T.S. Ellis, III, United States District Judge.
Plaintiffs, eight current or former residents of Waples Mobile Home Park ("the Park"), filed a six-count Complaint against the Park's owners and operators
Defendants moved to dismiss Counts I, II, IV, and VI for failure to state a claim pursuant to Rule 12(b)(6), Fed. R. Civ. P. The motion has been fully briefed and argued orally, and the motion is therefore now ripe for disposition.
Plaintiffs in this action are Jose Dagoberto Reyes, Rosy Giron de Reyes, Felix Alexis Bolanos, Ruth Rivas, Yovana Jaldin Solis, Esteban Ruben Moya Yrapura, Rosa Elena Amaya, and Herbert David Saravia Cruz.
The Park is located in Fairfax, Virginia and provides a relatively low-cost option for housing when compared to other options in the surrounding area. This action focuses on a policy ("the Policy") that defendants began enforcing at the Park in 2015. Under the Policy, defendants require as a condition of entering into or renewing a lease at the Park that all adults living or seeking to live in the Park present either (i) an original social security card or (ii) an original passport, U.S. visa, and original arrival/departure Form 1-94 or I-94W. Although defendants once applied the Policy only to leaseholders, in mid-2015 defendants began applying the Policy to all residents
If a tenant cannot satisfy the Policy, defendants then issue a letter to the tenant affording the tenant twenty-one days to cure the deficiency; tenants who cannot do so are then given thirty days to vacate the Park. If defendants determine that a person who has not satisfied the Policy is living in the Park, then defendants inform the leaseholder of the lot on which the non-compliant tenant lives that the leaseholder's year-long lease will not be renewed and will instead convert into a month-to-month lease. Once the lease is converted to a month-to-month tenancy, leaseholders with non-compliant tenants are charged $300 per month above their former monthly rental rates.
Each male plaintiff in this action satisfies the Policy, but each female plaintiff does not. In fact, the Reyes household vacated the Park under the threat of eviction because plaintiff Rosy Giron de Reyes could not satisfy the Policy. The remaining plaintiffs continue to reside at the Park, but they fear eviction or that they will be unable to afford to rent their lots because of the increased monthly charges associated with any tenant's non-compliance with the Policy.
In response to defendants' enforcement of the Policy, plaintiffs filed this lawsuit on May 23, 2016. Defendants' partial motion to dismiss attacks plaintiffs' Fair Housing Act, Virginia Fair Housing Law, and 42 U.S.C. § 1981 claims, each of which is addressed in turn.
Count I alleges that defendants' enforcement of the Policy violates the federal Fair Housing Act ("FHA"), which provides that it is unlawful, inter alia,
42 U.S.C. § 3604(a). Under the FHA, "a landlord's housing practice may be found unlawful ... either because it was motivated by a racially discriminatory purpose or because it is shown to have a disproportionate adverse impact on minorities." Betsey v. Turtle Creek Assocs., 736 F.2d 983, 986 (4th Cir.1984); see also Tex. Dep't of Hons. & Cmty. Affairs v. Inclusive Cmties. Project, Inc., ___ U.S. ___, 135 S.Ct. 2507, 2525, 192 L.Ed.2d 514 (2015) (affirming that "disparate-impact claims are cognizable under the [FHA]"). In other words, FHA plaintiffs may pursue claims for either disparate treatment or disparate impact. See Inclusive Cmties., 135 S.Ct. at 2525. The choice between these two approaches is not inconsequential, as "[t]he burden confronting defendants faced with a prima facie showing of discriminatory impact is different and more difficult than
Given these differences between disparate treatment and disparate impact claims, plaintiffs unsurprisingly couch their FHA claim primarily in terms of disparate impact. See Comp. ¶¶ 114-15. Where disparate impact theory properly applies, showing that a facially neutral policy causes a statistical disparity adverse to protected minorities is sufficient to make out a prima facie case of discrimination "because of a plaintiff's protected status. See Inclusive Cmties., 135 S.Ct. at 2523; Holder, 867 F.2d at 826. In this regard, to show that defendants' enforcement of the Policy — which targets illegal aliens — made housing unavailable to plaintiffs "because of race... or national origin,"
At the same time, a fair reading of the Complaint reflects that defendants' enforcement of the Policy is also alleged to constitute disparate treatment. This is so because (i) Count I can be read to say as much, see Comp. ¶ 113, (ii) the entire basis of plaintiffs' § 1981 claim is that defendants are engaged in intentional discrimination, and (iii) plaintiffs contend that the stated rationale for the Policy is merely a pretext for a discriminatory intent, see P. Opp. at 28. Nevertheless, the parties appear to agree that the thrust of plaintiffs' claim is based on the disparate impact theory, under which plaintiffs bear a lighter burden to state a prima facie case and defendants bear a heavier burden in justifying the Policy.
