TBS Group, LLC v. Zion, Illinois
MEMORANDUM Opinion and Order. Signed by the Honorable John W. Darrah on 1/23/2017. Mailed notice. (eg,)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
TBS GROUP, LLC,
CITY OF ZION, ILLINOIS,
Case No. 16-cv-5855
Judge John W. Darrah
MEMORANDUM OPINION AND ORDER
On June 3, 2016, Plaintiff filed a Complaint, alleging violations of the Fair Housing Act
(“FHA”), 42 U.S.C. § 3601 et seq., and seeking declaratory judgment as well as injunctive relief
to prevent Defendant from enforcing the adopted ordinance and Comprehensive Plan. Defendant
filed a Motion to Dismiss  pursuant to Fed. R. Civ. P. 12(b)(6). For the reasons discussed
below, Defendant’s Motion  is granted.
TBS Group, LLC is a property owner located in Round Lake Beach, Illinois, that rents
properties located in Zion that are subject to the ordinance. (Compl. ¶ 6.) On or about
July 7, 2015, the City of Zion, Illinois, adopted ordinance 15-O-33. (Compl.) The ordinance
added the following language to the Zion Municipal Code under Section 10-9
“Permit fee schedule”:
Rental Certificate inspection
$75.00 per dwelling unit
Residential buildings containing more than 132 multiple-family dwelling units, as
those terms are defined in Chapter 102 of this Code: Not to exceed $10,000 per
Residential buildings containing more than 132 multiple-family dwelling units, as
those terms are defined in Chapter 102 of this Code, and part of a single,
geographically contiguous, complex of multiple-family dwelling units, as
determined by the Director of Building and Zoning: Not to exceed $10,000 per
(Dkt. 13-2, p. 7.) The ordinance also provides permit fees for smaller residential units,
commercial units, and “industrial and warehouse” units. (Id.) The ordinance requires that
owners of rental property pay a fee, obtain a rental certificate, and open rental homes for
inspection before being rented. (Compl.) Failure to comply with the ordinance results in fines of
up to $10,000 per year. (Id.)
Under the ordinance, registration and inspection fees are $100.00 or more each, and
violations can accrue a fine of $750.00 per day. (Id. ¶ 14.) Plaintiff alleges Defendant’s
ordinance has made housing unavailable because of national origin, race, or color, and
constitutes discrimination in terms, conditions, or privileges of sale or rental dwellings or in
provision of services because of national origin, race, or color. (Id. ¶ 18.) Plaintiff also alleges
that this ordinance is selectively enforced against landlords who have African-American and
Latino tenants or has a disparate impact on them. (Id. ¶ 17.) The population of Zion is 31
percent African-American, 27 percent Latino, and 48.9 percent White. (Id. ¶ 10.) The rental
population within Zion is 39.3 percent African-American, 14.9 percent Latino, and 39 percent
Defendant also maintains a Comprehensive Plan that places multiple-family housing
almost exclusively in a specific area of Zion. (Id. ¶ 12.) This area is next to industrial areas and
remote from green space. (Id.) Plaintiff further alleges the Comprehensive Plan will make
housing unavailable because of national origin, race or color by locating multi-family rental
housing in less-desirable industrial areas far from desirable green space. (Id. ¶ 19.)
Rule 12(b)(6) permits a defendant to move to dismiss a complaint for “failure to state a
claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). To survive a motion to
dismiss, a complaint must allege “enough facts to state a claim to relief that is plausible on its
face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). “Threadbare recitals of the
elements of a cause of action, supported by mere conclusory statements, do not suffice.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555). However,
plaintiffs are not required to “plead the elements of a cause of action along with facts supporting
each element.” Runnion ex rel. Runnion v. Girl Scouts of Greater Chicago & Nw. Indiana, 786
F.3d 510, 517 (7th Cir. 2015). Rather, the complaint must provide a defendant “with ‘fair
notice’ of the claim and its basis.” Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008)
(quoting Fed. R. Civ. P. 8(a)(2) and Twombly, 550 U.S. at 555). When evaluating a Rule
12(b)(6) motion, the court accepts the complaint’s well-pleaded factual allegations as true and
draws all reasonable inferences in the plaintiff’s favor. Twombly, 550 U.S. at 555-56.
