The Inclusive Communities Project Inc v. Lincoln Property Company et al
Filing
55
Memorandum Opinion and Order granting 14 MOTION to Take Judicial Notice of Certain Data Produced by the U.S. Census Bureau and 15 Motion to Dismiss. The Court dismisses Plaintiff ICP's alleged disparate impact and disparate treatment claims as to Defendant Brick Row. Plaintiff ICP's Complaint is dismissed as to Defendant Brick Row. (Ordered by Judge Ed Kinkeade on 7/13/2017) (rekc)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
THE INCLUSIVE COMMUNITIES
PROJECT, INC.,
Plaintiff,
v.
LINCOLN PROPERTY COMPANY,
et. al.,
Defendants.
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Civil Action No. 3:17-CV-206-K
MEMORANDUM OPINION AND ORDER
Before the Court are Defendant Brick Row Apartments LLC’s Motion to Take
Judicial Notice of Certain Data Produced by the U.S. Census Bureau (Doc. No. 14),
and Defendant Brick Row Apartments LLC’s Rule 12(b)(6) Motion to Dismiss (Doc.
No. 15).
Plaintiff The Inclusive Communities Project, Inc. (“ICP”) brought this
lawsuit against Defendant Brick Row Apartments LLC (“Brick Row”) and other
Defendants –Defendant Lincoln Property Company, Defendant Legacy Multifamily
North III, LLC, Defendant CPF PC Riverwalk LLC, and Defendant HLI White Rock
LLC – alleging that Defendants’ practice of refusing to rent to or negotiate with
Section 8 housing voucher holders constitute violations of the disparate impact and
disparate treatment standard under the Fair Housing Act, 42 U.S.C. 3601, et. seq.
1
Defendant Brick Row contends that this Court should dismiss Plaintiff ICP’s
Complaint as to Defendant Brick Row.
After careful consideration of the motions, the response to Defendant Brick
Row’s motion to dismiss, the reply to Plaintiff ICP’s response to Defendant Brick
Row’s motion to dismiss, the supporting appendices, and the applicable law, the
Court GRANTS (1) Defendant Brick Row Apartments LLC’s Motion to Take
Judicial Notice of Certain Data Produced by the U.S. Census Bureau, and (2)
Defendant Brick Row Apartments LLC’s Rule 12(b)(6) Motion to Dismiss. Plaintiff
ICP’s disparate impact and disparate treatment claims against Defendant Brick Row
are dismissed. Plaintiff ICP’s Complaint is dismissed as to Defendant Brick Row.
I.
Factual Background
This case is about Defendant Brick Row’s and the other Defendants’ practice
of refusing to participate in the federal Housing Choice Voucher Program, commonly
known as the “Section 8” housing voucher program. This practice of refusing to rent
to or negotiate with Section 8 housing voucher holders is alleged to be implemented
by Defendants in high opportunity, predominantly White, non-minority areas of the
Dallas, Texas metropolitan area. Defendant Lincoln Property Company manages all
of the Defendants’ rental properties, including Defendant Brick Row’s apartment
complex in Richardson, Texas, Brick Row Urban Village. Plaintiff ICP asserts in its
Complaint (Doc. No. 1) Defendants’ practice of refusing to rent to or negotiate with
2
Section 8 housing voucher holders is discriminatory since African American or Black
families are the predominant participants in the Section 8 housing voucher program.
a. Plaintiff ICP and the Section 8 Housing Voucher Program
Plaintiff ICP is a nonprofit organization that seeks to create and maintain
racially and economically inclusive communities. Plaintiff ICP pursues expansion of
fair and affordable housing for low income families and attempts to remedy harmful
practices that perpetuate discrimination and segregation in the community. As part
of Plaintiff ICP’s fair housing focused initiative, Plaintiff ICP provides counseling,
financial assistance, and other services for low income families. Plaintiff ICP helps
low income families obtain housing in higher opportunity areas that have lower
poverty rates, higher median family incomes, and higher ranking public schools.
One of the main tools that Plaintiff ICP helps its client use to achieve housing
equality is the federal Section 8 housing voucher program. Plaintiff ICP’s Section 8
housing voucher clients are predominantly African American or Black families. The
Section 8 housing voucher program is a subsidy provided to landlords who are willing
to rent dwelling units to low income households. The Section 8 housing voucher
program is the largest national rent assistance program for low income households.
The subsidy from the program given to the landlords pays the difference between the
rental amount and the amount that the voucher household is required to pay under
the Section 8 housing voucher program, which ranges between 30% and 40% of the
3
household’s income.
Landlord participation in the Section 8 housing voucher
program is voluntary rather than mandatory.
Predominantly African American or Black families obtain and use Section 8
housing vouchers. The Dallas Housing Authority administers the largest number of
Section 8 housing vouchers of any agency in the Dallas, Texas metropolitan area.
Out of the 17,000 plus vouchers Dallas Housing Authority issues, 86% of the
voucher holders are alleged to be African American or Black families, and 6% are nonminority families.
According to the U.S. Housing & Urban Development
Department (“HUD”) 2015 statistics, of the 30,745 Section 8 housing voucher
population served by all of the housing authorities in the Dallas-Plano-Irving TX
Metropolitan Division, African American or Black families are alleged to make up
81% of the voucher population, Hispanic families are alleged to make up 6% of the
voucher population, and White non-Hispanic families are alleged to make up 10% of
the voucher population. According to the U.S. Office of Management and Budget,
the city of Richardson, Texas, where Brick Row Urban Village is located, is included
in the Dallas-Plano-Irving TX Metropolitan Division.
Plaintiff ICP advises, counsels, and seeks to provide financial assistance to
African American or Black families that participate in the Section 8 housing voucher
program administered by the Dallas Housing Authority. For example, Plaintiff ICP
provides mobility assistance to all Section 8 voucher households that want to move to
4
higher opportunity communities in the Dallas area.
