[00:00:02] Speaker 00:
Good morning, Your Honors.

[00:00:03] Speaker 00:
My name is Adam Fulton.

[00:00:05] Speaker 00:
I'm with the law firm of Jennings and Fulton, and we're here today on behalf of Diamond Sands, and I'm honored to present this appeal on their behalf.

[00:00:12] Speaker 00:
I'd like to reserve three minutes for rebuttal.

[00:00:15] Speaker 00:
We're here today because we believe that the district court made several errors in denying Diamond Sands' motion for preliminary injunction.

[00:00:23] Speaker 00:
to enjoin the enforcement of the penalty provisions provided, generally found in Clark County Code 7.100.

[00:00:30] Speaker 00:
These penalty provisions violate the Eighth Amendment's excessive fines clause as to Diamond Sands and as to any owner in Clark County.

[00:00:39] Speaker 00:
In excessive fines cases, there are two steps.

[00:00:42] Speaker 00:
The challenger first has to demonstrate that the fine is a penalty subject to Eighth Amendment scrutiny.

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Does the Eighth Amendment even apply?

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and there is no dispute that the fines that can be levied under Clark County Chapter Code 7.100 are penalties.

[00:00:59] Speaker 00:
They are subject to Eighth Amendment scrutiny.

[00:01:01] Speaker 00:
That point was never challenged below, and as such, step one is conceded.

[00:01:06] Speaker 00:
It was also never challenged by the county in the court in its briefings.

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We are only here to talk about step two, whether or not the fine runs afoul of the Eighth Amendment because the fine is grossly disproportionate to the gravity of the defendant's offense.

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The issues confronting your honors today arise solely from step two of this analysis, which the Bajikian Court addresses.

[00:01:29] Speaker 00:
The district court committed several errors in its analysis at step two, and this analysis concerns the four factors the Bajikian sets forth under the Eighth Amendment analysis.

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Factor one is the nature and extent of the underlying offense, and the court focuses on the culpability of the violator in this step.

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Step two is whether the underlying offense is related to other illegal activities,

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As set forth in Pimentel 2, this factor is neutral in civil cases.

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Factor 3 is whether other penalties may be imposed for the offense.

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And factor 4 is the extent of the harm caused by the offense.

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That is the harm that the government must demonstrate that is caused to it by the offense.

[00:02:15] Speaker 03:
So can I ask kind of a threshold question?

[00:02:17] Speaker 03:
Sure.

[00:02:17] Speaker 03:
You've just listed the factors.

[00:02:18] Speaker 03:
And as I understand it, as you've said today, we're evaluating 7.100 as to those factors.

[00:02:26] Speaker 03:
There's a whole bunch of discussion in the briefs about state law, not the county ordinance, but the state law.

[00:02:33] Speaker 03:
And I don't understand why any of that is relevant, because it seems like what we have to do is figure out whether this fine under the county ordinance violates the federal constitution.

[00:02:42] Speaker 03:
And so where state law comes into that question when we're looking at the county ordinance is very confusing to me.

[00:02:48] Speaker 00:
So I agree with your honor that the state law is not as applicable to what your honors are addressing today, right?

[00:02:54] Speaker 00:
Because we're just addressing that code provision as it applies to my client as an owner.

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So I agree with you.

[00:02:59] Speaker 00:
I believe that it was put in the brief because it's to provide context in how it came to be.

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And so a little additional background, Clark County previously had outlawed Airbnbs, like short-term rentals were completely outlawed.

[00:03:10] Speaker 00:
The state legislature then came in and said, hey, you can't ban them.

[00:03:14] Speaker 00:
Here's some provisions or requirements in order to actually put provisions in place, county commissioners throughout the state.

[00:03:21] Speaker 00:
And so the county ordinance arose out of that state law.

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And as we get to factor three, I'll point out when we get there that there were alternative remedies that the county could have employed outside of strict liability that they chose not to.

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But I'll get that assessment when we get to that factor.

[00:03:39] Speaker 00:
But I agree with you, Your Honor.

[00:03:40] Speaker 00:
I think that the state law is not, we're not here challenging the state law today.

[00:03:45] Speaker 00:
We're challenging the county ordinance.

[00:03:47] Speaker 01:
But it sounds like you agree that the county had the authority to enact an ordinance.

[00:03:53] Speaker 01:
Your question is whether the penalties were proper.

[00:03:55] Speaker 00:
I agree, Your Honor, 100%.

[00:03:56] Speaker 00:
They absolutely have the authority to enact the ordinance pursuant to state law.

[00:03:59] Speaker 00:
I agree with that.

