NATIONAL FAIR HOUSING ALLIANCE v. TRAVELERS INDEMNITY COMPANY et al

Filing 21

MEMORANDUM OPINION. Signed by Judge John D. Bates on 08/21/17. (lcjdb1)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
NATIONAL FAIR HOUSING ALLIANCE,
Plaintiff,
v.

Civil Action No. 16-928 (JDB)

TRAVELERS INDEMNITY COMPANY,
et al.
Defendants.
MEMORANDUM OPINION
This case raises an oft-litigated Fair Housing Act claim: whether an insurer’s faciallyneutral policy has a disparate impact on the availability of housing for members of a protected
class. The twist, however, is that it follows shortly after the Supreme Court’s decision in Texas
Department of Housing and Community Affairs v. Inclusive Communities Project, Inc., 135 S. Ct.
2507 (2015) (Inclusive Communities), and thus requires this Court to consider how that case
changed the pleading standards for disparate-impact claims under the Fair Housing Act (FHA).
The Court determines that plaintiff National Fair Housing Alliance (NFHA) has standing, and that
under Inclusive Communities’ more stringent pleading standard for disparate-impact claims,
NFHA has stated a claim under the FHA. The Court therefore also determines that NFHA has
stated a claim under the D.C. Human Rights Act (DCHRA). Defendants’ motion to dismiss will
be denied.
BACKGROUND
Except where noted, the following facts are according to the amended complaint, which
the Court accepts as true at this stage. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
NFHA is a non-profit “dedicated to ending discrimination in housing.” See Am. Compl. [ECF
No. 12] ¶ 1. The defendants are two insurers, Travelers Indemnity Corporation and Travelers
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Casualty Insurance Company of America (collectively, “Travelers”). Travelers “is one of the
largest underwriters of property insurance policies” in the D.C. metropolitan area. Id. ¶ 18.
NFHA alleges that Travelers has a policy of refusing to provide habitational insurance
policies for landlords that rent to tenants who receive Housing Choice Vouchers, commonly
known as Section 8 vouchers. Id. ¶ 21. As explained below, Housing Choice Vouchers is a federal
program that provides financial assistance to low-income persons to obtain housing. NFHA’s
allegations are based on the experiences of five “testers,” who each “posed as a prospective
purchaser of a four unit apartment complex” in the Anacostia neighborhood in southeast D.C. and
attempted to obtain insurance. Id. ¶¶ 22–23, 25. The testers spoke with “insurance agencies doing
business in the District of Columbia that market Travelers insurance policies” between July 2015
and February 2016. Id. ¶ 23 (listing the insurance agencies). NFHA employed “experienced
tester[s],” id. ¶ 25, “provided a common set of instructions to the individual testers,” and recorded
the interactions that took place over the telephone, id. ¶ 24. The testers “advised each broker that
the complex was currently occupied by tenants participating in the Housing Choice Voucher
program.” Id. ¶ 25. In each instance, the broker explained to the tester that “Travelers would not
underwrite the policy because of the presence of voucher recipients in the building.” Id.; see also
id. ¶¶ 26–32 (detailing individual interactions with each of the five brokers).
For example, one broker stated that she would not send the tester’s application to Travelers
because Travelers “won’t write subsidized housing policies.” Id. ¶ 27. Another broker, who was
not initially told that the property was occupied by voucher recipients, first stated that he had
spoken with a Travelers’ representative and quoted a policy between $3,000 and $3,500. Id. ¶ 29.
But when the tester then informed the broker that the building was occupied by tenants receiving
vouchers, he responded: “Wait a minute. Stop right there. Subsidized housing is a problem.” Id.

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The broker further expressed his doubt that Travelers would underwrite that policy, but he offered
to confirm with Travelers directly. Id. The following day, the broker called the tester and
conveyed that he spoke with a Travelers representative who stated that Travelers would not
underwrite a policy for that building and that “any Section 8 would be a problem.” Id. ¶ 30. The
broker then explained that the tester would likely need to obtain a policy from the secondary
market, which would have a premium of approximately $4,500 and would provide “not as good a
policy.” Id. In other words, the broker explained, the tester would be “paying more for less.” Id.
The Housing Choice Voucher program, established by Congress, is “the federal
government’s major program for assisting very low-income families, the elderly, and individuals
with disabilities in affording decent, safe, and sanitary housing in the private rental market.” Id.
¶¶ 9–10 (citing 42 U.S.C. § 1437f(o)). In the District of Columbia, households that participate in
the voucher program are disproportionately headed by African-American women. According to
the complaint, the D.C. population is currently 48.7% non-Hispanic African American or Black
and 35.4% non-Hispanic White. Id. ¶ 14. Households in D.C. are approximately 45.2% nonHispanic African American or Black and 41% non-Hispanic White. Id. Approximately 47.1% of
all households in D.C. are headed by women. Id. Within the population of households that receive
vouchers, however, African-American households and women-headed households are
overrepresented: 92% of participating households are non-Hispanic African American or Black
(compared to 45.2% in the whole D.C. population), and only 1% of participating households are
non-Hispanic White (compared to 41% in the whole D.C. population). Id. ¶ 16. Similarly, 81.5%
of households receiving vouchers are headed by women (compared to 47.1% in the whole D.C.
population). Id. Additionally, “residents who participate in the Housing Choice Voucher program
are largely concentrated” in particular neighborhoods: “the four Census tracts in the District with

