Bourbeau et al v. Jonathan Woodner Company

Memorandum in opposition to re MOTION to Dismiss

D.D.C.March 23, 2007

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ____________________________________ ) SARAH BOURBEAU, et al. ) ) Plaintiffs, ) ) v. ) ) THE JONATHAN WOODNER CO., ) Civil Action No. 1:07CV00164 ) Judge: Paul L. Friedman ) ) Defendant. ) ____________________________________) PLAINTIFFS’ MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANT’S MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM Plaintiffs, Sarah Bourbeau and the Equal Rights Center (collectively “Plaintiffs”) hereby respectfully request that this Court deny Defendant, the Jonathan Woodner Company’s (“Woodner Company” or “Defendant”) Motion to Dismiss Complaint for Failure to State a Claim Upon Which Relief Can be Granted (hereinafter “Def. Mot.”). Plaintiff, Sarah Bourbeau, sought and was denied housing at Defendant’s apartment complex located at 3636-3640 16th St. NW, in Washington, D.C. (“The Woodner”). Ms. Bourbeau claims that her request for housing was rejected based on the source of the funds she intended to use to pay her monthly rent, i.e., housing choice vouchers. Complaint at ¶ 22. If her allegations are taken as true, Defendant’s actions violated the District of Columbia Human Rights Act, D.C. Code §§ 2-1401.01, et seq., (“DCHRA” or the “Act”), and Ms. Bourbeau is entitled to damages pursuant to the Act. Case 1:07-cv-00164-PLF Document 6 Filed 03/23/2007 Page 1 of 27 2 Plaintiff, the Equal Rights Center (the “ERC”), as part of a program initiated in response to complaints from District of Columbia residents that many area landlords refused to accept vouchers, conducted tests and confirmed that the Woodner maintains an express policy and practice of refusing to rent to housing choice voucher holders. Complaint at ¶ ¶ 17-21. As a result of Defendant’s discriminatory conduct, the ERC further claims that it “has been damaged by frustration of mission, and by having to divert resources that could have been used to provide counseling, education, and referral services to efforts to identify and counteract Defendants’ discriminatory policies and practices through testing, investigation, and litigation of these policies.” Complaint at ¶ 6. If the Equal Rights Center’s allegations are taken as true, it too is entitled to damages pursuant to the DCHRA. Accordingly, Defendant has not met its burden of showing that Plaintiffs can prove no set of facts which will entitle them to relief. Additionally, Defendant’s standing and preemption arguments are unavailing. Defendant asserts that, due to the fact that ERC’s charter lapsed for a period ending almost two years ago, the ERC lacks standing to bring the present case. Def. Mot. at 3. While the ERC did inadvertently allow its corporate charter to lapse during the period September 9, 2002 to April 25, 2005, and some of the testing data upon which its case against the Woodner Company is premised was obtained during that period, these facts do not impact ERC’s standing to sue the Woodner Company here for each of the following reasons: (1) The ERC’s April 25, 2005 reinstatement of its corporate charter had the affect of restoring the ERC’s rights, duties, and obligations as if the revocation never happened; (2) even if the ERC is not considered a corporation prior to its reinstatement in April 2005, it has also sued in the alternative as an unincorporated Case 1:07-cv-00164-PLF Document 6 Filed 03/23/2007 Page 2 of 27 3 association – an entity which, under the D.C. Human Rights Act, clearly had standing to bring claims; and (3) even if the ERC is somehow foreclosed from asserting that it was damaged during the revocation period (either as a reinstated corporation or an unincorporated association), it also expressly alleges that the Woodner’s discriminatory conduct, and therefore the ERC’s injuries, extend well beyond the revocation period. At a minimum, the ERC has alleged, and is entitled to prove at trial, that the Woodner Company’s discriminatory conduct continued after April 25, 2005. Under this set of facts the ERC is entitled to relief. The possibility that the ERC can carry its case in this way alone defeats Defendant’s motion to dismiss the ERC.1 Contrary to Defendant’s assertions, (Def. Mot. at 4-6), federal law governing voucher programs does not preclude anti-discrimination legislation at the local level. There is no provision in 42 U.S.C. § 1437 (Subchapter 1 – General Program of Assisted Housing) or any indication in its legislative history that would suggest that Congress intended to preempt state or local laws designed to prohibit source of income discrimination. Nor is there any basis for the Defendant’s claim that the DCHRA’s prohibition against “source of income” discrimination violates the DC Home Rule Act. Def. Mot. at 4-6. Plaintiffs are therefore not precluded from basing their claims on the DCHRA. Moreover, notwithstanding Defendant’s convoluted interpretation of certain technical amendments to the DCHRA, ( see Def. Mot. at 6-7), the Act has expressly prohibited source of income discrimination since it was passed in 1977. Thus, Plaintiffs’ 1 Defendant’s charter revocation arguments obviously do not impact Plaintiff, Sarah Bourbeau, who is suing in an individual capacity and whose claims are not impacted by any lapse in the ERC’s corporate charter. Case 1:07-cv-00164-PLF Document 6 Filed 03/23/2007 Page 3 of 27 4 claims have been well plead as a matter of law. Defendant’s motion must be denied in its entirety. I. BACKGROUND The DCHRA forbids landlords and other apartment owners from discriminating against housing applicants based on the source of funds to be used to pay rent. See D.C. Code §§ 2-1401.01, et seq. In clear violation of this law, the Woodner Company maintains a policy and practice of refusing to accept housing choice vouchers as a means of paying rent for certain of its qualifying units at The Woodner. Plaintiffs have encountered this discriminatory conduct firsthand. Complaint at ¶ ¶ 17-22. In 2002 and again in 2005, the ERC utilized testers posing as housing applicants with vouchers who contacted the Woodner seeking to rent apartments. These tests uncovered a consistent pattern of source of income discrimination by managers of The Woodner who refused to accept Housing Choice Vouchers in direct violation of the DCHRA. Complaint at ¶ ¶18-21. Meanwhile, on April 8, 2005, Sarah Bourbeau contacted The Woodner in an effort to secure housing. Despite having apartments available for rent at prices that fell within the voucher payment standards, an agent of The Woodner advised her that The Woodner would not accept her vouchers as payment. Complaint at ¶ 22. II. DISCUSSION A. Standard of Review “[A] court may dismiss a complaint only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations.” Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002) (quoting Hishon v. King & Case 1:07-cv-00164-PLF Document 6 Filed 03/23/2007 Page 4 of 27 5 Spalding, 467 U.S. 69, 73 (1984)). Plaintiffs’ factual allegations must be presumed true, i.e., they must receive every favorable inference that may be drawn from their allegations. Isenbarger, 463 F.Supp.2d at 17-18 (citing Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). “[T]he issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.” Scheuer, 416 U.S. at 236. The burden, therefore, is on the Defendant to show beyond doubt that Plaintiffs can prove no set of facts entitling them to relief. Isenbarger v. Farmer, 463 F.Supp.2d 13, 18 (D.D.C. 2006) (citing Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). Defendant cannot satisfy this heavy burden here. B. Defendant Cannot Use the Temporary Revocation of the ERC’s Charter to Insulate Itself from Its Own Illegal Acts. 1. The ERC Has Standing to Sue Defendant. Defendant’s argument that ERC lacks standing in the present case due to a lapse in its charter which was cured two years ago (Def. Mot. at 3-4), lacks merit. Standing under the DCHRA is coextensive with Article III standing under the Constitution. See Havens Realty Corp. v. Coleman, 455 U.S. 363, 379 (1982) (nonprofit had standing to bring discrimination suit on grounds that discrimination impaired nonprofit’s ability to fulfill its mission and drained its resources); Molovinsky v. Fair Employment Council of Greater Washington, Inc., 683 A.2d 142, 146 (D.C. 1996). Similarly, the ERC has standing to sue under the DCHRA because it has sufficiently pled that, as a result of Defendant’s conduct, its mission has been frustrated and it has had to divert resources to the investigation and correction of Defendant’s discriminatory conduct. Complaint at ¶ ¶ 26-27. Indeed, the D.C. Superior Court recently held that the ERC may be entitled to diversion damages under this line of cases. Equal Rights Center v. E & G, et al., Civil Case 1:07-cv-00164-PLF Document 6 Filed 03/23/2007 Page 5 of 27 6 Action No. 05-2761 (J. Fisher, May 3, 2006) (attached as Exhibit A, at Tr. 13). Clearly, ERC has standing to press the discrimination claims at issue here. 2. The Temporary and Inadvertent Lapse in ERC’s Corporate Charter Has No Bearing on ERC’s Standing to Sue Defendant. The ERC’s articles of incorporation were revoked from September 9, 2002 to April 25, 2005 due to a clerical error.2 Upon learning of its error, the ERC immediately filed the necessary papers to reinstate its charter. However, for the reasons discussed below, this accidental lapse — cured two years ago — does not mandate dismissal of the ERC’s claims. a. Reinstatement of ERC’s Corporate Charter Retroactively Cured any Disabilities Caused by the Lapse. D.C. Code § 29-301.90 provides that reinstatement “shall have the effect of annulling the revocation proceedings theretofore taken as to such corporation and such corporation shall have such powers, rights, duties, and obligations as it had at the time of the issuance of the proclamation with the same force and effect as to such corporation as if the proclamation had not been issued.” In other words, when the District of Columbia reinstated the ERC’s charter, the reinstatement also retroactively “cured” any actions it took during the revocation period. See D.C. Code § 29-301.90(a); see also York & York Construction Co. v. Alexander, 296 A.2d 710, 713 (D.C. 1972) (finding that a corporation should be retroactively relieved of all disabilities once the corporation has fulfilled its statutory obligations to the District); Columbia Institute of Radio and Television 2 From September 9, 2002 until April 25, 2005, the ERC’s Articles of Incorporation were revoked based on an inadvertent failure to file an administrative two-year report of domestic corporations with the District of Columbia. The ERC was first advised on April 20, 2005, that its Articles of Incorporation had been revoked. The ERC immediately filed the required reports, paid all fees and penalties due, and the revocation of its Articles of Incorporation was annulled on April 25, 2005, which had the effect of giving the Equal Rights Center such powers, rights, duties, and obligations as it had at the time of the issuance of the revocation with the same force and effect as if the revocation had not been issued. Complaint at ¶ 7. Case 1:07-cv-00164-PLF Document 6 Filed 03/23/2007 Page 6 of 27 7 Broadcasting Inc., v. Shehyn, 336 F.2d 974, 977 n. 7 (D.C. Cir. 1964) (holding that a corporation whose articles of incorporation had been revoked could bring suit on claims arising during the first three years of revocation). Thus, consistent with the plain language of the D.C. Corporations Code, the ERC’s lapsed charter was annulled, and as such, does not impede the ERC’s ability to prosecute this case. In some revocation and reinstatement cases, courts have found that it may, in limited circumstances, be unfair to permit a party to take advantage of the plain language of the statute. See Accurate Construction Co. v. Washington, 378 A.2d 681, 684 (D.C. 1977); Community Credit Union Services, Inc., et al. v. American Federation of Community Credit Unions, et al., 534 A.2d 331, 335 (D.C. 1987). These cases stand for the proposition that “a corporation may not take advantage of its revoked status, either to enjoy a benefit derived from acts taken during the period of revocation or to avoid liability for corporate debts incurred during that period.” Equal Rights Center v. Phifer Realty Inc., et al., Civil Action No. 05-7191 at 2 (J. Weisberg, Dec. 21, 2005) (Def. Mot. at Exhibit A); Equal Rights Center v. Horning Bros., et al., at 2. (J. Weisberg, Dec. 21, 2005) (Def. Mot. at Exhibit B). However these cases hold only that the reinstatement provisions will not be applied retroactively as required by the plain language of the Act when to do so would be clearly inequitable. Accurate Construction Co., 378 A.2d at 685. Such an analysis in the case sub judice, cannot lead to the conclusion that retroactive reinstatement would be somehow unfair to the Defendant because here, the ERC was neither