TBS Group, LLC v. Zion, Illinois
MEMORANDUM Opinion and Order signed by the Honorable Edmond E. Chang. For the reasons stated in the Opinion, Defendant's motion 32 to dismiss the amended complaint is granted. The case is dismissed with prejudice. A separate AO-450 judgment shall be entered. Civil case terminated. Emailed notice(slb, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
TBS GROUP, LLC,
CITY OF ZION, ILLINOIS,
Judge Edmond E. Chang
MEMORANDUM OPINION AND ORDER
TBS Group, LLC, brought suit against the City of Zion, Illinois, alleging that
Zion’s adoption of a rental unit inspection ordinance and a “Comprehensive Plan”
(the City’s official development strategy), violates the Fair Housing Act, 42 U.S.C.
§ 3601 et seq. by allegedly seeking to shrink the amount of available housing for
African-Americans and Latinos.1 R. 23, Am. Compl.2 Zion now brings a motion to
dismiss, R. 32, Def.’s Mot. to Dismiss, under Federal Rule of Civil Procedure 12(b)(6)
for failure to state a claim. For the reasons discussed below, the motion to dismiss is
For purposes of this motion, the Court accepts as true the allegations in the
Amended Complaint. Erickson v. Pardus, 551 U.S. 89, 94 (2007). TBS Group owns
dozens of rental units in Zion, Illinois. Am. Compl. ¶¶ 1, 15. According to TBS, all of
its properties are in neighborhoods populated mostly with minorities and TBS rents
This Court has subject matter jurisdiction under 28 U.S.C § 1331.
Citations to the record are noted as “R.” followed by the docket number and the
page or paragraph number.
almost exclusively to African-American or Latino tenants. Id. ¶ 1.
In July 2015, Zion adopted Ordinance 15-O-33, which added rental housing
inspection and certification regulations to Zion’s Municipal Code. Zion Code § 10180;3 see also Am. Compl. ¶ 20; Def.’s Mot. to Dismiss at 1. The ordinance requires
all Zion property owners who rent out units to maintain a “current and valid cityissued certificate of compliance.” Id. § 10-180(2)(a). To get a certificate, a unit needs
to pass an inspection,4 id. § 10-180(5)(a), for which landlords are charged “$75.00
per dwelling unit,” id. § 10-9(c) (fee schedule for inspections).5
In order to obtain a compliance certificate for a dwelling unit, the unit must
be free of any condition “that would constitute a hazard to the health and safety of
the occupants” and must be “otherwise fit for occupancy.” Zion Code § 10-180(5)(c).
Landlords must keep the unit in a “safe, habitable, and code-compliant condition” or
else lose the certificate upon re-inspection. Id. § 10-180(5)(d). If a unit fails an
inspection, then the code official reports the violations to the owner and issues a
TBS did not attach a copy of the Ordinance to its complaint. Zion, in its motion to
dismiss, included a copy of the Ordinance as an exhibit. R. 32, Zion’s Mot. to Dismiss, Exh.
1 (Rental Housing Inspection and Certification Ordinance). Of course, the Court may
consider the Ordinance without converting the dismissal motion into a motion for judgment
on the pleadings because TBS challenges the Ordinance in the complaint and the
Ordinance is a local law, not a fact outside the pleadings. 188 LLC v. Trinity Indus., Inc.,
300 F.3d 730, 735 (7th Cir. 2002) (“documents attached to a motion to dismiss are
considered part of the pleadings if they are referred to in the plaintiff's complaint and are
central to his claim. Such documents may be considered by a district court in ruling on the
motion to dismiss.”) (internal quotation marks and citations omitted); see also Newcomb v.
Brennan, 558 F.2d 825, 829 (7th Cir. 1977) (“matters of public record such as state statutes,
city charters and city ordinances fall within the category of ‘common knowledge’ and are
therefore proper subjects for judicial notice.”).
4 There are other paperwork requirements for getting a certificate that are not
relevant to this case. See Zion Code § 10-180(4).
5 For residential buildings with more than 132 “multiple-family dwelling units,”
rental certification inspection fees are capped at $10,000 a year. Zion Code § 10-9(c).
notice to comply. Id. §§ 10-180(5)(c), 10-180(5)(h). A new inspection is scheduled and
the process repeats until the owner gets it right. Id. § 10-180(5)(i). Units that
passed inspection without a problem get a compliance certificate that is good for two
years; those that needed to correct a violation get a certificate that lasts only one
year. Id. § 10-180(3)(a)(ii). 6 Any rental unit that is out of compliance is fined
between $100 and $750 a day as a penalty. § 10-180(9)(a).7
TBS received notices from the Zion Building Department, notifying TBS of
the requirement to obtain certificates of compliance. See Am. Compl., Exh. A. The
group exhibit attached to the Amended Complaint includes 15 initial letters, which
cover various TBS rental properties and notify TBS of the rental inspection
regulations and requirements, and another 15 follow-up letters, labelled “FINAL
NOTICE,” covering those same properties. Id.; Am. Compl. ¶ 21.
The Ordinance also lays out an appeals procedure that is not relevant here. See
Zion Code § 10-180(6).
7 TBS contends that “[u]nder the rental registration and inspection ordinance,
Ordinance 15-O-33, [r]egistration and inspection fees are $100.00 or more each. Violations
can accrue a fine of $750.00 per day the alleged violation exists and up to $10,000 per year.”