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the highest concentration of Housing Choice Voucher program participants are all east of the
Anacostia River, as are eight of the top ten Census tracts.” Id. ¶ 17. These tracts have a far higher
concentration of African-American residents than the District as whole: they are 84.7% AfricanAmerican or Black, as compared to the District-wide average of 51.1%. Id. NFHA therefore
believes that Travelers’ policy of denying insurance to landlords whose tenants receive vouchers
discourages landlords from renting to voucher recipients, which has a disproportionate effect on
tenants who are African-American or in women-headed households.
Once NFHA became aware of Travelers’ allegedly discriminatory policy, it took several
steps to investigate the scope of the problem and educate D.C. tenants, landlords, and policy
makers about this issue. It “devoted considerable staff time and resources to efforts to identify the
nature and scope of Traveler’s [sic] discriminatory conduct.” Id. ¶ 35. It then “added educational
information to its website, along with links” to the relevant federal and state laws “specifically
designed to educate the general public . . . about fair housing laws and habitational insurance
discrimination based on Housing Choice Voucher program participation.” Id. ¶ 37(a). It also
engaged in targeted outreach specifically designed to inform the people who were likely to be
harmed by Travelers’ policy. It “placed a public service announcement in the Washington, DC
print edition of the Afro-American, a local weekly newspaper, for two weeks” from February 6
through February 19, 2016, and paid for an email blast to the newspaper’s readers during that same
time. Id. ¶ 37(b). NFHA also created and mailed “educational letter[s] and flyers” to a total of
approximately 105 “predominately African American churches in the Washington DC area” in
February and March 2016. Id. ¶ 37(c).
In addition to alerting residents who might be affected, plaintiff “has also taken steps to
educate” the D.C. Housing Authority and D.C. landlords “about insurance discrimination based

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on Housing Choice Voucher program participation.” Id. ¶ 37(d). NFHA’s President and Chief
Executive Officer addressed the D.C. Housing Authority’s monthly board meeting, and other staff
members communicated with Housing Authority officials about discrimination in habitational
insurance. Id. ¶ 37(d)–(e). The NFHA also designed and implemented additional training to
prepare its staff “for the possibility of landlords and tenants calling NFHA for additional
information about insurance discrimination” and prepared intake tools to handle an increased
volume of calls. Id. ¶ 37(f).
Collectively, according to NFHA, these efforts “diverted scarce time and resources away
from routine tasks and activities.” Id. ¶ 38. This required NFHA to “delay, suspend, or even
forego other existing programs or projects,” including suspending planned initiatives to investigate
a different “potentially discriminatory loan policy maintained by a specific national lender,” to
analyze “the conduct of two banks in Kentucky that appeared to be underserving AfricanAmerican consumers, and the unlawful redlining practices of two Tennessee banks.” Id. ¶ 42.
In May 2016, NFHA filed suit, and in August 2016, NFHA filed the operative Amended
Complaint. In the Amended Complaint, NFHA alleges that Travelers’ discriminatory policy has
a disparate impact on African-Americans and women and serves no legitimate business interest,
in violation of the Fair Housing Act, 42 U.S.C. § 3601 et seq. NFHA also asserts that Travelers’
policy violates the D.C. Human Rights Act’s prohibition on housing discrimination on the basis
of race, sex, and source of income. See D.C. Code § 2-1402.21 (2011). NFHA seeks declaratory
and injunctive relief as well as damages and attorney’s fees. In response, Travelers filed a motion
to dismiss. See Def.’s Mot. to Dismiss [ECF No. 14-1]. Travelers contends that NFHA does not
have standing because its only injuries are self-inflicted and because Travelers has ceased using
this policy. Travelers also argues that NFHA has failed to plead sufficient facts to show a causal

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connection between its policy and any disparate impact under the heightened pleading standards
for a prima facie disparate-impact claim following Inclusive Communities. Travelers contends
that the DCHRA is not applicable to insurance and that, even if it were, NFHA has failed to state
a claim for discrimination based on race, sex, or source of income under state law for the same
reasons that it has failed to do so under federal law.
The Court concludes that NFHA has standing to bring these claims, and that NFHA has
sufficiently pleaded a causal connection between Travelers’ policy and a disparate impact based
on race and sex to make out a prima facie claim under the FHA. The Court also concludes that
the DCHRA does apply to habitational insurance and that NFHA has stated a claim under that act
as well. The Court will therefore deny Travelers’ motion to dismiss.
LEGAL STANDARD
Federal Rule of Civil Procedure 12(b)(6) requires dismissal of a complaint that “fail[s] to
state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). At the motion to dismiss
stage, all of a plaintiff’s factual allegations are taken as true. Bell Atl. Corp., 550 U.S. at 555. In
order to survive a Rule 12(b)(6) motion to dismiss, a complaint’s “[f]actual allegations must be
enough to raise a right to relief above the speculative level on the assumption that all the allegations
in the complaint are true.” Id. (internal citation omitted). The complaint “must contain sufficient
factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted). On a Rule 12(b)(6) motion,
the Court generally may not consider documents or materials outside of the pleadings without
converting the motion into one for summary judgment. See Kim v. United States, 632 F.3d 713,
719 (D.C. Cir. 2011).

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When considering a motion to dismiss for lack of standing under Rule 12(b)(1), the Court
likewise accepts the plaintiff’s allegations as true and draws all reasonable inferences in its favor.
See Settles v. U.S. Parole Comm’n, 429 F.3d 1098, 1107 (D.C. Cir. 2005). However, because the
Court has an “affirmative obligation to ensure that it is acting within the scope” of its authority,
“‘plaintiff’s factual allegations . . . will bear closer scrutiny in resolving a 12(b)(1) motion’ than in
resolving a 12(b)(6) motion for failure to state a claim.” Grand Lodge of Fraternal Order of Police
v. Ashcroft, 185 F. Supp. 2d 9, 13–14 (D.D.C. 2001) (quoting 5A Charles Alan Wright & Arthur
R. Miller, Federal Practice & Procedure § 1350 (2d ed. 1987)). Therefore, in addition to the
complaint itself, the Court may examine documents attached to or incorporated in the complaint
and matters subject to judicial notice. Settles, 429 F.3d at 1107.
ANALYSIS
I.