Mobility assistance involves
Plaintiff ICP negotiating with landlords on behalf of its Section 8 voucher clients, if
necessary.
Plaintiff ICP also provides financial assistance to its Section 8 housing voucher
clients. Plaintiff ICP offers incentive payments, to serve as a sublessor, or to serve as
a third party guarantor to encourage landlords to participate in the Section 8 housing
voucher program. The incentive payments Plaintiff ICP offers to landlords are for the
purpose of alleviating possible business concerns that landlords might have when
renting to Section 8 housing voucher households.
Plaintiff ICP sent letters to
Defendant Lincoln Property Company attempting to encourage Defendant Lincoln
Property Company to accept Section 8 housing vouchers for properties it manages –
Parkside at Legacy, Park Central at Flower Mound, White Rock Lake Apartment
Villas, McKinney Uptown, and Brick Row Urban Village (owned by Defendant Brick
Row). In the letters to Defendant Lincoln Property Company, Plaintiff ICP proposed
participation in Plaintiff ICP’s Third Party Guarantor Program or Sublease Program.
b. The Brick Row Urban Village Apartment Complex and Its Section
8 Policy
Defendant Brick Row owns the Brick Row Urban Village apartment complex
in Richardson, Texas.
Tenants began to be occupy Brick Row Urban Village in
April 2010. Defendant Brick Row’s apartment complex is located in one of eight
5
census tracts in the 75081 zip code. Brick Row Urban Village has 500 rental units.
Plaintiff ICP alleges that black renters entail 11% of the 532 rental dwelling units in
the census tract where the Brick Row Urban Village apartment complex is located. In
the census tract where Brick Row Urban Village is located, there are 45 voucher
households available according to the HUD 2015 statistics. The majority of Section
8 voucher households in the census tract where Brick Row Urban Village is located
are alleged to be in single family or semi-detached structures, and not in apartment
complexes. In the 75081 zip code, which has eight different census tracts, there are
301 Section 8 housing voucher households available, according to the HUD 2015
statistics. In the city of Richardson, Texas there are 376 Section 8 housing voucher
households available, according to HUD 2015 statistics.
The HUD user dataset,
provided by Defendant Brick Row in the appendix to its motion to dismiss (Doc. No.
17), which Plaintiff ICP does not object to the Court considering (Doc. No. 21),
conveys the usage and availability of subsidized housing in the city of Richardson.
The HUD dataset reflects that as of April, 17, 2017, 376 Section 8 housing units
were available in the city of Richardson and that 90 percent of the available Section 8
voucher households in the city of Richardson were occupied. The HUD dataset also
reflects that 68 percent of voucher holders in the city of Richardson are Black or
African American households.
6
Defendant Lincoln Property Company manages the Brick Row Urban Village
apartment complex for Defendant Brick Row. Defendant Lincoln Property Company
is the property manager for all of the Defendants that are parties to this lawsuit. The
Defendants’ properties, which are alleged to be in high opportunity, predominantly
White non-minority, areas, are alleged to have adopted and implemented the practice
of their property manager Defendant Lincoln Property Company of refusing to
participate in the Section 8 housing voucher program.
Plaintiff ICP alleges that
Defendant Lincoln Property Company states in its advertisements in a variety of
ways that its communities, including Brick Row Urban Village, will not accept
Section 8 housing vouchers.
The advertisements by Defendant Lincoln Property
Company state that
•
Our community is not authorized to accept housing vouchers;
•
Our community is not authorized to accept Section 8 housing;
•
Our community is not authorized to accept any government subsidized rent
programs;
•
No 2nd chance leasing, and no vouchers accepted.
In March 2016, Defendant Lincoln Property Company’s President and Chief
Executive Officer received a letter regarding the Brick Row Urban Village apartment
complex from Plaintiff ICP encouraging Defendant Lincoln Property Company to
reconsider its position of not accepting Section 8 housing vouchers. Plaintiff ICP
7
noted in the letter that it “is a local non-profit entity that works with families using a
housing voucher to rent housing in high opportunity areas of the Dallas Metroplex.”
The letter also described how Plaintiff ICP offers incentive payments to encourage
landlords to rent to its Section 8 voucher clients, and Plaintiff ICP’s Third Party
Guarantor Program and Sublease Program.
For the Third Party Guarantor Program that Plaintiff ICP offered, Plaintiff ICP
proposed to serve as the third-party guarantor for its Section 8 voucher clients using
the standard Texas Apartment Association Lease Contract Guaranty Form. Plaintiff
ICP represented that it would be willing to add provisions to the Lease Contract
Guaranty form to cover any losses due to possible housing authority delays in
processing the Section 8 housing voucher of the voucher household. An incentive
payment of one month’s rent for each Section 8 housing voucher tenant selected to
be a tenant at Brick Row Urban Village was also offered to Defendant Brick Row if it
participated in the Third Party Guarantor Program.
Plaintiff ICP alternatively offered a Sublease Program to try to entice
Defendant Brick Row to rent to its Section 8 voucher clients. Plaintiff ICP began the
proposal by stating that the President of the Apartment Association of Greater Dallas
endorses the merit of the Sublease Program and has offered to work with Plaintiff
ICP. Defendant Brick Row would still ultimately make the decision of whether to
rent to the Section 8 housing voucher tenant.