[00:04:01] Speaker 00:
So under the first Bazikian factor, the district court's culpability analysis was fundamentally flawed.

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The district court approached the problem by accepting the county's argument that Diamond Sands was the person making the property available for use of the short-term rental.

[00:04:17] Speaker 00:
And that is wrong as a matter of law.

[00:04:19] Speaker 00:
And let me tell you why.

[00:04:20] Speaker 01:
But isn't there evidence that Diamond Sands probably had actual knowledge that there were ongoing violations of the ordinance?

[00:04:28] Speaker 00:
So we dispute that.

[00:04:30] Speaker 00:
Our declarations from the owners dispute that evidence, and the district court never found that as a factual matter of law.

[00:04:37] Speaker 00:
In fact, the county cites to hearsay declarations of their people.

[00:04:44] Speaker 00:
They interviewed someone named Alex, but that's not Alex Tyszynski, which is the problem.

[00:04:48] Speaker 01:
But on preliminary injunction, isn't the court able to consider hearsay evidence?

[00:04:52] Speaker 00:
Yeah, I agree, your honor.

[00:04:53] Speaker 00:
They are.

[00:04:54] Speaker 00:
But ultimately, whether they knew or not, I think also goes to the argument of whether there's strict liability under the statute.

[00:05:04] Speaker 00:
But again, we dispute that the property owners knew about it.

[00:05:06] Speaker 00:
In fact, we have lease language that says they're not allowed to do it.

[00:05:10] Speaker 00:
Our property owner has said that they're not supposed to.

[00:05:13] Speaker 00:
do airbnbs and if they word them they're allowed to terminate the leases and so our evidence supports that what was submitted the declaration support that they are not

[00:05:25] Speaker 00:
They're not aware of we're doing this.

[00:05:28] Speaker 03:
Why isn't there some sort of willful blindness notion in the background here though?

[00:05:32] Speaker 03:
Like, why wouldn't it be reasonable for the county to think, okay, you're the owner.

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You can put up cameras that look at who's coming and going.

[00:05:40] Speaker 03:
And if you didn't, that was your choice.

[00:05:42] Speaker 03:
And we assume that you could have known.

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And so we assume it's essentially like constructive notice.

[00:05:48] Speaker 00:
Well, I think being being in Clark County and an apartment complex on the strip, I think you're putting up cameras and seeing who are coming and going for people in apartments.

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I don't think that would be able somebody would be able to determine whether someone's air being it out based on people coming and going.

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But I think that just because a property owner is on notice,

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I don't think is as applicable to the fact that it's a strict liability under the statute.

[00:06:14] Speaker 00:
So the culpability factor I think is what the court should focus on and look at in this instance.

[00:06:19] Speaker 01:
But wasn't there also evidence that abatement notices were sent to Diamond Sands and there wasn't any action taken and enforcement officers had interviewed employees of Diamond Sands about these short-term rentals?

[00:06:33] Speaker 01:
So wouldn't that be evidence that they were put on notice?

[00:06:38] Speaker 00:
That is correct, Your Honor, but that doesn't mean that under the Eighth Amendment analysis that the fine's not excessive based on what's being assessed here against the property owner and what could be assessed in addition, right?

[00:06:53] Speaker 03:
And what is the theory by which we should look at what could be assessed?

[00:06:56] Speaker 03:
Why don't we just look at what is assessed and figuring out whether it's an excessive fine?

[00:07:01] Speaker 00:
Well, I think your honor is going to the Salerno, whether it's constitutional as to my client or as a facial challenger.

[00:07:09] Speaker 00:
I believe under Salerno, you're correct that it does need to be unconstitutional to my client in order to get to a facial challenge.

[00:07:16] Speaker 00:
But ultimately, your honor, I think that even if you assess the fines that were submitted against my client, our position today is that that also was unreasonable and grossly misproportionate.

[00:07:26] Speaker 00:
A $4,000 fine, we believe, is under Pimentero 2,

[00:07:31] Speaker 00:
The court looks at the proportionality analysis.

[00:07:34] Speaker 00:
This court issued and said, hey, look, even a $63 fine is disproportionate because it was 100% increase.

[00:07:41] Speaker 00:
And so I think under Pimentel 2, the court can find that, and under the Bazikian factors, the court can find that this is, in fact, an unconstitutional fine.

[00:07:51] Speaker 00:
So.

[00:07:54] Speaker 00:
But back to the I want to focus a little bit on the culpability issue and I think this is where where it matters because as a matter of law, there really are two targets underneath this code section.

