The 10 Biggest Fair Housing Cases of 2022—So Far
We’ll tell you what happened in each case—and how it may impact your property.
Most of you are pretty familiar with what the fair housing laws require. But it’s in the court rooms and administrative tribunals where the broad rules and principles of fair housing law are actually applied to real world situations. So, every once in a while we need to take a step back and look at what has been taking place in fair housing litigation across the country. And that’s precisely what this month’s lesson will do.
About two-thirds of the way through, 2022 has already proven to be a wild and impactful year for fair housing litigation. Here’s a briefing on what we believe are the most important cases of the year and how they may impact your own rental properties and operations. For dramatic effect, we’ll count down the Top 10 in descending order, leaving the biggest cases for the end.
#10. Federal Jury Hits Illinois City with $293K Verdict for Discriminatory Zoning
In recent years, there have been a number of significant fair housing cases against municipalities for using their zoning powers to perpetuate segregation and other forms of discriminatory housing practices. One of these cases happened in July when a federal jury slammed the city of Springfield, Ill., with a $293,000 verdict for discriminatory zoning.
What Happened: In 2016, the City of Springfield sought to shut down a small group home for three developmentally disabled individuals for violating an ordinance requiring that homes for persons with disabilities be spaced at least 600 feet apart. The U.S. Attorney for the Central District of Illinois sued the city for disability discrimination. In 2020, the Illinois federal court ruled that the city had engaged in a pattern or practice of discrimination by imposing the rule on homes of five or fewer persons with disabilities, but not on comparable homes of non-disabled persons. The city should have made reasonable accommodations allowing the home to stay open. “[T]he availability of community-based housing for persons with disabilities is most assuredly an ‘issue of general public importance,’” the court reasoned, while ordering a trial to be held to determine damages.
On July 26, the federal jury awarded damages of $293,000—$162,000 to compensate the home’s residents and their guardians, and $131,000 to Individual Advocacy Group (IAG), the state-licensed agency that provided community residential services for the home [United States v. City of Springfield, (C.D. Ill.), July 26, 2022].
Takeaway: It’s well established that the ban on housing discrimination set out in the federal Fair Housing Act (FHA) applies not only to landlords, property owners, and rental agents but also to states and municipalities. Historically, municipalities have adopted exclusionary zoning and building code requirements to keep racial minorities and lower-income people out of neighborhoods. In recent years, municipalities have used the practice to target other groups protected by fair housing laws, including group homes for the disabled, religious-based housing, and shelters for domestic violence victims.
#9. New York Landlord Fined $70,441 for Disability Discrimination
“Outright refusal to rent is arguably the most egregious form of fair housing violation.” So reasoned a U.S. Housing and Urban Development (HUD) Administrative Law Judge (ALJ) in imposing the maximum civil penalty on a Long Island, N.Y., landlord for refusing to rent to an applicant because her daughter had cerebral palsy.
What Happened: The landlord initially accepted the applicant and even took her security deposit. But after learning of the daughter’s disability, he delayed the move-in date three different times before eventually telling the applicant that he wouldn’t let her rent the apartment. He made no bones about basing his refusal on the daughter’s cerebral palsy, even though the applicant didn’t need or request any accommodations. When the applicant protested, he supposedly responded: “Yeah, sucks right?,” a comment the ALJ described as “callous” and “indefensible.” The eventual price tag: $50,530 in damages to the family and the maximum civil penalty of $20,111 [HUD v. Raimos, 21-JM-0160-FH-022, June 2022].
Takeaway: The majority of landlords not only seek to comply with fair housing laws but embrace their objectives. When fair housing violations do occur, they’re generally much more subtle and often inadvertent. The Raimos case is an outlier but also a reminder that overt and egregious discrimination, including outright refusal to rent to a person because of race, sex, religion, disability, etc., still occurs far too often.
#8. Failure to Make Properties Accessible Costs Landlord $7.1 Million
As the population ages, lack of accessible housing for the elderly and disabled has become a societal problem and a growing priority for HUD, state and local fair housing enforcers, and advocacy organizations. Consequently, developers of new multifamily housing properties that fail to ensure that their properties meet FHA disability accessibility requirements have a giant bullseye on their back. One landlord that can attest to this is New York-based real estate owner Clover Group, which has just agreed to shell out $7.1 million to settle accessibility claims.
