Nov 21, 2011

US Supreme Court To Hear Disparate Impact Claim

On November 7, 2011, the US Supreme court granted certiorari in Gallagher v. Magner, 619 F.3d 823, 829 (8th Cir. 2010) cert. granted, 10-1032, 2011 WL 531692 (U.S. Nov. 7, 2011).

The case arose out of the Eighth Circuit when several owners and former owners of rental properties in St. Paul, Minnesota brought consolidated actions, challenging the City of St. Paul's enforcement of its housing code.

In 1993, the City enacted the Property Maintenance Code which “[e]stablishes minimum maintenance standards for all structures and premises for basic equipment and facilities for light, ventilation, heating and sanitation; for safety from fire; for crime prevention; for space, use and location; and for safe and sanitary maintenance of all structures and premises.”

To enforce the code, the City established the Department of Neighborhood Housing and Property Improvement (“DNHPI”) as an executive department responsible for administering and enforcing the Housing Code. DNHPI was empowered to inspect all one- and two-family dwellings and administer and enforce laws regulating maintenance of residential property. This sounds all and well; protect the safety of residents and promotes the general appearance of the city … Until Andy Dawkins, the Director of DNHPI instructed his property inspectors to conduct proactive “sweeps” to detect housing code violations.

Dawkins also instructed his inspectors to “code to the max”, by writing up every violation that the inspectors would see, in addition to complaints about violations brought to the DNHPI’s attention by neighbors and other residents of the City. A “user-friendly” reporting system was also set up to allow neighbors and residents of the city to file complaints.

One can only imagine the ensuing tsunami of strategically-placed "complaints" neighbors could volley at each other, but the DNHPI employed a specific variety of strategies for renter-occupied dwellings. These included orders to correct or abate conditions, condemnations, vacant-building registration, fees for excessive consumption of municipal services, tenant evictions, real-estate seizures, revocations of rental registrations, tenant-remedies actions, and even, court actions.

While the DNHPI may sound like the HOA from Hell, its effects were broad, and far reaching. The DNHPI’s tactics fell heavily on low-income, African-American tenants living in privately-owned housing. The Appellant-Plaintiffs included individuals who own or formerly owned rental properties in the City. These property owners allege that they have suffered increased maintenance costs, fees, condemnations, and were forced to sell properties in some instances, due to as many as ten to twenty-five code violations, which ran the gamut of unsavory living conditions, such as rodent infestations and “inadequate sanitary facilities.”

Specifically, the Appellant-Plaintiffs allege that the City enforced the Housing Code more aggressively with regard to their properties because they rented to a disproportionately high amount of racial minorities, particularly African-Americans.

The 8th Circuit affirmed the lower court’s decision, except for the dismissal of the Appellant-Plaintiff’s disparate impact claim under the Fair Housing Act. The court held that the Appellant-Plaintiffs had satisfied the first query of the McDonnell-Douglas “Burden Shifting Analysis”, by successfully proving a prima facie case which requires showing “that the objected-to action[s] result[ed] in ... a disparate impact upon protected classes compared to a relevant population.”

The Judge correctly held that this was shown by four things which he ruled were sufficient to advance a theory of disparate impact:

(a) The City experienced a shortage of affordable housing
(b) Racial minorities, especially African-Americans, made up a disproportionate percentage of lower-income households in the City that rely on low-income housing.
(c) The City's aggressive Housing Code enforcement practices increased costs for property owners that rent to low-income tenants.
(d) The increased burden on rental-property owners from aggressive code enforcement resulted in less affordable housing in the City.
Gallagher v. Magner, 619 F.3d 823, 835 (8th Cir. 2010).

Thus, the court held that “given the existing shortage of affordable housing in the City, it is reasonable to infer that the overall amount of affordable housing decreased as a result. And taking into account the demographic evidence in the record, it is reasonable to infer racial minorities, particularly African-Americans, were disproportionately affected by these events.” Id.

