody of the vehicle and instructed Red Line to 26 1 When reviewing a motion to dismiss for failure to state a claim, the court must “accept as true all 27 of the factual allegations contained in the complaint.” Erickson v. Pardus, 551 U.S. 89, 94 (2007) 1 tow it from the roadway, store it, and “not to release it without prior approval from San Mateo.” 2 Id. at ¶ 16. VWCL alleges that Defendants’ seizure of the vehicle was without a warrant and “was 3 unaccompanied by any legitimate exception to the warrant requirement.” Id. at ¶¶ 49, 50. It 4 further alleges that “to the extent the initial seizure was accompanied by any arguably legitimate 5 exception to the warrant requirement, it was carried out in an unreasonable manner of execution 6 insofar as the seizure exceeded the scope necessary to complete any legitimate task associated 7 with the purported warrant exception for which the vehicle was seized.” Id. at ¶ 50. 8 VWCL alleges that it first discovered that the vehicle had been impounded on November 9 4, 2021, when it received a “Notice of Stored Vehicle” advising it of charges for storage, towing, 10 and a title search. Id. at ¶ 18, Ex. C. The Notice of Stored Vehicle lists total charges of $1,510 11 and states, “you are the last Legal Owner of record for this vehicle. Per the requirements of the 12 California Vehicle Code and Civil Code, you are hereby notified that the above described vehicle 13 has been placed in storage. Please contact us at the address shown above and pay the charges if 14 you intend to reclaim this vehicle.” Id. 15 When VWCL contacted Red Line to recover the vehicle, Red Line demanded payment of 16 $4,400 in towing and storage charges before it would release the vehicle to VWCL and claimed a 17 lien on the vehicle for the outstanding charges. FAC ¶¶ 19-21. Red Line claimed that it was not 18 permitted to release the vehicle “unless or until San Mateo authorized Red Line to do so.” Id. at ¶ 19 22. VWCL did not pay the fees that Red Line demanded. It alleges upon information and belief 20 that Red Line sold the vehicle and kept the sale proceeds. Id. at ¶¶ 24, 25. San Mateo did not 21 compensate VWCL for the extinguishment of its property rights in the vehicle. Id. at ¶ 72. 22 Further, “[n]either San Mateo nor Red Line provided VWCL an opportunity to be heard in relation 23 to either Defendants’ actions in relation to the Vehicle in any venue at any time.” Id. at ¶ 59. 24 VWCL alleges that San Mateo benefited from Red Line’s detention of the vehicle “in that 25 San Mateo obtained Red Line’s impound storage services, as well as Red Line’s towing services 26 to clear the roadway, with no payment (or reduced payment) of money from San Mateo to Red 27 Line. Id. at ¶ 26. VWCL further alleges that “[t]o the extent San Mateo or Red Line seek to rely 1 unconstitutional as applied to the circumstances.” Id. at ¶ 23. 2 VWCL alleges that Defendants’ regular policy and custom is to not obtain a warrant for 3 their actions, including initially seizing a vehicle; turning over possession of a vehicle to Red 4 Line; the decision to continue to detain vehicles after the initial reason for the seizure has passed; 5 the decision by Red Line to assert a possessory lien in vehicles and then terminate all property 6 interests in vehicles; and the eventual sale of vehicles. Id. at ¶ 39. It alleges that even if the initial 7 warrantless seizure of vehicles is pursuant to an valid exception to the Fourth Amendment’s 8 warrant requirement, Defendants’ “subsequent actions render the seizures unreasonable in their 9 manner of execution[.]” Id. at ¶ 40. Additionally, VWCL alleges that Defendants’ regular policy 10 and custom is to not provide any form of constitutionally adequate notice or any hearing 11 whatsoever with respect to the foregoing actions. Id. at ¶ 41. According to VWCL, San Mateo 12 benefits from these actions “by avoiding the costs of preserving the seized vehicles and towing 13 services by permitting the towing company to keep the vehicle as compensation,” while Red Line 14 “benefits by using its control over the vehicle (created under mantle of authority from San Mateo) 15 to profit by conditioning release of the vehicle upon payment of money . . . or by selling the 16 vehicle in the absence of payment.” Id. at ¶ 2. 17 VWCL asserts the following claims for relief: 1) a 42 U.S.C. § 1983 claim for 18 unreasonable seizure in violation of the Fourth Amendment against both Defendants; 2) a section 19 1983 claim for deprivation of property without due process in violation of the Fourteenth 20 Amendment against both Defendants; 3) a section 1983 claim for taking of property without just 21 compensation in violation of the Fifth Amendment against San Mateo; 4) declaratory relief against 22 both Defendants; 5) replevin against Red Line; 6) conversion against Red Line; and 7) tortious 23 interference with contractual relations and/or prospective economic advantage against Red Line. 24 San Mateo now moves to dismiss all of VWCL’s claims against it (claims one through 25 four). 