What Happened: In March, a group of 12 fair housing advocacy organizations led by the Fair Housing Center of Central Indiana (FHCCI) filed a lawsuit in the U.S. District Court in the Northern District of New York challenging Clover’s “long-standing and continuing practices of developing, constructing, operating, or owning properties that deny people with disabilities full access” in violation of the FHA. The complaint cites accessibility design and construction violations at 38 different senior-living properties.
Rather than risk a trial, Clover agreed to settle the charges for up to $7.1 million. Under the settlement, Clover will have to:
- Spend up to $3 million for ramps, retrofits, and upgrades to make parking lots, sidewalks, community rooms, picnic areas, dog parks, and other common areas at 50 sites accessible;
- Set aside $3.8 million for installing roll-in showers, lowering countertops, widening doorways and making other modifications to individual apartments that disabled tenants may request; and
- Adding insult to injury, pay $750,000 to cover the fair housing groups’ attorney’s fees and legal costs [FHCCI et al. v. Clover Construction Management, Inc., N.D.N.Y., August 2022].
Takeaway: Remember that under the FHA (the Americans with Disabilities Act applies to public accommodations but not housing), multifamily housing with four or more units constructed after March 1991 must have:
- An accessible building entrance on an accessible route;
- Accessible public and common-use areas;
- Doors that are usable by a person in a wheelchair;
- An accessible route into and through the dwelling unit;
- Light switches, electrical outlets, thermostats, and other environmental controls in accessible locations;
- Reinforced walls in bathrooms for future installation of grab bars; and
- Kitchens and bathrooms that are usable by a person in a wheelchair.
#7. Fannie Mae Settles Disparate Impact Foreclosure Claims for Record $53 Million
The Federal National Mortgage Association, a.k.a. Fannie Mae, is a government agency created to promote home ownership by guaranteeing low-interest mortgage loans to low- and middle-income home buyers. Three years ago, a California federal court broke new ground by ruling that the FHA covers foreclosed properties owned by Fannie Mae, setting the stage for a monster settlement that came down this February.
What Happened: During the subprime mortgage crisis of 2009 when there were so many foreclosures, Fannie Mae ended up assuming ownership of a vast number of so called real estate-owned (REO) properties. Six years ago, a group of 20 fair housing groups brought an unprecedented lawsuit accusing the agency of violating fair housing laws by allegedly putting all of its resources and efforts into maintaining properties located in predominately white neighborhoods while allowing those within communities of color to go to seed. The case was based on an extensive national statistical study showing that between 2011 and 2015, Fannie Mae neglected REO properties in black and Latinx neighborhoods. Examples:
- 53 percent of Fannie Mae REO properties in white neighborhoods had fewer than five deficiencies, as compared to only 24 percent in neighborhoods of color;
- 24 percent of Fannie Mae REO properties in neighborhoods of color had 10 or more deficiencies, as compared to only 7 percent in white neighborhoods.
Even if the agency didn’t discriminate deliberately, its property maintenance policies had a disparate impact on non-white neighborhoods, according to the complaint. The FHA requires Fannie Mae to maintain all REO properties regardless of location, without regard to race, color, religion, sex, handicap, familial status, or national origin, the fair housing groups argued. The Northern District of California federal court agreed and rejected the agency’s bid to get the case dismissed [National Fair Housing Alliance et al. v. Fannie Mae, Case 4:16-cv-06969-JSW, N.D. Cal., 2019].
Facing the prospects of a trial, Fannie Mae agreed to pay $53 million to settle the case, $35 million of which will go to promote fair housing in metropolitan areas across the country.
Takeaway: The Fannie Mae settlement may have seismic effects on future fair housing litigation. Aside from being the biggest fair housing settlement involving federal foreclosed property in history, it was the first case finding that fair housing laws even apply to such property. It will also help finance future fair housing initiatives targeting discriminatory maintenance of REO properties in non-white metropolitan areas.
#6. Redfin Pays $4 Million to Settle Redlining Discrimination Lawsuit
Lending discrimination, particularly the practice of redlining in which lenders deliberately avoid making loans to individuals because of the race, color, or national origin of the communities they live in, has become a primary target for federal fair housing enforcers. Last October, the U.S. Department of Justice (DOJ) announced a new initiative to work with the states to crack down on redlining and enforce the fair lending requirements of the FHA. So, it’s not surprising that redlining should appear on the list of the year’s biggest fair housing cases.