[00:08:06] Speaker 00:
The person who is operating the residential unit for the purpose of transient lodging and the property owner.

[00:08:11] Speaker 00:
So the court never grappled with the distinction between those two different people.

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And when you're weighing culpability, you have to look at who is culpable and what is the purpose of that.

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And it matters here because they do have extremely different levels of culpability.

[00:08:26] Speaker 00:
The person that's operating the tenant that's leasing out the space has a high level of culpability.

[00:08:32] Speaker 00:
but that's not Diamond Sands because in the statute the word operating or for the purpose has actual meaning.

[00:08:39] Speaker 00:
Those words mean what they say and so they are targeted at the tenant under the code and that person is actively violating the short-term rental ordinance.

[00:08:47] Speaker 00:
Now if you contrast that with the only other person that can be, the only other provision that could be applicable to Diamond Sands which is under E2 of the statute, that person has either no culpability or a low level of culpability.

[00:09:01] Speaker 00:
And the reason for that is the plain language of the statute.

[00:09:04] Speaker 00:
And so the property owner shall also be subject to, and this is what it says, the property owner shall also be subject to receipt of an administrative citation and the remedies and penalties set forth therein.

[00:09:15] Speaker 00:
And that is the only code that could be applicable to Diamond Sands in this instance.

[00:09:19] Speaker 00:
And so that matters because we are talking.

[00:09:22] Speaker 01:
Under the ordinance, couldn't they also suspend short term rentals or do an audit of potential violations with regard to diamond sands?

[00:09:32] Speaker 01:
So there are other penalties that are an option if they wanted to impose them.

[00:09:36] Speaker 00:
So the state statute gave them the right to create other remedies or other factors that they could do against the property owners, but they chose not to.

[00:09:45] Speaker 00:
And I think that's the issue.

[00:09:46] Speaker 00:
That goes to factor three, which is whether other penalties may be opposed for the offense.

[00:09:51] Speaker 00:
And here the county chose not to impose any additional requirements and the penalties tethered to those additional requirements against the property owner.

[00:09:59] Speaker 03:
Let me give you- I'm confused because I thought that,

[00:10:02] Speaker 03:
7100 had a misdemeanor option for a misdemeanor citation and also a right to suspend and revoke.

[00:10:09] Speaker 03:
Is that not true?

[00:10:13] Speaker 03:
I thought the county code actually had other options for enforcement.

[00:10:17] Speaker 03:
I think that's what Judge Shrier was asking, I think.

[00:10:21] Speaker 03:
Jumping to the state law doesn't make sense to me.

[00:10:22] Speaker 03:
I think we're talking about the county code.

[00:10:24] Speaker 00:
Yeah, so under county code ordinance 7.100.230.

[00:10:27] Speaker 00:
Yeah, sub F. Yes, sub F. They do have the right to do other enforcement options, agreed, but under the provision up above, under E2,

[00:10:41] Speaker 00:
This specifically says where the person violating this chapter is not the owner of the property that is the subject of the violation, including without limitation a local representative, property manager, tenant, or subtenant, the property owner shall also be subject to receipt of an administrative citation.

[00:10:56] Speaker 00:
So regardless of whether the client could even terminate the lease, regardless of whether my client, let's say my client knew, hey, this person's leasing, and they go, they're doing Airbnbs.

[00:11:09] Speaker 00:
And my client goes and terminates their lease, okay?

[00:11:12] Speaker 00:
after the fact, they still could be fined $10,000 a day.

[00:11:17] Speaker 03:
But if they aren't, why do we care?

[00:11:19] Speaker 03:
This gets back to don't you have to show that the actual penalty to your client was unconstitutional?

[00:11:24] Speaker 00:
It does, and I believe that it was unconstitutional, Your Honor, because the $4,000 fine is unconstitutional because there was no analysis done to determine what the proportionality of that fine is.

[00:11:37] Speaker 00:
And I believe that goes to the harm factor under the fourth Lejikian factor.

[00:11:40] Speaker 03:
Well, the proportionality is a question of law that we could evaluate, though, right?

[00:11:44] Speaker 03:
Do we need to say that the district court had to say particular magic words about that?

[00:11:48] Speaker 00:
I'm sorry, Your Honor.

[00:11:48] Speaker 03:
Do we have to ask whether the district court said a particular magic phrase or something, or can we just figure out whether it would be proportional?

[00:11:56] Speaker 03:
Is it a legal question that we can decide on appeal?

[00:12:00] Speaker 00:
I believe you probably can decide it on appeal.

[00:12:02] Speaker 00:
I believe Your Honor can do whatever she wants under the law.