In contrast, the City argued that “[the] Appellants must do more than show that the Housing Code increases the cost of low-income housing and that African-Americans tend to have lower incomes.” Id. at 836. The court, however, held that in viewing the evidence in the light most favorable to the moving party, “the evidence demonstrates that there is a shortage of affordable housing and that the City's aggressive code enforcement exacerbated that shortage.” Id.

Turning to the second query of the McDonnell-Douglas test, the court held that “the City has shown that enforcement of the Housing Code promotes the objectives of providing minimum property maintenance standards, keeping the City clean and housing habitable, and making the City's neighborhoods safe and livable.” Id. at 37.
The game goes into overtime, with the burden once again shifting to the plaintiffs to “offer a viable alternative that satisfies the [City's] legitimate policy objectives while reducing the ... discriminatory impact” of the City's code enforcement practices.” Id.

To do so, the Plaintiffs used the City's former program for Housing Code enforcement called “Problem Properties 2000” (“PP2000”). The program’s lists of goals and tactics of included: “identification of properties with a history of unresolved or repeat Housing Code violations, meeting with the owners individually, encouraging the owners to take a more business-like approach to managing their properties, keeping closer tabs on changes of ownership, and using consistent inspectors at each property.” Id. at 838.

Appellant-Plaintiffs contend that PP2000 embodied a flexible and cooperative approach to code enforcement, which achieved the goals of code enforcement while maintaining a consistent supply of affordable housing, something that, the Appellant-Plaintiffs argue, the DNHPI failed to do.

The City argued that this approach would not “reduce the alleged impact on protected class tenants,” and the District Court agreed with them, reasoning that “because participating landlords were not excused from compliance with the Housing Code, they would still incur the same costs of compliance with the housing code, leaving any alleged discriminatory effect on African-Americans unchanged.” Id.

However, the Court disagreed, stating that the Plaintiff-Appellants “offer[ed] evidence that the challenged enforcement practices burdened rental-property owners and thereby reduced affordable housing options. There is also evidence that PP2000 generated a cooperative relationship with property owners, achieved greater code compliance, and resulted in less financial burdens on rental property owners. It is reasonable to infer from these facts, viewed most favorably to Appellants, that PP2000 would significantly reduce the impact on protected class members.” Id.

Thus, the Court of Appeals overruled the District Court’s finding on the issue of disparate impact. The US Supreme Court granted certiorari, and is set to hear the case later this Spring, in 2012. The potential to change the landscape of Fair Housing litigation in this case is huge. The Disparate Impact test has been an invaluable tool in the fight against facially-neutral laws that, as applied, present an onerous burden on a protected class of people. What the Supreme Court will do in this case remains unclear, and the court may or may not strike down the McDonnell-Douglas "Burden Shifting" analysis, as they struck down the Trafficante case earlier this year.

Oct 6, 2011

Civil Rights Legend Passes Away Into History

Derrick Bell, distinguished Civil Rights advocate and father of Critical Race Theory, died today at the age of 80, the New York Times reports.

Bell, the first African-American law professor at Harvard, and the first dean of a non-historically black law school, led an interesting life, influencing our own President Barack Obama, who compared him to bus boycott heroine Rosa Parks. He left Harvard Law School when they refused to change their hiring practices to allow minorities a chance to teach at the famous Ivy League school.

Perhaps more famous for rejecting high positions in education and government than accepting them, Bell once resigned from working at the Civil Rights Division of the Justice Department in his 20s, after his superiors told him to give up his membership in the N.A.A.C.P., believing it posed a conflict of interest.

Professor Bell’s core beliefs included what he called “the interest convergence dilemma” — the idea that whites would not support efforts to improve the position of blacks unless it was in their interest. Asked how the status of blacks could be improved, he said he generally supported civil rights litigation, but cautioned that even favorable rulings would probably yield disappointing results and that it was best to be prepared for that.