8
The responsibility of finding and
proposing qualified Section 8 voucher tenants to Defendant Brick Row would fall
solely on Plaintiff ICP. For the Sublease Program, Plaintiff ICP would lease three to
five units in the Brick Row Urban Village apartment complex. As a sublessor, similar
to the role of a corporate entity, Plaintiff ICP would pay the agreed lease amount in a
timely manner, respond to all tenant issues, and, if necessary, evict the respective
Section 8 housing voucher tenants. If the Section 8 Voucher Program tenant, or the
housing authority responsible for the subsidy to the landlord was late or delinquent
on the rent payment, Plaintiff ICP offered to cover the unpaid portion of the
payment under the lease contract. Plaintiff ICP also offered a financial incentive of
one month’s contract rent for each unit that Defendant Brick Row would agree to
lease to a Section 8 Housing Voucher tenant.
Defendant Brick Row contends that it did not know of the contents contained
in this letter or receive any communications from Plaintiff ICP until the filing of this
lawsuit in January 2017. In its motion to dismiss, Defendant Brick Row states that,
“Brick Row never received any communications from ICP prior to January 23, 2017
when the lawsuit was filed.”
Defendant Brick Row’s agent, Defendant Lincoln
Property Company, however, received the letter regarding the Brick Row Urban
Village apartment complex from Plaintiff ICP. Neither Defendant Lincoln Property
Company nor Defendant Brick Row responded to Plaintiff ICP’s March 2016 letter
proposing the Third Party Guarantor Program and Sublease Program.
9
c. Plaintiff ICP’s Discrimination Claims Against Defendant Brick
Row
Because of the policy implemented at Brick Row Urban Village of refusing to
negotiate with or rent to Section 8 housing voucher holders, Plaintiff ICP brought
this lawsuit in January 2017 against Defendant Brick Row and other Defendants
alleging violations of the disparate treatment and disparate impact standard. Under
federal law and Texas law, landlords have the right to participate in or not to
participate in the Section 8 housing voucher program.
See 42 U.S.C. §
1437f(o)(6)(B); TEX. LOCAL GOV’T CODE § 250.007; see also Austin Apartment Ass’n v.
City of Austin, 89 F. Supp. 3d 886, 890 (W.D. Tex. 2015) (“Federal law does not
require landlords to accept housing vouchers, and landlords who do accept vouchers
are not required to approve tenants merely because they are voucher holders”); Salute
v. Stratford Greens Garden Apartments, 136 F.3d 293, 300 (2d Cir. 1998) (“We think
that the voluntariness provision of Section 8 reflects a congressional intent that the
burdens of Section 8 participation are substantial enough that participation should
not be forced on landlords”). The optional nature of the Section 8 housing voucher
program, however, does not automatically make a landlord immune from violating
the Fair Housing Act. See Graoch Assocs. #33, L.P. v. Louisville/Jefferson Cty. Metro
Human Relations Comm’n, 508 F.3d 366, 377 (6th Cir. 2007) (“The mere fact that a
landlord often can withdraw from Section 8 without violating the terms of Section 8
10
or [sic] the FHA does not mean that withdrawal from Section 8 never can constitute a
violation of the FHA.”) (emphasis in original).
Plaintiff ICP asserts that Defendant Brick Row’s policy achieves no legitimate
interests and violates the disparate impact standard under the Fair Housing Act, 42
U.S.C. § 3604(a). In Plaintiff ICP’s Complaint, Plaintiff ICP alleges that Defendant
Brick Row’s policy causes a disproportionate harm to African American or Black
households because the vast majority of Section 8 housing voucher families are
African American or Black. The allegations of Plaintiff ICP point to a limited amount
of places where Section 8 vouchers are accepted in the census tract where Brick Row
Urban Village is located as proof of the adverse impact that Defendant Brick Row’s
policy has on African American or Black families. In Plaintiff’s Response Brief (Doc.
No. 22) to Defendant Brick Row’s Motion to Dismiss (Doc. No. 15), Plaintiff ICP
states that “[t]he policy perpetuates racial segregation in the neighborhood.”
Plaintiff ICP asserts that Defendant Brick Row’s failure to accept and respond
to Plaintiff ICP’s proposal of the Third Party Guarantor Program and Sublease
Program insures the merit of Plaintiff ICP’s disparate impact claim. Plaintiff ICP
states that both the Third Party Guarantor Program and Sublease Program constitute
less discriminatory alternatives that Defendant Brick Row could have considered to
rent to Section 8 voucher holders.
The rejection of these proposed less
11
discriminatory alternatives, Plaintiff ICP contends, serves as proof of Defendant Brick
Row’s violation of the disparate impact standard.
In Plaintiff ICP’s Complaint, Plaintiff ICP also claims that Defendant Brick
Row’s refusal to negotiate with or rent to Plaintiff ICP constitutes disparate
treatment under 42 U.S.C. § 3604(a) and 42 U.S.C. § 1982. Plaintiff ICP alleges
that Defendant Lincoln Property Company’s policy, implemented by Defendant
Brick Row, is because of race or color of Plaintiff ICP’s voucher clients rather than
being related to legitimate business concerns of Defendant Brick Row.
Plaintiff ICP also claims that Defendant Lincoln Property Company’s
advertisements that state Defendant Lincoln Property Company’s refusal to negotiate
with or rent to Section 8 families are racially discriminatory and violate 42 U.S.C. §
3604(c). Section 3604(c) of the Fair Housing Act prohibits advertisements for rental
dwellings that show preference or discriminate based on “race, color, religion, sex,
handicap, familial status, or national origin.” Plaintiff ICP alleges that Defendant
Lincoln Property Company violated 42 U.S.C. § 3604(c) of the Fair Housing Act
because Defendant Lincoln Property Company caused the following advertisements
to be made that showed hostility to Section 8 voucher holders that state:
•
Our community is not authorized to accept housing vouchers;
•
Our community is not authorized to accept Section 8 housing;
12
•
Our community is not authorized to accept any government subsidized rent
programs; and
•
No 2nd chance leasing, and no vouchers accepted.