[00:12:05] Speaker 00:
But I do think that when the court's analyzing whether or not the harm is proportional to the fine, there was no analysis or any analysis done by the county to give the court

[00:12:22] Speaker 00:
any determination what the harm actually was.

[00:12:24] Speaker 00:
There was no evidence presented.

[00:12:26] Speaker 00:
They presented these broad policies.

[00:12:27] Speaker 00:
Oh, I see.

[00:12:27] Speaker 03:
But that's like the policies on the face of the ordinance, right?

[00:12:30] Speaker 03:
About all the harm.

[00:12:31] Speaker 03:
Correct.

[00:12:32] Speaker 00:
Yes, you're right.

[00:12:33] Speaker 00:
That's exactly right.

[00:12:34] Speaker 00:
So the policies that the county states are these broad policies, right?

[00:12:38] Speaker 00:
They're the goals that they have, right?

[00:12:41] Speaker 00:
We don't want taxation.

[00:12:42] Speaker 00:
We want

[00:12:43] Speaker 00:
We want you know, no loud parties for neighborhoods, right?

[00:12:47] Speaker 00:
But that doesn't but but the court and the county the district court didn't Require in the county never provide any actual evidence of harm Resulting from the property owners actions.

[00:12:59] Speaker 00:
That's the problem here.

[00:13:00] Speaker 03:
There is no harm or evidence presented Well, but some of those broad policy things were about having a

[00:13:06] Speaker 00:
Housing available to people who actually live there permanently so isn't it just by definition satisfied when you're doing a short-term rental instead But they still have to provide they still have to They still have to provide an analysis of as to the nature and extent of the harm that the government suffers as a result of the action and that was never provided in the underlying briefing your honor

[00:13:28] Speaker 00:
They never provided any evidence of what the armistice was.

[00:13:32] Speaker 02:
The government is trying to protect the interests of its citizens, I assume.

[00:13:38] Speaker 00:
Correct.

[00:13:38] Speaker 02:
The people who were living in this place were complaining about it.

[00:13:42] Speaker 02:
They didn't like it.

[00:13:44] Speaker 02:
So I'm not sure that there has to be some direct harm to the county that allows them to enforce the ordinance.

[00:13:54] Speaker 00:
So under PIMINTEL 2, though, the problem was that the court gave deference to the county in that issue of saying, hey, we just agree that the

[00:14:04] Speaker 00:
But what they're saying is legitimate, right?

[00:14:06] Speaker 00:
What their policy goals are are fine.

[00:14:09] Speaker 00:
But under Pimentel 2, Pimentel 2 stated that you can't just automatically give reflexively defer to the government where it stands to benefit.

[00:14:18] Speaker 00:
And in this case, the county obviously stands to benefit.

[00:14:21] Speaker 00:
So there must be skepticism in applying the analysis of the harm.

[00:14:25] Speaker 00:
So for instance, why can't the penalty be a million dollars or a billion dollars?

[00:14:29] Speaker 00:
There has to be some analysis done as to what the

[00:14:33] Speaker 01:
But if the penalty was a million dollars, it would appear more likely to be an excessive fine than a $2,000 fine.

[00:14:43] Speaker 01:
So we can look at balancing harms, which the county did when they enacted that ordinance.

[00:14:50] Speaker 01:
Why does it have to be specific to this allegation when you're looking at balancing those harms?

[00:14:55] Speaker 00:
Because under the eighth amendment, we have to look, the court has to look under the eighth amendment at what the harm is done to the county or the government when assessing whether the fine is proportional or grossly misproportionate, right?

[00:15:07] Speaker 00:
So that analysis has to be done and it wasn't done in this instance.

[00:15:11] Speaker 03:
The wasn't done though is getting back to the magic words for the district court.

[00:15:14] Speaker 03:
That was my question about whether we, you have to give us an argument, because we get to decide whether it's proportional, so whether it was done by the district court doesn't matter.

[00:15:22] Speaker 03:
You need to give us an argument about why the idea that preventing short-term rentals from undermining the availability of housing for people who actually live in the town isn't a harm that is worth $2,000.

[00:15:37] Speaker 00:
Well, so the harm, in this case, they were fined $4,000.

[00:15:40] Speaker 03:
Okay, $4,000.

[00:15:43] Speaker 03:
I thought it was two violations, but regardless, say $4,000 then.

[00:15:46] Speaker 03:
Why isn't the harms that they describe on the face of the ordinance just enough plausibly and facially to justify this fine, which is not that huge?