Ever the pragmatist, Professor Bell's teaching style was unique, in that he would forgo dry, boring, legal analyses and employ an allegorical method of teaching. Short stories, fictional characters, and other literary devices marked a successful foray into story writing, an example of such was the short story, "Space Traders", which appeared in his 1992 book, “Faces at the Bottom of the Well: The Permanence of Racism.” In the story, as Professor Bell later described it, creatures from another planet offer the United States “enough gold to retire the national debt, a magic chemical that will cleanse America’s polluted skies and waters, and a limitless source of safe energy to replace our dwindling reserves.” In exchange, the creatures ask for only one thing: America’s black population, which would be sent to outer space. The white population accepts the offer by an overwhelming margin. (In 1994 the story was adapted as one of three segments in a television movie titled “Cosmic Slop.”)

This teaching style, as revolutionary as it was, did have several critics, one of which was Judge Richard Posner of the United States Court of Appeals for the Seventh Circuit, who “label[ed] critical race theorists and postmodernists the ‘lunatic core’ of ‘radical legal egalitarianism.’” He writes,

"What is most arresting about critical race theory is turns its back on the Western tradition of rational inquiry, forswearing analysis for narrative. Rather than marshal logical arguments and empirical data, critical race theorists tell stories — fictional, science-fictional, quasi-fictional, autobiographical, anecdotal — designed to expose the pervasive and debilitating racism of America today. By repudiating reasoned argumentation, the storytellers reinforce stereotypes about the intellectual capacities of nonwhites."

Others lauded Bell's Critical Race Theory, such as Judge Alex Kozinski, in the United States Court of Appeals for the Ninth Circuit, who writes that Critical Race Theorists have constructed a philosophy which makes a valid exchange of ideas between the various disciplines unattainable.

"The radical multiculturalists' views raise insuperable barriers to mutual understanding. Consider the Space Traders story. How does one have a meaningful dialogue with Derrick Bell? Because his thesis is utterly untestable, one quickly reaches a dead end after either accepting or rejecting his assertion that white Americans would cheerfully sell all blacks to the aliens. The story is also a poke in the eye of American Jews, particularly those who risked life and limb by actively participating in the civil rights protests of the 1960s. Bell clearly implies that this was done out of tawdry self-interest. Perhaps most galling is Bell's insensitivity in making the symbol of Jewish hypocrisy the little girl who perished in the Holocaust — as close to a saint as Jews have. A Jewish professor who invoked the name of Rosa Parks so derisively would be bitterly condemned — and rightly so."

In addition to his wife, he is survived by three sons from his first marriage, Derrick A. Bell III and Douglas Dubois Bell, both of Pittsburgh, and Carter Robeson Bell of New York; two sisters, Janet Bell of Pittsburgh and Constance Bell of Akron, Ohio; and a brother, Charles, of New York.

Sep 14, 2011

Hard Times in the Big Easy for New Orleans Landlord

The ongoing effort to rebuild New Orleans after Hurricane Katrina, some six years ago, continues, but all has not been well on the path to recovery.

A few months ago, we posted a story on “The Road Home”, a program which would put thousands of people in newly-constructed homes, but the program was not without its’ faults. This time, however, residents are fighting back against housing discrimination.

The Times-Picayune published news in the beginning of this month stating that a group of New Orleans landlords agreed to pay around $70,000 in damages and penalties to settle various suits against them by prospective tenants. Read the story here.

These lawsuits alleged that the landlords denied housing to African-Americans at an apartment building which makes it ripe for a Fair Housing Act claim. The lawsuit alleges that Betty Bouchon, the building manager, failed to return calls from African-American testers while returning phone calls from white testers, made statements to white testers indicating that she would not rent to black people, and falsely told an African-American tester than an apartment was not available for rent when in fact it was available. One can imagine that the sting was similar to this commercial. See also Stanford professor John Baugh's study on voice recognition discrimination.

These “tests”, as they are called, have proved instrumental in the fight against housing discrimination, ever since the Fair Housing Act was passed in the late 60’s. Tests involve “control” groups, usually Caucasian men and women, and “experimental” groups, usually consisting of men and women of varying ethnic and racial heritage. The “experimental” groups usually walk in, or otherwise inquire about a property for rent, and the landlord’s response is noted. If the racial or ethnically diverse individual is turned down, a Caucasian person is sent in.