Am. Compl. ¶ 20 (emphases added). It is unclear what is meant by “registration” and “each”
in the first sentence. There is no “registration” fee mentioned in the Ordinance cited by TBS,
although it is possible that TBS is referring to the already-existing “certificate of occupancy”
fee for residential units listed in the “Permit fee schedule” of the same code chapter. See
Zion Code §§ 10-9(c) (listed as $100 for residential units and $50 for each unit after the first
two in a residential building). In any event, noted above, the inspection fee for each unit is
$75, not $100 (perhaps TBS meant that registration and inspection fees are $100 or more
when totaled for each unit, and not that registration and inspection fees are each at least
$100 per unit. Or TBS might be referring to the late fee for compliance applications, which
is priced at $150 in one of the letters sent by the City of Zion Building Department, Am.
Compl. Exh. A at 2). With regard to the fines, there is no explicit ceiling on the daily fines
that can accrue. Instead, $10,000 is the cap on inspection fees for 132 or more rental units,
Zion Code § 10-9(c), which might be where TBS got the $10,000 figure from. Under the
Ordinance, it is possible that an out of compliance rental unit could actually be fined
$36,500 to $273,750 a year, depending on the daily penalty rate (limited by the ordinance to
the range of $100 to $750, id. § 10-180(9)(a)).
TBS Group contends that Zion’s rental inspection ordinance violates Section
804(a) of the Fair Housing Act, 42 U.S.C. § 3604(a), in that it allegedly makes
“housing unavailable because of race, national origin, or color …” Am. Compl. ¶ 25.
TBS says, “[o]n information and belief,” that the ordinance is being “enforced
selectively against landlords who have African-American and Latino tenants.” Id. ¶
24. This selective enforcement is made possible, TBS argues, because “[t]he criteria
for the inspections is not defined” and therefore Zion has “latitude in deciding which
properties ‘pass’ and which do not.” Id. ¶ 23. This “vague[ness]” allows rental unit
inspection compliance decisions to be made in a discriminatory way, “deem[ing]
properties occupied by African-American and Latino tenants unrentable.” Id. TBS
also appears to contend that, even if its properties were all deemed code-compliant,
the inspection fees themselves are unaffordable. Id. As a result, TBS asserts, the
ordinance makes fewer housing units available to blacks and Latinos because it
prices out landlords like TBS who rent primarily to those racial minorities.
To support its argument, TBS relies on demographic statistics set forth in the
Amended Complaint. TBS contends that blacks are overrepresented as renters in
the area, making up 31% of Zion’s population but accounting for 39.3% of the
renting community. Id. ¶ 7. Whites, on the other hand, are 48.9% of Zion’s
population, but only 39% of renters. Id.8 TBS suggests (at least as far as data from
1980 to 2000 can show) that the number of black renters has been increasing
sharply while the number of white renters has fallen over time. Id. ¶¶ 8-9.
TBS also gives figures for the Latino population: they comprise 27% of Zion’s
population and 14.9% of Zion’s renters. Am. Compl. ¶ 7.
With these population numbers as a background, TBS goes on to list
incidents—over the past few decades—that allegedly show Zion’s attempts to
discriminate and limit rental units available to blacks and Latinos. See Am. Compl.
at 3-7. First, in 1982, a real estate developer brought a fair housing case against
Zion, alleging that the city was trying to curtail construction of “Section 8” housing.
Id. ¶ 12. “Section 8” refers to Section 8 of the Housing and Community Development
Act of 1974, 42 U.S.C. 5301 et seq., which authorizes the Secretary of Housing and
Urban Development to enter into contracts with landowners in order to help lowincome families finding suitable housing. The developer’s suit alleged that Zion did
not want any more “undesirable” people. Id. ¶ 12.9
Moving forward to the mid-1990s, TBS asserts that “[i]n a[n] … attempt to
eliminate rental housing for African-Americans,” Zion passed ordinances declaring
2100-2700 Hebron Avenue, the heavily black area where TBS’s properties are
located, as “blighted.” Am. Compl. ¶ 15(b). TBS does not cite the ordinances, but
gives a link to a 1994 Chicago Tribune article on Zion’s “blight” declarations and a
related federal housing investigation assessing possible discrimination. Id. ¶ 15(b)
(citing Steve Mills, Hud Probes Bias in Zion’s Blight, Chicago-Tribune, Dec. 22,
blocks-landlords (accessed Sept. 14, 2017)). According to TBS, the blight ordinances
ramped up segregation in the area, leading to a higher concentration of minorities
The Amended Complaint cites to the denial of a motion to dismiss the developer’s
suit. Am. Compl. ¶ 12. But at that stage of a case (as in this case), the complaint is assumed
to be true, and a denial of a motion to dismiss is not a finding that the allegations have
in the 2100-2700 Hebron Avenue neighborhood. Am. Compl. ¶ 15(c). By its
reckoning, whites went from occupying about half of the available housing in the
area in the early 1990s to 38 percent in 2010. Id.
TBS also alleges that Zion’s “Comprehensive Plan,” approved in December
2015, is another example of the city’s discriminatory approach to housing. Am.
Compl. ¶ 16. 10 According to TBS, that Plan “will make housing unavailable” for
racial minorities in violation of the Fair Housing Act, because it “includes multiplefamily housing (rental) relegated almost exclusively to a south-eastern area next to
industrial uses and remote from green space.” Id. ¶¶ 16, 26. As another example of
discrimination, TBS mentions another Zion ordinance that allegedly classifies
properties as “nuisance” properties merely because the residents of the property call
the police for help. Id. ¶ 17. 11
In addition to the ordinances and the Comprehensive Plan, the Amended
Complaint also offers certain remarks made by Zion mayors in support of the
allegations of discrimination. Around 2005, then-Mayor Lane Harrison allegedly
said to TBS that he did “not want more African-Americans to move into” TBS’s
property. Am. Compl. ¶ 11. Around ten years later, in 2015, Zion Mayor Al Hill
As described by TBS, “[t]he Planning and Zoning Board governs … preparation
and recommendation of a comprehensive plan, to suggest reasonable requirements with
regard to streets, roads, and alleys, to suggest specific improvements to the comprehensive
plan, to recommend zoning changes, and to hear appeals of decisions of the building
inspector.” Am. Compl. ¶ 5. (citing Zion Ordinance 201-O-19).