Plaintiff ICP also brings a disparate treatment claim under 42 U.S.C. §
3604(a) and 42 U.S.C. § 1982 against Defendant Lincoln Property Company.
Plaintiff ICP alleges this second disparate treatment claim solely against Defendant
Lincoln Property Company. Plaintiff ICP contends that Defendant Lincoln Property
Company’s policy of refusing to rent to or negotiate with Section 8 voucher holders is
because of the race or color of the Section 8 voucher holders, which would violate the
disparate treatment standard under the Fair Housing Act.
Defendant Brick Row’s motion to dismiss moved to dismiss two of the four
claims against alleged in Plaintiff ICP’s Complaint which include: (1) the refusal to
negotiate with or rent to voucher households under the disparate impact standard of
42 U.S.C. § 3604(a), and (2) the refusal to negotiate with or rent to Plaintiff ICP
under the disparate treatment standard of 42 U.S.C. § 3604(a) and 42 U.S.C. §
1982.
The two claims that Defendant Brick Row moved to dismiss are the two
claims against Defendant Brick Row in this lawsuit.
The Court GRANTS Defendant Brick Row’s motion to dismiss and dismisses
Plaintiff ICP’s Complaint as to Defendant Brick Row only. Defendant Brick Row’s
motion to dismiss only pertains to the Complaint being dismissed for the two claims
13
against Defendant Brick Row.
Plaintiff ICP’s disparate impact claims against the
other Defendants, disparate treatment claims against the other Defendants, and claim
that Defendant Lincoln Property Company violated 42 U.S.C. § 3604(c) of the Fair
Housing Act alleged in Plaintiff ICP’s Complaint still remain.
II.
Legal Standard for a Rule 12(b)(6) Motion to Dismiss
A complaint should be dismissed under Rule 12(b)(6) only where it appears
that the facts alleged fail to state a “plausible” claim for relief. Bell Atlantic v.
Twombly, 127 S. Ct. 1955, 1964–65 (2007); FED. R. CIV. P. 12(b)(6). The plaintiff
need only give the defendant fair notice of the plaintiff’s claim and the grounds upon
which
it
rests. See Erickson
v.
Pardus, 127
S.
Ct.
2197,
2200
(2007)
(citing Twombly, 127 S. Ct. 1955); FED. R. CIV. P. 8(a). In ruling on a motion to
dismiss, the Court must accept the facts alleged in the complaint as true and construe
them in the light most favorable to the plaintiff. See Ferrer v. Chevron Corp., 484 F.3d
776, 780 (5th Cir. 2007).
A claim is plausible where the plaintiff alleges factual content that “allows the
court to draw the reasonable inference that the defendant is liable for the misconduct
alleged.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1940 (2009). A plaintiff is not required to
provide “detailed factual allegations” to survive dismissal, but the “obligation to
provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not
14
do.” Twombly, 127 S. Ct. at 1964–65.
The plausibility standard requires that a
plaintiff allege sufficient facts “to raise a reasonable expectation that discovery will
reveal evidence” that supports the plaintiff’s claim. Id. at 1965. A complaint may
survive a motion to dismiss for failure to state a claim even if it is “improbable” that a
plaintiff would be able to prove those facts and even if the possibility of recovery is
extremely “remote and unlikely.” Id.
III.
Plaintiff ICP’s Standing and Defendant Brick Row’s Vicarious Liability
Defendant Brick Row does not raise in its motion to dismiss that it disputes
Plaintiff ICP’s standing to bring this lawsuit against Defendants. Plaintiff ICP alleges
that it devotes significant resources to achieve its mission of racially integrating
housing and eliminating racial segregation.
Fair housing organizations have been
deemed by the Supreme Court in Havens Realty Corp. v. Coleman, 102 S. Ct. 1114,
1124–25 (1982) to have standing to sue under the Fair Housing Act when it devotes
significant resources to identify and counteract a defendant’s unlawful practices. 42
U.S.C.
§ 3602(i) (stating the aggrieved person standard); Havens Realty Corp. v. Coleman, 102
S. Ct. at 1124–25.
Plaintiff ICP further alleges that Defendants’ alleged
discriminatory practices require Plaintiff ICP to devote more time and resources to
help its Section 8 voucher clients find housing units. At the pleading stage, general
factual allegations of injury may suffice to establish standing.
15
Lujan v. Defs. of
Wildlife, 112 S. Ct. 2130, 2137 (1992). At this stage of the proceedings, Plaintiff
ICP has established that it has standing to sue Defendant Brick Row in this case.
Defendant Brick Row also does not dispute Plaintiff ICP’s assertion that
Defendant Brick Row is vicariously liable for the alleged discriminatory actions of
Defendant Lincoln Property Company. “It is well established that the [Fair Housing
Act] provides for vicarious liability.” 24 C.F.R. § 100.7 (“A person is vicariously
liable for a discriminatory housing practice by the person’s agent or employee . . . .”);
see also Meyer v. Holley, 123 S. Ct. 824, 829 (2003).
A defendant can also be
vicariously liable for claims brought under 42 U.S.C. § 1982. See Dillon v. AFBIC
Dev. Corp., 597 F.2d 556, 562–63 (5th Cir. 1979). Defendant Brick Row can be
vicariously liable for possible Fair Housing Act and 42 U.S.C. § 1982 violations made
by Defendant Lincoln Property Company.
IV.
Plaintiff ICP’s Disparate Treatment Claim is Dismissed.
The Court holds that Plaintiff ICP’s disparate treatment claim against
Defendant Brick Row is dismissed. Plaintiff ICP states that it “pleaded the facts of a
claim of disparate treatment for Defendants’ refusal to negotiate with or enter into
leases with ICP based on the race and color of ICP’s voucher clients, Black or African
American.”
