Chronicling the high cost of our legal system
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Steve Malanga on New Jersey’s perennially activist Supreme Court [City Journal]. We’ve periodically discussed the court’s lamentable jurisprudence in its Abbott (school finance redistribution) and Mount Laurel (towns given quotas to build low-income housing) decisions. The court has also nullified constitutional limitations on borrowing by the state.
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The Justice Department has sued the University of Nebraska-Kearney and its regents and employees for allegedly “denying reasonable accommodation requests by students with psychological or emotional disabilities seeking to live with emotional assistance animals in university housing.” [Disability Law]
More/update: Inside Higher Ed.
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A woman “posted an advertisement for a Christian roommate on her local church’s bulletin board.” Someone who saw it denounced her anonymously to the Fair Housing Center of West Michigan which proceeded to file a civil rights complaint against her to the Michigan Department of Civil Rights. Nancy Haynes, executive director of the housing center, calls the woman’s notice “a clear violation on its face;” while the Fair Housing Act does not subject actual choice of roommates to penalties, it forbids advertisements expressing a preference.
The Fair Housing Center of West Michigan might ask for an initial reimbursement of $300 for time spent on the issue and training for the woman, in addition to pulling down the ad, Haynes said.
“Our interest really lies in her getting some training so that this doesn’t happen again,” she said.
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The New York Post has now picked up a slightly shortened version of my City Journal piece on the housing lawsuit that contributed to a voter revolt in Westchester (cross-posted from Point of Law).
P.S. The Weekly Standard “Scrapbook” feature discusses the piece, as do John Derbyshire and Ron Coleman. And reader Paul Rath writes: “We face the same issue at the other end of the state, near Buffalo. Unfortunately, we have the same race-baiting and over-simplified arguments in our press here as well.” For more on how towns expose themselves to litigation if they attempt to earmark sub-market-rate housing for local residents or workers, see this Oct. 23 New York Times report on Connecticut.
I’ve got a new piece up at City Journal on Tuesday’s sensational Westchester County upset, in which GOP challenger Rob Astorino knocked off Andy Spano, the longtime Democratic incumbent county executive, by a convincing 58-42 percent margin. Taxes were a key issue, but so was the county’s consent to what was billed as a landmark housing-reform settlement in which it agreed to arm-twist affluent towns into accepting low-income housing. Many Westchester residents were wary of the potential consequences — and downright insulted when Spano suggested that to resist the lawsuit further would be to make the generally liberal-leaning county a “symbol of racism”.
The federally brokered settlement is itself of interest far beyond Westchester, if only as the occasion of a truly remarkable rhetorical flourish from an Obama Administration official, HUD deputy secretary Ron Sims: “It’s time to remove zip codes as a factor in the quality of life in America.” It was also hailed at once in some quarters as a model for similar legal action against other suburban jurisdictions considered guilty of not being hospitable enough to low-income housing. The Westchester voter revolt, I argue in the piece, may serve as a signal to local officials elsewhere to fight, rather than roll over, when the social engineers and their lawyers come knocking (cross-posted from Point of Law).
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A long-running controversy pits some elected officials and townspeople of Framingham, Mass., west of Boston, against a social service agency that has proposed the town as a site for halfway houses and other residential facilities for recovering addicts, the homeless and others. Two years ago things turned particularly unpleasant:
…[South Middlesex Opportunity Council] filed suit in federal court this week demanding damages not just from town officials, but from citizens who have dared criticize the agency and challenge its plans.
SMOC’s 99-page complaint [which alleged violations of the Fair Housing Act, federal Rehabilitation Act, Americans With Disabilities Act and Civil Rights Act -- ed.] piles up charges against selectmen and planning board members not just in their official capacity, but as individuals. It targets town employees, both named and unnamed. It calls for damages against four Framingham Town Meeting members and two citizens for comments made on a private Web site and e-mails distributed on a privately-operated mailing list.
The ACLU of Massachusetts expressed unease at the naming of private citizens as defendants over their advocacy efforts. While the lawsuit has been narrowed somewhat in the two years since then, it continues to engender much acrimony as it drags on:
Aggravating the ill will is a recent revelation that a man charged with shooting a local police officer had lived in a home run by the agency, the South Middlesex Opportunity Council, or SMOC.