11 TBS does not cite the ordinance, but gives a link to a news article on the debate
surrounding it. Am. Compl. ¶ 17 (citing Luke Hammill, Zion Nuisance Property Ordinance
Raises Concerns Among Affordable Housing, Property Rights Advocates, News-Sun, Feb. 17,
allegedly said that he wanted to shrink the rental percentage of housing in Zion
from its current level of 60% to a “healthy” 20% to 30%. Id. ¶ 10. Then, in
deliberating over the rental inspection ordinance in February 2017, Mayor Hill said
that “Zion has 3.5 percent [of] the population of Lake County” but “38 percent of the
Section 8 vouchers” awarded by the county. He called this “an issue that we have to
address,” and cited “issues that are associated with too many rental units and too
much Section 8 rental units.” Id. ¶ 18. TBS also cites an incident at a public forum
on the rental inspection ordinance, where a resident “referred disparagingly to
‘Section 8’ and ‘these people,’” and officials responded by pointing to the
“disproportionate number of ‘Section 8’ vouchers in Zion.” Id. ¶ 19.
In January 2017, the previously assigned judge dismissed TBS’s original
complaint for failure to state a claim, but gave TBS the chance to amend it. R. 22,
Opinion and Order (Jan. 23, 2017). TBS did so, and now Zion moves to dismiss the
Amended Complaint for failure to state a claim. See Def’s. Mot. to Dismiss; R. 37,
Def’s. Rep. Br.
II. Standard of Review
Under Federal Rule of Civil Procedure 8(a)(2), a complaint generally need
only include “a short and plain statement of the claim showing that the pleader is
entitled to relief.” Fed. R. Civ. P. 8(a)(2). This short and plain statement must “give
the defendant fair notice of what the ... claim is and the grounds upon which it
rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (alteration in original)
(internal quotation marks and citation omitted). The Seventh Circuit explained that
this rule “reflects a liberal notice pleading regime, which is intended to ‘focus
litigation on the merits of a claim’ rather than on technicalities that might keep
2009) (quoting Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002)).
“A motion under Rule 12(b)(6) challenges the sufficiency of the complaint to
state a claim upon which relief may be granted.” Hallinan v. Fraternal Order of
Police of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). “[A] 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) (quoting Twombly,
550 U.S. at 570). These allegations “must be enough to raise a right to relief above
the speculative level.” Twombly, 550 U.S. at 555. Allegations that are entitled to the
assumption of truth are those that are factual, instead of mere legal
conclusions. Iqbal, 556 U.S. at 678-79.
Among other things, the Fair Housing Act prohibits race and color
discrimination in the selling and renting of housing. 42 U.S.C. § 3601 et seq. It is
illegal to “refuse to sell or rent ... or otherwise make unavailable or deny, a dwelling”
to someone because of race or color (among other protected characteristics), 42
U.S.C. § 3604(a), or to “discriminate against any person [based on race, color, or
other protected characteristics] in the terms, conditions, or privileges of sale or
rental of a dwelling.” Id. § 3604(b). At its core, then, individuals who are denied
housing based on their race may bring suit under the Fair Housing Act. Havens
Realty Corp. v. Coleman, 455 U.S. 363, 375 (1982). Covering more than those
individuals, however, the Fair Housing Act authorizes any “aggrieved person” to
bring a fair-housing suit, 42 U.S.C. § 3613(a), that is, any person who “claims to
have been injured by a discriminatory housing practice,” or is about to be injured. Id.
§ 3602(i). Supreme Court precedent instructs that any person or entity whose
alleged injury falls within the Fair Housing Act’s “zone of interests” qualifies as an
aggrieved person. Bank of America Corp. v. City of Miami, Fla., 137 S. Ct. 1296,
1302-03 (2017); see also Trafficante v. Metro. Life Ins. Co., 409 U.S. 205, 209 (1972)
(“The language of the [Fair Housing Act] is broad and inclusive.”). This gives
“aggrieved person” a “broad” construction. Bank of America Corp. v. City of Miami,
Fla., 137 S. Ct. at 1303. And, specifically, financial injuries caused by
discriminatory housing practices qualify as the type of injury that an aggrieved
person may file suit against. See id. at 1304 (city was an aggrieved person because
the alleged discriminatory practice caused a concentration of foreclosures and
vacancies, reduced property values, and diminished property-tax revenue).
Although Zion makes a cursory argument that TBS has not sufficiently alleged
injury under the Fair Housing Act, the Amended Complaint readily sets forth a
financial injury—the certificate-compliance fees for rental units—that allegedly is
the product of race discrimination. That sort of alleged injury is well within the zone
of interests of the Fair Housing Act.
That said, even if TBS has alleged a covered injury, the question remains
whether the Amended Complaint sufficiently alleges that Zion adopted the
compliance-certificate Ordinance in order to deny housing to racial minorities.
There are two pertinent forms of discrimination barred by the Fair Housing Act (1)
disparate treatment; and (2) disparate impact. Cty. of Cook v. HSBC N. Am.