Defendant Brick Row asserts that this Court should dismiss Plaintiff
ICP’s claim for disparate treatment against Defendant Brick Row.
16
“Disparate treatment is deliberate discrimination.” Munoz v. Orr, 200 F.3d
291, 299 (5th Cir. 2000). A claim of disparate treatment is “shown by evidence of
discriminatory action or by inferences from the ‘facts of differences in treatment.’” L
& F Homes & Dev., L.L.C. v. City of Gulfport, Miss., 538 F. App’x 395, 401 (5th Cir.
2013) (citing Int’l Bhd. of Teamsters v. United States, 97 S. Ct. 1843, 1855 n.15
(1977)).
Defendant Brick Row’s refusal to negotiate with or rent to voucher
households stems from Defendant Lincoln Property Company’s policy implemented
by Defendant Brick Row refusing to accept Section 8 housing vouchers. Defendant
Brick Row’s policy does not indicate that Defendant Brick Row only refuses Section
8 housing vouchers from African American or Black voucher holders.
Plaintiff ICP’s claim of disparate treatment should be labeled as a disparate
impact claim. Although Plaintiff ICP asserts that its claim of disparate treatment is
based on how Defendant Brick Row uses discretion to not lease to Plaintiff ICP based
on the color and race of ICP’s clients, which resembles disparate treatment, Plaintiff’s
claim should be labeled as a disparate impact claim. See Inclusive Communities Project,
Inc. v. Texas Dep’t of Hous. & Cmty. Affairs, No. 3:08-CV-0546-D, 2016 WL 4494322,
at *7 (N.D. Tex. Aug. 26, 2016) (“Where the plaintiff establishes that a subjective
policy, such as the use of discretion, has been used to achieve a racial disparity, the
plaintiff has shown disparate treatment.”).
17
Defendant Brick Row is following its
policy of refusing to accept any Section 8 housing vouchers by not leasing to Plaintiff
ICP.
Because Defendant Brick Row uniformly applies its policy to all Section 8
voucher holders, there is no discretionary method of how Defendant Brick Row
applies its policy for the Court to analyze for a possible violation of the disparate
treatment standard. Defendant Brick Row is not using its discretion in applying its
policy to accept some Section 8 voucher holders from certain groups of color or race
while rejecting Section 8 voucher holders of a another color or race that it does not
prefer. Plaintiff ICP’s actual issue is with the existence of Defendant Brick Row’s
policy so this claim should be labeled as a disparate impact claim. Id. (“Where the
plaintiff establishes that the existence of the policy itself, rather than how the policy
is applied, resulted in racial disparity, the plaintiff has shown disparate impact.”).
Plaintiff ICP’s disparate treatment claim is mislabeled. The Court dismisses
the alleged disparate treatment claim brought against Defendant Brick Row.
V.
Plaintiff ICP’s Disparate Impact Claim is Dismissed.
Defendant Brick Row asserts that this Court should dismiss Plaintiff ICP’s
claim for disparate impact against Defendant Brick Row.
Defendant Brick Row
argues that its practice of refusing to accept Section 8 housing vouchers does not
constitute a “policy” that creates an artificial barrier to fair housing resulting in
disparate impact. Even if the Court determines that Defendant Brick Row’s practice
18
is a “policy” or a specific enough practice to be analyzed for a violation of the
disparate impact standard, Defendant Brick Row further asserts that a prima facie
case of disparate impact is not established. Defendant Brick Row contends Plaintiff
ICP failed to provide facts that demonstrate a causal link between Defendant Brick
Row’s challenged policy and the alleged statistical disparity of availability of Section
8 households in the community of Brick Row Urban Village. Lastly, if the Court
determines that Plaintiff ICP has established a prima facie disparate impact claim,
Defendant Brick Row argues that Plaintiff ICP’s disparate impact claim fails because
Plaintiff ICP did not present viable less discriminatory alternatives. Even if a prima
facie case of disparate impact is shown, Defendant Brick Row asserts Plaintiff has not
provided a less discriminatory alternative to address Defendant Brick Row’s business
concerns.
Plaintiff ICP contends that Defendant Brick Row’s policy of refusing to
negotiate with or rent to Section 8 housing voucher households disproportionately
impacts African American or Black families. Plaintiff ICP further argues that because
Defendant Brick Row’s policy has an adverse effect on the amount of availability of
Section 8 voucher households in Brick Row Urban Village’s community, Defendant
Brick Row violated the disparate impact standard of the Fair Housing Act. Plaintiff
ICP contends that it adequately addressed Defendant Brick Row’s business concerns
19
related to renting to Section 8 families by providing the options of the incentive
payments, the Sublease Program, and the Third Party Guarantor Program.
Disparate impact claims are cognizable under the Fair Housing Act.
Texas
Dep’t of Hous. & Cmty. Affairs v. Inclusive Communities Project, Inc., 135 S. Ct. 2507,
2521 (2015) (“Recognition of disparate-impact claims is consistent with the FHA’s
central purpose.”).
A burden shifting approach has been adopted for disparate
impact claims under the Fair Housing Act.
See 24 C.F.R. § 100.500; Inclusive
Communities Project, Inc., 2016 WL 4494322, at *8 (stating that the burden-shifting
approach under 24 C.F.R. § 100.500 has been determined by the Supreme Court to
be adopted for disparate impact claims under the Fair Housing Act). First, a plaintiff
must prove a prima facie case of discrimination by showing that challenged practice
causes a discriminatory effect. See 24 C.F.R. § 100.500(c)(1). If the plaintiff makes a
prima facie case, the defendant must then prove that the challenged practice is
necessary
to
achieve
one
or
more
of
defendant’s
substantial,
legitimate,
nondiscriminatory interests. See 24 C.F.R. § 100.500(c)(2). If the defendant meets
its burden, the plaintiff must then show that the defendant’s interests “could be
served by another practice that has a less discriminatory effect.”
