Fair Housing Center of Washington v. Breier-Scheetz Properties, Llc et al

MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM

W.D. Wash.December 2, 2016

GEORGE T. HUNTER ATTORNEY AT LAW DEFENDANTS' MOTION TO DISMISS 5900 48th Ave. South (2:16-cv-00922 TSZ) - Page 1 of 26 Seattle, WA 98118 206.851.7700 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 HON. THOMAS S. ZILLY UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE FAIR HOUSING CENTER OF WASHINGTON, Plaintiff, v. BREIR-SCHEETZ PROPERTIES, LLC, a Washington corporation; and FREDERICK BREIER-SCHEETZ, an individual, Defendants. NO: 2:16-cv-00922 TSZ DEFENDANTS' MOTION TO DISMISS NOTE ON MOTION CALENDAR: January 13, 2017 Case 2:16-cv-00922-TSZ Document 16 Filed 12/02/16 Page 1 of 26 GEORGE T. HUNTER ATTORNEY AT LAW DEFENDANTS' MOTION TO DISMISS 5900 48th Ave. South (2:16-cv-00922 TSZ) - Page 2 of 26 Seattle, WA 98118 206.851.7700 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTRODUCTION Pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure (FRCP) Defendants Breier- Scheetz Properties, LLC and Frederick Scheetz seek dismissal with prejudice of Plaintiff Fair Housing Center of Washington's (FHCW's) claims of discrimination based on familial status. Because FHCW's complaint is unclear about whether FHCW seeks to recover for alleged disparate treatment or alleged disparate impact, this motion addresses the pleading requirements that a plaintiff must satisfy as to both forms of discrimination in order to survive a 12(b)(6) motion to dismiss. For the reasons articulated below, Defendants submit that FHCW's complaint fails to satisfy those requirements. THE IQBAL/TWOMBLY STANDARD FOR SURVIVING A 12(b)(6) MOTION TO DISMISS FRCP Rule 8(a)(2) provides: (a) CLAIM FOR RELIEF. A pleading that states a claim for relief must contain: (2) a short and plain statement of the claim showing that the pleader is entitled to relief; In Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007), the U.S. Supreme Court held that Rule 8(a)(2) requires the plaintiff to set forth "only enough facts to state a claim to relief that is plausible on its face." Thus, while a court must, for the purpose of considering a 12(b)(6) motion, accept as true factual allegations set forth in a complaint, conclusory allegations masquerading as facts are not entitled to such treatment. Id. at 556. Further, a court does not have to accept as true "allegations that are contradicted by documents referenced in the complaint. See Steckman v. Hart Brewing, Inc., 143 F.3d 1293, 1295- 1296 (9th Cir. 1998)." Turkle Trust v. Wells Fargo & Co., 602 Fed. Appx. 360, 362 (9th Cir. 2015). Case 2:16-cv-00922-TSZ Document 16 Filed 12/02/16 Page 2 of 26 GEORGE T. HUNTER ATTORNEY AT LAW DEFENDANTS' MOTION TO DISMISS 5900 48th Ave. South (2:16-cv-00922 TSZ) - Page 3 of 26 Seattle, WA 98118 206.851.7700 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 As to the meaning of the "plausibility" requirement, in Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009), the Supreme Court elaborated: Determining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. [citation omitted]. But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged--but it has not "show[n]"-"that the pleader is entitled to relief." Fed. Rule Civ. Proc. 8(a)(2). ELEMENTS OF DISPARATE TREATMENT CLAIMS UNDER THE FAIR HOUSING ACT In analyzing discrimination claims arising under the Fair Housing Act, 42 U.S.C. §3601, et seq., courts look for guidance to cases assessing employment discrimination claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C. §2000e, et seq. (Title VII). Gamble v. City of Escondido, 104 F.3d 300, 304 (9th Cir. 1997). Employment discrimination claims arising under Title VII are of two types: (a) the result of an intent to discriminate based on animus toward a person or persons in a protected class or (b) an adverse impact on a protected class arising out of a facially neutral policy or practice. In Griggs v. Duke Power Co., 401 U.S. 424, 431, 91 S. Ct. 849, 28 L.Ed.2d 158 (1971), the Supreme Court explained: "[ Title VII] proscribes not only overt discrimination but also practices that are fair in form, but discriminatory in operation." Title VII and, by extension, the Fair Housing Act prohibit overt discrimination against protected individuals and "fair in form" discrimination against protected classes of persons, as the Supreme Court explained in Connecticut v. Teal, 457 U.S. 440, 457, 102 S. Ct. 2525, 73 L. Ed.2d 2525 (1982): Thus, while disparate-treatment cases focus on the way in which an individual has been treated, disparate-impact cases are concerned with the protected group. This key distinction was explained in Furnco Construction Corp. v. Waters, 438 U.S. 567, 581-582 (1978) (MARSHALL, J., concurring in part): "It is well established under Title VII that claims of employment discrimination because of race may arise in two different ways. Teamsters v. United States, 431 U.S. 324, 335-336, n. 15 (1977). An individual may allege that he has been subjected to 'disparate treatment' Case 2:16-cv-00922-TSZ Document 16 Filed 12/02/16 Page 3 of 26 GEORGE T. HUNTER ATTORNEY AT LAW DEFENDANTS' MOTION TO DISMISS 5900 48th Ave. South (2:16-cv-00922 TSZ) - Page 4 of 26 Seattle, WA 98118 206.851.7700 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 because of his race, or that he has been the victim of a facially neutral practice having a 'disparate impact' on his racial group." 