Holdings Inc., 136 F. Supp. 3d 952, 966 (N.D. Ill. 2015). In the Amended Complaint,
TBS did not spell out specifically what type of discrimination claim it was bringing,
but it later clarified that it was pursuing both the disparate treatment and
disparate impact avenues. See Pl’s. Resp. Br. at 5. The Court turns to those next.
A. Intentional Discrimination
To state a disparate treatment claim under the Fair Housing Act (“disparate
treatment” is just another way of saying intentional discrimination), TBS must
plausibly allege that Zion had a discriminatory intent or motive. Ricci v. DeStefano,
557 U.S. 557, 577 (2009). Intentional discrimination can be alleged through “either
direct or circumstantial evidence.” Daveri Dev. Grp., LLC v. Vill. of Wheeling, 934
F.Supp.2d 987, 997 (N.D. Ill. 2013). “Proof of discriminatory motive … can in some
situations be inferred from the mere fact of differences in treatment.” Int’l Bhd. of
Teamsters v. United States, 431 U.S. 324, 335 n. 15 (1977). In this case, TBS does
not plead enough facts to plausibly suggest that Zion has intentionally
discriminated against racial minorities in its housing practices.
1. Selective Enforcement
First, TBS alleges that Zion is selectively enforcing the rental inspection
ordinance against landlords that rent to racial minorities. Am. Compl. ¶¶ 23-24.
But no facts are alleged in support of the bare conclusion that Zion is engaging in
selective enforcement. There is no factual assertion of an instance when any other
landlord (that is, one who does not rent primarily to minorities) was or is treated
differently from TBS with regard to the rental inspection ordinance. Although TBS
alleges that the challenged ordinance “giv[es] Defendant latitude in deciding which
properties ‘pass’ and which do not” and thus allows it to “be applied in a
discriminatory manner,” id. ¶ 23, TBS pleads nothing about this abuse of discretion
in action. TBS does not, for instance, say that it (or any other landlord with mostly
minority tenants) was cited by Zion for being in violation of the municipal code more
often than other landlords or for infractions that would not be pursued against
other landlords. In fact, as far as the pleadings are concerned, TBS has not been
cited by Zion at all for failure to maintain code-compliant conditions. TBS has only
received notifications to arrange an inspection and then follow-up letters saying
that those inspections have not yet been arranged (and that they must be, in
accordance with the Ordinance). Perhaps TBS means to argue that the very fact
that the City sent the letters to TBS constitutes selective enforcement, but even
there, TBS does not allege that other Zion landlords (who do not rent primarily to
minorities) did not receive the same notifications and warnings about the Ordinance.
Nothing TBS has alleged plausibly suggests any selective enforcement by Zion.
At bottom, the selective enforcement claim is premised on one conclusory
allegation: “On information and belief, the code is enforced selectively against
landlords who have African-American and Latino tenants.” Am. Comp. ¶ 24. To be
sure, pleading a fact on “on information and belief” does not necessarily disqualify
the allegation for consideration, especially where a defendant has exclusive access
to crucial information. But TBS does not explain why it believes the important facts
about Zion’s enforcement of the ordinance (who got cited or received a letter versus
who did not) would be within the exclusive control of Zion. And, most importantly,
the key (and sole) allegation is not even factual, but merely a conclusion. That type
of pleading “does not unlock the doors of discovery for a plaintiff armed with
nothing more than conclusions.” Iqbal, 556 U.S. at 678-679. The Amended
Complaint does not adequately state a claim for selective enforcement of the
2. The Ordinance and the Comprehensive Plan
Moving on, TBS goes beyond alleging selective enforcement of the Ordinance:
TBS also alleges that even Zion’s adoption of the Ordinance, as well as the adoption
of the Comprehensive Plan, was motivated by intentional race discrimination. In
support, TBS offers the following allegations as a basis to infer intent:
In 1982, a federal-court complaint was filed against Zion alleging
racially motivated curtailing of rental development; the complaint
survived a motion to dismiss. Am. Compl. ¶ 12.
In the early and mid-1990s, blight ordinances were enacted, allegedly
having a segregating effect on the community. Id. ¶ 15.
Comments from past or present mayors about Zion’s renting
population. Id. ¶¶ 10-11.
A current Zion ordinance that allegedly classifies properties as
nuisances if residents at the properties seek help from the police. Id. ¶
Zion’s current “Comprehensive Plan,” which TBS says relegates multifamily rental space to industrial areas and away from green spaces. Id.
When evaluated against the pertinent factors, that series of allegations does
not give rise to a plausible inference that Zion adopted the Ordinance with the
intent to discriminate. In considering a disparate treatment claim against a
municipal ordinance, federal courts consider “the historical background of the
decision … particularly if it reveals a series of official actions taken for invidious
purposes.” Vill. of Arlington Heights v. Metro. Hous. Dev. Corp., 429 U.S. 252, 267
(1977). Also, “[t]he specific sequence of events leading up [sic] the challenged
decision also may shed some light on the decisionmaker’s purposes,” id., and “[t]he
legislative or administrative history may be highly relevant, especially where there
are contemporary statements by members of the decisionmaking body, minutes of
its meetings, or reports,” id. at 268. Even if a law or ordinance is just maintaining
the status quo, it can run afoul of the Fair Housing Act if that status quo was based
on a history of discriminatory practices. Rogers v. Lodge, 458 U.S. 613, 625 (1982).