26 II. LEGAL STANDARD 27 A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the claims alleged in 1 When reviewing a motion to dismiss for failure to state a claim, the court must “accept as true all 2 of the factual allegations contained in the complaint,” Erickson, 551 U.S. at 94, and may dismiss a 3 claim “only where there is no cognizable legal theory” or there is an absence of “sufficient factual 4 matter to state a facially plausible claim to relief.” Shroyer v. New Cingular Wireless Servs., Inc., 5 622 F.3d 1035, 1041 (9th Cir. 2010) (quotation marks omitted) (quoting Navarro v. Block, 250 6 F.3d 729, 732 (9th Cir. 2001)) (citing Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009)). A claim 7 has facial plausibility when a plaintiff “pleads factual content that allows the court to draw the 8 reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 9 678 (citation omitted). In other words, the facts alleged must demonstrate “more than labels and 10 conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. 11 Corp. v. Twombly, 550 U.S. 554, 555 (2007). Taken together, Iqbal and Twombly require well- 12 pleaded facts, not legal conclusions, that “plausibly give rise to an entitlement to relief. Whitaker 13 v. Tesla Motors, Inc., 985 F.3d 1173, 1176 (9th Cir. 2021) (quotations and internal citations 14 omitted). 15 As a general rule, a court may not consider “any material beyond the pleadings” when 16 ruling on a Rule 12(b)(6) motion. Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001) 17 (citation and quotation marks omitted). However, “a court may take judicial notice of ‘matters of 18 public record,’” id. at 689 (citing Mack v. S. Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 19 1986)), and may also consider “documents whose contents are alleged in a complaint and whose 20 authenticity no party questions, but which are not physically attached to the pleading,” without 21 converting a motion to dismiss under Rule 12(b)(6) into a motion for summary judgment. Branch 22 v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994), overruled on other grounds by Galbraith, 307 F.3d at 23 1125-26. The court need not accept as true allegations that contradict facts which may be 24 judicially noticed. See Mullis v. U.S. Bankr. Court, 828 F.2d 1385, 1388 (9th Cir. 1987). 25 III. REQUEST FOR JUDICIAL NOTICE 26 San Mateo asks the court to take judicial notice of a California Highway Patrol Vehicle 27 Report dated September 15, 2021. It asserts that the document memorializes the San Mateo Police 1 contends that the subject of the Vehicle Report is the same vehicle at issue in the FAC. [Docket 2 No. 18-1 (Def.’s Request for Judicial Notice (“RJN”); O’Keefe Decl. Aug. 22, 2023 ¶ 5, Ex. A 3 (Vehicle Report).] 4 Pursuant to Federal Rule of Evidence 201, a court may take judicial notice of “an 5 adjudicative fact if it is ‘not subject to reasonable dispute.’” Khoja v. Orexigen Therapeutics, Inc., 6 899 F.3d 988, 999 (9th Cir. 2018) (quoting Fed. R. Evid. 201(b)). A fact is “not subject to 7 reasonable dispute” if it is “generally known,” or “can be accurately and readily determined from 8 sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b). VWCL does 9 not dispute the authenticity of the Vehicle Report and does not object to the court’s taking judicial 10 notice of the document. See Opp’n 3 n.1. The court will take judicial notice of the existence of 11 the Vehicle Report as a “matter[ ] of public record.” Lee v. City of Los Angeles, 250 F.3d 668, 689 12 (9th Cir. 2001). However, “[j]ust because [a] document itself is susceptible to judicial notice does 13 not mean that every assertion of fact within that document is judicially noticeable for its truth.” 14 Khoja, 899 F.3d at 999. If a court takes judicial notice of a document, it must identify the specific 15 fact or facts it is noticing from the document. Id. 16 San Mateo’s RJN does not identify which facts in the Vehicle Report are judicially 17 noticeable. It appears to seek judicial notice that 1) the vehicle “was recovered by the San Mateo 18 Police Department at 112 W 36th Ave, San Mateo as a stolen vehicle” and 2) that the vehicle was 19 stored pursuant to California Vehicle Code section 22651(c).2 See Mot. 2, 7. San Mateo offers no 20 authority that the court may judicially notice these facts for their truth, as opposed to judicial 21 notice that statements that the vehicle was stolen and stored under California Vehicle Code section 22 22651(c) appear in the Vehicle Report. See Lee, 250 F.3d at 689 (it is inappropriate to “take 23 judicial notice of a fact that is ‘subject to reasonable dispute’” (quoting Fed. R. Evid. 201(b)). 24 Accordingly, the court takes judicial notice of the existence of the Vehicle Report but does not 25

