United States District Court, District of Columbia
D. BATES United States District Judge
case raises an oft-litigated Fair Housing Act claim: whether
an insurer's facially-neutral policy has a disparate
impact on the availability of housing for members of a
protected class. The twist, however, is that it follows
shortly after the Supreme Court's decision in Texas
Department of Housing and Community Affairs v. Inclusive
Communities Project, Inc., 135 S.Ct. 2507 (2015)
(Inclusive Communities), and thus requires this
Court to consider how that case changed the pleading
standards for disparate-impact claims under the Fair Housing
Act (FHA). The Court determines that plaintiff National Fair
Housing Alliance (NFHA) has standing, and that under
Inclusive Communities' more stringent pleading
standard for disparate-impact claims, NFHA has stated a claim
under the FHA. The Court therefore also determines that NFHA
has stated a claim under the D.C. Human Rights Act (DCHRA).
Defendants' motion to dismiss will be denied.
where noted, the following facts are according to the amended
complaint, which the Court accepts as true at this stage.
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007). NFHA is a non-profit “dedicated to ending
discrimination in housing.” See Am. Compl.
[ECF No. 12] ¶ 1. The defendants are two insurers,
Travelers Indemnity Corporation and Travelers Casualty
Insurance Company of America (collectively,
“Travelers”). Travelers “is one of the
largest underwriters of property insurance policies” in
the D.C. metropolitan area. Id. ¶ 18.
alleges that Travelers has a policy of refusing to provide
habitational insurance policies for landlords that rent to
tenants who receive Housing Choice Vouchers, commonly known
as Section 8 vouchers. Id. ¶ 21. As explained
below, Housing Choice Vouchers is a federal program that
provides financial assistance to low-income persons to obtain
housing. NFHA's allegations are based on the experiences
of five “testers, ” who each “posed as a
prospective purchaser of a four unit apartment complex”
in the Anacostia neighborhood in southeast D.C. and attempted
to obtain insurance. Id. ¶¶ 22-23, 25. The
testers spoke with “insurance agencies doing business
in the District of Columbia that market Travelers insurance
policies” between July 2015 and February 2016.
Id. ¶ 23 (listing the insurance agencies). NFHA
employed “experienced tester[s], ” id.
¶ 25, “provided a common set of instructions to
the individual testers, ” and recorded the interactions
that took place over the telephone, id. ¶ 24.
The testers “advised each broker that the complex was
currently occupied by tenants participating in the Housing
Choice Voucher program.” Id. ¶ 25. In
each instance, the broker explained to the tester that
“Travelers would not underwrite the policy because of
the presence of voucher recipients in the building.”
Id.; see also id. ¶¶ 26-32
(detailing individual interactions with each of the five
example, one broker stated that she would not send the
tester's application to Travelers because Travelers
“won't write subsidized housing policies.”
Id. ¶ 27. Another broker, who was not initially
told that the property was occupied by voucher recipients,
first stated that he had spoken with a Travelers'
representative and quoted a policy between $3, 000 and $3,
500. Id. ¶ 29. But when the tester then
informed the broker that the building was occupied by tenants
receiving vouchers, he responded: “Wait a minute. Stop
right there. Subsidized housing is a problem.”
broker further expressed his doubt that Travelers would
underwrite that policy, but he offered to confirm with
Travelers directly. Id. The following day, the
broker called the tester and conveyed that he spoke with a
Travelers representative who stated that Travelers would not
underwrite a policy for that building and that “any
Section 8 would be a problem.” Id. ¶ 30.
The broker then explained that the tester would likely need
to obtain a policy from the secondary market, which would
have a premium of approximately $4, 500 and would provide
“not as good a policy.” Id. In other
words, the broker explained, the tester would be
“paying more for less.” Id.
Housing Choice Voucher program, established by Congress, is
“the federal government's major program for
assisting very low-income families, the elderly, and
individuals with disabilities in affording decent, safe, and
sanitary housing in the private rental market.”
Id. ¶¶ 9-10 (citing 42 U.S.C. §
1437f(o)). In the District of Columbia, households that
participate in the voucher program are disproportionately
headed by African-American women. According to the complaint,
the D.C. population is currently 48.7% non-Hispanic African
American or Black and 35.4% non-Hispanic White. Id.
¶ 14. Households in D.C. are approximately 45.2%
non-Hispanic African American or Black and 41% non-Hispanic
White. Id. Approximately 47.1% of all households in
D.C. are headed by women. Id. Within the population
of households that receive vouchers, however,
African-American households and women-headed households are
overrepresented: 92% of participating households are
non-Hispanic African American or Black (compared to 45.2% in
the whole D.C. population), and only 1% of participating
households are non-Hispanic White (compared to 41% in the
whole D.C. population). Id. ¶ 16. Similarly,
81.5% of households receiving vouchers are headed by women
(compared to 47.1% in the whole D.C. population).
Id. Additionally, “residents who participate
in the Housing Choice Voucher program are largely
concentrated” in particular neighborhoods: “the
four Census tracts in the District with the highest
concentration of Housing Choice Voucher program participants
are all east of the Anacostia River, as are eight of the top
ten Census tracts.” Id. ¶ 17. These
tracts have a far higher concentration of African-American
residents than the District as whole: they are 84.7%
African-American or Black, as compared to the District-wide
average of 51.1%. Id. NFHA therefore believes that
Travelers' policy of denying insurance to landlords whose
tenants receive vouchers discourages landlords from renting
to voucher recipients, which has a disproportionate effect on
tenants who are African-American or in women-headed
NFHA became aware of Travelers' allegedly discriminatory
policy, it took several steps to investigate the scope of the
problem and educate D.C. tenants, landlords, and policy
makers about this issue. It “devoted considerable staff
time and resources to efforts to identify the nature and
scope of Traveler's [sic] discriminatory conduct.”