[00:15:57] Speaker 00:
So I guess when you go back and you look at the harshness, so you're asking me really the harshness of the penalty compared to the gravity of the offense.

[00:16:03] Speaker 00:
That's what you're asking me, right?

[00:16:05] Speaker 00:
And so in that instance, I'll give you an example.

[00:16:08] Speaker 00:
If you compare the transient lodging tax in Clark County, which is 13.38% in the primary gaming corridor, the max penalty per violation in this ordinance is $20,000.

[00:16:21] Speaker 03:
We're asking about the actual $4,000, the actual penalty to your client.

[00:16:25] Speaker 00:
Okay, so the actual penalty to my client for $4,000 is still vastly misproportionate to what a nuisance penalty would be under our current statute and regulation.

[00:16:37] Speaker 00:
In addition, I know that we're addressing with the county ordinance, but the state ordinance, the state law didn't provide that you could find owners for this amount.

[00:16:48] Speaker 00:
The county came up with that on their own.

[00:16:49] Speaker 03:
But you already told Judge Shrier that they had the authority to enact this ordinance.

[00:16:53] Speaker 00:
They have the authority to enact a ordinance.

[00:16:55] Speaker 00:
The question is whether the ordinance is a violation of the Constitution.

[00:16:58] Speaker 00:
And I know I'm over my time.

[00:17:02] Speaker 03:
Yeah, I think we better cut you off.

[00:17:03] Speaker 03:
We'll give you two minutes for rebuttal, but let's hear from the other side.

[00:17:09] Speaker 04:
Good morning.

[00:17:09] Speaker 04:
May it please the court.

[00:17:10] Speaker 04:
My name is Timothy Allen from the Clark County District Attorney's Office, Civil Division, and I represent Appellee Clark County, Nevada.

[00:17:20] Speaker 04:
This case is a constitutional challenge as to the fines for operating a short-term rental without a license that were imposed under Clark County code 71030.

[00:17:30] Speaker 04:
This case started when Clark County received several complaints from members of the public who complained of the nuisances associated with the commercial short-term rentals that were occurring at the residentially zoned apartment building.

[00:17:45] Speaker 04:
Clark County code enforcement investigated and found that there were several violations taking place at the complex and noted that many of the units were being used as short-term rentals and they had special keypad locks instead of the traditional key deadbolt locks that many of the units that were not being used at the complex as an Airbnb had.

[00:18:08] Speaker 04:
And Clark County sent several notices of violation to Diamond Sands warning that fines would be issued

[00:18:14] Speaker 04:
if the rentals didn't stop at those four units that were being investigated.

[00:18:18] Speaker 04:
At that point, one of the owners of Diamond Sands responded and said they would stop the short-term rentals and turn the keys over to the leasing office so they could be rented out long-term.

[00:18:31] Speaker 04:
However, Clark County continued to inspect and found violations, finding Diamond Sands $1,000 for each violation they found, which eventually led to $4,000 in total.

[00:18:43] Speaker 04:
Diamond Sands paid $2,000 initially and then sued Clark County, in this case, for unconstitutionally excessive fines.

[00:18:51] Speaker 04:
One of Diamond Sands' main arguments is that the fines are unconstitutionally excessive because they are being fined for the conduct of their tenants and they are totally innocent.

[00:19:00] Speaker 04:
But this argument is not supported by the record.

[00:19:03] Speaker 04:
Further, Diamond Sands points to Clark County Code 7100-230-E2 and says that it allows fines for innocent owners, but Diamond Sands was not fined under Clark County Code 7100-230-E2.

[00:19:21] Speaker 04:
Diamond Sands was fined under Clark County Code 7100-030, which is operating a short-term rental without a license.

[00:19:30] Speaker 04:
Clark County believed that it was Diamond Sands that was operating the short-term rental without a license and fined Diamond Sands for that conduct.

[00:19:38] Speaker 04:
Diamond Sands was not fined under Clark County code 7100-230-E2.

[00:19:43] Speaker 04:
So even if this court enjoined that section, it would not overturn the fines issued to Diamond Sands.

[00:19:50] Speaker 04:
So Diamond Sands does not even have standing to challenge that code section.

[00:19:55] Speaker 04:
Further, Diamond Sands argues that it could be fined $10,000 per violation for things that they're not responsible for.

[00:20:02] Speaker 04:
But this is another hypothetical argument without any actual injury as to obtain standing.

[00:20:08] Speaker 03:
Further, the Nevada statute to- Can I just pause and go back to the idea that they sued under the wrong provision or something?

[00:20:14] Speaker 03:
How would they know that?