26 2 Pursuant to California Vehicle Code section 22651(c), a peace officer “may remove a vehicle located within the territorial limits in which the officer . . . may act . . . [i]f a vehicle is found upon 27 a highway or public land and a report has previously been made that the vehicle is stolen or a 1 accept as true the facts alleged in the document itself. See, e.g., Beckway v. DeShong, 717 F. 2 Supp. 2d 908, 912 n.1 (N.D. Cal. 2010), on reconsideration in part (July 28, 2010) (taking judicial 3 notice of the existence of documents from criminal proceeding, including transcript and police 4 reports, but declining to “accept as true the facts alleged in the documents.”). 5 IV. DISCUSSION 6 A. Constitutional Claims 7 Claims one through three assert violations of the Fourth, Fourteenth, and Fifth 8 Amendments to the United States Constitution. San Mateo argues that the FAC does not plausibly 9 allege the existence of a municipal policy, custom, or practice under Monell v. Department of 10 Social Services of City of New York, 436 U.S. 658 (1978), or that any such policy, custom, or 11 practice caused VWCL’s deprivation of rights in the vehicle. Mot. 6. It further contends that all 12 three constitutional claims fail as a matter of law. Id. at 7-12. 13 1. Monell Claim 14 a. Legal Standards for Monell Liability 15 A municipality may face section 1983 liability if it “‘subjects’ a person to a deprivation of 16 rights or ‘causes’ a person ‘to be subjected’ to such deprivation.” Connick v. Thompson, 563 U.S. 17 51, 60 (2011) (quoting Monell, 436 U.S. at 692). However, the municipality may be held liable 18 “only for ‘[its] own illegal acts.’” Id. (quoting Pembaur v. Cincinnati, 475 U.S. 469, 479 (1986)). 19 It cannot be held vicariously liable for its employees’ actions. Id. (citations omitted). To establish 20 municipal liability, plaintiffs “must prove that ‘action pursuant to official municipal policy’ caused 21 their injury.” Id. (quoting Monell, 436 U.S. at 691). “The ‘official policy’ requirement was 22 intended to distinguish acts of the municipality from acts of employees of the municipality, and 23 thereby make clear that municipal liability is limited to action for which the municipality is 24 actually responsible.” Pembaur, 475 U.S. at 479-80 (emphasis in original). Official municipal 25 policy includes “the decisions of a government’s lawmakers, the acts of its policymaking officials, 26 and practices so persistent and widespread as to practically have the force of law.” Connick, 563 27 U.S. at 61 (citations omitted). Such policy or practice must be a “moving force behind a violation 1 Monell, 436 U.S. at 694). An official municipal policy may be either formal or informal. City of 2 Saint Louis v. Praprotnik, 485 U.S. 112, 131 (1988) (acknowledging that a plaintiff could show 3 that “a municipality’s actual policies were different from the ones that had been announced.”). 4 b. Analysis 5 According to San Mateo, “no City policy or custom has been identified and no specific 6 facts regarding inaction or inaction have been alleged against the City.” Instead, it argues, the 7 FAC relies on “limited, conclusory assertions that there were ‘regular policies, customs and/or 8 practices for the handling of Vehicles encountered and impounded under the same or similar 9 circumstances.’” Mot. 6 (quoting FAC ¶ 28). 10 A complaint asserting liability under Monell “may not simply recite the elements of a 11 cause of action, but must contain sufficient allegations of underlying facts to give fair notice and 12 to enable the opposing party to defend itself effectively.” AE ex rel. Hernandez v. Cnty. of Tulare, 13 666 F.3d 631, 637 (9th Cir. 2012) (quoting Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011)). 14 Here, the FAC alleges that San Mateo has a policy and practice of “summarily turning over 15 control of seized vehicles to the private company that towed and stored the vehicle when San 16 Mateo seized it,” failing to “return those vehicles to a person with a preexisting property interest 17 when the justification for San Mateo’s seizure has passed,” and allowing tow companies “to lien 18 and/or sell the vehicle as a means to cover the costs of towing and storage,” instead of following a 19 “constitutionally appropriate procedure for disposing of seized vehicles consistent with the basic 20 due process requirements of notice and a hearing.” FAC ¶¶ 1, 32. It offers additional factual 21 allegations regarding San Mateo’s alleged policy and practice, see id. at ¶¶ 28-42, including the 22 following allegations at paragraphs 39 and 41:

23 39. It is San Mateo’s and Red Line’s regular policy and custom, in the course of the above-described conduct, to not obtain a warrant for any 24 of the following actions (for which no valid exception to the warrant requirement exists): 25 A. The initial seizure of a vehicle; 26 B. The turnover of possession of a vehicle to Red Line; C. The decision by San Mateo and/or Red Line to continue to 27 detain vehicles after the initial reason for the seizure has and the amount of that lien; 1 E. Red Line acting to acquire ownership by terminating all property interests in vehicles; and 2 F. The eventual sale of vehicles.