STANDING
The “irreducible constitutional minimum” of standing requires a plaintiff to have “(1)

suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant,
and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 136
S. Ct. 1540, 1547 (2016) (internal quotation marks omitted) (citing Lujan v. Defenders of Wildlife,
504 U.S. 555, 560–61 (1992)). In cases brought under the FHA, courts must interpret standing as
broadly as possible because “Congress intended standing under the Fair Housing Act to extend to
the full limits of Article III.” Spann v. Colonial Village, Inc., 899 F.2d 24, 27 (D.C. Cir. 1990)
(citing Havens Realty Corp. v. Coleman, 455 U.S. 363, 372 (1982)).
NFHA “can assert standing on its own behalf, on behalf of its members or both.” Equal
Rights Ctr. v. Post Properties, Inc., 633 F.3d 1136, 1138 (D.C. Cir. 2011). Here, NFHA asserts
standing only on its own behalf. When an organization asserts its own standing, it must make the

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same showing as an individual plaintiff. Id. For an organization, “the key issue” is whether it
“suffered a ‘concrete and demonstrable injury to [its] activities’” rather than “‘a mere setback to
[its] abstract social interests.’” PETA v. U.S. Dep’t of Agric., 797 F.3d 1087, 1093 (D.C. Cir.
2015) (first alteration in original) (quoting Equal Rights Ctr., 633 F.3d at 1138). This can be
demonstrated by showing that the plaintiff “had to devote significant resources to identify and
counteract the defendant’s racially discriminatory” practices. Havens Realty Corp., 455 U.S. at
379. Thus, the Supreme Court “has made plain that a ‘concrete and demonstrable injury to [an]
organization’s activities—with the consequent drain on the organization’s resources—constitutes
far more than simply a setback to the organization’s abstract social interests’ and thus suffices for
standing.” PETA, 797 F.3d at 1093 (alteration in original) (quoting Havens Realty Corp., 455
U.S. at 379); see also Am. Legal Found v. FCC, 808 F.2d 84, 92 (D.C. Cir. 1987) (“the organization
must allege that discrete programmatic concerns are being directly and adversely affected by the
defendant’s actions.”).
In contrast, an organization has not suffered an injury in fact sufficient to establish standing
if it has only diverted “resources to litigation or to investigation in anticipation of litigation.”
PETA, 797 F.3d at 1093; see also Am. Soc. for Prevention of Cruelty to Animals v. Feld Entm’t,
Inc., 659 F.3d 13, 25 (D.C. Cir. 2011). “Otherwise, the very act of bringing a case would confer
standing ‘and Article III would present no real limitation.’” Equal Rights Ctr., 633 F.3d at 1138
(quoting Spann, 899 F.2d at 27). Nor can an organization claim injury from “the effect of the
[challenged] regulations on the organizations’ lobbying activities.” PETA, 797 F.3d at 1093
(internal quotation marks omitted) (quoting Ams. for Safe Access v. DEA, 706 F.3d 438, 457
(D.C. Cir. 2013)). Similarly, an organization’s expenditure of resources to engage in “pure issueadvocacy” cannot create standing. Ctr. for Law & Educ. v. U.S. Dep’t of Educ., 396 F.3d 1152,

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1162 (D.C. Cir. 2005); see also Turlock Irrigation Dist. v. FERC, 786 F.3d 18, 24 (D.C. Cir. 2015);
PETA, 797 F.3d at 1094.
Here, NFHA’s activities fit squarely within the category of expenditures that are sufficient
to confer standing. In Havens, the Supreme Court held that an organization opposing housing
discrimination had standing when it “devote[d] significant resources to identify and counteract” a
real estate company’s “racially discriminatory steering practices.” Havens, 455 U.S. at 379. In
Spann, the D.C. Circuit applied Havens and held that “[e]xpenditures to reach out to potential
home buyers or renters who are steered away from housing opportunities by discriminatory
advertising, or to monitor and to counteract on an ongoing basis public impressions created by
defendants’ use of print media, are sufficiently tangible to satisfy Article III's injury-in-fact
requirement.” Spann, 899 F.2d at 29. Here, as in Spann, NFHA created new educational materials
and posted them on its website, purchased a public-service advertisement in a newspaper targeted
toward the population to be harmed by Travelers’ policy, and paid for an email blast to the
newspapers’ readers. Am. Compl. ¶ 37(a), (b). NFHA also spent funds and staff time on designing
new educational letters and flyers and mailing them to approximately 105 “predominately African
American churches in the Washington DC area.” Id. ¶ 37(c).
Moreover, the D.C. Circuit has “concluded that an organization promoting equal
employment had standing to sue an employment agency for racial discrimination in hiring because
the alleged discrimination ‘might increase the number of people in need of counseling’ and ‘may
have reduced the effectiveness of any given level of [the organization’s outreach efforts.’” Equal
Rights Ctr., 633 F.3d at 1139 (quoting Fair Emp’t Council of Greater Washington, Inc. v. BMC
Mktg. Corp., 28 F.3d 1268, 1276 (D.C. Cir. 1994)). NFHA diverted its resources to provide
additional training for staff and develop tracking and intake procedures to prepare for a potential

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increased volume of calls by landlords and tenants regarding insurance-related housing
discrimination. Id. ¶ 37(f). Thus, NFHA has certainly pleaded sufficient facts to show that it
suffered a concrete injury-in-fact by diverting scarce resources to “counteract the defendant’s
racially discriminatory” practices. See Havens Realty Corp., 455 U.S. at 379.
Travelers raises a host of arguments for why, despite the clear case law explained above,
NFHA does not have standing. None are persuasive. Travelers first asserts that because NFHA’s
expenditures were voluntary and self-inflicted, they do not “constitute the requisite injury-in-fact
to establish standing.” Def.’s Mot. to Dismiss at 27 (citing PETA, 787 F.3d at 1096–97, and
Turlock Irrigation Dist., 786 F.3d at 24). But the D.C. Circuit has rejected this argument,
explaining that standing does not “depend on the voluntariness or involuntariness of the plaintiffs’
expenditures” but instead on “whether they undertook the expenditures in response to, and to
counteract, the effects of the defendants’ alleged discrimination rather than in anticipation of
litigation.” Equal Rights Ctr., 633 F.3d at 1140. Here, as explained above, NFHA expended
significant resources to “counteract[] the effects of defendants’ alleged discrimination.” See id.
Although some of NFHA’s activities could be classified as preparing for litigation (or as engaging
in advocacy, another category of expenses that does not count toward standing), the Court does
not rely on those activities in finding that NFHA has standing.
Travelers next argues that NFHA’s choice to divert its resources was “predicated on the
legal conclusion that Travelers’ conduct violated the fair housing laws,” but because Travelers did
not violate the law, NFHA “cannot manufacture standing.” Def.’s Mot. to Dismiss at 28–29. This
argument puts the cart before the horse: NFHA’s standing does not depend on whether it prevails
on the merits. Rather, at the motion to dismiss stage, the Court accepts the plaintiff’s allegations
as true and “[i]f, as broadly alleged,” defendant’s unlawful practices “have perceptibly impaired”

