Kavanau v. Santa Monica Rent Control Board, 16 Cal. 4th 761 (1997)

Citation: Kavanau v. Santa Monica Rent Control Board, 16 Cal. 4th 761 (1997)
Parent Document: Kavanau v. Santa Monica Rent Control Board, 16 Cal. 4th 761 (1997)
Jurisdiction: California (state)
Effective Date: 1997-08-26
Original Source: https://www.courtlistener.com/opinion/5607899/kavanau-v-santa-monica-rent-con... ↗

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Although a government agency’s capacity under the police power to regulate rents in some manner is seldom in doubt, the particular form the regulation takes will not pass constitutional scrutiny if it is confiscatory. This confiscatory analysis, although it also goes under the rubric of “due process,” is substantially different from the substantive due process analysis discussed immediately above. The fixing of a “ ‘just and reasonable’ rate[] involves a balancing of the investor and the consumer interests. . . . [T]he investor interest has a legitimate concern with the financial integrity of the company whose rates are being regulated.” (Power Comm’n v. Hope Gas Co. (1944) 320 U.S. 591, 603 [64 S.Ct. 281, 288, 88 L.Ed. 333] (Hope).) In determining a just and reasonable rate, “it is the result reached not the method employed which is controlling. [Citations.] It is not theory but the impact of the rate order which counts. If the total effect of the rate order cannot be said to be unjust and unreasonable, judicial inquiry under the Act is at an end. The fact that the method employed to reach that result may contain infirmities is not then important.” (Id. at p. 602 [64 S.Ct. at pp. *789287-288].) Thus in Hope, for example, Justice Douglas discussed the utility’s historical earnings and financial status in considerable detail and concluded that it was able to maintain its “financial integrity.” (Hope, supra, 320 U.S. at pp. 604-605 [64 S.Ct. at p. 289].) The court more recently did the same in Duquesne Light Co., supra, 488 U.S. at page 312 [109 S.Ct. at page 618].

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