Plaintiff alleges that Defendant’s ordinance violates § 3604(a), § 3604(b), and § 3617 of
the FHA. Plaintiff also alleges that the Comprehensive Plan violates § 3604(a). The parties
disagree as to the pleading standard that should apply to claims under the FHA. Plaintiff argues
that the notice pleading standard of Federal Rule of Civil Procedure 8 applies. See Swanson v.
Citibank, N.A., 614 F.3d 400, 404 (7th Cir. 2010) (applying Rule 8 pleading standards to the
plaintiff's claims of racial discrimination in violation of the Fair Housing Act and Rule 9
heightened pleading standards to the plaintiff's fraud claims). However, the Seventh Circuit later
stated that the Iqbal/Twombly standard was applied in Swanson. McCauley v. City of Chicago,
671 F.3d 611, 617 (7th Cir. 2011) (“In Swanson, on the other hand, we applied Twombly/Iqbal
and held that the plaintiff's allegations were sufficient to survive a motion to dismiss on at least
some of her claims.”). The Seventh Circuit explained that “in the absence of an obvious legal
alternative explanation, pleading the ‘who, what, and when’ of the discrimination claim was
enough.” Id. at 619. Under either interpretation, “the plaintiff must give enough details about
the subject-matter of the case to present a story that holds together.” Swanson, 614 F.3d at 404.
The FHA makes it unlawful “[t]o refuse to sell or rent after the making of a bona fide
offer, or to refuse to negotiate for the sale or rental of, 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). It is similarly unlawful to “discriminate against any person in the terms,
conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities
in connection therewith, because of race, color, religion, sex, familial status, or national origin.”
Id. § 3604(b). Plaintiff alleges that “[the ordinance] has made housing unavailable because of
national origin, race, or color” and that “[the ordinance] also constitutes discrimination in terms,
conditions, or privileges of sale or rental of dwellings or in the provision of services because of
national origin, race, or color . . . .” (Compl. ¶ 18.) Plaintiff also alleges that the Comprehensive
Plan “will make housing unavailable because of origin, race, or color . . . by locating multifamily rented housing in less-desirable industrial areas far from desirable green space.” (Id.
¶ 19.) It is unclear whether Plaintiff is alleging disparate treatment, disparate impact, or both.
For a disparate-treatment claim, a plaintiff must allege that defendant had a
discriminatory intent or motive. Texas Dep’t of Hous. & Cmty. Affairs v. Inclusive Communities
Project, Inc., 135 S. Ct. 2507, 2513, 192 L. Ed. 2d 514 (2015) (citing Ricci v. DeStefano, 557
U.S. 557, 577 (2009)). On its face, the ordinance is neutral and does not require disparate
treatment on the basis of origin, race, or color. The ordinance equally applies to any rental
properties and is targeted at ensuring compliance with health and safety codes. 1 Plaintiff does
not allege that it is the only owner of a residential building containing more than 132 multiplefamily dwelling units or that the ordinance was specifically targeted at such buildings in order to
discriminate on the basis of origin, race, or color. Plaintiff alleges that Zion officials, at some
point in the past, indicated that they did not want to increase the number of rental units that
would be rented by African-Americans. (Compl. ¶ 13.) However, the Complaint does not
indicate when Plaintiff was told this or what connection it may have to the change in the
ordinance. Plaintiff also alleges that, upon information and belief, the ordinance is selectively
enforced. (Id. ¶ 17.) However, Plaintiff has not alleged facts beyond this conclusory assertion.
See Moak v. Roszak, No. 05-cv-01652, 2005 WL 2563014, at *4 (N.D.Ill. Oct. 6, 2005) (granting
motion to dismiss where plaintiff failed to state the grounds for allegations made upon
information and belief). 2 Nor has Plaintiff pled any facts to show that the Comprehensive Plan
was created and/or is being carried out with a discriminatory intent or purpose. Plaintiff has not
sufficiently alleged disparate treatment.
A disparate impact occurs when “a facially neutral policy unjustifiably falls more harshly
on a protected group than on others.” Nikolich v. Vill. of Arlington Heights, 870 F.Supp.2d 556,
The Supreme Court has noted that government agencies “must not be prevented from
achieving legitimate objectives, such as ensuring compliance with health and safety codes.”
Inclusive Communities, 135 S. Ct. at 2524.