3 41. It is also San Mateo’s and Red Line’s regular policy and custom, in the course of the above-described conduct, to not provide any form 4 of constitutionally adequate notice, nor any hearing whatsoever, in relation to any of the following actions: 5 A. The initial seizure of a vehicle; 6 B. The turnover of possession of a vehicle to Red Line; C. The decision by San Mateo and/or Red Line to continue to 7 detain vehicles after the initial reason for the seizure has passed; 8 D. The decision of Red Line to assert an ex parte possessory lien and the amount of that lien; 9 E. Red Line acting to acquire ownership by terminating all property interests in vehicles; and 10 F. The eventual sale of vehicles.

11 Id. at ¶¶ 39, 41. 12 The FAC also alleges that Defendants’ conduct with respect to VWCL and the vehicle 13 “comported with” these “regular policies, customs and/or practices for the handling of Vehicles 14 encountered and impounded under the same or similar circumstances.” Id. at ¶ 28. These 15 allegations specify the particular policies, customs, or practices pursuant to which VWCL alleges 16 it was injured and are sufficient to “give fair notice and to enable the opposing party to defend 17 itself effectively.” AE, 666 F.3d at 637. Moreover, the court finds that the FAC plausibly alleges 18 that VWCL’s constitutional claims arose as a result of the alleged policies, customs, or practices; 19 i.e., the alleged policies, customs, or practices were “the moving force behind” VWCL’s alleged 20 constitutional injuries. See Dougherty, 654 F.3d at 900; AE, 666 F.3d at 637 (“the factual 21 allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not 22 unfair to require the opposing party to be subjected to the expense of discovery and continued 23 litigation.” (quoting Starr, 652 F.3d at 1216)). 24 Before turning to whether the FAC states constitutional claims, the court addresses San 25 Mateo’s argument that VWCL has not stated constitutional claims because San Mateo acted 26 pursuant to state law in having the vehicle removed from its location and impounded. See Mot. 7- 27 8. In relevant part, it cites California Vehicle Code section 22653(a), which authorizes a peace 1 officer to “remove a vehicle from private property located within the territorial limits in which the 2 officer is empowered to act, when a report has previously been made that the vehicle has been 3 stolen or a complaint has been filed and a warrant thereon issued charging that the vehicle has 4 been embezzled.” It also cites a statutory provision authorizing a city to “adopt a regulation, 5 ordinance, or resolution establishing procedures for the release of properly impounded vehicles to 6 the registered owner . . . and for the imposition of a charge equal to its administrative costs 7 relating to the removal, impound, storage, or release of the vehicles to the registered owner or to 8 the agent of the registered owner,” California Vehicle Code section 22850.5(a), as well as other 9 provisions regarding the removal and storage of vehicles and establishment of a lien by the keeper 10 of the vehicle. Mot. 7-8 (citing Cal. Veh. Code §§ 22850, 22851(a)(1), Cal. Civ. Code §§ 3067- 11 3074). San Mateo contends that it “adhered to the requirements of California Vehicle Code in 12 removing the stolen Vehicle from private property” and thus did not violate VWCL’s 13 constitutional rights. Id. at 7. 14 This argument fails. As discussed in connection with San Mateo’s RJN, whether the 15 vehicle was reported stolen and removed pursuant to the authority cited in the Vehicle Report are 16 facts outside the pleadings that may not be considered on this motion. Moreover, whether San 17 Mateo complied with state law regarding the seizure, impoundment, and sale of the vehicle is not a 18 clear defense to VWCL’s constitutional claims. With respect to the Fourth Amendment claim, the 19 Ninth Circuit has explained that “the decision to impound [a vehicle] pursuant to the authority of a 20 city ordinance and state statute does not, in and of itself, determine the reasonableness of the 21 seizure under the Fourth Amendment, as applied to the states by the Fourteenth Amendment.” 