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City governments, sometimes in league with private counsel working on contingency fee, “have started suing banks and mortgage companies to recoup their costs” on such services as “fire departments, police, code enforcement or even demolition” in blighted neighborhoods. “The lawsuits were filed in recent months under different theories, in state and federal court. Cleveland and Buffalo filed suits under public nuisance laws. Minneapolis’ suit was brought on consumer fraud grounds, while Baltimore took the unusual approach of filing suit in federal court under alleged Fair Housing Act violations.” Bank of New York says it was included in Buffalo’s suit against 39 lenders even though it neither originated nor purchased loans, but merely acted as trustee. (Julie Kay, “Empty Homes Spur Cities’ Suits”, National Law Journal, May 9).
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In order to enhance diversity, it was necessary to suppress it, cont’d: The GuideOne Mutual insurance company offers, in 19 states at last report, what it calls a “FaithGuard” policy rider with features it believes are valued by some churchgoers. In particular, to quote its critics, the rider
waives insurance deductibles if there is a loss to personal property while it is in the “care, custody and control” of the insured’s church; pays church tithes or donations if the insured suffers a loss of income from a disability; and doubles medical limits for an injury received while sponsoring an activity conducted on behalf of the church.
All three provisions might make a family feel more confident about pledging material support or volunteer time to its church, by limiting the potential financial downside in case of accidents or misadventure. But now GuideOne is on the receiving end of a lawsuit filed by the National Fair Housing Alliance, on the grounds that the rider discriminates against non-churchgoers — which is to say, by providing benefits they would have no interest in purchasing. In particular, complains NFHA,
The benefits of FaithGuard are not available to persons who suffer a covered loss or disability while engaged in similar activities but who are not religious, who do not belong to a church, or who do not attend church or participate in religious activities.
Of course people in these latter categories would never be inclined to purchase FaithGuard in the first place, any more than people who never step on airplanes would go out of their way to buy flight insurance. Instead, if they worry about the financial risk of accidents, they would select one of the innumerable insurance products readily available with no particular religious component. But to achieve religious nondiscrimination in the eyes of NFHA, it’s apparently crucial not just that we non-churchgoers have access to every sort of risk coverage we might take a notion to buy, but that FaithGuard’s customers not have access to one they might like. Will the result of this lawsuit if successful be more diversity? Or, again, less? (earlier). More: Rick Armon, “Akron suit claims insurance for churchgoers discriminates”, Akron Beacon Journal, Nov. 27; Religion Clause (Howard M. Friedman), Nov. 28.
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Cross-posted from Point of Law.
Says the NAACP complaint: “In 2004, African-American homeowners who received subprime mortgage loans from Defendants were over 30% more likely to be issued a higher-rate loan than Caucasian borrowers with the same qualifications.” (¶ 1.) Thus, it concludes, the disparity “result[s] from a systematic and predatory targeting of African-Americans.” (¶ 6.)
Similarly, Baltimore’s suit argues that Wells Fargo is more likely to foreclose in African-American neighborhoods—and that suit does not even attempt to adjust for similar qualifications or finances, just alleging racial disparity.
Of course, there is a difference between being targeted for a subprime mortgage loan and accepting a subprime mortgage loan. And I don’t believe that African-American homeowners were targeted for subprime mortgage loans because they were African-American. They were targeted because they were homeowners.
Between 2001 and 2005, I was a law-firm associate, high-income, making multiples of what I make today at a thinktank. And, like I am today, I was also white. And the minute my adjustable-rate mortgage was registered in the title books in 2001, I got several solicitations a week in the mail from fly-by-night mortgage brokers offering to refinance my mortgage with ludicrous financial products. (And when I made the mistake of investigating on-line options for switching to a fixed-rate mortgage in 2004, I also got several e-mails a day and phone-calls a month on the same basis to the point that I switched e-mail providers.)
Somehow, I resisted refinancing with a mortgage that was not favorable to me in the long run—I took a 5.25% fixed-rate instead. But I sure was targeted with subprime opportunities, especially as the real-estate prices in my neighborhood skyrocketed about 10% a year. And if, with my skin-color, income, education-level, and impeccable credit-score, I was targeted, so was every homeowner and their grandmother.
To the extent a statistical study says minorities were, ceteris paribus, more likely to receive unfavorable mortgages than whites, the study reflects a specification error, perhaps in failing to account for different levels of consumer education. Another possibility: there is a lot of state-by-state regulation of the mortgage industry. Are subprime mortgages more likely in states with high minority populations, for example? Are subprime mortgage brokers more likely to be aggressive in urban areas in states on the coasts where real estate prices were increasing faster than average, and those states correspond to states with high minority populations?