Pleading on information and belief may be acceptable when the allegations regard
“matters peculiarly within the knowledge of the defendants.” Brown v. Budz, 398 F.3d 904, 914
(7th Cir. 2005) (citing Tankersley v. Albright, 514 F.2d 956, 964 n. 16 (7th Cir. 1975)). Whether
other landlords have been subject to the ordinance is not particularly within the knowledge of
563 (N.D. Ill. 2012). A plaintiff must allege facts “demonstrating a causal connection” to “make
out a prima facie case of disparate impact.” Inclusive Communities, 135 S. Ct. at 2523. Plaintiff
has not alleged how the inability to rent its properties, specifically, would make a disparate
impact on the availability of housing for African-Americans and those of Hispanic origin.
Plaintiff alleges facts about the ethnic makeup of the City and those who rent in the city in
general. But there are no allegations that it would affect more of one of those groups than any
other. There is also no allegation containing information regarding how Plaintiff’s properties
relate to the percentages of African-American and Latino renters in total, e.g., if Plaintiff’s
properties account for 65 percent of African-American and Latino renters in the City. Nor has
Plaintiff pled any facts to show that the Comprehensive Plan has or will have a disparate impact
on African-American and Latino renters. Plaintiff has failed to allege a disparate impact.
Defendant also argues that Plaintiff is not an “aggrieved person” under the FHA. An
aggrieved person under the FHA “includes any person who . . . (1) claims to have been injured
by a discriminatory housing practice; or (2) believes that such person will be injured by a
discriminatory housing practice that is about to occur.” 42 U.S.C. § 3602(i). Plaintiff alleges
that “[t]here are persons who have been injured by defendant’s discriminatory actions” and
“have been assessed fines.” (Compl. ¶ 21.) Plaintiff also alleges that it “does not have the
financial means to comply with the ordinance.” (Id. ¶ 2.) At this stage, Plaintiff has sufficiently
alleged that it will be injured by a discriminatory housing practice that is about to occur in
regards to the ordinance. If Plaintiff intends to rent any of its units, then it will be required to
pay fines and fees. However, Plaintiff has failed to allege that it is an aggrieved person in
regards to the Comprehensive Plan. Plaintiff has not alleged that any of its properties will be
moved or that it will be required to stop renting to any person on the basis of origin, race, or
color because of the Comprehensive Plan.
Defendant’s Motion to Dismiss is granted as to the claims under § 3604(a) and § 3604(b).
The FHA provides that it is unlawful to “coerce, intimidate, threaten, or interfere with
any person in the exercise or enjoyment of, or on account of his having exercised or enjoyed, or
on account of his having aided or encouraged any other person in the exercise or enjoyment of,
any right granted or protected by section 3603, 3604, 3605, or 3606 of [the FHA].” 42 U.S.C.
§ 3617. Plaintiff alleges that Defendant’s conduct has damaged it “because the conduct
interferes with [its] ability to assist others to take advantage (sic) of their right to fair housing by
renting homes to African-American and Latino tenants.” (Compl, ¶ 23.) Plaintiff does not
specify if Defendant’s conduct refers to the ordinance or the Comprehensive Plan.
For a § 3617 claim, a plaintiff must plead that: “(1) she is a protected individual under
the FHA, (2) she was engaged in the exercise or enjoyment of her fair housing rights, (3) the
defendants coerced, threatened, intimidated, or interfered with the plaintiff on account of her
protected activity under the FHA, and (4) the defendants were motivated by an intent to
discriminate.” Bloch v. Frischholz, 587 F.3d 771, 783 (7th Cir. 2009). Plaintiff has not alleged
that Defendant interfered with Plaintiff on the account of its protected activity under the FHA.
There is no allegation that Defendant knew that “almost all of Plaintiff’s tenants are Latino or
African-American.” (Compl. ¶ 16.) Therefore, the Complaint does not plausibly allege that
Defendant passed the ordinance amendment and adopted the Comprehensive Plan in order to
interfere with Plaintiff’s protected activity. Additionally, as discussed above, Plaintiff has not
plausibly alleged a disparate impact arising from the ordinance or the Comprehensive Plan.
Defendant’s Motion to Dismiss is granted as to the claims under § 3617.
Plaintiff has failed to plausibly allege violations of the FHA. Defendant’s Motion to
Dismiss  is granted without prejudice. Plaintiff may file an amended complaint within thirty
days of the entry of this Order, if it may do so in compliance with Rule 11.
January 23, 2017
JOHN W. DARRAH
United States District Court Judge
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