[00:20:16] Speaker 03:
Is there something in the record about where they were given notice of what they were being fined for that tells them that?

[00:20:24] Speaker 04:
Yes, so the notice of violation that Clark County issued to Diamond Sands and the actual citations themselves were issued under Clark County code 71030 and that is part of the record.

[00:20:40] Speaker 04:
So I believe it,

[00:20:51] Speaker 04:
is exhibit D is one of the examples, ER68.

[00:20:55] Speaker 04:
It's the notice of abatement and it says nature of violation 7100-030 operating without a license.

[00:21:06] Speaker 04:
And so it was Clark County's understanding that the owners were operating the short-term rentals.

[00:21:14] Speaker 04:
I understand that's disputed now, but

[00:21:18] Speaker 04:
The district court did find that there was evidence that they were operating and at very least had knowledge that these units were being operated and did nothing to stop them.

[00:21:28] Speaker 03:
So.

[00:21:28] Speaker 03:
Sorry, I don't remember.

[00:21:30] Speaker 03:
Maybe I'm just forgetting, but I don't remember an argument in your brief that essentially they have no standing at all.

[00:21:35] Speaker 03:
They're challenging the wrong thing altogether and this whole case is on the wrong track.

[00:21:39] Speaker 03:
Did you make that argument?

[00:21:41] Speaker 04:
Well, well, I think I made it, but I think I just made it in a really poor and unclear way, to be honest.

[00:21:49] Speaker 04:
But I think the way I made it was in discussing the first factor of Pimentel, the nature and cause of the underlying offense.

[00:22:00] Speaker 04:
And so in that, I argued that Diamond Sands wasn't being fined for being an innocent owner of a short-term rental violating tenant.

[00:22:11] Speaker 04:
And I argued that they themselves were causing the violation and so

[00:22:15] Speaker 04:
the nature of the offense was that they were culpable for their own conduct and not for the conduct of somebody else.

[00:22:22] Speaker 04:
And so, as I was doing that analysis and I still saw in the reply brief that they were responding to this 230E2 section, I realized that 230E2 could cease to exist and they would have still been fined in this case and they could still be fined going forward.

[00:22:43] Speaker 04:
And so,

[00:22:44] Speaker 04:
That's why I raise it here today and I apologize if I didn't brief that better.

[00:22:48] Speaker 03:
I'm just trying to figure out whether we can.

[00:22:52] Speaker 03:
I mean it seems like a new argument.

[00:22:55] Speaker 03:
Can you point to a page of your brief where you said they're talking about the wrong section or something because it seems like if you don't have that we probably should proceed on what was briefed.

[00:23:06] Speaker 03:
which maybe you'll win on.

[00:23:07] Speaker 03:
But to say that really just this whole thing is essentially a tangent that they have no standing to be talking about seems like a real switch.

[00:23:20] Speaker 04:
Yeah, I think if you look to the first factor, the Pimentel, that's where I discuss that they were fined for their own conduct and not for the fine.

[00:23:35] Speaker 03:
conduct of their tenants, but I also... That's an argument you could make in response to the argument they are making.

[00:23:42] Speaker 03:
I mean, under any of these sections, there is a question of whether they could have stopped this or whether they were willfully blind, or those kind of arguments exist under any of the provisions of this ordinance, right?

[00:23:58] Speaker 04:
I'm sorry.

[00:23:58] Speaker 04:
I don't think I fully understand the question.

[00:24:01] Speaker 03:
I mean, whichever part of this ordinance you're trying to invoke, they could say it really isn't us.

[00:24:08] Speaker 03:
It's really our tenant.

[00:24:09] Speaker 03:
And you could say back, no, you own this property and you have the ability to control it.

[00:24:14] Speaker 03:
And if you didn't control it or you didn't pay attention, that's your fault.

[00:24:17] Speaker 03:
So that kind of argument that this is really about your conduct seems like it could be made as to any provision of this ordinance.

[00:24:25] Speaker 03:
It doesn't seem to signal to us that they're using the wrong provision.

[00:24:28] Speaker 04:
I think that's a good point.

[00:24:29] Speaker 04:
Yeah, and I agree with that.

[00:24:30] Speaker 04:
And to the point of what they're saying in 230, I think 230 E2 specifically says that if they violate the code, they say that it means that their tenant violates the code and then they're automatically responsible.

[00:24:49] Speaker 04:
But I don't think that section even says that.

[00:24:51] Speaker 04:
I think 230 E2 just says they're subject to their own citation.

[00:24:56] Speaker 04:
And I think a citation can only be issued for certain things under the code.