Note that the CRL study that has been driving the debate and highlighted in the NAACP suit finds that for many types of loans, whites were “disadvantaged” relative to Hispanics, which would seem to count against a racial explanation (unless one believes that bankers hold a racial animus against whites and towards Hispanics) and more towards a geographic explanation.
Note also the irony that these same defendants were accused of failing to offer loans to African-Americans just a few years ago. (See also Apr. 1.)
Finally, note that the NAACP complaint is legally frivolous in at least one respect because of the lack of standing in a federal court. Domino’s Pizza, Inc. v. McDonald, 546 U.S. 470 (2006) (no § 1981 standing for third parties). (Baltimore brings no § 1981 claim.) Fair Housing Act standing is questionable, too, given the lack of allegation of injury to NAACP in particular, though that could be fairly easily rectified by an amended complaint, especially in the Ninth Circuit. Cf. Spann v. Colonial Vill., Inc., 899 F.2d 24 (D.C. Cir. 1990) (”[a]n organization cannot, of course, manufacture the injury necessary to maintain a suit from its expenditure of resources on that very suit”) (R. Bader Ginsburg, J.); Fair Housing of Marin v. Combs, 285 F.3d 899, 902 (9th Cir. 2002). N.B. that there is an amended version of the NAACP complaint that may already fix these issues. NAACP v. Ameriquest Mortgage Co., No. 8:07-cv-00794-AG-AN (C.D. Cal.). For some reason, this is not available on PACER, so I haven’t seen it.
Related: Jan. 8 (Krauss on Baltimore suit); Apr. 25 (me on third-party liability for subprime lending).
(Disclosure: I own less than $15,000 in stock in Citigroup, one of the defendants in the case.)
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We’ve extensively covered the various fair-housing complaints against Craiglist (Aug. 10, 2005; Feb. 9, Feb. 20, Mar. 6, Jun. 28, Dec. 1, 2006) for that service’s hosting ads for housing and roommates that fall afoul of non-discrimination laws—it’s technically illegal for a woman to say that she’s looking for another woman to share her apartment with, much less a co-religionist or someone without kids. We somehow missed the Santa Clara and San Diego lawsuits against Roommates.com over the same issue. While a district threw out the case, an appeal went to the Ninth Circuit Court of Appeals, and that was that: the three judges, Kozinski, Reinhardt, and Ikuta, wrote three separate opinions, with two of them deciding that there was enough for a suit to go forward on the grounds that there may be a cause of action under the Fair Housing Act because Roommate.com makes it easier for their users to express discriminatory preferences by using questionnaires that are then translated into searchable advertisements, thus supposedly running outside the Communications Decency Act’s immunity provision by being an “information content provider” because it is “responsible, in whole or in part, for the creation or development of [the] information”:
“By categorizing, channeling and limiting the distribution of users’ profiles, Roommate provides an additional layer of information that it is “responsible” at least “in part” for creating or developing.”
Worse, Judge Kozinski’s opinion issues irrelevant dicta, apparently aimed at a suit not being litigated before him:
Imagine, for example, www.harrassthem.com with the slogan “Don’t Get Mad, Get Even.” A visitor to this Web site would be encouraged to provide private, sensitive and/or defamatory information about others — all to be posted online for a fee.
Kozinski posits that this site—plainly based on dontdatehimgirl.com (Apr. 9 and links therein)—would also flunk the CDA protection. (Cal Law reporter/blogger Brian McDonough notes this passage, but apparently thinks it’s just a joke and thus misses its significance.) The administrators of Autoadmit/xoxohth.com (May 3) might also be concerned about this dicta. (Rebecca Tushnet makes this point independently.)
This substantial narrowing of § 230(c) protections is also bad because it now means that a number of Internet sites that were plainly protected before no longer have unambiguous protection, a problem exacerbated by the lack of a clear majority opinion. Creative lawyering can argue that these websites might be within Fair Housing Counsel’s fact-driven exception to the CDA exception, and thus get past the motion-to-dismiss stage, forcing defendants into expensive legal proceedings.
Elsewhere on the Internet: Volokh; Eric Goldman; Adam Liptak @ NYT; Slashdot; Laura Quilter; Aaron Perzanowski; Lillian Edwards; The Register. Joe Gratz has purchased harassthem.com.
Volokh separately argues the underlying laws are unconstitutional as applied to roommates.
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