What Happened: Redfin is a national brokerage firm with an online search portal containing real estate listings from over 100 housing markets across the country that’s widely considered the go-to source for homebuyers. But Redfin doesn’t post listings in certain ZIP codes unless they meet specific minimum price thresholds. At least, that used to be its policy. In October 2020, a group of 10 fair housing organizations led by the National Fair Housing Alliance (the same organization that spearheaded the Fannie Mae lawsuit) sued the real estate giant in a Seattle federal court, claiming that its minimum pricing policy discriminated against home sellers and buyers in communities of color and perpetuated racial segregation. The complaint alleged that Redfin offered no services in non-white ZIP codes at a disproportionately higher rate than in white ZIP codes in Baltimore, Chicago, Detroit, Kansas City, Long Island, Louisville, Memphis, Milwaukee, Newark, and Philadelphia.
Saying it would rather spend the money on fair housing than litigation, Redfin announced in April that it had agreed to settle the case for $4 million. Perhaps more importantly, Redfin agreed to eliminate its minimum housing price policy, revise other practices to expand access to the company’s real estate services, increase its “investment in serving buyers interested in low-priced homes in communities that have historically been underserved by the real estate industry,” and counter redlining [National Fair Housing Alliance et al. v. Redfin Corporation, Case No. 2:20-cv-015886-JLR-TLF].
Takeaway: Historically, redlining enforcement action has targeted banks and mortgage lenders. The case against Redfin is just one example of how traditional fair housing laws are being applied to modern media companies not traditionally thought of as landlords or financial institutions. Spoiler alert: We will see further variations on this theme as we work our way through the Top 10 case list.
#5. New York Landlord Slammed for Source of Income Discrimination
While the FHA doesn’t expressly cover it, source of income discrimination is banned by the fair housing laws of 17 states (and the District of Columbia) and many municipalities. These protections typically apply to wages, retirement benefits, child support, and public assistance.
What Happened: A housing complex in the Bronx refused to rent to a 34-year-old mother of two young kids because she didn’t earn at least $62,000 per year as required by community rules. What the applicant did have was a city voucher that would have covered the full rent. But the landlord refused to accept it. Forced into homelessness, the mother sued for discrimination noting that she wouldn’t have qualified for the voucher if her income was that high.
The Manhattan Supreme Court ruled that the “irrational” policy of requiring a minimum income without accepting vouchers violated the city’s ban on source of income discrimination, perpetuated homelessness, and forced poor applicants with rental subsidies into a cruel Catch-22 situation. It then took the unusual step of awarding “injunctive relief” and ordering the landlord to accept the applicant.
Takeaway: With a few exceptions (most notably, California), most source of income states and municipalities make it illegal to deny renting to people because they receive HUD Section 8 vouchers or other housing subsidies.
Example: In July, a California court fined a Santa Monica landlord $20,000 for refusing to accept a longtime tenant’s Section 8 voucher in an attempt to force her out of her rent-controlled apartment. The voucher would have reduced her rent from $838 to $411 per month. But because the landlord refused to accept it, the 69-year-old tenant had to use food stamps and all but $198 of her monthly income to come up with the money each month, according to the complaint. The court ruled that the landlord violated the city’s ban on income source discrimination [City of Santa Monica v. Lee, LA County Superior Court, July 12, 2022].
#4. Indiana Landlord Pays $262,500 for Tenant’s Racial Harassment of Neighbors
Landlord liability for sexual, racial, and other forms of discriminatory harassment extends to actions committed by their employees and other agents. Liability is based on the combination of knowledge and control. Among the most significant developments in fair housing litigation in recent years is the emergence of cases asking courts to extend these principles of liability to not only the landlord’s agents but other tenants who harass their neighbors. In March, one of those cases came to a somewhat anticlimactic settlement.
What Happened: For years, Indiana homeowner Vicki New directed a steady stream of racial and ethnic harassment against her neighbors. The abuse was mostly oral, but it was constant and egregious, including a steady diet of “N” word and other appalling nicknames and epithets. Despite constant complaints, the homeowners association didn’t do anything to stop the abuse. The FHCCI (which had a role in bringing the accessibility case against the Clover Group discussed earlier) sued not only New but also the homeowners association for racial harassment.
The association denied responsibility for New’s conduct and asked the Indiana federal court to toss the case without a trial. But the court ruled that FHCCI had a valid legal claim for harassment and ordered the case to go to trial [Fair Hous. Ctr. of Cent. Ind., Inc. v. New, 2021 U.S. Dist. LEXIS 241159, 2021 WL 5988397].
