June 22, 2023

Volume XIII, Number 173

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Articles Of Incorporation Doom Representational Standing

The Short Term Rental Alliance of San Diego is an advocacy and education organization whose members include landlords and hosts with at least one single-family short-term rental property located in the “San Diego Coastal Overlay.”   It is a nonprofit corporation under California Nonprofit Mutual Benefit Corporation Law.  In Short Term Rental All. of San Diego v. City of San Diego, 2023 WL 3964059, (S.D. Cal. June 12, 2023), the Alliance sought to declare void and enjoin enforcement of two City of San Diego ordinances insofar as they regulate short-term residential rentals not occupied by the host.   The City argued that the Alliance lacked representational (aka associational) standing to challenge the ordinance.

In assessing the Alliance claim of standing, U.S. District Judge M. James Lorenz, citing Am. Diabetes Ass'n v. U.S. Dep't of the Army, 938 F.3d 1147, 1155 (9th Cir. 2019), noted that an organization has standing to sue on behalf of its members when:

  • its members would otherwise have standing to sue in their own right;

  • the interests it seeks to protect are germane to the organization's purposes; and

  • neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit.

The City argued that the Alliance's second cause of action alleging that the City unconstitutionally discriminates among different groups of property owners was not "germane" to the Alliance's corporate purpose.  The Alliance's articles of incorporation state that its purpose is to "Educate & Advocate for short term rental owners & operators [sic]."   Apparently recognizing that this purpose may be insufficiently germane, the Alliance amended its bylaws before filing its action to "clarify" that its purpose includes prevention of discrimination.  Judge Lorenz, however, found this to be unavailing as it contradicted the specific purpose of the corporation as set forth in its articles of incorporation.  Accordingly, he concluded that the Alliance lacked standing as to its second cause of action.

© 2010-2023 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XIII, Number 172
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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
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Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

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