S.D.Ohio: Residential rental property is not a “closely regulated industry”

Plaintiff meets his burden to get a preliminary injunction against a city rental property inspection ordinance that had no warrant requirement for refused entry. Rental property is not a closely regulated industry. Vonderhaar v. Evendale, 2018 U.S. Dist. LEXIS 8856 (S.D. Ohio Jan. 19, 2018):

The Court recognizes that the question is not whether the Code may be unconstitutionally applied, but whether there exists “no” or at least few “circumstances” under which the Code would be valid. Connection Distrib. Co. v. Holder, 557 F.3d 321, 335 (6th Cir. 2009) (en banc) (citing U.S. v. Salerno, 481 U.S. 739, 745 (1987)). The Court is unable to definitively answer that question at this juncture. However, the Court finds, at this early stage, the lack of an express warrant provision raises questions that are sufficiently serious, substantial, and difficult so as to satisfy Plaintiffs’ preliminary burden.

i. Closely Related Business Exception

In the alternative, Defendants argue renting residential properties is a closely regulated business and thus, warrantless inspections are permissible under the Fourth Amendment. This exception, recognizes that “[c]ertain industries have such a history of government oversight that no reasonable expectation of privacy could exist for a proprietor over the stock of such an enterprise.” Marshall v. Barlow’s, Inc., 436 U.S. 307, 313 (1978) (internal citations omitted). The Supreme Court has only recognized four industries as being closely regulated: liquor sales, firearms dealing, mining, and running an automobile junkyard. Patel, 135 S.Ct. at 2454.
The court in Baker addressed and rejected the same argument raised by Defendants herein. This Court likewise rejects Defendants’ argument. As the court explained, “[a]s the Supreme Court has warned, to classify the rental business as closely regulated ‘would permit what has always been a narrow exception to swallow the rule.’ Accordingly, the exception does not render the warrantless inspections authorized by the Code reasonable under the Fourth Amendment.” Baker, 2015 WL 5822659 at *5 (internal citations omitted).

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