22 Miranda v. City of Cornelius, 429 F.3d 858, 864-65 (9th Cir. 2005). In such circumstances, “[t]he 23 question . . . upon review of a state-approved search or seizure is not whether the search (or 24 seizure) was authorized by state law. The question is rather whether the search was reasonable 25 under the Fourth Amendment.” Id. (quoting Sibron v. New York, 392 U.S. 40, 61 (1968)). As to 26 the Fourteenth Amendment, “minimum procedural requirements are a matter of federal law, they 27 are not diminished by the fact that the State may have specified its own procedures that it may 1 Education v. Loudermill, 470 U.S. 532, 541 (1985) (cleaned up); see also Robison v. Via, 821 F.2d 2 913, 923 (2d Cir. 1987) (“[f]ederal constitutional standards rather than state statutes define the 3 requirements of procedural due process.” (citing Cleveland, 470 U.S. at 540-41)). The court now 4 turns to whether the FAC states constitutional violations. 5 2. Fourth Amendment Claim 6 VWCL’s Fourth Amendment claim is based on allegations that Defendants seized the 7 vehicle without a warrant, and that even if the seizure was pursuant to an “arguably legitimate 8 exception to the warrant requirement,” it was unreasonable and violated the Fourth Amendment as 9 it “exceeded the scope necessary to complete any legitimate task associated with the purported 10 warrant exception for which the vehicle was seized.” FAC ¶¶ 49-51. 11 “The impoundment of an automobile is a seizure within the meaning of the Fourth 12 Amendment.” Miranda, 429 F.3d 862. “A seizure conducted without a warrant is per se 13 unreasonable under the Fourth Amendment—subject only to a few specifically established and 14 well delineated exceptions” and the government bears the burden of “persuad[ing] the district 15 court that a seizure comes under one of a few specifically established exceptions to the warrant 16 requirement.” Id. (quoting United States v. Hawkins, 249 F.3d 867, 872 (9th Cir. 2001)). 17 San Mateo argues that the warrantless seizure of the vehicle was valid under the 18 community caretaker exception to the Fourth Amendment warrant requirement. It cites South 19 Dakota v. Opperman, 428 U.S. 364, 368-69 (1976), in which the Supreme Court held that police 20 officers may remove and impound vehicles that impede traffic or “jeopardize both the public 21 safety and the efficient movement of vehicular traffic” under the “community caretaking” 22 function. According to San Mateo, it acted reasonably under the community caretaking exception 23 to the Fourth Amendment’s warrant requirement by towing and storing the stolen vehicle. Mot. 24 11. However, “[w]hether an impoundment is warranted under this community caretaking doctrine 25 depends on the location of the vehicle and the police officers’ duty to prevent it from creating a 26 hazard to other drivers or being a target for vandalism or theft.” Miranda, 429 F.3d at 864. San 27 Mateo’s argument goes to the merits of the Fourth Amendment claim and relies upon facts not 1 property. Resolution of whether the initial seizure was reasonable under the Fourth Amendment is 2 thus not appropriate at the pleading stage. 3 San Mateo also ignores VWCL’s allegations that even if San Mateo initially seized the 4 vehicle under a valid exception to the warrant requirement, “the seizure exceeded the scope 5 necessary to complete any legitimate task associated with the purported warrant exception for 6 which the vehicle was seized.” FAC ¶¶ 40, 50. “It’s well established that ‘a seizure lawful at its 7 inception can nevertheless violate the Fourth Amendment because its manner of execution 8 unreasonably infringes possessory interests.’” Brewster v. Beck, 859 F.3d 1194, 1196 (9th Cir. 9 2017) (quoting United States v. Jacobsen, 466 U.S. 109, 124 & n.25 (1984)). Specifically, “[a] 10 warrantless seizure that was valid at its inception may become unreasonable by virtue of a delay in 11 time.” Sandoval v. Cnty. of Sonoma, 72 F. Supp. 3d 997, 1002 (N.D. Cal. 2014) (citing United 12 States v. Place, 462 U.S. 696, 709-10 (1983)), aff’d, 912 F.3d 509 (9th Cir. 2018). See, e.g., 13 United States v. Dass, 849 F.2d 414, 414-15 (9th Cir. 1988) (holding that the length of valid, 14 warrantless seizure of packages containing marijuana violated the Fourth Amendment). “To 15 determine whether a prolonged warrantless seizure was reasonable, a reviewing court will 16 ‘balance the nature and quality of the intrusion on the individual’s Fourth Amendment interests 17 against the importance of the governmental interests alleged to justify the intrusion.’” Sandoval, 18 72 F. Supp. 3d at 1009 (quoting United States v. Sullivan, 753 F.3d 845, 855 (9th Cir. 2014)). 