Keeping Tabs on the Ninth Circuit
February 04, 2022 - This Week at the Ninth

This Week at The Ninth: Money, Money, Money, Money

This Week at The Ninth: Money, Money, Money, Money

This week the Court addresses the constitutionality of Oakland’s Uniform Residential Tenant Relocation Ordinance’s “relocation fee,” and the proper method for calculating an employer’s “withdrawal liability” under ERISA.


The Court holds that money may be the subject of a physical taking claim, but relocation fee under Oakland’s Uniform Residential Tenant Relocation Ordinance is not an unconstitutional taking.

Panel: Judges Clifton, N.R. Smith, and Nelson, with Judge Nelson writing the opinion.

Key highlight: “[E]ven though money can be the subject of a physical, also called a per se, taking, the relocation fee required by the Ordinance was a regulation of the landlord-tenant relationship, not an unconstitutional taking of a specific and identifiable property interest.”

Background: Plaintiffs Lyndsey Ballinger and Sharon Ballinger own property in Oakland, California. In 2016, they moved to the East Coast and decided to rent out their house. When they returned to the Bay Area, they wanted to move back in to their Oakland home. Under Oakland’s Residential Tenant Relocation Ordinance (“Ordinance”), landlords moving back in to their homes after the expiration of a lease are required to pay tenants a relocation fee. Accordingly, the Ballingers gave their tenants sixty days’ notice to vacate the property and paid them $6,582.40 in relocation fees.

The Ballingers then filed suit against the City of Oakland under the Declaratory Judgment Act and 42 U.S.C. § 1983. They alleged that the relocation fee is an unconstitutional physical taking, an unconstitutional exaction, and an unconstitutional seizure under the Fourth and Fourteenth Amendments. The district court dismissed each claim under Federal Rule of Civil Procedure 12(b)(6).

Result: The Ninth Circuit affirmed. First, the Court held that the relocation fee is not an unconstitutional taking but rather “a regulation of the landlord-tenant relationship[.]” The Court compared the Ordinance to other lawful housing regulations, including rent control and zoning regulations, and other obligations to pay in relation to property use, including property and estate taxes. The Court acknowledged that money can be the subject of a physical taking, but not when a law “imposes a general obligation to pay money and does not identify a specific fund of money.” Second, the Court held that the relocation fee is not an exaction, or an unconstitutional condition on the Ballingers’ use of their Oakland home. Third, the Court held that the relocation fee is not a seizure under the Fourth and Fourteenth Amendments because it did not involve state action. After all, the relocation fee is an exchange of money between tenants and landlords. Although the City of Oakland enacted the Ordinance requiring the relocation fee, the Court concluded that that is not enough to qualify as state action.


The Court holds that a surcharge paid by an employer when a pension plan is in critical status is not included as part of the “highest contribution rate” calculation under ERISA.

Panel: Judges Fletcher, Ikuta, and Bress, with Judge Ikuta writing the opinion.

Key Highlight: “Because the surcharge is neither a contribution nor a contribution rate under the statute, it does not affect § 1399’s formula for calculating annual withdrawal payments.”

Background: The Employee Retirement Income Security Act of 1974 (“ERISA”) sets forth minimum standards for private pension plans, including multiemployer plans. Multiemployer pension plans are plans where multiple employers pool their resources into a general fund. In 1980, Congress amended ERISA to hold employers withdrawing from multiemployer plans liable for their share of unfunded benefits. The employer’s “withdrawal liability” is calculated according to a complex formula and can be paid out in one lump sum or on an annual basis. If the employer opts for annual payments, there is a separate formula to calculate payment amounts. One component of that formula is the “highest contribution rate at which the employer had an obligation to contribute under the plan during the 10 plan years” preceding withdrawal. In 2006, Congress amended ERISA yet again to address another problem: underfunded multiemployer pension plans. For pension plans in “critical status”—less than 65 percent funded—the legislation obligated employers to pay a surcharge into the plan.

Plaintiff is the administrator of a multiemployer pension plan (“the Fund”). Defendant Welfare & Pension Administration Service, Inc. (“WPAS”) was obligated under a collective bargaining agreement to contribute to that plan. In 2009, the plan was determined to be in critical status and WPAS began paying the statutorily required surcharge. In 2016, WPAS withdrew from the pension plan, was assessed nearly $25,000 in withdrawal liability, and opted to make annual payments. In calculating WPAS’s withdrawal liability, the Fund reasoned that the “highest contribution rate” included the critical status surcharge.

WPAS disagreed with the Fund’s assessment and challenged it in an arbitration proceeding. The arbitrator found in favor of WPAS and ordered the Fund to recalculate WPAS’s annual withdrawal payment amount. The Fund then asked the district court to vacate the arbitrator’s award. The district court granted WPAS’s motion for summary judgment.

Result: The Ninth Circuit affirmed, holding that the “highest contribution rate” does not include the critical status surcharge under ERISA. The Court began its analysis with the text of ERISA and its amendments. The statute did not define “contribution rate,” so the panel determined the most straightforward meaning to be “the highest dollar amount per compensable hour specified in the pension plan.” The panel noted that the surcharge does not increase that amount; instead the surcharge requires a separate payment. In reaching that conclusion, the panel embraced a similar conclusion by the Third Circuit in Bd. Of Trs. Of IBT Loc. 863 Pension Fund v. C&S Wholesale Grocers, Inc., 802 F.3d 534, 544-45 (3d Cir. 2015).

The court then addressed the Fund’s argument that the “highest contribution rate” necessarily includes the surcharge because WPAS was required to pay that amount to the plan. First, the panel wrote that that interpretation is inconsistent with the plain language of the statute, which “makes clear that the surcharge is based on the contribution, but is not itself deemed to be part of the contribution.” Second, the panel wrote that the surcharge does not increase the “contribution rate” as a practical matter. Third, the panel disagreed with the Fund’s legislative intent analysis. The Fund’s analysis relied on the Supreme Court’s decision in Milwaukee Brewery Workers’ Pension Plan v. Joseph Schlitz Brewing Co., 513 U.S. 414 (1995), which, in interpreting the effect of the 1980 amendments to ERISA, stated that the amendment “fixes the amount of each annual payment at a level that (roughly speaking) equals the withdrawing employer’s typical contribution in earlier years.” In contrast, the result of the panel’s interpretation would be an annual withdrawal payment that is ten percent lower than what the employer would make if it did not withdraw. But the panel distinguished Milwaukee Brewery because it was decided before Congress enacted the critical status surcharge amendment. Ultimately, the Court concluded “that nothing in ERISA supports an interpretation that the surcharge is a component of a contribution rate[.]”