"In these challenging economic times, it is more important than ever that all Americans be able to rent or buy housing they can afford, and not face discrimination because of the color of their skin," Thomas E. Perez, assistant attorney general for civil rights, said in a statement.

Although the settlement is awaiting approval from a federal circuit court judge in Louisiana, the Defendants, Betty Bouchon, the Bouchon Limited Family Partnership and Sapphire Corp., may also benefit from this settlement, as the consequences may be financially grave for some defendants who lose fair housing cases.

Under the terms of the settlement, the defendants will pay $50,000 to the Greater New Orleans Fair Housing Action Center and $20,000 in civil penalties to the United States. The settlement also requires the defendants to adopt non-discriminatory policies, keep detailed records of inquiries from prospective tenants and of rental transactions, and submit periodic reports over the four-year term of the settlement.

Aug 21, 2011

Plaintiff wins big in Fair Housing Derby

The New Haven Reporter reported at the end of last month, that a federal judge ruled in favor of Valley Housing LP, Home Development and nonprofit housing developer HOME Inc. Friday in their 2006 lawsuit against the City of Derby, Connecticut, finding that city officials tried to thwart development of a “supportive housing” project for low-income residents with special needs.

The Plaintiffs “provide social services, in addition to affordable housing to allow people with mental and other disabilities to live successfully in the community.” Valley Housing is a limited partnership “created to develop and manage supportive housing for low income disabled people in the Naugatuck Valley of Connecticut.” The partnership combines the efforts of HOME (Housing Operations Management Enterprise), a nonprofit developer, whose mission is to “develop and manage safe, decent and affordable housing for low income people,” and Home Development, Inc., a nonprofit organization created for the “purpose of developing and maintaining supportive housing for low-income people.”

The properties in question involved three buildings zoned as multi-family properties. The Plaintiffs purchased these properties for the purpose of “providing supportive housing for the clients of the Birmingham Group Health Services, Inc. These properties were intended for “persons with mental disabilities, [persons with] a history of substance abuse, and/or HIV/AIDS, capable of independent living and productive community membership with Birmingham Group-provided support services.”
The plan was to relocate the current residents of the buildings, and renovate them to a “high standard.” The number of apartments would remain the same, but each unit would have a reduced number of bedrooms. This was required under CHFA (Connecticut Housing Finance Authority) standards, as “a predicate to the Agency’s commitment to finance the purchase of properties as affordable rental housing for persons with low incomes.”

The Plaintiffs took over two years in locating these properties. Specifically, they sought properties that would not require a zoning change or variance in order to quell neighborhood fears and suppress the cries of NIMBY among the opposition. HOME Inc., was to provide the development and management of the properties, and Valley Housing was contracted by Birmingham Group to be the social services provider for the intended tenants.

The Mayor of Derby at the time, Marc Garofalo, conducted an investigation of the development, once a resident of the area called in to his office to voice their opinion, even going so far as to make a personal appearance at the CHFA to review the Plaintiffs’ application for CHFA funding. His motives weren’t clear at the time, but they came out at trial: he opposed the mutual housing project, and planned on forestalling the development process by blocking its tax credit funding.

Garofalo’s position was that the Plaintiffs could not develop their properties as supportive housing without a process that allowed input from the City and the neighborhood and as a part of a comprehensive scheme for rehabilitating the neighborhood. This process would take upwards of 18 months, and approval was not guaranteed. He knew a similar project in another neighborhood of Derby had not received full financing before.