Defendants' motion to dismiss Count I focuses chiefly on whether the Complaint states a valid disparate impact claim. Specifically, defendants attack plaintiffs' reliance on a disparate impact theory on three grounds. First, defendants argue that recognition of plaintiffs' disparate impact claim would conflict with the policies of the United States Department of Housing and Urban Development ("HUD") and with certain criminal penalties under federal immigration law. Second, defendants maintain that in the context of this case, where the challenged Policy facially targets illegal aliens, Latinos cannot state a valid FHA disparate impact claim as a matter of law. And finally, defendants contend that even assuming a disparate impact claim is appropriate in this context, the allegations of a disparity alleged here are insufficient
Defendants first argue that recognizing plaintiffs' FHA claim requires the recognition of "illegal immigrants as a class" protected by the FHA, which would therefore create a conflict among certain federal laws and policies. D. Reply at 17. Specifically, defendants argue that (i) accepting plaintiffs' view about the scope of disparate impact liability under the FHA necessarily leads to the conclusion "that the policies of the HUD also violate the FHA because HUD explicitly excludes undocumented immigrants from participation in many of its programs," D. Reply at 7, and (ii) protecting illegal aliens under the FHA would be inconsistent with the Immigration Reform and Control Act, which criminalizes the reckless harboring of such aliens. See 8 U.S.C. § 1324(a)(1)(A)(iii). These arguments fail.
First, permitting plaintiffs' FHA claims to proceed would not, as defendants contend, require the recognition of a new class — namely, illegal aliens — protected by the FHA. To be sure, the Policy challenged here draws a facially legitimate distinction on the basis of lawful presence in the United States. For the reasons discussed below, however, this facially lawful distinction may nonetheless be an impermissible pretext for discrimination on the basis of race or national origin — two classes that the FHA does protect. Thus, defendants' argument fails because it adopts a false premise, that plaintiffs' claims require the creation of a new class covered by the FHA's antidiscrimination provision.
Second, there is no conflict between HUD policies and the FHA. To be sure, HUD excludes illegal aliens from many of its programs because federal law prohibits HUD from "mak[ing] financial assistance available for the benefit of any alien unless that alien is a resident of the United States" and is lawfully present in this country. See 42 U.S.C. § 1436a(a). But this in no way creates a contradiction between HUD policies and the FHA. The latter prohibits discrimination in the provision of housing on the basis of, inter alia, race or national origin, whereas the former simply prohibits certain expenditures of funds based on an alien's unlawful presence, regardless of that alien's race or national origin.
Finally, the federal prohibition on recklessly harboring illegal aliens, 8 U.SC. § 1324, does not require the conclusion defendants seek here. Once again, there is no conflict because the FHA prohibits discrimination on the basis of protected categories, such as race and national origin, whereas the prohibition against recklessly harboring illegal aliens focuses on an alien's lawful presence, not his race or ancestry. The FHA and § 1324(a)(1)(A)(iii) have different purposes and are not inconsistent. Nonetheless, it is worth noting that defendants' obligations under § 1324 may constitute a basis to argue that the Policy is supported by a legitimate nondiscriminatory reason and is a business necessity.
In sum, neither the HUD policy regarding illegal aliens' ineligibility for certain financial assistance, nor § 1324(a)(1)(a)(iii) are a basis for dismissing plaintiffs' FHA claim.