It is worth a reminder that, at this stage of the litigation, TBS is entitled to
It is not crystal clear whether TBS intended to bring a standalone Fair Housing
Act claim based on the Comprehensive Plan itself, see, e.g., Am. Compl. ¶ 26 (“Zion’s
adoption and imminent implementation of the Comprehensive Plan will make housing
unavailable because of national origin, race, or color in violation of Section 804(a) of the
Fair Housing Act, 42 U.S.C. § 3604(a)”); Pl’s. Resp. Br. at 5 (“Count I States Claims for
violation of 42 U.S.C. §§ 3604(a)-(b) relative to Defendant’s Ordinance and Comprehensive
Plan”), or whether the Comprehensive Plan is offered only as further circumstantial
evidence for the rental inspection ordinance discrimination claims, Am. Compl. ¶ 16 (listing
the Comprehensive Plan as “another attempt to limit rentals available to AfricanAmericans and Latinos,” alongside the 1982 case and the blight and nuisance ordinances,
Am. Compl. ¶¶ 12, 15, 17); see also Def’s. Rep. Br. at 4 (pointing out that TBS does not
respond to any of Zion’s arguments relating to the Comprehensive Plan)—or both. The
Court thus considers the Plan in both contexts.
But the first set of allegations on which TBS relies is from two or even three
decades ago, and invoking “historical background” to prove race discrimination does
not necessarily mean stretching indefinitely back in time. See McCleskey v. Kemp,
481 U.S. 279, 298 n. 20 (1987) (“Of course, the historical background of the decision
is one evidentiary source for proof of intentional discrimination. But unless
historical evidence is reasonably contemporaneous with the challenged decision, it
has little probative value.”) (internal quotation marks and citation omitted); see also
Laramore v. Ill. Sports Facilities, 1996 WL 153672, at *13 (N.D. Ill. Apr. 1, 1996)
(“given the change in the political realities, plaintiffs simply cannot rely on a past
climate of racial discrimination … as evidence that [a current municipal] decision
was racially motivated as well.”) Start with the oldest allegation, from 1982: in West
Zion Highlands v. City of Zion, a landlord brought a Fair Housing Act claim against
Zion. The landlord alleged that, by preventing the landlord from proceeding with its
planned housing development, the City was engaging in racial discrimination. 549 F.
Supp. 673, 675-676 (N.D. Ill. 1982). As TBS points out, the district court denied
Zion’s motion to dismiss the claim. Id. at 677. But at the dismissal-motion stage, the
landlord enjoyed the benefit of all factual allegations being taken as true, as does
any plaintiff facing a Rule 12(b)(6) motion. Courts need not give allegations in a
separate lawsuit the presumption of truth; that type of allegation instead should be
accorded only “limited corroborative weigh[t].” See Pirelli Armstrong Tire Corp.
Retiree Med. Benefits Tr. v. Walgreen Co., 631 F.3d 436, 443 (7th Cir. 2011). Indeed,
TBS provides no additional information about the lawsuit, including how the three-
decades-old allegations in that lawsuit plausibly connect to the actions and
motivations of Zion’s current policymakers or to the rental inspection Ordinance.
And TBS does not say what was the ultimate disposition of the case. The allegations
in the 1982 lawsuit provide no help to TBS here.
TBS tries to continue the Zion storyline into the 1990s, but here again it still
fails to link those events to the current rental inspection Ordinance. According to
TBS, in an attempt to eliminate rental housing for African Americans, Zion passed
“blight” ordinances in 1993 and 1995. Am. Compl. ¶ 15(b). But rather than provide
a copy of, or even cite, the ordinances, TBS relies on a Chicago Tribune article for
that proposition. Nor does the Amended Complaint describe how those ordinances
operated against landlords who rented to blacks or Latinos. Nor, crucially, does it
explain how the 1990s blight ordinances (whatever it is they did) connect to Zion’s
decision-making process 20 years later in 2015 when it adopted the rental
inspection Ordinance. Yes, historical background and prior instances of alleged
discrimination can be important in evaluating a Fair Housing Act claim,
particularly when discrimination is entrenched. But decades-old allegations with
sparse factual content cannot form part of “a series of official actions taken for
invidious purposes” or a “specific sequence of events” leading to the “challenged
decision.” Vill. of Arlington Heights, 429 U.S. at 267.
Moving into the twenty-first century, TBS cites a comment, made in 2005, by
then-mayor Lane Harrison. Am. Compl. ¶ 11. Mayor Harrison told TBS that he did
not want more blacks to move into TBS’s property in Zion. Id. The 2005 statement
was made around a decade before the adoption of the rental inspection Ordinance.
Again TBS does not explain how the statement suggests that the rental inspection
Ordinance was motivated by discrimination. Is the suggestion that the previous
mayor’s sentiments can be imputed to the members of Zion’s City Council who
adopted the Ordinance? Or that the former mayor, harboring views against black
tenants, otherwise helped to bring about the current Ordinance? Even with the
benefit of all reasonable inferences, and even against just a plausibility standard,
TBS does not connect the dots.
The closest that TBS comes to plausible allegations of intentional
discrimination are remarks by Zion officials to the effect that they want to reduce
both the rental housing and the number of Section 8 vouchers in Zion. Specifically,
in 2015, Mayor Al Hill said that he wanted to shrink the percentage of housing that
is rented rather than owned in Zion from its current level of 60% to a “healthy” 20%
to 30%. Am. Compl. ¶ 10. Along similar lines, when deliberating over the adoption
of the rental inspection Ordinance in February 2017, Mayor Hill criticized the
disproportionate number of Section 8 vouchers used in Zion versus other cities in
Lake County: “Zion has 3.5 percent [of] the population of Lake County” but “38
percent of the Section 8 vouchers” awarded by the County. Id. ¶ 18. Mayor Hill
expressed concern over “issues that are associated with too many rental units and
too much Section 8 rental units.” Id. TBS also cites remarks made during a public
forum on the rental inspection Ordinance,
where a resident “referred
disparagingly to ‘Section 8’ and ‘these people,’” and Zion officials responded by
pointing again to the “disproportionate number of ‘Section 8’ vouchers in Zion.” Id.