1 The Fair Housing Act's language that proscribes discrimination is, arguably, not as clear as that of Title VII in barring those two forms of discrimination. In Texas Dep't of Housing and Community Affairs v. Inclusive Communities Project, Inc., ___U.S.___, 135 S. Ct. 2507, 2522, 192 L. Ed.2d 514 (2015), however, the U.S. Supreme Court eliminated any doubt as to proscribed discrimination under the Fair Housing Act by holding that the statute prohibits disparate impact as well as disparate treatment discrimination. At the same time the Supreme Court cautioned: Courts must examine with care whether a plaintiff has made out a prima facie case of disparate impact . . .. A plaintiff who fails to allege facts at the pleading stage or produce statistical evidence demonstrating a causal connection cannot make out a prima facie case of disparate impact. Id. at 2523. In Swierkiewicz v. Sorema N.A., 534 U.S. 506, 510, 122 S. Ct. 992, 152 L. Ed. 2d 1 (2002), the U. S Supreme Court ruled that in a disparate treatment case arising under Title VII a plaintiff need not plead factual allegations that if true would establish a prima facie case. In Bell Atlantic Corp. v. Twombly, 550 U.S. at 569-570, the Supreme Court explained that the heightened pleading standard adopted in that case did not alter the teaching of Swierkiewicz. In Sheppard v. Daniel Evans & Assoc., 694 F.3d 1045, 1050 n.2 (9th Cir. 2012), a disparate treatment discrimination case arising under the Age Discrimination in Employment Act, the Ninth Circuit adhered to the teaching of Swierkiewicz. Thus, in a disparate treatment discrimination case under the Fair Housing Act a plaintiff must allege the statutory basis for his or her claims of intentional discrimination and the "factual predicate of those claims." Lindsay v. Yates, 498 F.3d 434, 440 (6th Cir. 2007). Case 2:16-cv-00922-TSZ Document 16 Filed 12/02/16 Page 4 of 26 GEORGE T. HUNTER ATTORNEY AT LAW DEFENDANTS' MOTION TO DISMISS 5900 48th Ave. South (2:16-cv-00922 TSZ) - Page 5 of 26 Seattle, WA 98118 206.851.7700 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 In Lindsay an African-American couple alleged a violation of the Fair Housing Act, specifically 42 U.S.C. §3604. As to the factual predicate for that claim, the plaintiffs alleged the following: They had gone through a realtor to look for a home to purchase. After finding a suitable house, they communicated to the realtor their intent to purchase. Subsequently, they signed a purchase and sale agreement to purchase the house and paid a $500 earnest money deposit. The next day, after learning that the couple were Black, the owner communicated that the house was off the market. Consistent with Swierkiewicz the Sixth Circuit ruled that those factual allegations satisfied the "factual predicate" pleading requirement for a disparate treatment race discrimination claim under 42 U.S.C. §3604. Id. at 436-437, 441. Although the plaintiffs in Lindsay pursued a disparate treatment claim, the evidence did not involve an explicit comparison in treatment of the plaintiffs and some specified non-protected person(s). As Kevin Gilmartin, Identifying Similarly Situated Employees in Employment Discrimination Cases, 31 JURIMETRICS 429 (1991) (Gilmartin) explains, citing BARBARA L. SCHLEI AND & PAUL GROSSMAN, EMPLOYMENT DISCRIMINATION LAW 15 (2d ed. 1983), however: Many, if not most, Title VII [fn. omitted] employment discrimination cases involve claims of disparate treatment.[fn. omitted] Statistical proof of disparate treatment requires a comparison of similarly situated members of contrasting groups: The key [to statistical evidence of discrimination] is usually comparative evidence. The plaintiff will normally offer a comparison of treatment between protected group members and majority group members, contending that comparably situated protected group members were treated less favorably than majority group members. The defendant will normally contend that the comparisons made by the plaintiff are inappropriate because the individuals are not comparably situated, and/or offer examples of allegedly comparably situated protected group members and majority group members who received similar treatment. In all instances of comparative evidence, the critical question is whether the persons sought to be compared by either the plaintiff or the defendant are in fact in a comparable factual setting. 