19 On reply, San Mateo argues that “[t]he ongoing impoundment of the Vehicle remained 20 essential to serve the purpose of maintaining public safety by keeping a stolen and unclaimed 21 vehicle off the street,” and attempts to distinguish Brewster on its facts. Reply 3. Again, this 22 argument fails to persuade because it rests on facts that are not part of the FAC and goes to the 23 merits of VWCL’s Fourth Amendment claim. Next, San Mateo contends that “[t]he ongoing 24 impoundment was also essential until the legal owner fulfilled its financial obligation and claimed 25 the property,” citing California Vehicle Code section 22851. That statute provides in relevant part 26 that “[w]henever a vehicle has been removed to a garage under this chapter and the keeper of the 27 garage has received the notice or notices as provided herein, the keeper shall have a lien dependent 1 vehicle . . .” Cal. Veh. Code § 22851(a)(1). To the extent that Vehicle Code section 22851 2 obligated VWCL to “pay for towing and impound charges before regaining possession of the 3 vehicle” as San Mateo claims, see Reply 3, “statutory authorization alone does not satisfy the 4 Fourth Amendment’s requirement of reasonableness.” Sandoval, 72 F. Supp. 3d at 1006-07 5 (rejecting argument that 30-day impoundment of vehicle was reasonable because it was authorized 6 by a California Vehicle Code provision; noting “[t]he mere fact that a state has authorized a search 7 or seizure does not render it reasonable under the Fourth Amendment.” (citations omitted)). 8 San Mateo’s motion to dismiss the Fourth Amendment claim is denied. 9 3. Fourteenth Amendment Claim 10 The Fourteenth Amendment’s due process clause requires that individuals “receive notice 11 and opportunity to be heard before the Government deprives them of property.” Lavan v. City of 12 Los Angeles, 693 F.3d 1022, 1032 (9th Cir. 2012) (quoting United States v. James Daniel Good 13 Real Prop., 510 U.S. 43, 48 (1993)). “A procedural due process claim has two elements: 14 deprivation of a constitutionally protected liberty or property interest and denial of adequate 15 procedural protection.” Krainski v. Nevada ex rel. Bd. of Regents of Nevada Sys. of Higher Educ., 16 616 F.3d 963, 970 (9th Cir. 2010). 17 VWCL’s Fourteenth Amendment claim is based on the allegations that “[n]either San 18 Mateo nor Red Line had any mechanism for, nor did either secure, review of either Defendants’ 19 actions in relation to the Vehicle before a judge or other neutral decisionmaker,” nor did they 20 “provide[ ] VWCL an opportunity to be heard in relation to either Defendants’ actions in relation 21 to the Vehicle in any venue at any time.” FAC ¶¶ 58-59. Accordingly, VWCL alleges that neither 22 Defendant “provided VWCL with constitutionally adequate notice of that non-existent hearing 23 procedure.” Id. at ¶ 60. It further alleges that “[t]he manner in which VWCL became aware of 24 San Mateo and Red Line’s seizure of the Vehicle, as well as Red Line’s continued possession of 25 the Vehicle, did not constitute adequate notice for the purposes of due process.” Id. at ¶ 61. 26 San Mateo does not dispute the first element of the due process claim (deprivation of a 27 constitutionally protected property interest), but argues that under Ninth Circuit law, procedural 1 (citing Miranda, 429 F.3d at 867). It asserts that under the three-part balancing test from Mathews 2 v. Eldridge, 424 U.S. 319, 333 (1976), “there was no violation of due process” based on VWCL’s 3 claim that it was not afforded a hearing prior to the seizure of the vehicle. Mot. 8-10. 4 In Miranda, the Ninth Circuit observed that caselaw “support[s] the proposition that 5 procedural due process does not require pre-deprivation notice and a hearing before 6 impoundments,” but noted that in those cases, “the police clearly were acting within their 7 legitimate caretaking functions.” 