Once again, however, these allegations fall short of a plausible claim of
intentional discrimination in adopting the rental inspection Ordinance. First, TBS
does not allege any facts that actually rebut Zion’s expressed concerns over the
housing allocation in the city, or rebut the legitimacy of those concerns. In other
words, TBS does not dispute that 60% of housing in Zion is rented. TBS does not
dispute that Zion has only 3.5% of Lake County’s population, yet Zion has 38% of
the Section 8 vouchers used in the County. In TBS’s spare response brief, R. 33, Pl’s.
Resp. Br., it makes no attempt—whether based on facts or case law—to argue why
Zion officials should not be concerned with what they viewed as disproportionate
rental housing, why they should not be concerned with a disproportionate
percentage of Section 8 housing when compared to the rest of Lake County, or why
the rental inspection Ordinance is connected to all this. To be sure, it is possible to
conceive of arguments that those concerns about the housing stock are pretext for
racial discrimination—but TBS does not offer them, and the Court cannot cross the
line into advocating on one side’s behalf.
TBS offers two final sets of allegations in support of an inference of race
discrimination. Neither helps. First, TBS refers to a “nuisance” ordinance that
TBS alleges that the forum was held in October 2015. Am. Compl. ¶ 10. The
YouTube page cited by TBS, https://www.youtube.com/watch?v=Hk8f_3NKN9g, states that
it was published on October 31, 2015.
allegedly classifies a property as a “nuisance” if a resident calls for help from that
property. Am. Compl. ¶ 17. But once again TBS only cites a newspaper article,
rather than set forth the text of the actual ordinance, id., leaving a yawning factual
gap. How does the ordinance operate? What does it mean for a property to be
dubbed a “nuisance”? When was the ordinance adopted relative to the rental
inspection Ordinance? No connection can be drawn to the rental inspection
Ordinance absent these basic facts.
Second and last of all, TBS says that Zion’s current “Comprehensive Plan”
raises the inference of race discrimination, because the Plan places multiple-family
housing almost entirely in industrial areas and away from green spaces. Am Compl.
¶ 16. TBS again does not provide a copy of the Plan. Zion’s website does appear to
house the plan. Comprehensive Plan Update, December 1, 2015, available at
omp_plan.pdf (last accessed Sept. 22, 2017). TBS cites to page 112, but that appears
to be the overall .pdf page number, which includes non-paginated pages (like the
cover page and the table of contents). The actual published pertinent page number
is 94, entitled Future Land Use Plan. The map on that page sets forth future landuse designations, and it does show multi-family land use clustered near an
industrial zone and not especially near green space. But what of it? TBS again
makes no attempt to explain how that choice suggests an intent to discriminate on
the basis of race. The response brief repeats the allegation, Pl’s. Resp. Br. at 2, and
mentions the Plan in a point heading, id. at 5—but that is all. TBS leaves factual
gaps: how was the Comprehensive Plan generated? Who was involved in creating it?
What is its legal effect? The Comprehensive Plan spans about 200 pages (including
appendices), yet TBS leaves it up to the Court to rummage through and put the
pieces together. That burden is on TBS, especially in light of the myriad legitimate
factors that go into city planning. Texas Dep’t of Hous. & Cmty. Affairs v. Inclusive
Communities Project, Inc., 135 S. Ct. 2507, 2523 (2015) (“Zoning officials, moreover,
must often make decisions based on a mix of factors, both objective (such as cost and
traffic patterns) and, at least to some extent, subjective (such as preserving historic
architecture).”); id. (“The FHA does not decree a particular vision of urban
development … .”). Ultimately, even accepting the truth of the factual (as distinct
from conclusory) allegations and even with the benefit of reasonable inferences,
TBS has not pled a plausible claim of intentional race discrimination.
B. Disparate Impact
1. Rental Inspection Ordinance
To adequately state a claim of disparate impact under the Fair Housing Act,
TBS must allege facts that raise a plausible inference that the rental inspection
Ordinance “caused or predictably will cause a discriminatory effect” against a
protected class. Inclusive Communities Project, Inc., 135 S. Ct. at 2514; see also
Metro. Hous. Dev. Corp. v. Vill. of Arlington Heights, 558 F.2d 1283, 1289–90 (7th
Cir. 1977); Cty. of Cook v. HSBC N. Am. Holdings Inc., 136 F. Supp. 3d 952, 966
(N.D. Ill. 2015). For a disparate impact claim, it is the disproportionate effect (or
potential effect) of the challenged policy on racial minorities that comprises the
discrimination, and there is no need to prove (or, at this state, adequately allege) a
racial discriminatory intent of the policy-makers. But causation remains a key
element of a disparate impact claim: without causation, there is no liability.
Inclusive Communities Project, 135 S. Ct. at 2523. Recently, in Inclusive
Communities Project, the Supreme Court emphasized the importance of the
causation element. If there were no “robust causality requirement,” then housing
developers or governments would be “held liable for racial disparities they did not
create.” Id. The importance of the causality requirement prompted the Supreme
Court, in Inclusive Communities Project, to caution lower courts to evaluate these
cases carefully, even at the pleading stage:
Courts must therefore examine with care whether a plaintiff has made out a
prima facie case of disparate impact and prompt resolution of these cases is
important. 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.