24 C.F.R. §
100.500(c)(3).
a. Requirements for a prima facie claim of disparate impact
20
Disparate impact claims permit the plaintiff “to counteract unconscious
prejudices and disguised animus that escape easy classification as disparate
treatment.”
Id. at 2522.
Liability for disparate impact, however, is limited and
should not be imposed based solely on a showing of statistical disparity. Id.; see also
Inclusive Communities Project, Inc., 2016 WL 4494322, at *4. “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.”
Id. at 2523.
If the
plaintiff cannot show a causal connection between the defendant’s policy and a
disparate impact, a prima facie claim for disparate impact is not shown and plaintiff’s
disparate impact claim should be dismissed. Id. at 2524 (citing Inclusive Communities
Project, Inc. v. Texas Dep’t of Hous. & Cmty. Affairs, 747 F.3d 275, 283 (5th Cir. 2014),
aff’d and remanded, 135 S. Ct. 2507 (2015) (Jones, J. concurring)).
b. Defendant Brick Row’s practice of not renting to Section 8
housing voucher families is a specific, facially neutral, “policy” or
practice.
The first element required for a prima facie disparate impact claim to be
asserted, is that Plaintiff ICP must identify a specific, facially neutral, policy or
practice of Defendant Brick Row that resulted in disparate impact.
Inclusive
Communities Project, Inc., 2016 WL 4494322, at *6 (citing Texas Dep’t of Hous. & Cmty.
Affairs, 135 S. Ct. at 2521 (the plaintiff must point to “a defendant’s policy or
policies causing that disparity”).
“Disparate impact claims seek to remove
21
impermissible barriers; therefore, ICP must identify a specific policy that has created
barriers to fair housing.” Id. This is not a trivial burden and the plaintiff needs to
point to more than a generalized policy that allegedly leads to disparate impact.
Meacham v. Knolls Atomic Power Lab., 554 U.S. 84, 100 (2008) (citing Smith v. City of
Jackson, Miss., 544 U.S. 228, 241 (2005)); see also Inclusive Communities Project, Inc.,
2016 WL 4494322, at *6 (“If the plaintiff does not identify a specific policy or
practice, the court cannot determine whether that policy or practice has created a
barrier to fair housing or resulted in a statistical disparity.”).
Plaintiff ICP’s claim that Defendant Brick Row’s practice of refusing to
negotiate with or rent to Section 8 housing voucher holders, is sufficient to be a
specific “policy” or practice for disparate impact purposes. Plaintiff ICP asserts that
Defendant Brick Row’s policy of not accepting Section 8 housing vouchers creates a
statistical disparity in the availability of voucher householders in Brick Row Urban
Village’s community. The result of this statistical disparity, Plaintiff ICP alleges, is
that African American or Black families have diminished opportunities to live in
Brick Row Urban Village’s community.
Plaintiff ICP’s Complaint shows how
Defendant Lincoln Property Company on behalf of Defendant Brick Row defines the
policy. The policy specifically states: Our community is not authorized to accept
housing vouchers; Our community is not authorized to accept Section 8 housing; Our
community is not authorized to accept any government subsidized rent programs; No
22
2nd chance leasing, and no vouchers accepted. The terms of Defendant Brick Row’s
policy are clear and are sufficient to be defined as a specific, facially neutral, “policy”
or practice to be analyzed for a possible violation of the disparate impact standard.
See, e.g., Graoch Assocs. #33, L.P., 508 F.3d at 377–78 (stating that for purposes of
plaintiff’s prima facie case of disparate impact, defendant’s practice of no longer
accepting Section 8 vouchers constituted a specific practice).
c. Defendant Brick Row’s policy caused no statistical disparity, thus
Plaintiff ICP did not allege a prima facie claim of disparate impact.
Defendant Brick Row alleges that Plaintiff ICP has not adequately alleged facts
that demonstrate its policy regarding Section 8 housing voucher holders caused a
statistical disparity. Defendant Brick Row contends that the statistical analysis of
Plaintiff ICP uses to prove disparate impact is flawed. Defendant Brick Row further
asserts that even if there are statistical disparities in the availability of Section 8
voucher households in Brick Row Urban Village’s community, no statistical
imbalance can be linked to its policy.
i. Plaintiff ICP’s theory that a “census tract” defines the
parameters of the area to evaluate for a statistical disparity
is unsupported.
The parties dispute how the geographical area to determine if Defendant Brick
Row’s policy actually caused a statistical disparity should be measured. Plaintiff ICP
asserts that Defendant Brick Row’s policy perpetuates segregation in the
23
“neighborhood” of Brick Row Urban Village. Plaintiff ICP contends that a census
tract can be used to represent the geography of a “neighborhood” or “community,”
which in turn can be used as the area to evaluate data and determine if there is a
statistical disparity from Defendant Brick Row’s policy. Defendant Brick Row asserts
Plaintiff ICP’s theory is unsupported and that different geographical parameters can
be used to define the “community” or “neighborhood” that encompasses Brick Row
Urban Village.
To support the argument for a statistical disparity being felt in Defendant
Brick Row’s community, Plaintiff ICP noted that “there are only 45 voucher
households in [Brick Row Urban Village’s] entire census tract.”
Plaintiff ICP
provided in the appendix to its response to Defendant Brick Row’s motion to dismiss,
a publication from the United States Census Bureau describing how the parameters
of a “neighborhood” or “community” can be defined.
In the “Defining my
Neighborhood and/or Community” section of the publication, the U.S. Census
Bureau states that there are “several options for finding data for your neighborhood
and community using census geography.”