shirking responsibility for corporate debt, nor seeking to avoid liability. Rather, it was injured by another party’s illegal conduct during the revocation period. These cases certainly do not forgive illegal conduct, where as here, the party seeking to take Case 1:07-cv-00164-PLF Document 6 Filed 03/23/2007 Page 7 of 27 8 advantage of revocation is the defendant bad-actor. At a minimum, however, the Accurate Construction line of cases require that a case-by-case equitable analysis be completed before finding whether or not dismissal is appropriate. Accurate Construction Co., 378 A.2d at 685. Equitable considerations in this case militate in favor of allowing revocation damages and most certainly against dismissal.3 In any event, in order for this Court to properly assess the equitable considerations in the instant case, it must engage in a more detailed factual analysis than is appropriate for a 12(b)(6) motion, where the only question before the court is whether ERC has alleged the basis for a colorable claim. Swierkiewicz, 534 U.S. at 514. b. At a Minimum the ERC May Pursue Claims and Damages Arising After Reinstatement of Its Corporate Charter. Despite the clear statutory language relating to retroactive reinstatement, Defendant insists that reinstatement here offers no curative effect, and therefore the ERC has no standing to pursue claims arising from testing it performed or injury it suffered during the revocation period. Def. Mot. at p. 3. Defendant cites four D.C. Superior Court decisions4 involving similar claims brought by the ERC against other landlords as support for this broad and erroneous proposition, and in so doing, grossly misstates the 3 Furthermore, the Accurate Construction line of cases is inapplicable to the present claim because corporate status is irrelevant for purposes of maintaining standing under the DCHRA, D.C. Code § § 2- 1403.16, 2-1401.02 (allowing “any person” to maintain a suit, including unincorporated organizations). See subsection c, below. 4 Equal Rights Center v. The Unnamed Co-Trustees of the Irrevocable Trust for Estelle Gelman, Civil Action No. 05-2776 (July 21, 2006, J. Rankin) (granting Defendant’s Renewed Motion to Dismiss); Equal Rights Center v. Phifer Realty, Inc., et al., Civil Action No. 05-7190 (Dec. 21, 2005, J. Weisberg) (partially granting Defendants’ Motion for Summary Judgment), and Equal Rights Center v. Horning Brothers, et al., Civil Act. No. 05-7191 (Dec. 21, 2005, J. Weisberg) (partially granting Defendants’ Motion for Summary Judgment); and Equal Rights Center v. E & G Group, et al., Civil Action No. 05-2761 (May 4, 2006, J. Fisher) (granting in part Defendants’ Motion for Summary Judgment, granting in part Plaintiff’s Motion for Summary Judgment, granting Third-Party Defendant’s Motion to Dismiss). Attached as Exhibits A-D of Def. Mot. Case 1:07-cv-00164-PLF Document 6 Filed 03/23/2007 Page 8 of 27 9 holdings in those cases. Interpreting the implications of the corporate revocation provisions of the D.C. Code, Superior Court Judges found in three of the cases cited by Defendant only that the ERC could not recover damages incurred during the revocation period. It did not find, as Defendant erroneously asserts, that the ERC lacked standing to sue.5 Indeed, in both Phifer Realty, Inc., et al., (Def. Mot. at Exhibit A) and Horning Bros., et al., (Def. Mot. at Exhibit B), Judge Weisberg specifically stated that “[a]lthough the court has ruled that [the ERC] may not claim damages allegedly incurred during its statutory ‘non-existence,’ it may be able to prove its claims and damages based on events occurring after reinstatement on April 25, 2005. To that extent Defendants’ motion to dismiss […] must be denied and Plaintiff is entitled to proceed and take discovery consistent with this ruling.” Phifer Realty, Inc. at p. 3 (Def. Mot. at Exhibit A); Horning Bros. at p. 3 (Def. Mot. at Exhibit B). Nor did Judge Weisberg’s decision preclude ERC from offering into evidence testing data accumulated during the period of revocation. Phifer Realty, Inc. at n. 2 (Def. Mot. at Exhibit A); Horning Bros at n. 2 (Def. Mot. at Exhibit B). In the instant case, the ERC’s claims should survive Defendant’s motion because, at a minimum, it has claimed that its injuries and Defendant’s illegal conduct extend far beyond the revocation period. Complaint at ¶ ¶ 24-27. Defendant’s reliance on Equal Rights Center v. The Unnamed Co-Trustees of the Irrevocable Trust for Estelle Gelman, Civil Action No. 05-2776 (July 21, 2006, J. Rankin) (Def. Mot. at Exhibit D) and Equal Rights Center v. E & G Group, et al., Civil 5 Defendant claims that in each of these cases, “the trial judge assigned to the case ruled that ERC had no standing to pursue any claim based on testing it performed, or injury it purported to suffer before it was reinstated.” Def. Mot. at 3. No such rulings were made in these cases. Case 1:07-cv-00164-PLF Document 6 Filed 03/23/2007 Page 9 of 27 10 Action No. 05-2761 (May 4, 2006, J. Fisher) (Def. Mot. at Exhibit C) is similarly misplaced. Gelman, a vague, one-line order with a handwritten note from Judge Rankin referencing the Horning Bros. decision as a basis for his dismissal of the case, is not sufficiently articulated to serve as relevant authority for this Court. In any event, the complaint in Gelman was filed during the revocation period which might explain the Court’s willingness to dismiss the case outright. In addition, in Gelman there were no allegations of continuing violations past the reinstatement period. 6 The complaint in this case suffers no such deficiency. E & G Group is also inapposite. The ERC retained its standing in that case despite the Court’s ruling disallowing damages incurred during the revocation period. Indeed, the ERC’s motion for partial summary judgment on the claim of source of income discrimination was granted in that case. E & G Group, et al., at 2 (Def. Mot. at Exhibit C). c. ERC Has Standing to Sue as an Unincorporated Association. Also distinguishing the instant case from Phifer, Horning, Gelman and E&G, supra, is the fact that here, the ERC has expressly pled claims in its capacity as an unincorporated association — the form it assumed when its articles of incorporation were revoked.7 Simply put, the ERC’s organizational form is irrelevant to its standing to sue under the DCHRA. It makes no difference under the applicable law whether the ERC 6 Notwithstanding the dismissal of the case, the parties settled the matter while appeal was pending with the defendants paying $125,000 in damages to the ERC and agreeing to broad injunctive relief including a prohibition on future source of income discrimination. 