3 Case 2:16-cv-00922-TSZ Document 16 Filed 12/02/16 Page 5 of 26 GEORGE T. HUNTER ATTORNEY AT LAW DEFENDANTS' MOTION TO DISMISS 5900 48th Ave. South (2:16-cv-00922 TSZ) - Page 6 of 26 Seattle, WA 98118 206.851.7700 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Citing Gilmartin, the Ninth Circuit has held that "statistical evidence [of disparate impact], however, must be drawn from appropriate comparison pools." Hemmings v. Tidyman's Inc., 285 F.3d 1174, 1184-1185 (9th Cir. 2002). To borrow from Gilmartin, the appropriate comparison pools necessarily encompass classes of persons in a "comparable factual setting." Determining a "comparable factual setting" is not necessarily a straightforward exercise. In, for example, a plaintiff class whose members allege that they were subjected to discriminatory disparate treatment in the form of not being selected for a promotion because of race, the class would need to point for the purpose of comparison to a group of persons who possessed the same qualifications for the promotion that the plaintiff class members possessed, received promotions to comparable positions, and were outside the protected class. It is not necessary that all members of the two groups of employees have identical qualifications. Instead, the distribution of qualifications must be comparable. Gilmartin at 430. Statistical analyses of the two groups for the purpose of comparison depend on the care given to the construction of the pool from which the groups come. That is, the comparison pool must be limited to persons who are in all relevant respects, except protected status, similarly situated. Gilmartin explains: To perform simple [statistical] analyses of selection rates to support or refute the allegations, the class members and non-class members being compared must be similarly situated, that is, the pools from which the selections were made should be constructed such that relevant eligibility criteria, qualifications, and circumstances are similar for the two groups. The more carefully the pools are constructed, the more valid the analyses and conclusions will be. Gilmartin at 430. Unless the groups being compared are comparable on all relevant dimensions except protected status, statistical analyses for differences are likely to be invalid: So to perform valid analyses of the selection rates of men and women, or blacks and whites across many separate selection events, it may be necessary to construct the pools in a number of different ways to take into account the differing circumstances of the selection events. This task may seem daunting, but to the extent that the Case 2:16-cv-00922-TSZ Document 16 Filed 12/02/16 Page 6 of 26 GEORGE T. HUNTER ATTORNEY AT LAW DEFENDANTS' MOTION TO DISMISS 5900 48th Ave. South (2:16-cv-00922 TSZ) - Page 7 of 26 Seattle, WA 98118 206.851.7700 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 pools are not defined properly, the analyses and any conclusions drawn from them may be invalid. Gilmartin at 431. Thus class based disparate treatment claims relying on statistical analyses must utilize appropriate comparably situated groups for comparison, as Gilmartin explains. In contrast, a defendant landlord's explicit "adults only" policy may constitute direct evidence that supports a claim of disparate treatment based on familial status under the Fair Housing Act. See, e.g., United States v. Lepore, 816 F. Supp. 1011, 1018-1021 (M.D. Pa. 1991). In the wake of Twombly and Iqbal considerable debate exists about the reach of Swierkiewicz in disparate impact discrimination cases as, for example, Joseph A. Seiner, Plausibility and Disparate Impact, 64 HASTINGS L. J. 287, 298-300 (2013), discusses. Prof. Seiner explains that there is no consensus among the lower courts as to what a plaintiff must plead in a disparate impact case arising under Title VII in order to satisfy the "plausibility" requirement, irrespective of the considerable uniformity among the several circuits regarding the analytical framework for disparate impact Title VII cases. A common version of that framework comprises three elements: First, the plaintiff must identify a facially neutral policy or practice that causes a disproportionate impact on the protected class of which he or she is a member. Implicit in that formulation is the necessity for a comparison: The facially neutral policy or practice must cause a disproportionate impact on members of the protected class compared to the resulting impact on some other, non-protected, group. Thus, the need for constructing appropriate comparison pools in class based