As typically happens when a landlord loses on summary judgment and faces the risk of trial, the association came under enormous pressure to settle—especially given that some of New’s antics were caught on video. And in March, the association agreed to fork over $262,500 as compensation for FHCCI’s damages, attorneys’ fees, and costs. On June 30, an Indiana federal judge ordered New to pay over $226,000 in damages to the neighbors she threatened and harassed for so long.
Takeaway: While the courts have split on the issue, the New ruling follows the majority view that a landlord may be directly liable for discrimination by a tenant against another tenant, if it:
- Knows or should know of the conduct;
- Is in a position to take action to stop the harassment—as the homeowners association was in this case; and
- Doesn’t take any action to curb the harassment.
#3. DOJ Reaffirms that FHA Protects Limited English Proficiency
HUD and the DOJ take the position that the FHA bans discrimination against applicants and tenants based on their limited proficiency in English (LEP). Explanation: Even though the law doesn’t mention LEP, adverse and unfavorable treatment based on a person’s language skills is often a form of discrimination that the FHA does expressly ban, including religion, race, and especially national origin. The most recent reaffirmation of this policy occurred in April when the DOJ sought and received permission to participate in a federal LEP discrimination case taking place in New York.
What Happened: A fair housing organization sued a New York landlord for refusing to rent apartments to applicants who are LEP unless somebody who speaks and reads English lived in the apartment. It also claimed that the landlord refused applicants’ offers to bring their own interpreters to the rental office to help with communications and translate lease documents. The DOJ exercised the Attorney General’s power to file what’s called a Statement of Interest to participate in and attend to the U.S. government’s interest in a case taking place in a federal court. The government files Statements of Interest only when it believes a case raises an important issue. The clear message is that the government feels very strongly that the FHA should be used to go after landlords that commit LEP discrimination [CNY Fair Housing v. Swiss Village LLC, et al., (N.D.N.Y.), April 1, 2022].
“When housing providers ban prospective tenants who do not speak English well, their actions may violate the FHA, which prohibits discrimination based on national origin, race, and other protected characteristics,” noted Assistant Attorney General Kristen Clarke in the press release announcing the action.
Takeaway: Excluding persons based on their primary language or how well they speak or understand English violates the FHA. Other discriminatory practices to avoid include:
- Applying an English-speaking language-related requirement to people of certain races or nationalities;
- Posting advertisements that contain blanket statements, such as “all tenants must speak English”; and
- Immediately turning away applicants because they’re not fluent in English.
#2. HUD Charges Florida RV Park Owner with Transgender Discrimination
In June 2020, the U.S. Supreme Court ruled in a landmark case called Bostock v. Clayton County that the ban on “sex” discrimination contained in Title VII of the Civil Rights Act of 1964 (which deals with employment) also covers workers who are gay or transgender. Upon taking office, President Biden issued an executive order directing all federal agencies to ensure that their own rules are consistent with Bostock. In February, HUD went the president one better by not only conducting Bostock internal review, but ordering its Fair Housing and Equal Opportunity (FHEO) office to apply the ruling to Title VIII, the part of the 1964 Act that deals with housing. And in July, the agency actually charged a landlord for discriminating against a transgender person.
What Happened: Upon learning that a male tenant had started taking medication in preparation for upcoming sex change surgery, the owner of a Florida RV park sent him a handwritten notice offering him some words of advice: “1. Act as a man. 2. Talk as a man. 3. Dress as a man. 4. Avoid tight clothing that is revealing sexual organs.” As long as you follow these steps, “trouble will be avoided,” the note concluded. Rather than risk eviction, the tenant did what the landlord instructed, returning to male dress and being careful not to talk to any of his neighbors, before just deciding he needed to move out.
HUD charged the landlord with engaging in gender identity discrimination. “No one should have to change how they express their gender identity to maintain their housing,” noted HUD Principal Deputy Assistant Secretary Demetria L. McCain. “Setting restrictions like these is not only unacceptable, but illegal. This charge demonstrates HUD’s commitment to enforcing the FHA and ensuring housing providers meet their fair housing obligations” [Name redacted v. Palms RV Resort, Inc., FHEO No. 04-21-5434-8, June 2022].
