The Inclusive Communities Project Inc v. Texas Department of Housing and Community Affairs et al

Filing 239

MEMORANDUM OPINION AND ORDER granting 233 MOTION to Stay Proceedings Pending Disposition of Petition for Certiorari filed by Juan Sanchez Munoz, Michael Gerber, C Kent Conine, Leslie Bingham-Escareno, Gloria L Ray, Dionicio Vidal Flores, Texas Department of Housing and Community Affairs, Tomas Cardenas. (Ordered by Chief Judge Sidney A Fitzwater on 6/23/2014) (Chief Judge Sidney A Fitzwater)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
THE INCLUSIVE COMMUNITIES
PROJECT, INC.,
Plaintiff,
VS.
THE TEXAS DEPARTMENT OF
HOUSING AND COMMUNITY
AFFAIRS, et al.,
Defendants.

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§ Civil Action No. 3:08-CV-0546-D
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MEMORANDUM OPINION
AND ORDER
Following the Fifth Circuit’s remand in this case, defendants Texas Department of
Housing and Community Affairs and others (collectively, “TDHCA”) move to stay the
proceedings pending the Supreme Court’s disposition of their petition for a writ of certiorari.
Plaintiff The Inclusive Communities Project, Inc. (“ICP”) opposes the motion. For the
reasons that follow, the court grants the motion.
I
In its merits decision in this case, the court held that ICP had failed to prove its
intentional discrimination claims, but that it had proved that TDHCA’s allocation decisions
had a disparate racial impact, in violation of §§ 3604(a) and 3605(a) of the Fair Housing Act
(“FHA”). See Inclusive Cmtys. Project, Inc. v. Tex. Dep’t of Hous. & Cmty. Affairs, 860
F.Supp.2d 312, 321, 331 (N.D. Tex. 2012) (Fitzwater, C.J.) (“ICP III”), rev’d, 747 F.3d 275
(5th Cir. 2014), petition for cert. filed, 82 U.S.L.W. 3686 (U.S. May 13, 2014) (No.