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the plaintiff’s ability to provide services, “there can be no question that the organization has
suffered injury in fact.” Havens, 455 U.S. at 363; see also Lujan, 504 U.S. at 56 (“[E]ach element
[of standing] must be supported . . . with the manner and degree of evidence required at the
successive stages of the litigation. At the pleading stage, general factual allegations of injury
resulting from the defendant’s conduct may suffice[.]” (internal citations omitted)).
Travelers also attaches an affidavit to its motion to dismiss attesting that since January 1,
2016, it no longer uses the policy that NFHA challenges. See Kearney Decl. [ECF No. 14-2] ¶ 3.
Travelers therefore argues that “the costs expended by NFHA are not the result of Travelers’
conduct, but of NFHA’s own failure to perform a reasonable investigation.” Def.’s Mot. to
Dismiss at 30. It is not clear how this affidavit could affect NFHA’s standing. Travelers’
admission that it used this policy prior to January 1, 2016 will likely bolster’s NFHA’s claims at a
later stage of this litigation. But regardless, NFHA has pleaded facts, which must be accepted as
true at this stage, that show that Travelers still followed this policy as of February 2016. See Am.
Compl. ¶ 32. At best, then, the affidavit raises a factual dispute that could be relevant to the merits
of NFHA’s claims—but it does not affect NFHA’s standing.
Finally, Travelers argues that because the activities NFHA undertook to counteract
Travelers’ allegedly discriminatory practices are “wholly consistent with the very type of
education and outreach efforts that are part of NFHA’s stated mission,” they cannot suffice for
injury in fact. Def.’s Mot. to Dismiss at 26. A different judge on this court responded to a similar
argument by stating that “[t]he Court need not address defendants’ theory,” which “borders both
on the offensive and absurd.” National Fair Hous. Alliance, Inc. (NFHA) v. Prudential Ins. Co. of
Am., 208 F. Supp. 2d 46, 53–54 (D.D.C. 2002). This Court need only remark that in nearly all of
the cases where an organization has standing to pursue a claim under the FHA, of course those

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organizations’ activities are “wholly consistent” with their mission of promoting fair housing. See,
e.g., Havens, 455 U.S. at 368; Equal Rights Ctr., 633 F.3d at 1136; Spann, 899 F.2d at 26; cf.
Inclusive Communities, 135 S. Ct. at 2514 (not considering standing, but describing plaintiff as a
“Texas-based nonprofit corporation that assists low-income families in obtaining affordable
housing”).

Indeed, it would be surprising if an organization with no interest in housing

discrimination were to bring suit under the FHA, and more importantly, nothing in the FHA,
standing jurisprudence, or common sense supports Travelers’ position.
Having determined that NFHA has standing to pursue its claims, the Court turns to
defendant’s motion to dismiss for failure to state a claim.
II.

THE FAIR HOUSING ACT
The Fair Housing Act was enacted during “a period of considerable social unrest.”

Inclusive Communities, 135 S. Ct. at 2516. A commission established by President Lyndon
Johnson found that “both open and covert racial discrimination prevent black families from
obtaining better housing and moving to integrated communities” and that as a result, “‘our Nation
is moving toward two societies, one black, one white—separate and unequal.’” Id. (quoting Report
of the Nat’l Advisory Comm’n on Civil Disorders 1, 91 (1968)). This state of affairs came about
because of “various practices [that] were followed, sometimes with government support, to
encourage and maintain the separation of the races: Racially restrictive covenants prevented the
conveyance of property to minorities; steering by real-estate agents led potential buyers to consider
homes in racially homogeneous areas; and discriminatory lending practices, often referred to as
redlining, precluded minority families from purchasing homes in affluent areas.” Id. at 2515
(internal quotation marks omitted).

In response, Congress adopted the commission’s

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recommendation and passed the Fair Housing Act to “eradicate discriminatory practices within a
sector of our Nation’s economy.” Id. at 2521.
The FHA announces that “[i]t is the policy of the United States to provide, within
constitutional limitations, for fair housing throughout the United States.” See 42 U.S.C. § 3601.
Thus, it is unlawful to “refuse to sell or rent . . . or otherwise make unavailable or deny, a dwelling
to any person because of race, color, religion, sex, familial status, or national origin.” 42 U.S.C.
§ 3604(a). In Inclusive Communities, the Supreme Court reached the same conclusion as many
of the circuit courts and held that the FHA creates liability under a disparate-impact theory of
discrimination as well as under a disparate-treatment theory. Inclusive Communities, 135 S. Ct.
at 2525. “The availability of disparate-impact liability” both “permits plaintiffs to counteract
unconscious prejudices and disguised animus that escape easy classification as disparate
treatment” and promotes the “removal of artificial, arbitrary, and unnecessary barriers” to housing.
Id. at 2522 (internal quotation marks omitted).
But the Supreme Court carefully explained that “disparate-impact liability has always been
properly limited.” Id. Disparate-impact liability under the FHA can be proven under a burdenshifting framework analogous to that used in employment discrimination cases: the plaintiff must
plead a prima facie case of discrimination, the defendant may rebut by presenting nondiscriminatory reasons for the challenged policy, and the plaintiff bears the ultimate burden of
persuasion. See 24 C.F.R. § 100.500(c); Inclusive Communities, 135 S. Ct. at 2522–23. Because
this case is at the motion to dismiss stage, the limitations at the prima facie stage are relevant here.
The Supreme Court explained that there is a “robust causality requirement” at the prima
facie stage: “A plaintiff who fails to allege facts at the pleading stage or produce statistical evidence
demonstrating a causal connection cannot make out a prima facie case of disparate impact.”