disparate treatment employment cases applies to disparate impact cases as well. Griggs v. Duke Power Co., 401 U.S. 424, 91 S. Ct. 849, 28 L. Ed.2d 158 (1971), the seminal disparate impact case under Title VII, provides a starting point for understanding the statistical analysis of groups, drawn from an appropriately constructed comparison pool, that a plaintiff must undertake in order to show "disparate impact" discrimination under Title VII. Case 2:16-cv-00922-TSZ Document 16 Filed 12/02/16 Page 7 of 26 GEORGE T. HUNTER ATTORNEY AT LAW DEFENDANTS' MOTION TO DISMISS 5900 48th Ave. South (2:16-cv-00922 TSZ) - Page 8 of 26 Seattle, WA 98118 206.851.7700 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 At issue in Griggs was an employer's use of two qualifying mechanisms for determining promotions for employees at the employer's Dan River Stream Station (Power Station) in North Carolina. In order to receive a promotion employees had to have (a) completed high school and (b) achieved a passing score on a battery of standardized intelligence tests. In assessing the plaintiffs' disparate impact claim the Supreme Court invoked two comparisons. The first of the two focused on the pool of potential candidates for promotion, i.e., 95 employees at the Power Station, all of whom were male, 81 of whom were Caucasian, and 14 of whom were African American. 58% of the Caucasians at the Power Station and 6% of the African American employees passed the intelligence tests. Thus, the comparison was of the proportion of members of the protected class at the Power Station who passed the tests relative to the proportion of members of the non-protected class who passed the test. Because the comparison involved the entire population of potential candidates at the Power Station, there could be no uncertainty as to whether there was actually a difference in pass rates for the protected class compared to the non-protected class. Id. at 426 - 428, 430 n. 6. The second comparison utilized U.S. census data for high school completion proportions for both Caucasian males and African American males in North Carolina. Id. at 430 n. 6. The U.S. Census Bureau utilizes sampling to collect such data. Consequently, sample data are estimates accompanied by a sampling error, the meaning and use of which the Census Bureau explains on its website: https://www.census.gov/programs-surveys/acs/methodology/sample-size- and-data-quality/sample-size-definitions.html. Thus, for example, the true value of high school completion rates for Caucasian males and African American males in North Carolina reported by the U.S. Census Bureau, and referenced in Griggs, would fall within ranges defined by the value of the estimate bounded by a margin of error. As a result, determining whether an observed Case 2:16-cv-00922-TSZ Document 16 Filed 12/02/16 Page 8 of 26 GEORGE T. HUNTER ATTORNEY AT LAW DEFENDANTS' MOTION TO DISMISS 5900 48th Ave. South (2:16-cv-00922 TSZ) - Page 9 of 26 Seattle, WA 98118 206.851.7700 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 difference in high school completion rates for Caucasian and African American males, using sample data, is indicative of an actual difference between those two classes requires the application of statistical hypothesis testing utilizing standard errors that one can calculate from margin of error data that the U.S. Census Bureau reports. If the observed difference is "statistically significant" at, for example, the p = .05 level, one can say that if there were no actual difference in high school completion rates for the two classes, then 95% of the time that one collected sample data on high school completion rates, we would not expect to see a difference as large as that present in the current samples. At the same time, the existence of a statistically significant difference reveals nothing about the size of the difference. See David H. Kaye and David A Freedman, Reference Guide on Statistics, in REFERENCE MANUAL ON SCIENTIFIC EVIDENCE, Federal Judicial Center and National Research Council, Third Ed. 2011, at 249-251. Griggs involved neither an effort to show that the observed difference in high school completion rates was statistically significant nor a principled discussion of the magnitude of the difference in completion rates. That absence implicates another "statistical" reality: The larger the sample that one uses for comparison purposes the more likely one will be able to show a statistically significant difference between two classes on some variable at issue. For that reason, when discussing differences in proportions between two classes on some variable, statisticians distinguish between statistical significance and practical, or substantive, significance. David H. Kaye and David A Freedman, Reference Guide on Statistics, in REFERENCE MANUAL