Defendants next argue that plaintiffs' FHA cause of action based on disparate impact must be dismissed for failure to state a claim. In this regard, defendants in essence argue that plaintiffs' disparate impact claim is inconsistent with the history and purpose of the judicially-created theory of disparate impact. Although this argument does not warrant threshold dismissal of plaintiffs' FHA claim, defendants' contention in this regard nonetheless must be carefully addressed, as it presents an important question as to the proper application of disparate impact theory to plaintiffs' FHA claim in the context of this case.
Analysis properly begins by recognizing that certain disparate impact claims are undoubtedly cognizable under the FHA to satisfy the statute's requirement that an actionable housing decision be made "because of" a protected status. See Inclusive Cmties., 135 S.Ct. at 2525; Betsey, 736 F.2d at 986. Yet, importantly, it must also be noted that the Supreme Court has expressed concern about the scope and application of the disparate impact theory in certain circumstances. See Inclusive Cmties., 135 S.Ct. at 2523. In this regard, the Supreme Court noted that FHA disparate impact claims are subject to a "robust causality requirement," which "protects defendants from being held liable for racial disparities they did not create." Id. (quotation marks and alterations omitted). In other words, in determining whether the FHA permits a disparate impact cause of action, the Supreme Court in Inclusive Communities did not squarely address the limits or proper scope of such claims.
In this case, there are compelling reasons to conclude that plaintiffs' FHA disparate impact claim arises in a context different from that which prompted courts to apply the disparate impact theory to discrimination cases. Indeed, as the analysis that follows demonstrates, courts devised the disparate impact theory to ferret out long-entrenched racial discrimination that might otherwise have escaped scrutiny by using facially neutral policies to hide or shield already entrenched discrimination. Moreover, the analysis that follows also shows that allowing a disparate impact claim to operate in the context of this case would essentially erase the FHA's requirement that discrimination be "because of race, color, religion, sex, familial status, or national origin. 42 U.S.C. § 3604(a). This is so for the obvious reason that the vast majority of illegal aliens in the United States are persons of Latino descent; thus, any policy that targets illegal aliens in the United States will disparately impact Latinos. In other words, allowing plaintiffs in this case to satisfy the FHA's causation element simply by proving that the Policy disparately impacts Latinos would effectively eliminate the statute's "because of" requirement, as essentially any policy aimed at illegal aliens will have a disproportionate effect on Latinos.
To begin with, it is important to note that disparate impact theory arose as a judicially-created doctrine to ferret out historically-entrenched racial discrimination that was perpetuated by facially neutral policies. The Supreme Court made this clear in the seminal case of Griggs v. Duke Power Co., 401 U.S. 424, 91 S.Ct. 849, 28 L.Ed.2d 158 (1971). There, the Supreme Court interpreted Title VII to prohibit employment testing policies with unjustifiable and adverse disparate impacts regardless of an employer's subjective intention to discriminate.
The rationale for the disparate impact theory as articulated in Griggs and the underlying rationale for the FHA are essentially the same. See Inclusive Cmties., 135 S.Ct. at 2521 ("Recognition of disparate-impact claims is consistent with the FHA's central purpose."). As the Supreme Court noted recently in Inclusive Communities, the FHA's purpose is to address the "vestiges" of "[d]e jure residential segregation by race" that remain "intertwined with the country's economic and social life." See id. at 2515. In other words, the disparate impact theory in FHA cases is designed to remove barriers to housing that endure as remnants of the country's tragic and regrettable history of state-sanctioned intentional discrimination. See id. at 2515-16.
Similarly, the facts in Inclusive Communities fit well within the conception of disparate impact theory as a doctrine designed to ferret out long-entrenched discrimination. The litigants in Inclusive Communities had disputed whether a Dallas low-income housing development should be built in the inner-city or in the suburbs. Id. at 2513. Specifically, the plaintiffs alleged that the Texas Department of Housing and Community Affairs, in determining where to place such developments, had perpetuated segregated housing patterns among whites and African-Americans. Id. at 2514. Thus, the Supreme Court in Inclusive Communities applied disparate impact theory as a means of ferreting out entrenched segregated housing patterns.