13-1371). In ruling in ICP’s favor on its disparate impact claim, the court noted that the Fifth
Circuit had not yet adopted a standard and proof regime for FHA-based disparate impact
claims, that the circuits that had done so had adopted at least three different standards and
proof regimes, and that this court’s prior summary judgment decision—Inclusive
Communities Project, Inc. v. Texas Department of Housing and Community Affairs, 749
F.Supp.2d 486 (N.D. Tex. 2010) (Fitzwater, C.J.)—had essentially followed the approach
of the Second Circuit in Huntington Branch, NAACP v. Town of Huntington, 844 F.2d 926,
939 (2d Cir.), aff’d in part, 488 U.S. 15 (1988), but without engaging in a process of
balancing the factors identified in Metropolitan Housing Development Corp. v. Village of
Arlington Heights, 558 F.2d 1283 (7th Cir. 1977). ICP III, 860 F.Supp.2d at 322 n.17. The
court also noted that it appeared at one point “that the Supreme Court might clarify this
unsettled area of the law,” id., and that this court had deferred its decision in this case based
on a case pending before the Supreme Court.
After this case was tried, and while the parties were making
post-trial submissions, the Court granted certiorari in Gallagher
v. Magner to decide two questions: “Are disparate impact claims
cognizable under the Fair Housing Act?” and “If such claims are
cognizable, should they be analyzed under the burden shifting
approach used by three circuits, under the balancing test used by
four circuits, under a hybrid approach used by two circuits, or by
some other test?” On February 14, 2012 this court entered an
order deferring its decision in this case until Magner was
decided. But the Supreme Court dismissed the petition the same
day this court entered its order.
Id. (citations omitted). After the Supreme Court dismissed the petition, this court issued its
ruling in favor of ICP on its disparate impact claim.
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On appeal, the Fifth Circuit reversed and remanded. It held that this court had
“correctly noted [that a] violation of the FHA can be shown either by proof of intentional
discrimination or by proof of disparate impact.” Inclusive Cmtys. Project, Inc. v. Tex. Dep’t
of Hous. & Cmty. Affairs, 747 F.3d 275, 280 (5th Cir. 2014) (citing cases). But the panel
also noted that the Fifth Circuit had “not previously determined the legal standards that
should be applied in disparate impact housing discrimination cases,” id. at 280-81; that other
circuits “have applied multiple different legal standards to similar claims under the FHA,”
id. at 281; and that “after [this] court’s decision in this case, [the U.S Department of Housing
and Urban Development (“HUD”)] issued regulations regarding disparate impact claims
under the FHA,” id. at 282. The panel then adopted the burden-shifting approach found in
the new HUD regulations for claims of disparate impact under the FHA, id. at 282, and it
remanded the case to this court “to apply this legal standard to the facts in the first instance,”
id. at 283. In a footnote, the panel acknowledged, but rejected, TDHCA’s and intervenor’s
reliance on the two recent cases in which the Supreme Court had granted writs of certiorari
to determine whether disparate impacts claims are cognizable under the FHA—Township of
Mount Holly, N.J. v. Mt. Holly Gardens Citizens in Action, Inc., ___ U.S. ___, 133 S.Ct.
2824 (2013) (granting petition for writ of certiorari), and Magner v. Gallagher, ___ U.S. ___,
132 S.Ct. 548 (2011) (same)—but had dismissed the writs before hearing argument,
Township of Mount Holly, N.J. v. Mt. Holly Gardens Citizens in Action, Inc., ___ U.S. ___,
134 S.Ct. 636 (2013) (dismissing writ), and Magner v. Gallagher, ___ U.S. ___, 132 S.Ct.
1306 (2012) (same). Inclusive Cmtys. Project, 747 F.3d at 280-81 n.4.
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TDHCA has filed a petition for a writ of certiorari that presents two questions: “1. Are
disparate-impact claims cognizable under the Fair Housing Act? [and] 2. If disparate-impact
claims are cognizable under the Fair Housing Act, what are the standards and burdens of
proof that should apply?” TDHCA Mot. Stay App. 2 (petition for a writ of certiorari).
II
“The district court has a general discretionary power to stay proceedings before it in
the control of its docket and in the interests of justice.” McKnight v. Blanchard, 667 F.2d
477, 479 (5th Cir. 1982). “[A] stay must be ‘so framed in its inception that its force will be
spent within reasonable limits, so far at least as they are susceptible of prevision and
description.’” Wedgeworth v. Fibreboard Corp., 706 F.2d 541, 545 (5th Cir. 1983) (quoting
Landis v. N. Am. Co., 299 U.S. 248, 257 (1936)) (addressing stay entered in one case pending
resolution of another case).
The court holds in its discretion that the proceedings on remand should be stayed
pending resolution of the Supreme Court’s decision on TDHCA’s petition for a writ of
certiorari. First, the Supreme Court has twice, and relatively recently, granted petitions that
presented the question whether disparate impact claims are cognizable under the FHA. If the
Court grants TDHCA’s petition and decides that such claims cannot be brought under the
FHA, this court and the parties should not expend the resources necessary to litigate a claim
that is not legally viable.
Second, this court noted in its decision on the merits that “[t]he Fifth Circuit ha[d] not
yet adopted a standard and proof regime for FHA-based disparate impact claims,” and that
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“[t]he circuits that ha[d] done so ha[d] adopted at least three different standards and proof
regimes.” ICP III, 860 F.Supp.2d at 322 n.17. Although the Fifth Circuit has now adopted
the HUD regulations for FHA disparate impact claims, TDHCA’s petition for a writ of
certiorari asks the Supreme Court to decide what standards and burdens of proof should
apply if such a claim is available under the FHA.
The idea that this case should be stayed while awaiting guidance from the Supreme
Court did not first arise when TDHCA filed the instant motion. As noted, this court ordered
that its merits ruling be deferred while awaiting the Supreme Court’s decision in Magner v.
Gallagher, which was then scheduled for oral argument. In a February 14, 2012 order the
court wrote: “The court has concluded that it should defer its decision in this case until
Magner is decided. After the Supreme Court’s opinion is filed, this court will decide whether
to establish a supplemental schedule for briefing in the present case.” Feb. 14, 2012 Order
at 1-2. Although this court now has the benefit of an unequivocal, binding decision of the
Fifth Circuit confirming that a disparate impact claim is available under the FHA and
adopting a specific proof regimen and standard, given the Supreme Court’s recent inclination
to decide whether an FHA disparate impact claim is even available, and the possibility that
it will decide in this case what are the standards and burdens of proof that apply—decisions
that will materially affect the proceedings in this case on remand—the court concludes in its
discretion that this case should be stayed pending the outcome of TDHCA’s petition.

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III
Accordingly, TDHCA’s May 16, 2014 motion to stay proceedings pending disposition
of petition for certiorari is granted, and this case is stayed pending the Supreme Court’s
decision on TDHCA’s petition for a writ of certiorari. If the petition is granted as to at least
one question presented, the stay will remain in place, and the court will direct that the case
be administratively closed for statistical purposes pending further order. If the petition is
denied, the stay will be lifted automatically, and the court will proceed to adjudicate the case
in accordance with the mandate and opinion of the United States Court of Appeals for the
Fifth Circuit in Inclusive Communities, 747 F.3d 275, after considering the parties’ views on
such matters as the procedures and schedule that should be followed.
SO ORDERED.
June 23, 2014.

_________________________________
SIDNEY A. FITZWATER
CHIEF JUDGE

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