7 In his written opinions in Horning Bros. and Phifer, Judge Weisberg never considered whether the ERC was an unincorporated association during the period of its revocation and if so whether the ERC as the successor in interest to this unincorporated association could pursue damages incurred during the revocation period. Case 1:07-cv-00164-PLF Document 6 Filed 03/23/2007 Page 10 of 27 11 was a corporation or an unincorporated organization at the time of the discriminatory acts alleged in the Complaint. The defendant’s statement that during the period of revocation, that ERC had “only such authority as is prescribed by statute,” (Def. Mot. at 3), goes to the heart of why ERC does have standing in this case – because the DCHRA does not condition standing on corporate status. The DCHRA grants a private right of action to “any person claiming to be aggrieved” by a violation of the Act, D.C. Code, Section 2-1403.16, and defines “person” to include associations, organizations, unincorporated organizations, as well as assignees, agents or representatives of any of these. D.C. Code Section 2-1401.02 (21). As this expansive language suggests, the DCHRA is a broad remedial statute which must be “generously construed.” George Washington University v. District of Columbia Board of Zoning Adjustment, 831 A.2d 921, 939 (D.C.C.A. 2003) (citations omitted). The DCHRA is a “powerful, flexible and far reaching prohibition against discrimination of many kinds.” Executive Sandwich Shoppe v. Carr Realty Corp., 749 A.2d 724, 732 (citing Dean v. District of Columbia, 653 A.2d 307, 319 (D.C. 1995)). In its complaint, ERC noted that it “operated continuously since its founding as a non-profit corporation, or, in the alternative, has operated as a non-profit corporation except during the time of revocation from September 9, 2002 to April 25, 2005, during which time it operated as an organization and/or unincorporated association.” Complaint at ¶ 6. It further stated that ERC is currently the successor-in-interest to all rights, title, and interest in any and all claims and causes of action that were held by the ERC as an organization and/or unincorporated association. Id. Under the plain language of the DCHRA, these allegations are more than sufficient to establish that the ERC has standing Case 1:07-cv-00164-PLF Document 6 Filed 03/23/2007 Page 11 of 27 12 to pursue all of its claims in this matter regardless of whether, during the September 2002-April 2005 period it was an unincorporated association or a reinstated non-profit corporation. 3. ERC’s Claim is Not Precluded by the Superior Court’s Dismissal in Gelman. Finally, the defendant claims that collateral estoppel (more commonly referred to as issue preclusion) should bar ERC from bringing claims in this case because of the decision dismissing ERC’s complaint in Gelman. The only clue to the reasoning behind this single page Order is a handwritten note indicating that the Court “read and agrees with the rationale expressed by Judge Weisberg” in the Horning Bros. decision. Gelman at 1 (Def. Mot. at Exhibit D). This order provides no explanation for the dismissal, especially given the fact that the Horning Bros. decision specifically allowed ERC to proceed on its source of income discrimination claim. Horning Bros. at p. 3 (Def. Mot. at Exhibit B).8 The only possible interpretation of this Order consistent with the Horning Bros. decision is that the Court concluded that the ERC, which filed its suit during the revocation period, could not pursue such actions while it technically did not exist. Alternatively, the Court may have accepted the defendant’s allegations that it did not discriminate against voucher holders after April 25, 2005 – an assertion that this court cannot accept because it is required to accept the Plaintiff’s factual allegations as true. Isenbarger, 463 F.Supp.2d at 17-18. In the end, the Order itself sheds no light on the reasoning behind its conclusion, and as such, cannot bar the ERC’s case here. District of Columbia and federal law preclude “re-litigation of (1) an identical issue (2) that was fully and fairly litigated and (3) determined by a valid judgment on the 8 See discussion at p. 9 supra. Case 1:07-cv-00164-PLF Document 6 Filed 03/23/2007 Page 12 of 27 13 merits (4) in which the issue was essential.” Bryson v. Gere, 268 F.Supp.2d 46, 57 (D.D.C. 2003). Moreover, issue preclusion is not appropriate where, as here, the basis of the decision is so unclear that it is “uncertain whether the issue was actually and necessarily decided.” Connors v. Tanoma Mining Co., Inc., 953 F.2d 682, 684 (C.A.D.C. 1992). The Order to dismiss in Gelman contains no legal reasoning that this court can rely upon, beyond a handwritten note referencing the Horning Brothers case in which ERC’s claims were specifically and clearly not dismissed. This type of unclear reasoning cannot support the application of a doctrine that would completely bar the ERC from having its claims heard. See Connors, 953 F.3d at 684-85 (an “opaque judgment fails to preclude relitigation”) (citations omitted). Despite the Defendant’s attempts to confuse the issue, the ERC’s standing in this case is a relatively straightforward matter, and is not undermined by any of the D.C. Superior Court decisions cited by Defendant or the Accurate Construction line of cases. While these cases may raise evidentiary issues, or issues concerning damages, Defendant’s motion to dismiss cannot put those issues before the Court at this time. For the purposes of this motion, Defendant has not offered a single case, point of authority, or argument articulating why the ERC does not have standing to pursue claims arising from the Defendant’s ongoing discrimination against voucher holders. Contrarily, the authority cited by Defendant supports the ERC’s standing to sue in this case. C. Federal Law Does Not Preempt the D.C. Human Rights Act’s Prohibition on Source of Income Discrimination. Defendant argues that Federal law allows it to discriminate based on source of income, and that a construction of the D.C. Human Rights Act prohibiting such Case 1:07-cv-00164-PLF Document 6 Filed 03/23/2007 Page 13 of 27 14 discrimination would impermissibly “override” Federal law. However, this argument is barred by the express provisions of both the D.C. Human Rights Act, and