ON SCIENTIFIC EVIDENCE, explain the distinction between statistical and practical significance. The latter form addresses the question, "Is the observed difference large enough to make a difference in a practical sense?" While social scientists have traditionally accepted significance at the p = .05 level as being the threshold for a showing of statistical significance, Case 2:16-cv-00922-TSZ Document 16 Filed 12/02/16 Page 9 of 26 GEORGE T. HUNTER ATTORNEY AT LAW DEFENDANTS' MOTION TO DISMISS 5900 48th Ave. South (2:16-cv-00922 TSZ) - Page 10 of 26 Seattle, WA 98118 206.851.7700 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 there is no generally accepted benchmark for a showing of practical or substantive significance. Practical significance does not derive from hypothesis testing. Instead, as Kaye and Freedman note: Because the term “significant” is merely a label for a certain kind of p-value, significance is subject to the same limitations as the underlying p-value. Thus, significant differences may be evidence that something besides random error is at work. They are not evidence that this something is legally or practically important. Statisticians distinguish between statistical and practical significance to make the point. When practical significance is lacking-when the size of a disparity is negligible-there is no reason to worry about statistical significance. 102 Id. at 252. Thus, "practical" or "substantive" significance refers to a difference of such magnitude as to matter in a legal sense. Although the Supreme Court did not invoke that term in Griggs, discussion in the case, particularly in footnotes 5 and 6, suggests that, as a practical matter, the disproportionate adverse impact qualified as being substantively significant. No case establishes, however, a bright line rule for ascertaining when disproportionate adverse impact is large enough to qualify as being practically/substantively significant. Showing no concern for the need to account for the reality of sampling error, in Griggs, as explained above, the Supreme Court noted that U.S. Census data, i.e., estimates, revealed that 34% of Caucasian males in North Carolina had completed high school in contrast to 6% of African American males. That is, the requirement of a high school diploma would disqualify 66% of the Caucasian males and 94% of the African American males in North Carolina. Adverting to nothing more than the details of that comparison and the comparison of pass rates on the battery of intelligence tests, referenced above, the Supreme Court in Griggs concluded that Caucasian employees "registered far better" on the two qualifying standards than did African American employees. Evidence revealed that the neither the requirement of a high school education nor that of passing a standardized intelligence test bore any relationship to an employee's being able to Case 2:16-cv-00922-TSZ Document 16 Filed 12/02/16 Page 10 of 26 GEORGE T. HUNTER ATTORNEY AT LAW DEFENDANTS' MOTION TO DISMISS 5900 48th Ave. South (2:16-cv-00922 TSZ) - Page 11 of 26 Seattle, WA 98118 206.851.7700 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 perform the jobs at issue in a satisfactory manner. Thus, race provided the only explanation for the "far better" performance of Caucasian employees on the qualifying standards compared to their African American counterparts. Consequently, the Supreme Court recognized that the employer's qualifying standards for promotion were the kind of "artificial, arbitrary, and unnecessary barriers to employment . . . on the basis of racial or other impermissible classification" that Congress sought to eliminate when it passed Title VII. Griggs v. Duke Power Co., 401 U.S. at 430-431. The EEOC's UNIFORM GUIDELINES ON SELECTION PROCEDURES (Guidelines), 29 C.F.R. Part 1607 (1984), contain a four fifths, or 80 percent rule, as a measure of practical/substantive significance for disparate impact cases involving selection procedures in the context of employment decisions. In Clady v. County of Los Angeles, 770 F.2d 1421, 1428 (9th Cir. 1985), the Ninth Circuit noted the 80 percent rule is a "rule of thumb" and that the Guidelines are not legally binding. In Bouman v. Block, 940 F.2d 1211, 1225 (9th Cir. 1991), the Ninth Circuit elaborated: Rather than using the 80 percent rule as a touchstone, we look more generally to whether the statistical disparity is "substantial" or "significant" in a given case. [Clady] at 1428-1429. Nonetheless, while the guidelines are not necessarily dispositive, they are instructive. As several commentators have noted, in the years following Griggs courts have struggled to resolve the methodological "significance" issues that are inherent in disparate impact discrimination cases. E.g., Jennifer L. Peresie, Toward a Coherent Test for Disparate