[00:24:59] Speaker 04:
And one of those things is operating without a license, which is what they were fined for, if that makes sense.

[00:25:08] Speaker 03:
So what would you like us to do?

[00:25:09] Speaker 04:
Well, I think you can just uphold the district court's finding that they're unlikely to succeed on the merits, which is why she denied the motion on preliminary injunction.

[00:25:21] Speaker 03:
But on the basis that they are talking about the wrong section or on the basis that they are incorrect that this fine is excessive under whichever section it is?

[00:25:33] Speaker 04:
I think that you could just find that they have failed to show that they're likely to succeed on the merits.

[00:25:40] Speaker 04:
And so that's under obviously a number of the factors.

[00:25:43] Speaker 04:
I believe all the factors weigh in favor of Clark County.

[00:25:47] Speaker 04:
The first factor being the nature of the violation is I think they did have, and there's evidence in the record that they did participate in operating the short-term rentals.

[00:25:58] Speaker 04:
But at very least, as the district court found, had actual knowledge that these short-term rentals were occurring and failed to remedy those violations.

[00:26:08] Speaker 02:
And that would be relevant to all the sections?

[00:26:12] Speaker 04:
I think that's relevant to the first Pimentel factor as well as, yeah.

[00:26:21] Speaker 04:
And then for the second factor, the court found neutral, but as I argued in my brief, I believe that this is associated with the failure to pay transient lodging taxes, which is a separate offense with separate elements.

[00:26:38] Speaker 04:
And the court said that there was no case law that either party cited

[00:26:42] Speaker 04:
but I believe under the factors, I don't know how else to apply those factors when analyzing a municipal fine.

[00:26:50] Speaker 04:
And so I would ask the court to also find that the second Pimtel factor ways in favor of Clark County.

[00:27:01] Speaker 04:
If there's no other questions, I can conclude my argument there.

[00:27:05] Speaker 04:
Thank you for your time.

[00:27:07] Speaker 03:
Thank you very much.

[00:27:09] Speaker 03:
I can't remember what I said.

[00:27:11] Speaker 03:
Two minutes, please.

[00:27:13] Speaker 03:
Thank you.

[00:27:48] Speaker 00:
So I'll start by stating that I was not, I don't believe there's anything in their brief that says we don't have standing to bring this forward.

[00:27:54] Speaker 00:
And so I would ask the court to reject that argument on its face because that's the first time I've ever heard of this argument coming up and it wasn't in their brief.

[00:28:02] Speaker 01:
So I didn't see it in the brief either, but isn't standing something that can be raised at any time, even at the appellate level?

[00:28:10] Speaker 01:
Doesn't the court always have to determine if they're standing?

[00:28:13] Speaker 00:
Well, Your Honor, when we briefed it on the underlying documentation, everything before the District Court, everything before Your Honors, this is the first time the standing argument has ever been raised, ever.

[00:28:24] Speaker 03:
And so I don't believe that... Well, the standing argument stems from the idea that you've been talking about the wrong subsection.

[00:28:33] Speaker 03:
Have they argued before that you've been talking about the wrong subsection?

[00:28:36] Speaker 00:
No, Your Honor.

[00:28:37] Speaker 00:
It hasn't come up before.

[00:28:38] Speaker 00:
And so I believe for that reason, the court should not take that into consideration.

[00:28:45] Speaker 00:
In addition, you asked me the question earlier, why is this penalty unconstitutional?

[00:28:53] Speaker 00:
Why is the proportionality, why is the harm there?

[00:28:58] Speaker 00:
I think that the answer is,

[00:29:01] Speaker 00:
because it's arbitrary on the amount of fine that was assessed.

[00:29:04] Speaker 00:
They can assess anything between $1,000 to $10,000 per violation.

[00:29:10] Speaker 00:
And in their own brief, they admit they could have fined my client $140,000.

[00:29:16] Speaker 00:
the arbitrary decision, even in their own declaration, they admit, we have no basis.

[00:29:21] Speaker 00:
We just decided to find out.

[00:29:23] Speaker 03:
So what case says that fining discretion makes something unconstitutional?

[00:29:28] Speaker 00:
I believe Pimentel II went to that analysis when the Pimentel II court went through and looked at what evidence did the government provide.

[00:29:36] Speaker 00:
In that case, the court said that because the government provided, and I believe

[00:29:41] Speaker 00:
off the top of my head, they used the word zilch or nothing, that because they provided no evidence of the proportionality of the reason that it's unconstitutional under the Eighth Amendment.