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Inclusive Communities, 135 S. Ct. at 2523. A claim “that relies on a statistical disparity must fail
if the plaintiff cannot point to a defendant’s policy or policies causing that disparity”—in other
words, a “one-time decision [that] may not be a policy at all” cannot support a disparate-impact
claim. Id. In Inclusive Communities, where the plaintiff claimed a developer’s choice of location
for a new housing complex had a disparate impact, the Court explained that “[i]t may also be
difficult to establish causation because of the multiple factors that go into investment decisions
about where to construct . . . housing units.” Id. at 2523–24. Other limitations on disparate-impact
liability take effect at different stages—for example, defendants must have “leeway to state and
explain the valid interest served by [the challenged] policies” at the rebuttal stage. Id. at 2522.
Keeping in mind the ultimate purpose of disparate-impact liability, the Court reiterated that
“[g]overnmental or private policies are not contrary to the disparate-impact requirement unless
they are ‘artificial, arbitrary, and unnecessary barriers.’” Id. at 2524 (quoting Griggs v. Duke
Power Co., 401 U.S. 424, 431 (1971)). Thus, “[c]ourts should avoid interpreting disparate-impact
liability to be so expansive as to inject racial considerations into every housing decision.” Id.
Travelers asserts that under Inclusive Communities’ robust causality requirement, NFHA
has failed to state a claim because failing to provide habitational insurance to a landlord is too
remote to have any effect on a tenant and because NFHA relies on statistical evidence to
demonstrate the disparate impact of Travelers’ policy. As explained below, these arguments are
unpersuasive.
There is a large body of case law holding that insurers—including insurers who sell
products to landlords—can be held liable under the FHA, and Inclusive Communities does not call
those cases into question.

Courts have long recognized the role of insurance in housing

discrimination. One classic form of racial discrimination is “redlining,” which in the insurance

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industry is “charging higher rates or declining to write insurance for people who live in particular
areas.” NAACP v. Am. Fam. Mut. Ins. Co., 978 F.2d 287, 290 (7th Cir. 1992). Numerous courts
have applied disparate-impact liability to insurers that provide (or don’t provide) insurance to
homeowners or renters. See, e.g., id. at 301; Nationwide Mut. Ins. Co v. Cisneros, 52 F.3d 1351,
1358–59 (6th Cir. 1995); NFHA, 208 F. Supp. 2d at 55–58. 1 This interpretation makes sense:
“insurance provides the financial assistance necessary to maintain a dwelling,” NFHA, 208 F.
Supp. 2d at 58, and thus denial of insurance has the effect of making housing “otherwise . . .
unavailable,” 42 U.S.C. § 3604(a). Indeed, the Department of Housing and Urban Development
has issued a regulation stating that denying “property or hazard insurance” violates the FHA. 24
C.F.R. § 100.70(d)(4). 2 Moreover, many courts have considered similar issues to that which
Travelers raises here—whether refusing to provide insurance to the landlord (rather than to the
tenant) can violate the FHA—and concluded that it can. See, e.g., Viens v. Am. Empire Surplus
Lines, Inc., 113 F. Supp. 3d 555, 565–66 (D. Conn. 2015); Nevels v. W. World. Ins. Co., 359 F.
Supp. 2d 1110, 1117–1120 (W.D. Wash. 2004); Wai v. Allstate Ins. Co., 75 F. Supp. 2d 1, 6–7
(D.D.C. 1999).
Travelers does not argue that these cases were wrongly decided or attempt to distinguish
its factual circumstances from the ones presented there. Rather, it argues that the reasoning in
these cases is no longer sound given Inclusive Communities’ “robust causality requirement.” 135
S. Ct. at 2523. But Inclusive Communities said no such thing. The Supreme Court was concerned

1

As far as the Court is aware, only one court has ever held that the FHA does not cover insurance at all. See
Mackey v. Nationwide Ins. Co., 724 F.2d 419, 424 (4th Cir. 1984). However, it is unclear whether this case is still
good law given intervening changes in the statute and HUD regulations. See NAACP, 978 F.2d at 300 (doubting
Mackey’s continued force after Congress’ 1988 amendments to the FHA); NFHA, 208 F. Supp. 2d at 55 (doubting
Mackey’s continued weight after HUD’s 1989 regulations).
2
Travelers does not cite or discuss this regulation, or present any argument regarding whether this regulation
is entitled to deference under Chevron USA, Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984). The Court
therefore does not consider how much deference is owed to this regulation.

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with ensuring that disparate-impact liability does not lead to “inject[ing] racial considerations into
every housing decision” by allowing bare statistics to state a prima facie claim without evidence
of a “causal connection,” or by allowing one-time decisions to be challenged as discriminatory
policies, such that governments and private parties cannot implement reasonable policy priorities
in their housing plans. See id. at 2523–24. But it does not require courts to abandon common
sense or necessary logical inferences that follow from the facts alleged. Indeed, quite the
opposite—the Supreme Court instructed courts to ensure that disparate-impact liability is confined
to removing “artificial, arbitrary, and unnecessary barriers.” Id. at 2524 (internal quotation marks
omitted).
The Seventh Circuit explained the clear, non-speculative, and inescapable consequences
that follow from a lack of habitational insurance: “No insurance, no loan; no loan, no house; lack
of insurance thus makes housing unavailable.” NAACP, 978 F.2d at 297. As another court in this
district explained when considering housing discrimination against disabled tenants, it does not
matter whether the denial of insurance is to the landlord or the tenant: “If, in order to rent to
disabled persons, a landlord must risk losing her home through loss of . . . insurance, she will be
disinclined to rent to disabled persons. Such powerful disincentives to rent to disabled persons
make housing unavailable to them.” Wai, 75 F. Supp. 2d at 6. Hence, insurance policies can
create exactly the type of “artificial, arbitrary, and unnecessary barriers” to housing that disparateimpact liability is suited to address. See Inclusive Communities, 135 S. Ct. at 2524. The
arguments in these cases, then, apply with full force to Travelers. Here, NFHA alleges that
Travelers refuses to provide insurance to landlords who rent to voucher recipients.