Takeaway: HUD doesn’t use the popular term “LGBT” in its regulations. Instead, it affords protections to people on the basis of:
- Sexual orientation, which includes homosexuality, heterosexuality, or bisexuality; and
- Gender identity, which refers to an individual’s personal sense of being a male, female, a blend, or neither.
Some state and local laws also extend protection on the basis of “gender expression,” which refers to outward appearance of gender identity, typically expressed through clothing, behavior, voice or hairstyle. The golden rule: Avoid stereotypes based on how you believe people of a particular gender should behave and who they should and shouldn’t have sex with. Examples of pitfalls to avoid:
- Refusing to rent to an otherwise qualified gay couple because you believe that homosexuality is a sin;
- Asking a transgender resident not to dress in women’s clothing in the common areas of the building; and
- Refusing to rent to a gay male because you fear he has AIDS.
Eighth Circuit Upholds HUD “Gender Identity/Sexual Orientation” Directive
In February 2021, HUD issued a directive calling on universities to make allowances for sexual orientation and gender identity in providing student housing. A Christian college in Missouri called College of the Ozarks sued, contending that the directive violated religious liberty by forcing religious schools to open “their dormitories, including dorm rooms and shared shower spaces, to members of the opposite sex.” On July 27, the U.S. Court of Appeals for the Eighth Circuit rejected the claim and upheld the HUD directive. There was no evidence that the directive would chill the College’s First Amendment free speech rights or subject it to enforcement action for maintaining its “religiously-based housing policies,” the court concluded [College of the Ozarks v. Biden, No. 21-2270, 8th Cir., July 27, 2022].
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We are now ready to reveal the biggest fair housing case of 2022. Drum roll . . . .
#1. Facebook Settles Historic Housing Discrimination Case
Facebook? Fair housing? What possible connection can there be between these two?
Social networking didn’t exist when the FHA and its various amendments were enacted. But as digital communication has changed the world, it’s also altered the face of fair housing discrimination, particularly in the realm of advertising. This became abundantly clear in June, when Facebook (which is now called Meta Platforms) entered into a historic fair housing settlement agreement.
What Happened: Although it’s a free service, Facebook has made billions of dollars by developing technology that deploys algorithms enabling paid advertisers to direct messages to precisely the people they want to reach. For years, civil rights groups and the U.S. government have voiced concerns about housing providers taking advantage of these marketing algorithms to target ads by recipients’ race, religion, sex, and other personal characteristics that the FHA protects from discrimination.
In 2019, the DOJ sued Facebook for discrimination, alleging that the social network giant:
- Enabled and encouraged advertisers to decide which Facebook users would be eligible and ineligible to receive their housing ads based on users’ race, color, religion, sex, disability, family status, and national origin;
- Created an ad targeting tool called “Special Ad Audience” (previously called “Lookalike Audience”) that uses a machine-learning algorithm to find Facebook users who share similarities with groups of individuals selected by advertisers based on race, religion, and sex; and
- Incorporated race, national origin, and sex into the machine-learning algorithms its ad delivery system uses to determine which subset of an advertiser’s target audience actually receives a housing ad.
Facebook denied the charges but in 2019 agreed to stop letting advertisers use sex, age, and ZIP codes—which often denote race—to market housing, credit, and job openings to its users. But that wasn’t enough to satisfy the DOJ, which pressed on with its federal lawsuit.
The breakthrough came on June 26, 2022, when the DOJ announced that it had reached a settlement requiring Facebook to not only pay the maximum civil penalty of $115,054 but actually change its ad delivery systems to eliminate “algorithmic discrimination.” Specifically, Facebook has until Dec. 31, 2022, to stop using the “Special Ad Audience” tool and develop and submit for government review a new automated advertising system to ensure that housing-related ads are delivered to a more equitable mix of the population. If the government doesn’t approve the new system, the settlement agreement will end and the DOJ will continue the lawsuit. In addition, Facebook can no longer give housing advertisers options for targeting their ads based on FHA-protected characteristics [United States v. Meta Platforms, Inc., f/k/a Facebook, Inc., 22 Civ. 5187, (S.D.N.Y.) June 26, 2022].
Takeaway: While HUD and the DOJ have discussed fair housing in the context of social media in the past, the Facebook settlement is the first actual case to comprehensively apply the traditional advertising principles contained in the FHA to social media and machine-learning algorithm technology. The case will likely serve as a model for future fair housing enforcement against other social media and digital communication companies.