Id. ¶ 35. It then “added educational
information to its website, along with links” to the
relevant federal and state laws “specifically designed
to educate the general public . . . about fair housing laws
and habitational insurance discrimination based on Housing
Choice Voucher program participation.” Id.
¶ 37(a). It also engaged in targeted outreach
specifically designed to inform the people who were likely to
be harmed by Travelers' policy. It “placed a public
service announcement in the Washington, DC print edition of
the Afro-American, a local weekly newspaper, for two
weeks” from February 6 through February 19, 2016, and
paid for an email blast to the newspaper's readers during
that same time. Id. ¶ 37(b). NFHA also created
and mailed “educational letter[s] and flyers” to
a total of approximately 105 “predominately African
American churches in the Washington DC area” in
February and March 2016. Id. ¶ 37(c).
addition to alerting residents who might be affected,
plaintiff “has also taken steps to educate” the
D.C. Housing Authority and D.C. landlords “about
insurance discrimination based on Housing Choice Voucher
program participation.” Id. ¶ 37(d).
NFHA's President and Chief Executive Officer addressed
the D.C. Housing Authority's monthly board meeting, and
other staff members communicated with Housing Authority
officials about discrimination in habitational insurance.
Id. ¶ 37(d)-(e). The NFHA also designed and
implemented additional training to prepare its staff
“for the possibility of landlords and tenants calling
NFHA for additional information about insurance
discrimination” and prepared intake tools to handle an
increased volume of calls. Id. ¶ 37(f).
according to NFHA, these efforts “diverted scarce time
and resources away from routine tasks and activities.”
Id. ¶ 38. This required NFHA to “delay,
suspend, or even forego other existing programs or projects,
” including suspending planned initiatives to
investigate a different “potentially discriminatory
loan policy maintained by a specific national lender, ”
to analyze “the conduct of two banks in Kentucky that
appeared to be underserving African-American consumers, and
the unlawful redlining practices of two Tennessee
banks.” Id. ¶ 42.
2016, NFHA filed suit, and in August 2016, NFHA filed the
operative Amended Complaint. In the Amended Complaint, NFHA
alleges that Travelers' discriminatory policy has a
disparate impact on African-Americans and women and serves no
legitimate business interest, in violation of the Fair
Housing Act, 42 U.S.C. § 3601 et seq. NFHA also
asserts that Travelers' policy violates the D.C. Human
Rights Act's prohibition on housing discrimination on the
basis of race, sex, and source of income. See D.C.
Code § 2-1402.21 (2011). NFHA seeks declaratory and
injunctive relief as well as damages and attorney's fees.
In response, Travelers filed a motion to dismiss.
See Def.'s Mot. to Dismiss [ECF No. 14-1].
Travelers contends that NFHA does not have standing because
its only injuries are self-inflicted and because Travelers
has ceased using this policy. Travelers also argues that NFHA
has failed to plead sufficient facts to show a causal
connection between its policy and any disparate impact under
the heightened pleading standards for a prima facie
disparate-impact claim following Inclusive
Communities. Travelers contends that the DCHRA is not
applicable to insurance and that, even if it were, NFHA has
failed to state a claim for discrimination based on race,
sex, or source of income under state law for the same reasons
that it has failed to do so under federal law.
Court concludes that NFHA has standing to bring these claims,
and that NFHA has sufficiently pleaded a causal connection
between Travelers' policy and a disparate impact based on
race and sex to make out a prima facie claim under the FHA.
The Court also concludes that the DCHRA does apply to
habitational insurance and that NFHA has stated a claim under
that act as well. The Court will therefore deny
Travelers' motion to dismiss.
Rule of Civil Procedure 12(b)(6) requires dismissal of a
complaint that “fail[s] to state a claim upon which
relief can be granted.” Fed.R.Civ.P. 12(b)(6). At the
motion to dismiss stage, all of a plaintiff's factual
allegations are taken as true. Bell Atl. Corp., 550
U.S. at 555. In order to survive a Rule 12(b)(6) motion to
dismiss, a complaint's “[f]actual allegations must
be enough to raise a right to relief above the speculative
level on the assumption that all the allegations in the
complaint are true.” Id. (internal citation
omitted). The complaint “must contain sufficient
factual matter, accepted as true, to state a claim to relief
that is plausible on its face.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (internal quotation
marks omitted). On a Rule 12(b)(6) motion, the Court
generally may not consider documents or materials outside of
the pleadings without converting the motion into one for
summary judgment. See Kim v. United States, 632 F.3d
713, 719 (D.C. Cir. 2011).
considering a motion to dismiss for lack of standing under
Rule 12(b)(1), the Court likewise accepts the plaintiff's
allegations as true and draws all reasonable inferences in
its favor. See Settles v. U.S. Parole Comm'n,
429 F.3d 1098, 1107 (D.C. Cir. 2005). However, because the
Court has an “affirmative obligation to ensure that it
is acting within the scope” of its authority,
“‘plaintiff's factual allegations . . . will
bear closer scrutiny in resolving a 12(b)(1) motion' than
in resolving a 12(b)(6) motion for failure to state a
claim.” Grand Lodge of Fraternal Order of Police v.
Ashcroft, 185 F.Supp.2d 9, 13-14 (D.D.C. 2001) (quoting
5A Charles Alan Wright & Arthur R. Miller, Federal
Practice & Procedure § 1350 (2d ed. ...