And

importantly, these are the type of clear, non-speculative, connections that Inclusive Communities
requires to make out a prima facie claim of disparate impact. Accordingly, nothing about the fact

16

that Travelers offers insurance, rather than directly selling or renting property, makes the causal
connection too weak for NFHA to state a claim under Inclusive Communities.
To support its contention that the connection between an insurer’s policies and any effect
on tenants is too attenuated to state a claim, Travelers points out that NFHA has not identified any
specific tenant who has been or would be harmed by Travelers’ policy. It is true that NFHA’s
complaint does not identify any individual tenant who has (or is likely to) lose housing due
Travelers’ policy, nor has NFHA identified any building that ceased (or will cease) renting to
tenants who receive vouchers. But this has little legal relevance here. For standing purposes,
NFHA must identify a party with an actual injury—which it has done. For the purpose of stating
a claim, Travelers does not cite any case holding that an organizational plaintiff must identify a
specific tenant harmed by the challenged policy. To the contrary, both the Supreme Court and
lower courts have permitted organizational plaintiffs to proceed by identifying the category of
persons who will be harmed by the challenged policy without naming the specific impacted tenants
(again, once standing has been demonstrated).

See, e.g., Gladstone Realtors v. Village of

Bellwood, 441 U.S. 91, 97–98, 109–111 (1979); Avenue 6E Investments, LLC v. City of Yuma,
217 F. Supp. 3d 1040, 1051 (D. Ariz. 2017) (explaining that Ninth Circuit precedent “does not
require Plaintiffs to identify those people who were actually affected by the rezoning denial. . . .
[P]roof of a predictably discriminatory effect is sufficient”); Viens, 113 F. Supp. 3d at 559–560;
Wai, 75 F. Supp. 2d at 3–4. While identifying a specific tenant harmed by Travelers’ policy might
help convince a jury or judge of the merits of NFHA’s factual claims, it is not necessary for
demonstrating causation at the prima facie stage. 3

3

Travelers also argues that NFHA cannot show causation because the Housing Choice Voucher program is
voluntary for landlords to participate in. The Court need not spend much time on this argument, and does not decide
the extent to which participation is voluntary or a landlord’s withdrawal from the program could lead to liability under
the FHA. NFHA here has not alleged that any landlord is required to participate in the Housing Choice Voucher

17

Travelers’ next argument is a stronger one: it asserts that NFHA relies on the type of bare
“showing of statistical disparity” that is insufficient for a prima facie claim under Inclusive
Communities. Only a handful of cases since Inclusive Communities have closely examined when
statistical evidence demonstrates a sufficiently close causal connection to state a claim. In Rhode
Island Commission for Human Rights v. Graul, the court noted that “disparate impact is proven
by presentation of evidence compar[ing] those affected by the policy with those unaffected by the
policy.” 120 F. Supp. 3d 110, 124 (D.R.I. 2015) (internal quotation marks omitted) (alteration in
original). There, the plaintiffs were a family comprised of two parents and a child, who alleged
that their landlord’s policy of not renting a one-bedroom apartment to three people violated the
FHA’s prohibition against discrimination based on family status. On a motion for summary
judgment, the court held that they stated a prima facie case by presenting analysis based on statewide census data that showed that for three-person households renting at that price range,
“households with children are more than three times as likely to be adversely impacted” by the
landlord’s policy than “comparable households with no children.” Id. at 126.
In Mhany Management, Inc. v. County of Nassau, 819 F.3d 581, 619–620 (2d Cir. 2016),
the Second Circuit held that the district court’s 2012 analysis of the plaintiff’s prima facie claim
was still valid following Inclusive Communities. The circuit court affirmed the district court’s
conclusion that the plaintiff showed a disparate impact by demonstrating that the zoning rule
limiting multi-family dwellings “perpetuates segregation generally because it decreases the
availability of housing to minorities in a municipality where minorities constitute approximately

program or that any landlord’s withdrawal from the program is unlawful. Rather, it alleges that the insurer’s policy
prevents landlords from participating in the Housing Choice Voucher program, and thus violates the FHA. Travelers’
argument is therefore not relevant to NFHA’s claim. Cf. Viens, 113 F. Supp. 3d at 572 (“[e]ven if landlords have the
prerogative under federal law to reject Section 8 tenants, there is no sound reason why insurers should be immunized
from claims of discrimination when such landlords have decided to accept Section 8 tenants”).

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only 4.1% of the overall population . . . and only 2.6% of the population living in [single family]
households.” Id. at 620 (first alteration original) (internal quotation marks omitted). The initial
district court opinion further detailed the statistical evidence, which tended to show that the
challenged zoning rule, as opposed to an alternative zoning rule, “significantly decreased the
potential pool of minority residents likely to move into” the new housing development “in
proportion to the number of non-minorities affected.” Mhany Mgmt., Inc. v. County of Nassau,
843 F. Supp. 2d 287, 329 (E.D.N.Y. 2012).
And in Avenue 6E Investments, LLC v. City of Yuma, 217 F. Supp. 3d 1040 (D. Ariz.
2017), the district court considered whether statistical evidence at the summary judgment stage
made out a prima facie claim after the Ninth Circuit ordered a remand following Inclusive
Communities. See Avenue 6E Investments, LLC v. City of Yuma, 818 F.3d 493, 512 (9th Cir.
2016). The plaintiffs alleged that a lower-density zoning rule would lead to more expensive houses
which would have a disparate impact on Hispanics. Avenue 6E Investments, 217 F. Supp. 3d at
1048. The plaintiffs’ expert “compare[d] the percentages of Hispanics and whites who were
qualified home buyers in the identified price ranges in the Yuma market” during 2007–2009. Id.
at 1049. The expert determined that “the pool of persons purchasing a home in [the developer’s]
proposed price range [for higher-density housing] was roughly 45% Hispanic and 50% white,
while the pool of persons purchasing a home in the more expensive range [for lower-density
housing] was roughly 30% Hispanic and 65% white.” Id. at 1049. Hence, the court concluded
“that Plaintiffs’ evidence is sufficient to show a prima facie case of disparate impact.” Id. at 1050.
The court explained that “Plaintiffs did not just show that the denial of a request to lower the
density increases housing costs and that Hispanics are generally less wealthy than whites in