Garofalo even admitted in trial, that he thought “Derby should have a say in where that kind of housing gets placed.” Garofalo’s plan was orchestrated with the Chairman of the Zoning Board of Appeals, Samuel Rizzitelli. Also involved was David Kopjanski, Derby’s Zoning Enforcement Official and Building Official. These insiders’ insidious intentions were foiled at trial, however, when the court found their testimonies “riddled with inconsistencies, self-serving, and not credible.” Kopjanski denied the Plaintiff’s application for a CZC (Certificate of Zoning Compliance), and asked for the Plaintiffs to apply for a variance with the Zoning Board of Appeals. But, at trial, he admitted that the same Plaintiff’s application, in some instances, actually authorized, in and of itself, a variance. Garofalo also had other motives for his attempt to derail the supportive housing. The neighborhood in which the properties were to be developed expressed vehement opposition, citing “fears and concerns about the prospective occupants.”

The court, however, found that the City of Derby intentionally discriminated against the Plaintiffs under the Fair Housing Act, awarding the Plaintiffs (Valley Housing and Home Development, Inc.) $676,279.65 in compensatory damages. The damage calculation factored in increased construction costs, increased construction contingency, an additional land survey, loan interest, legal services, appraisals, and other administrative costs. HOME, Inc. also received an award for damages: $73,768.78. The amount included staff time, credit for management fees, and borrowing costs.

Jun 17, 2011

Defense Attorneys Go Home Hungry: Ohio Civil Rights Commission v. Mellon Ridge

The Court of Common Pleas in the County of Warren, Ohio, recently denied defense attorneys’ motion for Attorney’s fees under Fed. R. Civ. P. 11 and R.C. 2323.51 and R.C. 2335.39, in the Ohio Civil Rights Commission v. Mellon Ridge (Case No. 05CV64506 The court denied the fees and said: “Mellon Ridge’s proof of the reasonable and necessary attorney’s fees is problematic in the extreme,” according to the court.

In what started out in the trial phase as a fair housing complaint, Rodney Jackson filed a complaint in the Ohio Civil Rights Commission against Mellon Ridge Residential Care Facility alleging that he had been discriminated against because of his race, and because of the Defendant’s failure to reasonably accommodate his disability. Mr. Jackson required the use of a wheelchair and the services of a service animal, namely, a dog, in order to function.

The court found that the Defendant’s rationale for rejecting Mr. Jackson’s residency was legitimate – Mellon Ridge required proof of vaccinations and health records from a veterinarian before any resident of the facility could be admitted. Thus the court found for the Defendants.

Defendant, Mellon Ridge filed a petition for fees in the amount of $86,668.12. So why didn’t they get it? The Defense even hired “a prominent and well-respected local attorney with many years of litigation experience” to review the billing records and testify at the fee evidentiary hearing. The attorney found that “the amount of fees claimed [were] reasonable and necessary.”

There were billing records, but Defense counsel “…made a calculated choice not to submit his billing records into evidence (in the evidentiary hearing).” Apparently copies of the billing records were made available to the Plaintiffs during discovery, but the Magistrate never saw them. In fact, when asked about the lack of detail in the accounting for attorney’s fees in the evidentiary hearing, Defense counsel stated “I don’t believe the statute requires that kind of explicit detail.”

The only thing even remotely resembling “an itemized list or other evidence of the legal services” required for attorney’s fees under R.C. 2323.51(B)(5) was a short table contained in the Defense’s time affidavit giving the names, the amount of time spent, the hourly rate, and the total amount of fees of each attorney who worked on the case. The court noted, however, that what was NOT included in the time affidavit was “a breakdown of how these hours were spent and what activities were performed.”

Defense counsel was obviously mistaken. The correct way attorney’s fees are calculated per the Lodestar method: the number of hours reasonably expended on a case, multiplied by reasonable attorney’s fees. However, per the Ohio statute, in order to recover attorney’s fees based on frivolous conduct, an itemized list or other evidence of legal services is required.

