The United States District Court for the Eastern District of Louisiana held a contentious hearing Wednesday, Nov. 8, 2023. Before the court were cross motions for summary judgment in the consolidated New Orleans Short-Term Rental cases, Hignell & Marquadt.  Ultimately, it maintained the existing TRO, telegraphed some likely rulings, and then ordered additional briefing.

               At the prior hearing on the motions, the Court requested supplemental evidence related to the relationship between short-term rentals (STRs) and affordable housing. Boththe City and the two plaintiff groups filed supplemental briefing and evidence.

           Before a full courtroom, Judge Ivan Lemelle opened oral argument by stating that the parties had confused and complicated what he believed should be a dormant commerce clause claim. While the plaintiffs raised a number of constitutional claims, the Court described the on-site operator requirement as the “core issue” of the dormant commerce clause matter, as that was the issue remanded by the U.S. Fifth Circuit Court of Appeal.

           The City and the Plaintiffs sparred over whether the Plaintiffs had even pled an equal protection claim with respect to STRs vs. other rentals. The Court focused in on the affordable housing issue. The Plaintiffs argued that while they provided evidence in the form of a study by Charles River Associates that there was no correlation between affordable housing and STRs, the City referenced some existing resources that the plaintiffs considered dubious—but which they had failed to attempt to exclude, the Court said

           Hignell had been consolidated with the Marquadt case earlier this year. In the Marquadt case, a property owner who held an RSTR license sued when she was told her RSTR would expire and she would have to apply for a new, non-commercial license. When discussing that claim, the Court raised the question of whether that plaintiff’s real claim was an ex post facto / bill of attainder claim. Counsel for Marquadt supported the Court’s question while the City maintained that there was extensive due process during the council’s debate and session.

           The Court twice referred to Wednesday’s hearing as the beginning of a process. The Court indicated it was prepared to “reject” (or dismiss) the Plaintiffs’ claims stating that (1) the one NCSTR per bloc limit was unconstitutional; (2) that the City’s ability to demand records without probable cause was illegal; and (3) that the City lacked the power to regulate STR’s in the first place. This final position could be very significant for any property owner seeking to challenge the potential ordinance banning RSTRs altogether. 

           The Court then ordered additional briefing on a range of topics. First, it ordered briefing on the City’s decision to allow bed and breakfasts in residential zones, and briefing on the justification for certain Commercial STRs. The Court indicated it does not take issue with an on-premises operator requirement, but wanted more clarity on whether the operator needed to reside in the dwelling unit or merely on the block of record. Following the Hignell Plaintiffs’ argument, the Court also ordered briefing on whether juridical persons (such as a company or an LLC) could constitutionally be prohibited from holding an RSTR permit. From what appeared to be a concern the Court itself raised, the Court also ordered briefing on the two “exceptions” provided for by the statutes. Finally, the Court ordered briefing on the ex post facto issue.

           The Court ordered the City to produce the required background information to the plaintiffs in two weeks and the plaintiffs to respond with any relevant information one week after that. From that date, the parties have one week to file post-hearing briefs. The Court will not allow additional briefing and will instead reset the matter for another oral argument.

           At the close of the hearing, the City asked for clarification of the existing TRO, stating that the City had witnessed a rise in unlicensed activity. The Court emphasized that the city was not enjoined from enforcing things like nuisance laws if a property is problematic. When pressed, the Court declined the request to clarify the TRO but did say that the injunction applies to properties with STR permits. It is unclear if that exchange will impact the City’s current conservative enforcement posture.