Also instructive in this regard is the Tenth Circuit's holding in Livingston v. Roadway Express, Inc., 802 F.2d 1250
Indeed, the Supreme Court has observed that, even within the Title VII context, in which the Supreme Court first recognized disparate impact theory as a viable cause of action, disparate impact claims are available only "in some cases." See Ricci v. DeStefano, 557 U.S. 557, 577, 129 S.Ct. 2658, 174 L.Ed.2d 490 (2009).
Further demonstrating the proper limited scope of disparate impact theory in the FHA context is the fact that the Supreme Court has instructed that disparate impact claims are subject to a "robust causality requirement." Inclusive Cmties., 135 S.Ct. at 2523. A robust causality requirement, as the Supreme Court puts it, "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." Id. (quotation marks and alterations omitted). Plaintiffs' use of the disparate impact theory in this case is not consistent with a robust causality requirement; it operates instead to eliminate the statute's explicit requirement that the bar to housing be "because of" race or national origin. Indeed, to permit plaintiffs to use disparate impact in this case to establish causation results in essentially writing out of the FHA its robust causation requirement altogether. See id.
The Supreme Court in Espinoza v. Farah Manufacturing Co. wrestled with a similar causation problem in the employment discrimination context. See 414 U.S. 86, 94 S.Ct. 334, 38 L.Ed.2d 287 (1973). There, the Supreme Court was required to construe and apply Title VII's prohibition against employment discrimination "because of a person's national origin. 42 U.S.C. § 2000e-2. In Espinoza — a post-Griggs case on appeal from summary judgment — a lawfully admitted resident alien mounted a Title VII challenge to an employer's policy that all hires must be U.S. citizens. 414 U.S. at 87, 94 S.Ct. 334. The plaintiff, a Latina citizen of Mexico, had alleged that the employment policy discriminated against her "because of her `national origin.'" Id. at 87-88, 94 S.Ct. 334. She relied on the Title VII provision which, like the FHA, prohibits discrimination "because of national origin and race, but not alienage discrimination.
The Espinoza opinion, of course, does not directly address the Fair Housing
Judge Loken, in Keller v. City of Freemont — the precedent closest on point factually to this case — addressed the same issue. See 719 F.3d 931 (8th Cir.2013). There, plaintiffs brought an FHA disparate impact claim to challenge a Nebraska city ordinance that made it "unlawful for any person or business entity to rent to, or permit occupancy by, `an illegal alien, knowing or in reckless disregard of the fact that an alien has come to, entered, or remains in the United States in violation of law.'" Id. at 938. Judge Loken — the only member of the panel majority to reach the merits of the FHA claim
Id. (citing Espinoza, 414 U.S. 86, 94 S.Ct. 334).
As Judge Loken correctly recognized, the imposition of disparate impact liability for policies that impact Latinos only incidentally to the impact on illegal aliens decouples disparate impact theory from its original and central purpose. When properly applied, the disparate impact theory should target only those policies with effects that cannot fairly be explained other than as resulting at least in part "because of a protected characteristic. See 42 U.S.C. § 3604(a); Inclusive Cmties., 135 S.Ct. at 2523 (requiring a "robust causality requirement" to "protect defendants from being held liable for racial disparities they did not create.") (quotation marks and alterations omitted).
In the instant case, the disparate impact on plaintiffs as Latinos is incidental to the Policy's effect on all illegal aliens. That is, a disparate impact exists as to Latinos because Latinos have chosen in greater numbers than any other group to enter the United States illegally.
In summary, the history and purpose of disparate impact theory, and the application of that theory in the decided cases, make clear that it would be inappropriate to permit plaintiffs to use disparate impact theory alone to satisfy the FHA's "because of" requirement. Disparate impact theory, applied in this case, would be insufficient by itself to satisfy the FHA's causation requirement. This is not to say that landlords have free reign to discriminate against illegal aliens as Latinos, nor that Latinos or illegal aliens are categorically precluded from the benefits of the FHA, including the disparate impact theory. To the contrary, an illegal alien who can prove discrimination on the basis of his or her race or national origin is undoubtedly a "person" entitled to the benefit of the FHA's protection. See 42 U.S.C. § 3604(a) (protecting "any person"). Also, there may well be cases in which the adversity Latinos face in obtaining housing stems from the same sources of historical, state-sanctioned intentional discrimination faced by, for example, African-Americans. Cf. Griggs, 401 U.S. at 430, 91 S.Ct. 849 (noting the lasting effects of de jure educational segregation on African-American workers). In those cases, disparate impact theory may be sufficient, by itself, to carry the burden of satisfying the FHA's causation requirement. But in this case, the analysis here makes clear that plaintiffs cannot rely solely on disparate impact to satisfy the FHA's causation requirement; plaintiffs must still show that the Policy was instituted "because of" race or national origin.