429 F.3d at 867. As discussed above, San Mateo’s argument 8 that its seizure of the vehicle was justified under the community caretaking function relies on facts 9 outside of the FAC. As to San Mateo’s argument that it did not violate VWCL’s due process 10 rights under the Mathews balancing test, it does not address the portion of VWCL’s claim directed 11 at the failure to provide a post-seizure notice and hearing. See FAC ¶¶ 41, 59-60. Accordingly, 12 the motion to dismiss the Fourteenth Amendment claim is denied. 13 4. Fifth Amendment Claim 14 VWCL’s Fifth Amendment claim is based on the following allegations: San Mateo 15 compensated Red Line “by turning over possession of the Vehicle to Red Line” and “interfered 16 with VWCL’s protected interests in the Vehicle . . . by turning over the Vehicle to Red Line and 17 permitting it to assert a possessory lien that both Defendants asserted encumbered VWCL’s 18 interests and prevented VWCL from exercising its contractual possessory rights in the Vehicle.” 19 FAC ¶¶ 68, 70. Accordingly, it alleges, San Mateo took VWCL’s interests in the vehicle for a 20 public use without compensation in violation of the Fifth Amendment’s takings clause. Id. at ¶¶ 21 71-73. 22 The takings clause provides in full: “nor shall private property be taken for public use 23 without just compensation.” U.S. Const. Amend. V. “The takings clause applies to two types of 24 government action—the taking of physical possession of property, or of an interest in that 25 property, for a public use and the regulatory prohibition of a private use.” Mateos-Sandoval v. 26 Cnty. of Sonoma, 942 F. Supp. 2d 890, 911 (N.D. Cal. 2013) (citing Tahoe-Sierra Pres. Council, 27 Inc. v. Tahoe Reg’l Planning Agency, 535 U.S. 302, 321-23 (2002), aff’d sub nom. Sandoval v. 1 reh’g, 599 F. App’x 673 (9th Cir. 2015). VWCL alleges the first type of taking. 2 San Mateo first argues that the takings clause is not applicable to the seizure of property 3 pursuant to the government’s police power, even if the plaintiff alleges the government acted 4 unlawfully. See Acadia Tech., Inc. v. United States, 458 F.3d 1327, 1330 (Fed. Cir. 2006) (“a 5 takings claim is separate from a challenge to the lawfulness of the government’s conduct: a taking 6 does not result simply because the government acted unlawfully, nor does a takings claim fail 7 simply because the government's conduct is subject to challenge as unlawful.”). It contends that it 8 seized the vehicle under its police power pursuant to California Vehicle Code section 22653, and 9 as a result, VWCL cannot state a claim for violation of the takings clause. Mot. 12. 10 VWCL responds that in Jenkins v. United States, 71 F.4th 1367, 1373-74 (Fed. Cir. 2023), 11 the Federal Circuit recently distinguished Acadia, the case on which San Mateo relies. In Jenkins, 12 the court held that “[w]hile the United States’ police power may insulate it from liability from an 13 initial seizure, there is no police power exception that insulates the United States from takings 14 liability for the period after seized property is no longer needed for criminal proceedings.” Id. at 15 1373. Therefore, “[e]ven when the initial seizure and retention of property is properly done 16 pursuant to the police power, the police power does not insulate the government from liability for 17 a taking if the property is not returned after the government interest in retaining the property 18 ceases.” Id. at 1373-74. 19 Once again, San Mateo’s argument rests on facts about the seizure that are not alleged in 20 the FAC. Moreover, VWCL alleges that San Mateo’s seizure was unreasonable because it 21 “exceeded the scope necessary to complete any legitimate task . . . for which the vehicle was 22 seized,” see FAC ¶ 50, the scenario contemplated in Jenkins. In its reply, San Mateo 23 acknowledges Jenkins but argues that the police power exception applies here because “the need 24 to retain the Vehicle does not end until the legal owner settles the charges” associated with the 25 towing and storage. Reply 9 (citing Cal. Veh. Code § 22851). San Mateo does not develop this 26 argument and offers no support for the claim that state law authorization of the retention of the 27 vehicle pending payment