Id. (emphasis added). TBS’s allegations do not survive this scrutiny.
disproportionate toll on rental property owners with mostly black and Latino
tenants. Am. Compl. ¶ 24. The Amended Complaint provides historical and census
data on the demographics of Zion and its rental market, essentially alleging a
divided housing market where blacks are largely renters and white residents are
largely homeowners. Id. ¶¶ 7-9, 15. According to TBS, Zion’s population is 31%
black, 27% Latino, and 48.9% white. Id. ¶ 7. Renters, in supposed contrast, are
39.3% black, 14.9% Latino, and 39% white. Id.
TBS’s response brief does not lay out a chain of inferences explaining how the
Ordinance will cause a racially disparate impact, as distinct from just resulting in a
disparate impact. Apparently, TBS’s theory is that minorities are a disproportionate
segment of Zion’s rental community. Am. Compl. ¶¶ 7-9, 15. And so even though the
regulation applies on its face to all rental units, it will affect Zion’s minority
population in a discriminatory way by singling out the rental community in the first
place. But by that way of thinking, every Zion ordinance that addresses only rental
property would be grounds for a disparate impact claim. As Inclusive Communities
Project reminds courts, however, racial imbalance is not alone sufficient to make out
a disparate impact claim: causation is still required. The Amended Complaint here
is devoid of allegations that plausibly suggest that Zion has caused the racially
disproportionate impact that might result from the Ordinance.
TBS also seems to argue that the rental inspection Ordinance will
disproportionately drive landlords out of business who rent primarily to minority
tenants. By increasing the cost of doing business, TBS essentially says that the
Ordinance will force TBS to close up shop. 14 If it has to shutter (and if other
landlords with similar tenant bases have to do so), then racial minorities will
experience the discriminatory effect of shortages in rental housing. There are a
couple of problems with this argument. First, there is no allegation that landlords
This is different from the more straightforward argument that inspection fees
would be passed along from landlords to renters, resulting in higher rental rates for all Zion
renters. That, in turn, would conceivably make less affordable housing available for any
renter. And because minorities are, according to TBS, overrepresented in the rental
community and in the Section 8 voucher community, they would be particularly vulnerable
to a general rent hike. This theory is not pursued, and TBS instead decided to focus on its
who rent to non-minorities would be affected any differently than TBS; the rental
inspection Ordinance applies to all landlords. TBS did not allege that renting to
minorities is comparatively less profitable than renting to non-minorities, or allege
any other facts suggesting that landlords who rent to non-minorities will not feel
the inspection-fee impact any less than TBS.15 Nor did TBS allege that Zion’s rental
inspection fees are substantially higher than comparable cities.16
When TBS does offer statistics, they do not mean what TBS thinks they do.
To be sure, statistics of course might be very helpful in adequately alleging a
disparate impact claim. Jones v. Nat’l Council of Young Men’s Christian
Associations of the United States of Am., 48 F. Supp. 3d 1054, 1092 (N.D. Ill. 2014);
Tsombanidis v. W. Haven Fire Dep’t, 352 F.3d 565, 575–76 (2d Cir. 2003)
(“Statistical evidence is also normally used in cases involving fair housing disparate
impact claims.”). In Gallagher v. Magner, for instance, there was a massive
disparity between blacks as a percentage of a city’s population (11.7%) and blacks as
a percentage of those in the city enrolled in Section 8 housing programs (61-62%).
619 F.3d 823, 834 (8th Cir. 2010). That, in combination, with the plaintiff’s pleading
TBS might have tried to use statistical data to argue that the rental inspection fee
is too high for landlords more generally, which will lead to less available rental housing in
Zion overall. That would then ostensibly impact minorities more than others, according to
the way TBS reads the data (because minorities are overrepresented as renters and
potentially as Section 8 tenants). But TBS did not offer that argument, and it is not the
Court’s responsibility to make arguments for either side.
16 See, e.g., Highwood, Illinois, Municipal Code § 3-2A-1 (rental inspection of a
property is $150 per unit up to 5 units, then $125 from 5 to 49 units, then $70 for the 50th
unit and above); City of Waukegan, Illinois, Municipal Code § 14-1101 (rental inspection
fees of $30 per unit, $75 per unit needing re-inspection); Wood Dale, Illinois, Municipal
Code § 6.1614 (rental “registration fee” for multi-family home is $150.00 per building plus
$50.00 per unit in excess of 1; “Rental reinspection fee” is $250.00 per inspection).
of the “City’s aggressive Housing Code enforcement practices” leading to evictions
and forced property sales, was enough to adequately state a disparate impact claim
(and then to survive summary judgment). Id. at 834-838.
Here, the demographic statistics cited by TBS do not plausibly suggest a
disparate impact. TBS equates Zion’s “Section 8” rental tenants with blacks and
other minorities. Am. Compl. ¶ 13 (“‘Section 8’ is a proxy for race”); Pl’s. Resp. Br. at
1 (contending that “Section 8” is a “term commonly understood to denote AfricanAmericans and Latinos, as well as people with children.”) TBS alleges that, out of
the blacks receiving Section 8 help in Lake County, the city breakdown of where
they end up living is as follows: “By 1993, almost 80% of subsidized black families
were located in two towns, Zion (62%) which was (at that time) 22% black, and
North Chicago (18%) which was 34% black, with another 6% in Waukegan which
was 20% black.” Am. Compl. ¶ 13. 17 But these numbers do not establish the
percentage of black participation in the area’s Section 8 program, Instead, that data
shows the distribution of black Section 8 participants by town, and then reports the
percentage of blacks compared to the overall populations in those towns. That does
not establish what percentage of Section 8 recipients are black. And the figures are
dated, reaching back nearly 25 years. As a result, these statistics do not help TBS
state a disparate impact claim.