the applicable federal regulations themselves. Moreover, courts examining this issue have uniformly rejected such arguments. Congress may preempt laws in three ways: express preemption, field preemption, or conflict preemption. Express preemption occurs when Congress, in plain language, indicates that state law is preempted. English v. Gen Elec. Co., 496 U.S. 72, 78 (1990). Field preemption occurs when state law attempts to regulate conduct in a field that Congress intended to occupy exclusively. Id. Conflict preemption arises where state law actually conflicts with federal law, either interfering with the full purpose and objectives of Congress, or making it impossible for a private party to comply with both federal and state requirements. Florida Lime and Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142- 43 (1963).9 In examining the specific question of preemption of local fair housing law by federal regulation of the voucher program, the Court in Gumanovsky v. Diagonal Realty, LLC, explained that “[p]reemption is not to be lightly presumed,” and further, “the presumption is that Congress did not intend to preempt the State’s power to regulate matters of local concern.” 803 N.Y.S. 2d 343, 349-50 (2005) (citations omitted). Defendant’s arguments fail under this legal framework. Although the D.C. Human Rights Act states that “[n]othing in this chapter shall be construed to supersede any Federal rule, regulation, or act,” (D.C. Code § 2- 9 The applicable standard for conflict preemption is whether compliance with both federal and local law is a “physical impossibility” such that some action required by federal law is rendered illegal by local law. Florida Lim, 373 U.S. at 142-43. State laws with more stringent or demanding requirements than their federal counterparts do not alone create “physical impossibility.” See California Fed’l Sav. And Loan Ass’n v. Guerra, 479 U.S. 272, 276, 290-91 (1987); see also Franklin Tower One, L.L.C. v. N.M., 725 A.2d 1104, 1112 (N.J. 1999) (observing that “[f[ederal courts have permitted states to impose greater restrictions than those imposed by Federal law”). Case 1:07-cv-00164-PLF Document 6 Filed 03/23/2007 Page 14 of 27 15 1401.03(c) (Supp. 2001)), the provisions of the D.C. Human rights Act at issue here do not purport to “supersede” any federal law.10 In a recent bench ruling in a case alleging source of income discrimination against participants in the housing voucher program, the Superior Court Judge in Equal Rights Center v. E&G Property Services, Inc., CA-05- 2761 denied the Defendant’s motion for summary judgement on the preemption issue, holding: I don’t believe that the Human Rights Act conflicts with federal law. I don’t think this either [sic] expressed preemption [sic], field preemption, or conflict preemption. The arguments are set forth in both parties’ pleadings, maybe more fully in the pleading of the plaintiff who argues strongly that there is no preemption, and I agree with that. I think this is an area that the actions of the District of Columbia government coextensive [sic] with the actions of the federal government and in no way conflict with it. In addition, virtually every court that has considered the issue has found no federal preemption of the Federal Voucher program because a local law makes participation mandatory.11 See Gumanovsky, 803 N.Y.S. 2d at 351-52; Commission on Human Rights and Opportunities v. Sullivan Assocs, 739 A.2d 238, 245 (Conn. 1999) (“The trial court concluded that nothing in the Federal program prevents a state from mandating participation. We agree with the trial court.”); Franklin Tower, 725 A.2d at 1113 (the New Jersey court held, “[n]othing in the statute . . . mandates that landlord participation in the Section 8 program be voluntary, nor is there any provision that prohibits states from mandating participation”); Attorney Gen. v. Brown, 511 N.E.2d 1103, 1107 (Mass 10 This provision is quite unremarkable. Under the Supremacy Clause of the Constitution, valid federal action supersedes conflicting state law. See Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 209 (1824). Moreover, it is the job of the courts, not the City Council, to determine whether there is any preemption. 11 See also Kouznetski v. Verga Assocs., N.Y.L.J., July 10, 2002, at 29, col. 2 (N.Y. Sup. Ct. Kings Co.); Stevenson v. San Francisco Housing Authority, 24 Cal App. 4th 269, 29 Cal Rptr. 2d 398 (1994), review denied, 1994 Cal. LEXIS 3908 (Cal. Jul. 14, 1994). Case 1:07-cv-00164-PLF Document 6 Filed 03/23/2007 Page 15 of 27 16 1987) (no preemption of Massachusetts statute which prohibited housing discrimination on the basis of Section 8 vouchers); Mott v. New York State Div. of Housing & Community Renewal, 211 A.D.2d 147, 628 N.Y.S.2d 712 (2d Dep’t), appeal dismissed, 86 N.Y.2d 836, 658 N.E.2d 222. 634 N.Y.S.2d 444 (1995). Therefore, the D.C. Human Rights Act’s provisions withstand any federal preemption arguments. The legal basis for this overwhelming weight of authority is clear. There is no evidence in the federal voucher statute (42 U.S.C. § 1437) or its legislative history, that Congress intended to preempt state or local laws. See Brown, 511 N.E.2d at 1105. The federal statute contains no express preemption clause. Sullivan Assocs., 739 A.2d at 246. To the contrary, federal regulations advise that no preemption was intended. See 24 C.F.R. § 982.53(d) (2005) (“[N]othing in part 982 is intended to pre-empt operation of State and local laws that prohibit discrimination against a Section 8 voucher-holder because of status as a Section 8 voucher-holder.”);12 Gumanovsky, 803 N.Y.S.2d at 351 (“In accord with the express terms of 24 C.F.R. § 982.53 (d), this Court is bound to determine that the anti-discrimination provisions of the City’s J-51 law are not preempted by the Federal Section 8 Statutory scheme”); Sullivan Assocs., 739 A.2d at 246 (the “Federal statute does not ‘occupy the field’ so comprehensively that states implicitly are prohibited from acting in the arena of low income housing assistance”). Since housing is a local matter that does not require uniform, national regulation, courts have held there is no Federal interest in maintaining uniformity in a national 12 Moreover, the Section 8 voucher program actually envisions state participation in implementing the program. See, e.g. 42 U.S.C. § 1437f (b) (authorizing secretary of HUD to enter into contracts with local public housing authorities); 42 U.S.C. § 11437f (d) (authorizing local public housing authorities to enter into housing payment contracts with landlords); accord Brown, 511 N.E.2d at 1105; Sullivan Assocs., 739 A.2d at 246. Case 1:07-cv-00164-PLF Document 6 Filed 03/23/2007 Page 16 of 27 17 market. In fact, Congress designed the voucher program to be implemented on state and local levels. See, e.g., Brown, 511 N.E.2d at 1106 (housing is an area of “local, rather than national, importance.”) Courts have further recognized that the goal of the Voucher program is to facilitate the provision of affordable, decent housing for those of low income. See Brown, 511 N.E.2d at 1106; Franklin Tower, 725 A.2d at 1111-12 (stating that “the heart of 42 U.S.C.A. §1473f is aiding low-income residents in obtaining affordable housing). They specifically note that the Voucher program was enacted “[f]or the purpose of aiding low-income families in obtaining a decent place to live and of promoting economically mixed housing [. . .]” 