Although plaintiffs may not rely exclusively on disparate impact, the allegations in their Complaint are sufficient to state a claim under the FHA. Indeed, the Complaint alleges that plaintiffs have been denied renewals of their leases and subjected to increased monthly rates and threats of eviction that could — and for one set of plaintiffs, did — drive them from their homes. See, e.g., Comp. ¶¶ 2, 53, 88, 107, 115. And as to defendants' motive or intent, the Complaint alleges that the Policy is a pretext for discrimination against Latinos. See id. ¶¶ 61-63. Indeed, the Policy challenged here draws a facially legal distinction on the basis of lawful presence in this country. It may well nonetheless be an impermissible pretext for discrimination on the basis of race or national origin. Thus, if defendants in this case establish a legitimate non-discriminatory reason or
In essence, therefore, plaintiffs' complaint states a proper cause of action for a claim under the FHA. Although plaintiffs cannot rely solely on disparate impact to prove causation, they may use evidence of disparate impact to help prove that the Policy discriminates "because of race or national origin, and to counter any claim of the Policy's legitimate, nondiscriminatory reason or justification. For these reasons, defendants' motion to dismiss Count I is denied.
Count II alleges that defendants' enforcement of the Policy violates the Virginia Fair Housing Law ("VFHL"). Similar to the FHA, the VFHL makes it unlawful
Va. Code § 36-96.3. The parties' arguments as to whether the Complaint states a disparate impact claim under the VFHL are essentially identical to the arguments they made regarding Count I, with the added wrinkle that it is unsettled whether the VFHL authorizes disparate impact liability at all. Assuming without deciding that the VFHL authorizes a cause of action based solely on disparate impact,
Count IV alleges that defendants' enforcement of the Policy violates 42 U.S.C. § 1981, which provides that "[a]ll persons within the jurisdiction of the United States shall have the same right in every State ... to make and enforce contracts... as is enjoyed by white citizens...." Specifically, Count IV alleges intentional discrimination against aliens and non-citizens, which § 1981 prohibits. See Duane v. GEICO, 37 F.3d 1036, 1044 (4th Cir.1994) ("[W]e conclude that section 1981 prohibits private discrimination
The Complaint alleges that the Policy is designed to be more burdensome on non-citizens than on citizens to the point that non-citizens are essentially excluded from qualifying to lease a lot in the Park. See Comp. ¶¶ 26-39. Specifically, whereas citizens need only obtain a Social Security card (which any citizen can obtain for free), non-citizens must present three documents, namely (i) a passport, (ii) a U.S. visa, and (iii) an original 1-94 or I-94W "arrival/departure" form. Id. ¶ 27. In this regard, the burden arises from the fact that copies of original I-94 and I-94W forms cost $330, and aliens with immigrant visas do not even need to acquire 1-94 or I-94W forms in the first instance.
The Complaint's allegations of intentional discrimination on the basis of alienage or non-citizenship, though not conclusive, are nonetheless sufficient to state a plausible claim under § 1981. Although each of the plaintiff husbands is a foreign national and non-citizen who satisfies the Policy and therefore qualifies to enter into a lease, the Complaint alleges improper denial of year-long lease renewals on the basis that the plaintiff wives do not satisfy the Policy. See, e.g., Comp. ¶¶ 51-53, 73, 79,
Accordingly, Count IV states a plausible claim for relief under § 1981, and defendants' motion to dismiss Count IV must therefore be denied.
For the foregoing reasons, defendants' partial motion to dismisses Counts I, II, and IV must be denied.
An appropriate Order will issue.