[00:29:53] Speaker 00:
It was only $63, but they found it unconstitutional because it was so arbitrary.

[00:29:55] Speaker 00:
But it was like interest.

[00:29:57] Speaker 03:
It was like the late fee.

[00:29:59] Speaker 03:
And so there was no evidence that the local government had suffered some amount of interest equivalent to that.

[00:30:06] Speaker 03:
But we have an ordinance that talks about a whole bunch of kinds of harms.

[00:30:12] Speaker 03:
Not a very big sign.

[00:30:13] Speaker 01:
There's also evidence specific to this instance where people that lived in that apartment building were complaining and that there was more noise, there was more people moving around at different times.

[00:30:24] Speaker 01:
So in addition to the general reasons why the ordinance was enacted, there's specific complaints dealing with that property.

[00:30:31] Speaker 00:
I agree, Your Honor, but the government still has the duty to show something more than just a general policy goal.

[00:30:38] Speaker 00:
And that's what PIMINTEL 2 focused on.

[00:30:40] Speaker 00:
When you look at PIMINTEL 2, the argument is, in PIMINTEL 2, was that you have to show that there's actual harm put forth to the government.

[00:30:50] Speaker 00:
So in this instance, they haven't done that.

[00:30:52] Speaker 00:
Like they could have shown,

[00:30:54] Speaker 00:
Hey, look, we have to go out and do additional policing.

[00:30:57] Speaker 00:
We have additional police costs.

[00:30:59] Speaker 00:
We have additional, you know, there's more violence that they haven't resulted in these costs.

[00:31:05] Speaker 01:
But the county said that there's an affordable housing problem.

[00:31:09] Speaker 01:
that's being impacted by these short term rentals.

[00:31:12] Speaker 01:
Isn't that identifying a specific local problem?

[00:31:16] Speaker 00:
So I agree with your honor.

[00:31:17] Speaker 00:
And by the way, I'm not disputing the fact that the county has the right to put forth general policy goals and general things that it wants.

[00:31:25] Speaker 00:
But when a government puts forth general policy goals and then finds people under a strict liability statute, it has to have

[00:31:33] Speaker 00:
a basis to apportion that amount of the fine, and they don't do that here.

[00:31:38] Speaker 00:
That's the real argument that we're trying to make, is they have to provide some type of evidence, something.

[00:31:45] Speaker 00:
And that's what PIM and TIL-2 says.

[00:31:47] Speaker 03:
Okay, so what do you think they should have needed to provide that hasn't been provided here?

[00:31:52] Speaker 00:
Absolutely.

[00:31:53] Speaker 00:
So they should have needed to provide something that shows more than just a policy goal, as PIM and TIL-2 says.

[00:31:58] Speaker 00:
If they would have provided something that says, hey, we had to have

[00:32:02] Speaker 00:
additional you know as a result of these property owners because remember we're also bringing a facial challenge so as a result of all the property owners in the county going out and allowing short-term leases we've had to employ more police officers or we've had to have more heart okay it sounds like you think it has to be the county itself why can't the county say we think complaints about noise are show real distress in our community and so that is the reason for the fines

[00:32:29] Speaker 00:
Because Pimentel II says that it has to show harm to the government.

[00:32:33] Speaker 03:
But that's because it was a parking thing that no one else was involved in.

[00:32:37] Speaker 03:
But that's not the kind of ordinance this is.

[00:32:39] Speaker 00:
And I believe that Pimentel II was talking about actually the benefit that the government receives, right?

[00:32:43] Speaker 00:
So in this case, the Eighth Amendment says, hey, we need to stop or take a look at, a serious look at, when the government stands to benefit from an ordinance.

[00:32:52] Speaker 00:
In this case, they clearly stand to benefit.

[00:32:54] Speaker 00:
I think that's undisputed.

[00:32:56] Speaker 00:
They can find $10,000 per day to the property owner, and if they add the tenant in there, which they didn't do in this case, but if they find the tenant as well, it's $20,000 per day.

[00:33:06] Speaker 00:
And so when the court is analyzing whether or not a fine is excessive under the Eighth Amendment, the standard that the government has to show to the court is what harm it suffers.

[00:33:21] Speaker 00:
It's not just a general policy, and Pimintill 2 supports that.

[00:33:24] Speaker 03:
Okay, I think we understand your argument.

[00:33:26] Speaker 03:
Thank you very much.

[00:33:27] Speaker 03:
Thanks both sides for the helpful arguments.

[00:33:29] Speaker 03:
This case is submitted and we are adjourned.

[00:33:32] Speaker 00:
Thank you, Your Honors.