42 U.S.C. §1473f (a); see also 42 U.S.C. §1473 (declaration of policy) (2000). Courts thus tend to find that state “source of income” provisions that extend rental opportunities actually serve to advance the voucher program’s remedial purpose. Sullivan Assocs., 739 A.2d at 246. Defendant argues that Congress’ decision in 1996 to repeal a law, which required landlords who had previously accepted vouchers to accept other Section 8 tenants, somehow supports a preemption argument. Def. Mot., at 4-5. Courts have rejected this argument repeatedly. In Franklin Tower, the Court viewed Congress’s repeal of the statute as supporting the argument that there was no federal preemption. 725 A.2d at 1113 (finding no preemption and noting that “take one take all” provision was repealed because “it was having the unintended effect of discouraging landlords from joining the Section 8 program.”). See also Gumanovsky, 803 N.Y.S. 2d at 352-53 (rejecting Defendant’s exact argument). Defendant’s argument that it is permitted to discriminate against potential tenants Case 1:07-cv-00164-PLF Document 6 Filed 03/23/2007 Page 17 of 27 18 because the Human Rights Act only prohibits discrimination against voucher holders “who are accepted as tenants” (Def. Mot. at 4-5) is not tenable. Defendant relies on Peyton v. Reynolds, 955 F.2d 247 (4th Cir. 1992) 13 for this proposition, but Peyton makes no such distinction between voucher holders who are current tenants versus those who are not. That is, while the plaintiffs in Peyton were current tenants (who remained in the owner’s building when he terminated participation in the Section 8 Set-Aside Program and sought to enter new rental agreements under the Section 8 Housing Voucher Program), their status as current tenants had nothing to do with the Court’s finding that discrimination based on their status as voucher holders would have been unlawful. See Id. at 251. Defendant’s statement that the ERC is arguing for “special dispensation” for voucher holders rather than the nondiscrimination required by the Human Rights Act (Def. Mot., at 5-6) is inaccurate. One case Defendant cites to illustrate this argument, Duncan v. Children’s National Medical Center, 702 A.2d 207 (D.C. 1997), in fact emphasizes that refusal to rent to voucher holders is precisely the type of discrimination that is within the scope of the Human Rights Act’s prohibitions. In this employment discrimination case, the plaintiff cited the D.C. Human Rights Act as the source of a “public policy of not exposing pregnant women to radiation” and the Court concluded that the Human Rights Act “does not create a special dispensation for pregnant women, but only requires that they not be discriminated against nor denied employment due to 13 The case involved a claim that a housing owner who refused to certify compliance before entering a housing voucher contract and refused to enter into a one year contract term had violated 42.U.S.C.1437f(t), which prohibits an owner who has entered certain contracts for housing assistance payments, from leasing to a voucher holder and refusing to enter a voucher contract if the proximate cause of such refusal is the status of the tenant as a voucher holder. Peyton, 955 F.2d at 248. Case 1:07-cv-00164-PLF Document 6 Filed 03/23/2007 Page 18 of 27 19 pregnancy.” Id. at 210. Similarly, this Court should find that the Human Rights Act requires that potential tenants not be discriminated against nor denied housing due to their status as voucher holders. D. The D.C. Home Rule Act Does Not Prevent D.C. From Requiring Landlords To Participate In the Housing Voucher Program. Defendant argues that under the District of Columbia Home Rule Act, D.C. Code sec. 1-206.02(a)(3)(2001.ed), the City Council lacks the authority to proscribe discrimination against voucher holders. Such a prohibition, Defendant contends, would impermissibly alter the federal voucher program (by making a voluntary program mandatory for landlords renting low and moderately priced housing units) which is in effect in other jurisdictions as well as in the District. However, the antidiscrimination provisions of the D.C. Human Rights Act do not alter or amend the federal voucher program in a way that violates the Home Rule Act. Determining whether the D.C. Council has exceeded its authority under the Home Rule Act is a question of statutory interpretation which requires the court to focus on the intent of Congress. U.S. v. Alston, 580 A.2d 587, 597 (D.C. 1990) (citing District of Columbia v. Washington Home Ownership Council, Inc., 415 A.2d 1349 at 1351 (D.C.1980)). Congress did not intend to use the Home Rule Act to prohibit local regulation that is specifically allowed by a federal statute. Such regulation does not alter a federal statute in the way the Home Rule Act prohibits. Rather, it administers the federal statute locally in the way Congress intended. The federal voucher program was designed to be implemented on both state and local levels. There is no suggestion in the plain language of the statute or legislative history that Congress intended to preclude State regulation. See New York State Dep’t of Case 1:07-cv-00164-PLF Document 6 Filed 03/23/2007 Page 19 of 27 20 Social Servs. v. Dublino. 