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United States v. Mid-America Apartment Communities, Inc.

United States District Court, District of Columbia

March 27, 2017



          RICHARD J. LEON, United States District Judge.

         Plaintiff, the United States of America ("the Government"), brings suit against defendants Mid-America Apartment Communities, Inc. and Mid-America Apartments, L.P., alleging that its predecessor companies, Post Properties, Inc., Post Apartment Homes, L.P., and Post GP Holdings, Inc. (together, "Post"), engaged in a pattern or practice of discrimination under the Fair Housing Act, as amended by the Fair Housing Amendments Act of 1988 ("the FHA"), 42 U.S.C. §§ 3601-31, and Title III of the Americans with Disabilities Act of 1990 ("the ADA"), id. §§ 12181-89. Compl. ¶ 1 [Dkt. #1]. Because "Post" became "Mid-America" only recently [Dkt. #111], and the events and filings at issue here all took place while the companies were still operating as "Post, " I will continue to refer to the defendants by that name in this opinion. This matter is before the Court on motions by both the Government and Post to clarify certain legal issues in advance of trial. See Defs.' Mot. to Resolve Legal Issues in Advance of Trial [Dkt. #90]; U.S.'s Mot. for Pre-Trial Rulings [Dkt. #93]. Namely, the parties seek guidance on what sort of evidence would be legally sufficient to satisfy the Government's burden to demonstrate that Post has engaged in a pattern or practice of discriminatory behavior under the FHA and what sort of evidence is legally relevant to contradict that contention. Additionally, Post seeks an evidentiary ruling as to the appropriate scope of expert witness testimony. It also seeks to exclude from evidence a number of the 50 multifamily dwellings that the Government has alleged have accessibility problems, claiming that they are inadmissible to support the Government's pattern or practice claim. As I explain more fully with respect to each issue below, the parties' motions are each GRANTED IN PART and DENIED IN PART.

         I. The Proper Role of the HUD Guidelines in Proving an Instance of Housing Discrimination Is Limited.

         The FHA prohibits housing discrimination on the basis of a handicap. 42 U.S.C. § 3604(f). In the type of dwellings at issue here, which the statute seeks to regulate, the FHA requires that public areas must be "readily accessible to and usable by handicapped persons, " the doors must be wide enough to allow passage into and within the premises by people in wheelchairs, and the individual units must contain four enumerated features of "adaptive design." [1] Id. § 3604(f)(3)(C). The statute charges the Secretary of the Department of Housing and Urban Development with the responsibility to enforce these requirements by bringing administrative enforcement actions to correct non-compliant buildings. See 42 U.S.C. § 3601, et seq. Additionally, a "failure to design and construct" a building in accordance with these requirements constitutes discrimination "because of a handicap" under the FHA and the statute charges the Department of Justice with the responsibility to pursue claims against parties who engage in a pattern or practice of discrimination of this kind. Id. § 3604(f); id. § 3614(a).

         In this case, the Government claims that Post has engaged in a pattern or practice of discrimination by failing to design and construct 50 multifamily dwellings in accordance with the accessibility requirements of the FHA over 20 years, from 1997 to 2008. Compl. ¶¶ 16-20. To win the pattern or practice case, the Government must prove that designing and constructing inaccessible dwellings was Post's "standard operating procedure, the regular rather than the unusual practice." Int 7 Bhd. Of Teamsters v. United States, 431 U.S. 324, 336 (1977).

         As evidence, the Government plans to rely on expert testimony that the 50 properties did not satisfy the set of measurements and specifications known as the HUD Guidelines, which are a set of criteria developed by the Department of Housing and Urban Development ("HUD") that serve to warn the public what it will consider presumptively accessible when it decides whether to bring an enforcement action charging that a building fails to meet the requirements of the FHA. U.S.'s Mem. of P. & A. ISO Its Mot. for Pre-Trial Rulings ("Gov't's Mem.") 2 [Dkt. #93-1]. By virtue of this warning, the HUD Guidelines provide a concrete benchmark for builders to know, regardless what the law actually requires, that HUD will not prosecute them under it, a phenomenon commonly referred to as a prosecutorial "safe harbor." But the Government is here seeking to turn this shield into a sword. It argues that if it establishes that Post's 50 properties do not comply with the HUD Guidelines, it is entitled to a presumption, rebuttable only by a narrow category of evidence, that the buildings were not designed and constructed in compliance with the FHA. Id. The Government reasons that the rebuttable presumption is warranted because the HUD Guidelines are the least restrictive often sets of accessibility criteria that HUD has approved as safe harbors for builders. See Id . at 4 (quoting 56 Fed. Reg. 9476 for the proposition that the HUD Guidelines "describe minimum standards of compliance with the specific accessibility requirements of the Act"). Furthermore, it points out that if the HUD Secretary had brought an administrative action to challenge the design of each property, the agency would have been owed deference in the decision to use the HUD Guidelines to establish a rebuttable presumption of non-compliance. See Id . at 8-11; U.S.'s Reply ISO Its Mot. for Pre-Trial Rulings 2-5 [Dkt. #96]. These arguments are unavailing because, as a general matter, the internal operating procedures of HUD are not dispositive for the federal courts. Furthermore, Congress has not delegated authority to HUD to define the minimum standards for accessibility, and therefore the Court has no reason to defer dispositively to HUD's interpretation or to adopt its procedure in this pattern or practice case.