The publication went on to provide
options for finding data for your neighborhood, which includes: (1) incorporated
places, (2) census designated places, (3) county subdivisions/minor civil divisions (4)
census tracts, (5) census block groups, and (6) census blocks.
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A census tract is one of various options that the U.S. Census Bureau suggests
for finding data for a “neighborhood” or “community” using census geography.
Plaintiff ICP states in its response to Defendant Brick Row’s motion to dismiss that
“[c]ensus tracts and block groups are often used to represent the geography of a
neighborhood” – however, this subtle manipulation of language to conceal truth by
saying true things fails to paint a complete picture of how the U.S. Census Bureau
suggests how a “neighborhood” or “community” should be defined.
The U.S. Census Bureau states that, “[t]he most common geography for
defining communities is Place,” rather than a census tract. (Doc. No. 23) (emphasis in
original). The U.S. Census Bureau states that “[t]here are two types of places the
Census Bureau tabulates data for: incorporated places and census designated places.”
(emphasis in original). “Incorporated places are legal entities such as cities, towns,
villages, or boroughs.” Census designated places are identifiable by name and cannot
exist within incorporated places. Under the U.S. Census Bureau’s definition, China
Spring, Texas is an example of a census designated place since it is identifiable by
name and does not exist within an incorporated place. County subdivisions/minor
civil divisions are then offered as the next alternative to define a “community” or
“neighborhood.” The U.S. Census Bureau publication, provided by Plaintiff ICP to
the Court, then states, “[i]f your community or neighborhood cannot be defined at
the place or county subdivision levels, you can define the area using the smallest
25
levels of geographies offered by the Census Bureau: census tracts, block groups, and census
blocks.” (emphasis in original).
Using a census tract as the geographical area to
measure for statistical purposes is one of many options, and is not even offered as the
first option to use to define a “neighborhood” or “community.”
Plaintiff ICP also did not provide any case law to add to its already tenuous, at
best, assertion that a census tract should be the geographical parameter used to see if
Defendant Brick Row’s policy caused a statistical disparity. There are a variety of
ways that the geographical area for statistical purposes can be evaluated by the Court.
If the Court uses Plaintiff ICP’s suggestion by using the census tract where Brick Row
Urban Village is located, then there are just 45 Section 8 Voucher households
available in the census tract. If the Court uses the 75081 zip code where Brick Row
Urban Village is located as the proper area to use when analyzing the potential effect
of Defendant’s policy, then there are eight more census tracts that are added to the
Court’s analysis. In the 75081 zip code there are 301 Section 8 voucher households
available according to HUD 2015 census tract data, instead of just 45 voucher
households in the one census tract Plaintiff ICP provided. If the Court uses the city
of Richardson, Texas where Brick Row Urban Village is located, which has additional
zip codes located in it, then there are 376 Section 8 Voucher households available
according to HUD 2015 statistics. The parameters that the Court uses in its analysis
of whether a statistical disparity exists because of Defendant Brick Row’s policy
26
makes a difference. Plaintiff ICP did not provide adequate support for its assertion
that the Court should only analyze the census tract where Brick Row Urban Village is
located to determine if there was a statistical disparity felt by Defendant Brick Row’s
policy of refusing to accept Section 8 vouchers.
ii. Plaintiff ICP did not show that Defendant Brick Row’s
policy caused a disparate impact.
Even if the Court uses the census tract where Brick Row Urban Village is
located, Plaintiff ICP did not allege facts that show that Defendant Brick Row’s
policy caused a disparate impact.
The Court finds no causal link between
Defendant’s policy and the alleged disparate impact that was felt. Plaintiff also did
not provide support for why its assertion about the majority of the voucher
households in Brick Row Urban Village’s census tract being in single family or semidetached structures is significant to the Court’s analysis.
The plaintiff has the burden of proving that a challenged practice caused or
predictably will cause a discriminatory effect.
24 C.F.R. § 100.500(c)(1); see also
Texas Dep’t of Hous. & Cmty. Affairs, 135 S. Ct. at 2514. “A robust causality
requirement ensures that racial imbalance . . . does not without more, establish a
prima facie case of disparate impact and thus protects defendants from being held
liable for racial disparities they did not create.” Texas Dep’t of Hous. & Cmty. Affairs,
135 S. Ct. at 2523 (quoting Wards Cove Packing Co. v. Atonio, 109 S. Ct. 2115
27
(1989)) (quotation marks omitted).
The causality requirement is required to be
“robust” to make sure that “defendants do not resort to the use of racial quotas to
avoid liability for statistical disparities.” Id.; see also Inclusive Communities Project, Inc.,
2016 WL 4494322, at *8 (quotation marks omitted). If there are not safeguards at
the prima facie stage for analyzing possible disparate impact liability, “disparate
impact liability might cause race to be used and considered in a pervasive way and
would almost inexorably lead governmental or private entities to use numerical
quotas and serious constitutional questions then could arise.” Texas Dep’t of Hous. &
Cmty. Affairs, 135 S. Ct. at 2523 (quoting Wards Cove Packing Co., 109 S. Ct. 2115)
(quotation marks omitted).
Plaintiff ICP has not proved that Defendant Brick Row’s policy caused a
“robust” statistical disparity, much less any statistical disparity. Plaintiff ICP asserts
that the lack of available voucher households in Brick Row Urban Village’s census
tract amounts to an adverse impact on African American or Black families, since
African American or Black families predominantly hold Section 8 housing vouchers in
the Dallas metropolitan area.
Plaintiff stated that “[t]here are only 45 voucher
holders in the entire census tract.”
By presenting this information to the Court,
Plaintiff shows that there is a possible statistical imbalance with the amount of
voucher households in the census tract. Plaintiff ICP, however, does not provide
facts to link Defendant Brick Row’s policy to the possible statistical disparity.