413 U.S. 405, 415 (1973). Courts addressing this issue have found that “there is nothing in the federal statute that prohibits state regulation. In fact, the Federal statute envisions participation by states in the implementation of the program.” Brown, 511 N.E.2d at 1105-1106. Indeed, under the federal legislative scheme, state and local governments are required to flesh out the details of the voucher program. See 24 C.F.R. § 982.1(a)(1) (2005). The voucher program is “generally administered by state and local government entities called public housing agencies (PHAs). HUD provides housing assistance funds to the PHA. HUD also provides funds for PHA administration of the programs.” Id. These state and local entities are wholly responsible for program implementation, ranging from the approval of units, to entering contracts with owners to make rental subsidy payments, to the creation of policies for the admission of applicants. See generally 24 C.F.R. § 982 (2005). The federal mandate that PHAs “affirmatively further fair housing in the administration of the program”14 requires that circumstances under which landlords are allowed or required to participate in the program are also locally regulated. Thus, because the antidiscrimination provisions of the D.C. Human Rights Act were in fact contemplated by the federal voucher statute, they do not alter or amend it in any way that would violate the Home Rule Act. Defendant’s reliance on Brizzil v. District of Columbia Board of Election and Ethics 911. A. 2d 1212 (DC 2006) is misplaced. The facts in Brizzil are far different than those present here. In Brizzil, the Court issued a decision interpreting a provision of the D.C. Home Rule Act governing the authority of the D.C. City Council or the citizens of the District, by initiative, to enact laws which have the effect of amending or repealing 14 24 C.F.R. § 982.53 (b)(2). Case 1:07-cv-00164-PLF Document 6 Filed 03/23/2007 Page 20 of 27 21 federal laws which apply in the District. The court rejected an initiative which would have allowed the operation of certain “gambling devices” in the District because a federal law, the Johnston Act, makes it unlawful to “manufacture, repair, sell, transport, process, or use any gambling device” within D.C. and certain possessions and territories of the United States. Id. at 1216. The Court held that “although the Council may repeal a Congressionally-enacted statute limited in its application to the District of Columbia, the Council may not repeal a Federal statute of broader application.” Id. Unlike Brizzil, there is no attempt here to repeal a federal statute. As discussed above, the requirement that D.C. landlords not discriminate against voucher holders does not supersede or conflict with the federal law creating the voucher program. The antidiscrimination provisions of the D.C. Human Rights Act were contemplated by the federal voucher statute and therefore, are not prohibited by the Home Rule Act. E. The DCHRA Has Prohibited “Source of Income” Discrimination Since 1977. The DCHRA has expressly prohibited discrimination on the basis of, among other things, “source of income,” since it was passed in 1977. D.C. Code §2-1402.21(a). “Source of income” has always been defined to include money from “federal payments,” D.C. Code § 2-1401.02(29). The statutory language does not enumerate any of the “federal payments” that are undeniably a “source of income,” such as Social Security payments, Temporary Aid to Need Family (“TANF”) payments, or Aid to Families with Dependent Children (“AFDC”) payments. See Bennett v. Arkansas, 485 U.S. 395, 197- 198 (1988) (social security benefits are federal payments); Arizona v. Thompson, 281 F.3d 248, 258 n.15, 350 U.S. App. D.C. 141, 151 n.15 (D.C. Cir. 2002) (TANF and AFDC are federal payments). Nor does the statute enumerate the vast number of specific Case 1:07-cv-00164-PLF Document 6 Filed 03/23/2007 Page 21 of 27 22 examples of “court ordered payments” (such as alimony, child support, or restitution) that are clearly protected sources of income. See D.C. Code § 2-1401.02(20). The D.C. Council, not unreasonably, chose to identify categories of sources of income and did not attempt to list the multitude of specific sources. The D.C. Office of Human Rights, the agency charged with enforcement of the DCHRA, has previously ruled that the refusal to accept housing vouchers violates the DCHRA’s prohibition on discrimination based on source of income before 2005. Equal Rights Center v. Long & Foster, No. 05-063-H (O.H.R. Nov. 28, 2005) (finding probable cause to believe that respondents engaged in discriminatory action from 2003 through 2005 on the basis of source of income (use of Section 8 housing vouchers)); Equal Rights Center v. Weichert Realtors, No. 05-0026-H (O.H.R. Jan. 3, 2006) (finding probable cause to believe that respondents engaged from 2003 through 2005 in a “discriminatory practice” on the basis of source of income (use of Section 8 vouchers)). Defendant chooses to ignore both the plain language of the DCHRA and the decisions of the D.C. Office of Human Rights, and instead argues that the District of Columbia did not consider vouchers to be federal payments until the passage of the Low- Income Housing Preservation Act (“2002 Legislation”), D.C. Code § 42-2851.01 et seq, and the Technical Amendments Act of 2004 (“2004 Legislation”). D.C. Law 15-453. These acts, which were enacted long after the DCHRA, did nothing to substantively change the scope of Sections 2-1402(a) or 2-1401.02(20). In the Low Income Housing Preservation and Protection Act of 2002, the D.C. Council added the following language to Section 42-2851.06 of the D.C. Code: The monetary assistance provided to an owner of a housing accommodation under section 8 of the United States Housing Act of 1937, Case 1:07-cv-00164-PLF Document 6 Filed 03/23/2007 Page 22 of 27 23 either directly or through a tenant, shall be considered income and a source of income under section 231 (sic) of the District of Columbia Human Rights Act, effective December 13, 1977 (D.C. Law 2-48, D.C. Official Code § 2-1402.319 [sic]). 