19

Yuma.” Id. Rather, the plaintiff “provided statistical evidence” that was specific to the “relevant
market area” and the “relevant time frame.” Id.
In contrast, two cases where courts have found that plaintiffs failed to meet their pleading
burden after Inclusive Communities are also instructive. In Boykin v. Fenty, 650 F. App’x 42, 43
(D.C. Cir. 2016) (per curiam) (nonprecedential), 42 former residents of a homeless shelter
challenged the city’s decision to close two low-barrier homeless shelters in the northwest quadrant
of the city, alleging that it would have a disparate impact on disabled homeless individuals. The
court determined that they “failed to allege facts suggesting that the closure affected a greater
proportion of disabled individuals than non-disabled” because the complaint “did not, for instance,
include an allegation that disabled homeless individuals are more likely to rely on low-barrier
shelters than non-disabled homeless individuals.” Id. at 44. And in Burbank Apartment Tenants
Ass’n v. Kargman, 48 N.E.3d 394, 398 (Mass. 2016), the Massachusetts Supreme Judicial Court
considered a disparate impact claim against a landlord who switched from participating in a
program for low-income tenants (known as project-based subsidies) to instead accepting Section
8 vouchers. The court considered the FHA and the analogous state statue under Inclusive
Communities. Id. at 411. It explained that while the plaintiffs pleaded facts that showed that the
beneficiaries of project-based subsidies were more likely to be members of protected classes as
compared to the general public, it did not show that they were more likely to be members of a
protected class as compared to voucher recipients. See id. at 412–13. Moreover, because the
property would still rent to voucher recipients, the plaintiffs did not present evidence that those
tenants would be “negatively affected” by the switch from project-based subsidies to vouchers.
Id. at 414.

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Travelers asks the Court to rely on Ellis v. City of Minneapolis, No. 14-cv-3045, 2016 WL
1222227 (D. Minn. Mar. 28, 2016). There, the plaintiffs were private landlords of low-income
housing who alleged that the city had a policy of over-enforcing housing codes against them, as
compared to the relaxed enforcement against publicly owned low-income housing. Id. at *1.
Travelers identifies that case as one where plaintiffs alleged that low-income tenants were more
likely to be members of a protected class, yet the court rejected the claim because plaintiffs’
complaint “[did] not point to a defendant’s policy and purported disparity and allege facts that a
show a causal connection.” Id. at *5.
But Travelers misunderstands the district court’s analysis and does not consider the more
recent decision from the Eighth Circuit on appeal. The district court in Ellis explained that the key
problem with plaintiffs’ allegations was that they failed to show that the city had a policy that
could cause a disparate impact. Id. at *6. Indeed, “Plaintiffs admit[ted] that the units were not up
to code” thus undermining their claim that the city had a policy of unfairly enforcing housing
codes. Id. The Eighth Circuit, on appeal, emphasized this element of the district court’s analysis.
Ellis v. City of Minneapolis, 860 F.3d 1106, 1112–13 (8th Cir. 2017). It explained that the FHA
may not be used as “‘an instrument to force housing authorities to reorder their priorities,’ and an
FHA disparate-impact claim may not be used to lower housing standards for everyone merely
because housing standards are inconsistently applied.” Id. at 1112 (internal citation omitted)
(quoting Inclusive Communities, 135 S. Ct. at 2522). Most importantly, the Eighth Circuit
affirmed the district court’s decision because the facts alleged did not “plausibly suggest a City
policy to misapply the housing code.” Id. at 1113 (emphasis in original). This is not surprising,
given Inclusive Communities’ admonition that a “one-time decision may not be a policy at all”
and therefore cannot support a disparate-impact claim. 135 S. Ct. at 2523. In this case, however,

21

there is no dispute that NFHA has alleged that Travelers has a policy that has a disparate impact,
and thus Ellis is not helpful to either party on that issue and provides little guidance regarding
NFHA’s statistical analysis.
Here, NFHA has pleaded facts that are far closer to those in Graul, Mhany Management
and Avenue 6E Investments than to Boykin or Burbank. Unlike in Boykin and Burbank, NFHA
did not just allege that some voucher recipients are members of a protected class, but rather pleaded
facts that show that voucher recipients are significantly more likely to be members of a protected
class than is true for the D.C. population as a whole. See Am. Compl. ¶¶ 14–17; Boykin, 650 F.
App’x at 44; Burbank Apt. Tenants Ass’n, 48 N.E.3d at 413–14. As in Avenue 6E Investments,
NFHA not only conducted a general statistical analysis, but also focused on the relevant
geographic region of the District: it ensured that testers claimed they were buying properties in the
Anacostia neighborhood, which is also the area with the highest portion of voucher recipients. See
Am. Compl. ¶ 17; Avenue 6E Investments, 217 F. Supp. 3d at 1049–50. And as in Graul and
Mhany Management, NFHA pleaded facts that show that because of the different composition of
the affected population (voucher recipients) as compared to the District’s population as a whole,
members of a protected class are more likely to be harmed by Travelers’ policy than are other
individuals. See Graul, 120 F. Supp. 3d at 126; Mhany Mgmt., 843 F. Supp. 2d at 329.
“[T]here is no rigid mathematical formula to show specific disparate impact and the inquiry
is necessarily fact-specific.” Avenue 6E Investments, 217 F. Supp. 3d at 1050 (citing Watson v.
Fort Worth Bank & Trust, 487 U.S. 977, 994 (1988)). Here, based on a fact-specific inquiry,
NFHA has pleaded facts that, if true, would show that Travelers’ policy will exacerbate racial and
sex-based disparities by having a disproportionate impact on African-American residents and

22

members of women-headed households in the District. NFHA has therefore stated a prima facie
FHA claim under the “robust causality requirement” of Inclusive Communities. 4
III.