28
Merely showing a statistical imbalance, without providing a bridge to how Defendant
Brick Row’s policy caused the imbalance is not sufficient.
In the city of Richardson, Texas the amount of available Section 8 Housing
Voucher households has increased since April 2010, when Brick Row Urban Village
began to be occupied by tenants. According to the HUD statistics, the number of
available voucher households has increased from 280 in 2009 to 376 in 2015. The
Section 8 voucher population was 68% African American or Black in 2009 and in
2015.
Plaintiff also did not provide any information to the Court that noted
approximately how many African American or Black voucher holders were denied
Section 8 housing in Brick Row Urban Village’s census tract, the 75081 zip code, or
the city of Richardson, Texas.
The statistics provided by Plaintiff ICP failed to
establish a causal link between Defendant Brick Row’s policy and the alleged
disparate impact.
Plaintiff ICP did not allege a prima facie disparate impact claim. The Court
dismisses Plaintiff ICP’s disparate impact claim.
d. Plaintiff ICP’s disparate impact claim also fails because Plaintiff
did not propose viable less discriminatory alternatives.
Even if Plaintiff ICP met its burden to establish a prima facie showing of
disparate impact, Plaintiff ICP did not establish a disparate impact claim.
For a
disparate impact claim under the Fair Housing Act, there is a burden-shifting
29
framework that must be met. If the plaintiff meets the burden of establishing a prima
facie case, the defendant must then prove that the challenged practice is necessary to
achieve one or more substantial, legitimate, nondiscriminatory interests of the
defendant. See 24 C.F.R. § 100.500(c)(2); Inclusive Communities Project, Inc., 2016 WL
4494322, at *8 (adopting the burden-shifting framework under 24 C.F.R. §
100.500). If the defendant meets its burden, the plaintiff must then show that the
defendant’s interests could be served by another practice that has a less
discriminatory alternative. 24 C.F.R. § 100.500(c)(3).
Defendant Brick Row met its burden of proving that the Section 8 housing
voucher policy was implemented for “substantial, legitimate, nondiscriminatory
interests.”
The regulatory requirements that Defendant Brick Row states that it
would be subjected to by participating in the Section 8 voucher program are
sufficient. If Defendant Brick Row participated in the Section 8 voucher program,
which is voluntary at the state and federal level, Defendant Brick Row could be
subjected to increased costs, administrative delays for payment, and various other
financial risks. See 24 C.F.R. §§ 982.308(2), 982.401, 982.405; 42 U.S.C. § 1437f;
TEX. LOCAL GOV’T CODE § 250.007. Defendant Brick Row also notes that it chooses
not to participate in the Section 8 housing voucher program because of the possibility
of increased litigation. Defendant Brick Row satisfied its burden.
30
Plaintiff ICP offered incentive payments, its Sublease Program, and its Third
Party Guarantor Program as possible less discriminatory alternatives to satisfy
Defendant Brick Row’s anticipated business concerns.
Plaintiff ICP’s Sublease
Program and Third Party Guarantor Program are not adequate. For the Third Party
Guarantor Program, Plaintiff ICP proposed to serve as a third-party guarantor for its
Section 8 voucher clients that were permitted to be tenants.
For the Sublease
Program, Plaintiff ICP would lease three to five units in Brick Row Urban Village.
Plaintiff ICP proposed that it would pay the agreed lease amount in a timely manner,
respond to all tenant issues, and if the Section 8 voucher program tenant was late or
delinquent on the rent payment, Plaintiff ICP would cover the payment.
An
incentive payment of one month’s rent for each Section 8 housing voucher tenant
was also offered to Defendant Brick Row if they participated in the Sublease Program
or Third Party Guarantor Program.
Although Plaintiff ICP proposed the Sublease Program and Third Party
Guarantor Program to alleviate anticipated business concerns of Defendant Brick
Row, the programs are not adequate to serve as less discriminatory alternatives that
address Defendant Brick Row’s business interests. Plaintiff ICP has not shown that
its proposed programs have been successfully implemented in the past, or even that
Plaintiff ICP can financially support the programs. If Plaintiff ICP’s programs are not
31
successfully executed, then Defendant Brick Row could be exposed to potential
financial harm and litigation.
Defendant Brick Row could also be subject to further litigation for deciding to
participate in Plaintiff ICP’s programs because it could result in favoritism of Section
8 voucher holders that Plaintiff ICP represents.
Participation in Plaintiff ICP’s
programs would create legitimate issues that Defendant Brick Row has pointed out.
“Can the ICP seriously contend that Brick Row can continue [to] refus[e] to accept
vouchers from White, Hispanic and handicapped tenants, if Brick Row begins
accepting vouchers from Black tenants under ICP’s programs, without increasing the
risk of litigation?” Plaintiff ICP’s programs were legitimately refused by Defendant
Brick Row and are not less discriminatory alternatives that can adequately serve
Defendant Brick Row’s business interests. Even if Plaintiff ICP proved a prima facie
case of disparate impact, the Court finds that Plaintiff ICP’s disparate impact claim
fails.
VI.
Conclusion
The Court GRANTS Defendant Brick Row Apartments LLC’s Motion to Take
Judicial Notice of Certain Data Produced by the U.S. Census Bureau. The Court also
GRANTS Defendant Brick Row’s Rule 12(b)(6) Motion to Dismiss.
The Court
dismisses Plaintiff ICP’s alleged disparate impact and disparate treatment claims as to
32
Defendant Brick Row. Plaintiff ICP’s Complaint is dismissed as to Defendant Brick
Row.
SO ORDERED.
Signed July 13th, 2017.
______________________________________
ED KINKEADE
UNITED STATES DISTRICT JUDGE
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