TBS next compares the percentage of blacks in Zion’s overall population to
the percentage of blacks in Zion’s rental community. According to the Amended
TBS cited an online link to a research report on this topic, but the link was broken
when the Court tried it on September 22, 2017. TBS did not supply a copy of the report.
Complaint, blacks make up 31% of Zion’s population and Latinos constitute 27%.
Am. Compl. ¶ 7. In comparison, among renters in Zion, blacks account for 39.3% of
tenants and Latinos are 14.9%. Id. Again, TBS offers no explanation for why the
different percentages matter, nor—more precisely—how they plausibly suggest that
Zion’s Ordinance caused (or will cause) a disparate impact. In absolute terms, there
is an 8.3% difference (and relatively, 26.7% difference) between Zion’s percentage of
black residents and renters (39.3% – 31% = 8.3%). The meaning of that difference is
unexplained by TBS. And to the extent that TBS cites these statistics to make any
argument about Latinos, that makes no sense. There are fewer Latinos percentagewise in Zion’s rental community than in Zion’s general population. So any inference
about a burden on renters created by the rental inspection Ordinance (based solely
on those figures) would actually go the other way.
In promoting the idea that Zion is causing a disparate impact, TBS also
implies that the Ordinance hands Zion unbounded discretion in deciding which
properties pass the inspection. Am. Compl ¶ 23. But the Ordinance’s text instructs
that “[t]he code official shall issue certificates of compliance on the condition that
the residential rental property remains in a safe, habitable, and code-compliant
condition.” Zion Code § 10-180(5)(d) (emphasis added). Zion’s Building Department
publishes a copy of the actual inspection checklist used for certifications, laying out
all the things that will be looked at by inspectors. City of Zion, City of Zion Building
Department Rental Housing and Inspection Checklist (“Zion Inspection Checklist”),
content/uploads/2016/01/2016_rental_inspection_checklist.pdf. Almost every one
of the checklist boxes is tethered to an explicit reference to Zion’s municipal code (or
more precisely, to the International Property Maintenance Code, which Zion has
adopted in full). 18 So, for instance, there is nothing arbitrary about having a
checkbox for “No insects/rodents visible” in the laundry area, supported by a
reference to Sections 306.1 and 302.5 of the property maintenance code. Id. In fact,
out of the 44 different checkbox items, only six of them have no citation to a code,
and they are hardly areas of unfettered discretion: “CO [carbon monoxide] Detectors
present and operable where gas service is present,” (repeated for “Kitchen” and
“Basement & Habitable Space”); “CO Detectors present and operable within 15
foot[sic] of bedroom”; “Electrical outlets/lighting/wiring in good repair”; “No
fire/safety hazards including water heater or furnace areas,” and (for “Hallway and
Stairs”) “Exit signs visible and Maintained.” Id. To support its conclusion of
arbitrary discretion, TBS Group mentions neither the relevant municipal code nor
the actual inspection checklist in its pleadings. All in all, the Amended Complaint
does not adequately allege that Zion caused, or will cause, a disparate impact via
the rental inspection Ordinance.
2. Comprehensive Plan
As noted earlier, in its response brief, TBS mentions the Comprehensive Plan
two times: once, in repeating the conclusory allegation that the Plan comprises an
attempt to limit black and Latino rentals, Pl’s. Resp. Br. at 2, and second in an
See City of Zion, Building Codes, http://www.cityofzion.com/buildingdepartment/building-codes (listing codes that Zion has adopted) (last accessed Sept. 22,
argument point heading of the brief, id. at 5 (“Count I States Claims for violation of
42 U.S.C. §§ 3604(a)-(b) relative to Defendant’s Ordinance and Comprehensive
Plan”). That is not nearly enough to explain how the Plan has a racially disparate
impact and, more importantly, how Zion has caused that disparate impact. It is
especially important to understand the legal effect—if any—of the Plan, because
disparate impact liability requires a discriminatory effect. TBS says nothing about
that. And, again, without any factual allegations on how the Plan was created, it is
impossible to assess whether TBS has adequately alleged that Zion’s adoption of the
Plan has caused the effect (whatever the effect is). No disparate impact claim has
been adequately pled as to the Comprehensive Plan.19
Relatedly, TBS has failed to cure the statutory standing deficiency as to the
Comprehensive Plan. To qualify as an “aggrieved person” under the Fair Housing
Act, one must either (1) “claim to have been injured by a discriminatory housing
practice”; or (2) “believe” that one “will be injured by a discriminatory housing
practice that is about to occur.” 42 U.S.C. § 3602(i). The prior Opinion held that that
“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.” R. 22, Opinion and Order, Jan 23.
2017, at 6-7. Nothing in the Amended Complaint fixes the problem—not only does
the Amended Complaint sufficiently allege a disparate impact, it fails to allege any
impact on TBS. TBS does not even respond to Zion’s argument about standing, Def’s.
Rep. Br. at 4. And the additional historical details that TBS provides in its amended
complaint do not do anything to show why TBS should now be considered injured or
about to be injured by the Plan.
Zion’s motion to dismiss is granted. Because TBS already had a chance to
amend the complaint after the prior dismissal, and because it has not asked for
another chance to replead (indeed, TBS says that it has provided “all it knows,” Pl’s.
Resp. Br. at 5), the dismissal this time is with prejudice. Judgment will be entered
in favor of Zion. The case is dismissed with prejudice.
s/Edmond E. Chang
Honorable Edmond E. Chang
United States District Judge
DATE: November 6, 2017
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