         It is true that HUD relies on the Guidelines as part of a burden-shifting framework it uses for administrative enforcement actions. Under that framework, HUD establishes a prima facie case of inaccessibility in violation of the FHA by showing non-compliance with the HUD Guidelines. Thereafter, the burden shifts to the defendant to demonstrate compliance with either a different HUD safe harbor or another "comparable standard, " which HUD interprets to mean only a comprehensive set of specifications and measurements similar to one of its sets of safe harbor criteria. See Gov't's Mem. at 7; 24 C.F.R. § 100.201. According to the Government, this framework has "the force of law" because it was adopted by HUD in what the parties refer to as the Nelson Order, named after the administrative adjudication in which the HUD Secretary outlined how the agency would exercise its enforcement powers under the FHA. See Id . at 7-9 (quoting HUD ex rel. Mont. Fair Horn., Inc. v. Brent Nelson, No. HUDALJ 05-068FH, 2006 WL 4573902 (Sept. 21, 2006), petition for review denied 320 F.App'x 635 (9th Cir. 2009)). But the Government is wrong to suggest that the Nelson Order has any binding force outside the agency.

         Indeed, on its face the Nelson Order does not purport to bind federal courts in any way. Moreover, it would be inappropriate for a federal court to give Chevron deference to the Nelson Order in a case such as this where the Court is not reviewing agency action. This is not a case where HUD applied the Nelson Order, or the HUD Guidelines, in an enforcement action that the court is then asked to review. Nor does the Government point to any evidence in the text of the FHA that it was delegated authority to draft either the minimum specifications for accessibility or the procedure for determining the fact of accessibility. To the contrary, the only rulemaking authority that the FHA delegates to HUD is specifically cabined to the procedures necessary to pursue its enforcement discretion. See 42 U.S.C. § 3614a.[2] In short, I can find no precedent for giving Chevron deference to an agency's recommendation to the Court about what a statute means in a civil action that is completely independent of the agency's enforcement apparatus. In this context, it is the Court's job, not HUD's, to interpret the accessibility requirements of the FHA. Of course, in so doing, the Court may find it instructive to hear what design features have tended to make dwellings accessible in HUD's experience enforcing the statute. The Supreme Court explained this type of deference in the seminal case United States v. Mead Corp., 533 U.S. 218 (2001): "[A]gencies charged with applying a statute necessarily make all sorts of interpretive choices, and while not all of those choices bind judges to follow them, they certainly may influence courts facing questions the agencies have already answered. The well-reasoned views of the agencies implementing a statute constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance." Id. at 227 (alterations and quotation marks omitted). The HUD Guidelines may, in this way, be a useful summary of HUD's relevant experience. A helpful analogy is the way the Government may use the Horizontal Merger Guidelines in antitrust cases in this Circuit. Our Circuit Court has explained in that context that "[a]lthough the Merger Guidelines are not binding on the court, " the specific numerical presumptions contained therein "provide a useful illustration" for the court and could be persuasive insofar as it places the case in context by relating it to other instances of problematic conduct. FTC v. H.J. Heinz Co., 246 F.3d 708, 716 n.9 (D.C. Cir. 2001) (citation and quotation marks omitted).

         Likewise, the Government here may reference the HUD Guidelines in order to illustrate how designers and builders typically ensure their dwellings are accessible, and it may put on expert evidence to support that the particular specifications contained in the HUD Guidelines are in fact necessary to make a building accessible to a handicapped person. But I decline to adopt the HUD Guidelines, or any other wholesale set of criteria, as a minimum standard for the Government to make out & prima facie case or as the only sufficient way for Post to rebut & prima facie showing that a dwelling is actually inaccessible. This conclusion is necessary, in part, because the Government's own expert describes that there are certain specifications in the HUD Guidelines that are more demanding than the equivalent specifications in other safe harbors that HUD has approved. Expert Report of Peter A. Stratton 4 ("P. Stratton Report") [Dkt. #91-2]. For instance, the maximum allowable distance to reach for a light switch is shorter in the Guidelines than in another safe harbor set of criteria known as the ANSI specifications. Id. If it were the Government's position, then, that Post's dwellings were inaccessible due in part to the reach to light switches, evidence as to failing the HUD Guidelines specification would not presumptively prove that the light switch was actually inaccessible. But neither can the Court adopt wholesale the ANSI criteria because some of its specifications are more demanding than the equivalent specifications in the HUD Guidelines.