2002 Legislation, § 206(b), 49 D.C. Reg. 1468, 1490 (Feb. 22, 2002) codified at D.C. Code § 42-2851.06. In introducing this bill, Councilman Evans (chair of the Finance Committee), said: “[t]his title, importantly, clarifies that Section 8 assistance is considered income, and a source of income, for purposes of the District’s non-discrimination law.” Committee Report on Bill 14-183. This intent to merely “clarify” existing law was confirmed in the “Section by Section Analysis” of the Committee Report, which stated that “[this section] clarifies that Section 8 assistance is considered income, and a source of income, for the purposes of the Districts non-discrimination law.” Id. The D.C. Superior Court agrees with this reading of the legislative history. Equal Rights Center v. E & G, et al., Civil Action No. 05-2761 (May 3, 2006 bench ruling of J. Fisher at 16) (Exhibit 1 at 4). The D.C. Court of Appeals has held that “clarifying” legislation is not a substantive change in law. See Needle v. Hoyte, 644 A.2d 1369, 1372-73 (D.C. 1994) (court will not view amendment to mean that prior version of statute differed from new version where legislative history indicated that it was meant to clarify and not change previous law); see also Revithes v. District of Columbia Rental Housing Comm’n, 536 A.2d 1007, 1013 n.18 (D.C. 1987) (resolution of issue under 1977 Act applies to 1980 and 1985 Acts where only amendment was in 1985 and was for clarifying purposes only; 1A Norman J. Singer, Sutherland Statutory Construction § 22:30, at 366 (6th ed. 2002) (“Although generally, a statutory amendment is presumed to have been intended to change the law, the legislative history may indicate that the amendment was intended Case 1:07-cv-00164-PLF Document 6 Filed 03/23/2007 Page 23 of 27 24 instead as a clarification.”). Therefore it is clear that prior to 2002, based upon the plain language of the statue and the legislative history, vouchers were already considered a “source of income” under the D.C. Human Rights Act. The 2002 legislation did nothing to change that.15 Discriminating against voucher holders, as Defendant has done here, has been considered source of income discrimination under the DCHRA since well before 2005. Neither the D.C. Council’s action to clarify the law in 2002, nor the technical amendments made in 2004 made any substantive changes. Defendant’s augment that the DCHRA does not prohibit discrimination based on vouchers is simply contrary to the law. 15 When it was reported out of committee to the full Council, the text of the 2002 Legislation, which “clarified” that Vouchers were to be considered a “source of income,” erroneously referred to Section 231 (Public Accommodations) of the DCHRA, rather than Section 221 (Housing) as was intended by the Council. See D.C. Act 14-26, § 292(c); 49 D.C. Reg. 1468, 1490 (Feb. 22, 2002). The placement of this provision in the Public Accommodations section of the DCHRA was clearly an error in that vouchers are by definition useable only to pay for housing, and have no applicability or relationship to public accommodations whatsoever. The D.C. Council recognized its error and corrected it in 2004 with the Technical Amendments Act of 2004. In the 2004 Legislation, the Council acknowledged its error, and appropriately transferred its 2002 clarification regarding source of income to the Housing and Commercial Space section from the Public Accommodations section. D.C. Act 15-770, § 8; 52 D.C. Reg. 2638, 2645 (Mar. 18, 2005). Importantly, however, none of these legislative machinations changed the original language defining “source of income” as including “federal payments.” Courts have made clear that technical amendments such as the 2004 Legislation are not substantive changes in the law. See Drax v. Ashcroft, 178 F. Supp. 2d 296, 308 (E.D.N.Y. 2001) (“Technical amendments are by nature non-substantive”); Knight Transp., Inc. v. Arizona Dep’t of Transp., 203 Ariz. 447, 452, 55 P.3d 790, 795 (Ariz. Ct. App. 2002) (“‘Technical’ has been defined as ‘formal rather than practical.’ In our view, a technical change or rewrite connotes a non-substantive or merely formal change. ‘[A] court will not treat as mandatory an act which does not purport to be amendatory.’ State v. Lammie, 164 Ariz. 377, 379, 793 P.2d 134, 136 (App. 1990). We decline to read into a mere ‘technical re-write’ separating the statutes into two articles a legislative intent to change the substantive law.”); Pollio v. Planning Comm’n, 652 A.2d 1026, 1032 (Conn. 1995) (“Technical amendments are not generally intended to effect substantive changes in the law.”). Case 1:07-cv-00164-PLF Document 6 Filed 03/23/2007 Page 24 of 27 25 CONCLUSION Based on the foregoing, Plaintiffs respectfully request that this Court deny Defendant’s Motion to Dismiss For Failure to State a Claim. Respectfully Submitted, Robert M. Bruskin (D.C. Bar No. 164293) Isabelle M. Thabault (D.C. Bar No. 318931) Washington Lawyers’ Committee For Civil Rights and Urban Affairs 11 Dupont Circle, N.W., Suite 400 Washington, D.C. 20036 Tel: 202-319-1000 / Fax: 202-319-1010 Bob_Bruskin@washlaw.org isabelle_thabault@washlaw.org Thomas A. Reed (D.C. Bar No. 435258) Jonathan Smith (D.C. Bar No. 500145) Jenée Desmond-Harris Kirkpatrick & Lockhart Preston Gates Ellis LLP 1735 New York Ave., N.W., Suite 500 Washington, DC 200006 Tel: 202-661-1700 / Fax: 202-331-1024 thomas.reed@klgates.com DATED: March 23, 2007 Case 1:07-cv-00164-PLF Document 6 Filed 03/23/2007 Page 25 of 27 26 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on this 23rd day of March, 2007, I caused a true and correct copy of the foregoing Plaintiff’s Memorandum of Points and Authorities in Opposition to Defendant’s Motion to Dismiss for Failure to State a Claim to be served electronically and by first class mail postage prepaid on the following attorney of record: Roger D. Luchs, Esq. Greenstein DeLorme & Luchs, P.C. 1620 L Street, N.W., Suite 900 Washington, D.C. 20036-5606 rdl@gdllaw.com ________________________________ Thomas A. Reed (D.C. Bar No. 435258) Jonathan Smith (D.C. Bar No. 500145) Jenée Desmond-Harris Kirkpatrick & Lockhart Preston Gates Ellis 1735 New York Ave., N.W., Suite 500 Washington, DC 200006 Tel: 202-661-1700 / Fax: 202-331-1024 thomas.reed@klgates.com Case 1:07-cv-00164-PLF Document 6 Filed 03/23/2007 Page 26 of 27 27 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ____________________________________ ) SARAH BOURBEAU, et al. ) ) Plaintiffs, ) ) v. ) ) THE JONATHAN WOODNER CO., ) Civil Action No. 1:07CV00164 ) Judge: Paul L. Friedman ) ) Defendant. ) ____________________________________) [PROPOSED] ORDER Having read and considered Defendant’s Motion to Dismiss for Failure to State a Claim, the Memorandum of Points and Authorities in Support thereof, and Plaintiffs’ Memorandum of Points and Authorities in Opposition, and any reply thereto; it is by the Court this _____ day of ________, 2007, hereby ORDERED: that Defendant’s Motion to Dismiss for Failure to State a Claim is DENIED. ________________________ The Hon. Paul L. Friedman Judge, United States District Court for the District of Columbia Case 1:07-cv-00164-PLF Document 6 Filed 03/23/2007 Page 27 of 27