THE D.C. HUMAN RIGHTS ACT
The D.C. Human Rights Act identifies several actions that are “unlawful discriminatory

practice[s]” if undertaken “wholly or partially for a discriminatory reason based on actual or
perceived: race, color, religion, national origin, sex, . . . [or] source of income.” D.C. Code § 21402.21(a). One such category of actions is: “[t]o appraise a property, refuse to lend money,
guarantee a loan, purchase a loan . . . or otherwise refuse to make funds available for the purchase,
acquisition, construction, alteration, rehabilitation, repair or maintenance of real property; or
impose different conditions on such financing; or refuse to provide title or other insurance relating
to the ownership or use of any interest in real property.” Id. § 2-1402.21(a)(3). NFHA argues that
Travelers’ policy has a disparate impact based on race, sex, and source of income in violation of
this provision of the DCHRA.

4
In a footnote, Travelers argues that the McCarran-Ferguson Act, 15 U.S.C. §§ 1011–15, bars NFHA’s
claims. See Def.’s Mot. to Dismiss at 16–17 n.9. The McCarran-Ferguson Act states that “[n]o Act of Congress shall
be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business
of insurance.” 15 U.S.C. § 1012(b). The Supreme Court has explained the threshold requirements for preemption
under that act: (1) the federal law in question must not be “specifically relat[ed] to the business of insurance”; (2) there
is a state law enacted “for the purpose of regulating the business of insurance,”; and (3) application of the federal law
would “invalidate, impair, or supersede the State’s law.” Humana Inc. v. Forsyth, 525 U.S. 299, 307 (1999) (internal
quotation marks omitted). The Eighth Circuit, in analyzing the FHA and the McCarran-Ferguson Act, explained that
under “Humana’s fact-intensive interpretation of the word ‘impair,’ [a court’s] focus must be on the precise federal
claims asserted. Federal civil rights statutes are drafted broadly, so a statute might ‘impair’ state insurance laws when
applied in some ways, but not in others.” Saunders v. Farmers Ins. Exch., 537 F.3d 961, 967 (8th Cir. 2008). Thus,
the key issue in analyzing whether the McCarran-Ferguson Act reverse-preempts this application of the FHA is the
specific details of the state insurance law that supposedly contradicts the FHA. But Travelers has not identified any
specific state insurance law that might contradict this application of the FHA, or explained how the laws are
incompatible. Rather, it has only cited the D.C. insurance code as a whole, and the section of that code generally
pertaining to rate making. See Def.’s Mot. to Dismiss at 16–17 n.9 (citing D.C. Code §§ 31-2231.01 et seq. and 312703). Undeveloped arguments are waived because “it is not the obligation of this court to research and construct
legal arguments open to parties, especially when they are represented by counsel.” Sanchez v. Miller, 792 F.2d 694,
703 (7th Cir. 1986); see also Johnson v. Panetta, 953 F. Supp. 2d 244, 250 (D.D.C. 2013). The Court therefore
considers this argument waived and does not decide whether, under the McCarran-Ferguson Act, any D.C. insurance
law might bar this application of the FHA.

23

Travelers argues that the DCHRA does not cover the issuance of insurance, and therefore
that NFHA may only state a discrimination claim under the D.C. insurance code. Def.’s Mot. to
Dismiss at 21–22. Travelers relies on National Organization for Women (NOW) v. Mutual of
Omaha Insurance Co., Inc., 531 A.2d 274, 275 (D.C. 1987), for this proposition. But that case
says something entirely different. Regardless of whether NOW analyzed only health insurance or
insurance more generally (which the parties disagree on), it undoubtedly only considered whether
insurance was a public accommodation under the DCHRA. Id. at 276. The DCHRA contains a
particular prohibition on discrimination in public accommodations—at the time codified in § 12519(a)(1) (1987) and now codified in nearly identical language in § 2-1402.31(a)(1) (2011). The
public accommodations provision is an entirely separate section from the one at issue here, which
pertains to housing and commercial space, codified at § 2-1402.21(a). And importantly, the act
specifies that § 2-1402.21(a) applies to habitational insurance: it states that it shall be unlawful to
discriminate in “other insurance relating to the ownership or use of any interest in real property.”
D.C. Code §2-1402.21(a)(3). There can be no serious question, then, that § 2-1402.21(a) applies
to the provision (or denial) of habitational insurance.
Travelers next contends that because the DCHRA is interpreted in accordance with the
FHA, Inclusive Communities’ heightened pleading requirements apply. Def.’s Mot. to Dismiss at
20–23 (citing McCaskill v. Galludet Univ., 36 F. Supp. 3d 145, 157 (D.D.C. 2014); Feemster v.
BSA Ltd. P’ship, 548 F.3d 1063, 1070 (D.C. Cir. 2008)). It therefore argues that, for all of the
reasons NFHA has failed to state a claim under the FHA, it has failed to state a claim under the
DCHRA as well. Id. The Court assumes without deciding that the FHA’s pleading limitations for
disparate-impact claims, as interpreted in Inclusive Communities, apply to disparate-impact claims

24

under the DCHRA. But these arguments fail here for the same reasons that they fail with respect
to the FHA. NFHA has therefore stated a claim under the DCHRA as well.
CONCLUSION
For these reasons, Travelers’ motion to dismiss will be denied. A separate order has been
issued on this date.
/s/
JOHN D. BATES
United States District Judge

Dated: August 21, 2017

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