         There is another important obstacle to the Government's request that the Court adopt a presumption of inaccessibility from the HUD Guidelines or another set of safe harbor specifications. Indeed, it is in black and white in the text of the FHA. According to the statute, a state or unit of local government may "review and approve newly constructed covered multifamily dwellings for the purpose of making determinations as to [accessibility under the FHA's design and construction requirements]" and compliance with state or local laws that incorporate the FHA "shall be deemed to satisfy" the FHA's design and construction requirements. 42 U.S.C. § 3604(f)(5). As a result, the Government must show how the state and local codes failed to ensure compliance with the FHA before it is entitled to a presumption of inaccessibility for any building that was in fact permitted and built in a jurisdiction with its own accessibility requirements. The Government does not shift the burden of production on any individual building, therefore, until it explains how the permitting regime for that building did not comply with the FHA or, if it did comply, how a designer or builder such as Post either evaded the permitting regime or wrongfully obtained a permit. And again here, the Government cannot prove that a state or local code failed to ensure compliance with the FHA by comparison to the HUD Guidelines alone. Congress expressed the clear preference that state and local jurisdictions be allowed to define accessibility in this context and I would review the exercise of that authority with due deference. I will discuss this requirement in more detail below when I address which of Post's buildings the Government may introduce as evidence in their pattern or practice case.

         In sum, the HUD Guidelines do not set a minimum standard for accessibility under the FHA, whereas compliance with state or local codes could satisfy the FHA. For any permitted building, therefore, the Government must first show the Court that the nature of the permitting regime leaves room for the allegation that the building is evidence of housing discrimination. Assuming there is reason to doubt that a permit ensured compliance with the FHA, the Government can then meet its burden of production by putting on evidence as to what design elements in the building are inaccessible. The Government may reference the relevant specification in the HUD Guidelines or any other safe harbor criteria as persuasive authority, similar to any expert opinion, which will satisfy its burden of production. But Post may rebut the evidence on any design element by reference to the specification from any other safe harbor or to the actual ability of handicapped individuals to effectively use the design element. Accord Fair Hous. Council, Inc. v. Vill. of Olde St. Andrews. Inc., 210 Fed.App'x 469, 482 (6th Cir. 2006). As is typical, the burden of persuasion remains always with the Government-the trier of fact must ultimately decide if the specification in any safe harbor actually describes what is necessary for use by handicapped persons.

         Accordingly, I DENY the request for a legal ruling that the burden-shifting framework of the Nelson Order applies in this case. I likewise DENY the Government's request to find an instance of discrimination under the FHA wherever a Post building fails to satisfy, wholesale, one of the ten HUD-approved safe-harbors or another recognized, comparable, objective set of accessibility specifications. However, I also reject Post's contention that such a showing "is not sufficient to meet [the Government's] burdens." Mem. of P. & A. ISO Defs.' Mot. to Resolve Legal Issues in Advance of Trial ("Post Mem.") 4 [Dkt. #90-1]; see also Id . at 14-15. The trier of fact may be persuaded by the Government experts' opinions that non-compliance with the HUD Guidelines makes a building inaccessible[3]

         II. The FHA "Features of Adaptive Design" Must Be in Place at the Time of Construction.

         The Government asks for a legal ruling to clarify that the FHA requires features of "adaptive design" to be in place at the time of construction and, accordingly, that Post cannot put on evidence of its ability to quickly modify buildings to include those features when necessary or requested. Gov't's Mem. 2. As two courts before me have so held, the plain text of the statute indeed supports the Government's interpretation. See Baltimore Neighborhoods, Inc. v. Rommel Builders, Inc., 40 F.Supp.2d 700, 708 (D. Md. 1999); Mont. Fair Hous., Inc. v. Am. CapitalDev., Inc., 81 F.Supp.2d 1057, 1065 (D. Mont. 1999).

         The relevant section of the FHA defines discrimination as "the failure to design and construct" the covered dwellings "in such a manner that... all premises . . . contain the followings features of adaptive design:

(I) an accessible route into and through the dwelling;
(II) light switches, electrical outlets, thermostats, and other environmental controls in accessible locations;
(III) reinforcements in bathroom walls to allow later installation of grab bars; and
(IV) usable kitchens and bathrooms such that an individual in a wheelchair can maneuver about the space." 42 U.S.C. § 3604(f)(3)(c)(iii) (emphasis added). Because the statute explicitly contemplates later installing grab bars but does not mention later installation for other features, I can rule out Post's interpretation that it may add the other features on an as-needed basis.

         Accordingly, I will not allow Post to advance a theory that it complied with the design and construction requirements to include the features of adaptive design by being ready to modify dwelling units to include those features.

         III. The Government Has Failed to Demonstrate That Its Evidence from the Majority of the 50 Subject Properties Is Relevant to a Pattern or Practice Claim.

         A. ...

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