How could Defense counsel have missed that? The need for an itemized list of legal services being rendered is not mutually exclusive to civil, fair housing cases such as this. The Bankruptcy Code, 11 U.S.C.A. §330, states that “attorney fee applications must include itemized daily entries, with nature and purpose of particular entries noted, with actual time spent on each item, rather than minimum block of time, recorded separately, and abbreviations must be explained.”
The Illinois Appellate Court, Second District, held that “the court is not bound by the attorney's opinion as to what constitutes a reasonable fee and must inquire into all of the necessary factors. The time spent on a case is the factor of greatest importance. An attorney's general statement as to the time spent is an insufficient basis for a fee award and detailed time records are usually required. The attorney must itemize both the time expended and the work performed. In re Marriage of Pease, 106 Ill. App. 3d 617, 623, 435 N.E.2d 1361, 1367 (Ill. App. Ct. 1982).

Under Ohio’s R.C. 2323.51 (B)(5), “the party’s counsel of record may submit to the court or be ordered by the court to submit to it, for consideration in determining the amount of reasonable attorney’s fees, an itemized list or other evidence of the legal services rendered, the time expended in rendering the services and the attorney’s fees associated with those services.” (Emphasis added).
The problem with Defense’s request for attorney’s fees is that the court found the basis for the fees – that the Plaintiffs made a frivolous appeal, was that Plaintiff’s appeal was NOT found to be frivolous. The attorney’s fees expended in the appeal phase was therefore unrecoverable, but how could the Magistrate decide what amount to deduct from the fees when there wasn’t a detailed record outlining which of that $86,000 consisted of defending an appeal?

“Absent detailed billing records, any sum would be a mere shot in the dark – arbitrary and capricious,” the court concluded, refusing to make an award of reasonable and necessary attorney’s fees.

Defense counsel missed out on a slice of the Mellon for failure to follow the fee petition rules.

Mar 1, 2011

Proposed LGBT Protection by HUD

The Department of Housing and Urban Development (“HUD”) has unveiled a series of proposed rule changes that would prohibit lenders from using sexual orientation or gender identity as a way of determining a borrower's eligibility.

The proposed rule changes will (a) define sexual orientation and gender identity, (b) prohibit inquiries regarding sexual orientation and gender identity, (c) prohibit sexual orientation and gender identity as grounds for decision making in Federal Housing Administration (“FHA”) programs, and (d) would clarify that all eligible families, regardless of marital status, sexual orientation, or gender identity, have the opportunity to participate in HUD programs, including the housing choice voucher program.

The proposed rule changes come in response to information gathered by HUD which suggests that gay, lesbian, bisexual, and transgender (“LGBT”) individuals and families are arbitrarily excluded from housing opportunities because of their sexual preferences and gender identities. The decision by HUD to seek to protect LGBT individuals and families is a controversial decision, but one which is supported by the findings of arbitrary discrimination. One of the primary goals of the Fair Housing Act (“the Act”) is to eliminate arbitrary and invidious discrimination in the area of housing, and HUDs attempt to protect LGBT individuals and families is well in line with the federal goals of the Act and the mission of HUD.

If you wish to review and comment on the proposed rule changes, you can do so at .

Feb 28, 2011

How To File A Federal Fair Housing Claim

Housing discrimination based on your race, color, national origin, religion, sex, family status, and disability is illegal by federal law. If you believe that you have been discriminated against in the process of trying to rent or buy a home or apartment, you may file a fair housing complaint.

There are several ways to file a complaint.

You can file an immediate complaint with the Department of Housing and Urban Development (“HUD”), the federal agency which has jurisdiction over matters of fair housing and lending.

To file a complaint, you can call the HUD toll-free number, 1-800-669-9777.
Or you can file your complaint by filling out their online form [].

Or you can send a complaint by mail. The HUD website contains the HUD complaint form, and you may wish to accompany your complaint form with a letter. A letter to HUD should including the following information:

• Your name and address
• The name and address of the person your complaint is about
• The address of the house or apartment you were trying to rent or buy
• The date when this incident occurred
• A short description of what happened

The HUD complaint form may be accessed here []. Fill it out, and mail it to the address:

Office of Fair Housing and Equal Opportunity
Department of Housing and Urban Development
Room 5204
451 Seventh St. SW
Washington, DC 20410-2000

Not all HUD housing complaints are handled by HUD. Certain states have equivalent housing agencies to which HUD may refer your complaint.