of the outstanding charges immunizes it from liability under the Fifth 1 San Mateo next asserts that VWCL cannot state a takings clause claim because it has not 2 alleged that it attempted to obtain compensation through available state procedures. Mot. 12 3 (citing Williamson Cnty. Reg’l Plan. Comm’n v. Hamilton Bank of Johnson City, 473 U.S. 172, 4 195 n.13 (1985) (“because the Fifth Amendment proscribes takings without just compensation, no 5 constitutional violation occurs until just compensation has been denied. The nature of the 6 constitutional right therefore requires that a property owner utilize procedures for obtaining 7 compensation before bringing a § 1983 action.” (emphasis in original)). San Mateo does not 8 acknowledge that in Knick v. Township of Scott, 139 S. Ct. 2162, 2167-68 (2019), the court 9 overruled its prior jurisprudence requiring exhaustion of state remedies and held “[a] property 10 owner has an actionable Fifth Amendment takings claim when the government takes his property 11 without paying for it.” 12 Finally, San Mateo argues that the takings clause claim fails because San Mateo did not 13 deprive VWCL of its due process rights, relying on its arguments in favor of dismissing the 14 Fourteenth Amendment claim. Mot. 12. As discussed above, the court concludes that the FAC 15 states a due process claim. Accordingly, the motion to dismiss the takings clause claim is denied. 16 B. Declaratory Relief Claim 17 VWCL’s final claim against San Mateo is for declaratory relief under 28 U.S.C. § 2201(a). 18 The FAC alleges that “[a] judicial declaration will also serve the public interest, insofar as . . . San 19 Mateo seizes hundreds of cars every year under the same or similar circumstances to the Vehicle, 20 which it subjects to the same” allegedly unconstitutional policies and customs. FAC ¶ 82. It also 21 “seeks a declaration that, to the extent Defendants seek to rely on any provisions of state or local 22 law to justify the above-described actions, those laws are unconstitutional as applied in violation 23 of the supremacy clause and the aforementioned constitutional rights.” Id. at ¶ 83. 24 28 U.S.C. § 2201(a) provides that “[i]n a case of actual controversy within its jurisdiction . 25 . . any court of the United States . . . may declare the rights and other legal relations of any 26 interested party seeking such declaration, whether or not further relief is or could be sought.” 27 “This statute does not create new substantive rights, but merely expands the remedies available in 1 (9th Cir. 2014). The dispute must be “real and substantial” and “definite and concrete, touching 2 |} the legal relations of parties having adverse legal interests[.]” MedImmune, Inc. v. Genentech, 3 Inc., 549 U.S. 118, 127 (2007) (quotation marks and citation omitted). Courts must ask “whether 4 the facts alleged, under all the circumstances, show that there is a substantial controversy, between 5 parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance 6 || of a declaratory judgment.” /d. (quotation marks and citation omitted). 7 San Mateo moves to dismiss the declaratory relief claim on the ground that the FAC fails 8 to specify which state or local laws VWCL claims are unconstitutional as applied. However, it 9 || does not address the FAC’s request for declaratory relief related to San Mateo’s allegedly 10 || unconstitutional policies. The court concludes that the FAC contains sufficient allegations to 11 indicate a real controversy with adverse legal interests between the parties, and to put San Mateo 12 || on adequate notice of the claim such that it can defend against it. The motion to dismiss the

13 declaratory relief claim is denied.

14 |] v. CONCLUSION

15 For the foregoing reasons, San Mateo’s motion to dismiss is denied. The November 9, 16 || 2023 initial case management conference is vacated and rescheduled to December 6, 2023 at 1:30

= 17 || p.m. The parties’ updated joint case management conference statement is due on November 29,

Z 1 2023.

19 KD OD 20 IT IS SO ORDERED. A) □□ &y ERED | □ 21 || Dated: November 7, 2023 ZINtT 1S ~ 22 Ley Ly Pz 2. | Loot OM. Rey, □ □□□ 8 Chial® ee ana Ze —— □□□ 24 ee > Lay KS 25 oO

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