Impact Discrimination, 84 IND. L.J. 773 (2009), and Joseph A. Seiner, Plausibility and Disparate Impact, 64 HASTINGS L.J. 287 (2013). According to the U.S. Supreme Court, irrespective of whether the plaintiff has identified appropriate classes for the purpose of comparison, there is no clear test for determining when a legally significant difference between the appropriate classes exists: Case 2:16-cv-00922-TSZ Document 16 Filed 12/02/16 Page 11 of 26 GEORGE T. HUNTER ATTORNEY AT LAW DEFENDANTS' MOTION TO DISMISS 5900 48th Ave. South (2:16-cv-00922 TSZ) - Page 12 of 26 Seattle, WA 98118 206.851.7700 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Instead, courts appear generally to have judged the "significance" or "substantiality" of numerical disparities on a case-by-case basis. See Clady, supra, at 1428-1429; B. Schlei & P. Grossman, Employment Discrimination Law 98-99, and n. 77 (2d ed. 1983); id., at 18-19, and n. 33 (Supp. 1983-1985). At least at this stage of the law's development, we believe that such a case-by-case approach properly reflects our recognition that statistics "come in infinite variety and . . . their usefulness depends on all of the surrounding facts and circumstances." Teamsters v. United States, 431 U.S. 324, 340 (1977). Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 995 n. 3, 108 S. Ct. 2777, 101 L. Ed.2d 827 (1988). Thus, depending on the circumstances of a given case, if the plaintiff uses statistics to prove disproportionate impact, the test for doing so focuses on either statistical significance, practical/substantive significance, or a combination of the two. In addition to the significance issues attending Title VII disparate impact discrimination claims, Griggs says little about the comparison that a disparate impact claim requires. At first blush the comparison appears to require specifying two classes that a facially neutral policy or practice affects: (1) the actual population of members of the protected class who, for example, were candidates for promotion and (2) the actual population of members of the non-protected class who were candidates for the same promotion. As suggested above, Griggs appears to require expanding the membership in the two classes under some, identified, circumstances. More fundamentally, the comparison must focus on classes of persons who are similarly situated: a group of persons in a protected class and persons in a non-protected class who are alike in all relevant respects except for the effect that the practice or policy at issue allegedly caused. Thus, the proof of a disproportionate discriminatory impact depends on identifying appropriate classes for statistical comparison, as the Supreme Court recognized in Watson: Such proof is usually accomplished by statistical evidence showing "that an employment practice selects members of a protected class in a proportion smaller than their percentage in the pool of actual applicants." Moore v. Hughes Helicopters, Inc., 708 D.2d 475, 482 (9th Cir. 1983). Case 2:16-cv-00922-TSZ Document 16 Filed 12/02/16 Page 12 of 26 GEORGE T. HUNTER ATTORNEY AT LAW DEFENDANTS' MOTION TO DISMISS 5900 48th Ave. South (2:16-cv-00922 TSZ) - Page 13 of 26 Seattle, WA 98118 206.851.7700 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Watson v. Fort Worth Bank & Trust, 487 U.S. at 994-995. Necessarily, applicant flow data are essential for the required comparison. Paige v. California, 291 F.3d 1141 (9th Cir. 2002), demonstrates that where actual applicant flow data are available, the necessary statistical comparison must utilize those data. Paige involved a claim by California Highway Patrol officers that the employer's selection process for promotions had a disparate impact on non-white officers. Among other things, the parties disagreed about the composition of the appropriate comparison group. The employer took the position that the comparison group should come from the pool of applicants for promotion. The plaintiff employees contended that the employer's historical discriminatory practices necessarily depressed the proportion of non-whites in the applicant pool. Consequently, the employees argued, the "applicant pool" should include "similarly skilled peace officers in the state of California." Id. at 1145. The Ninth Circuit noted that, ordinarily, the appropriate comparison in a Title VII disparate impact case looks at "those who enter the [selection process] compared to those who emerge from it." Paige v. California, 291 F.3d at 1145. That is, the comparison focuses on an "internal pool" of actual applicants as opposed to an "external pool" of potential applicants. Because the plaintiffs were unable to demonstrate that the employer's alleged discriminatory practices depressed the number of non-white officers in the applicant pool, the Ninth Circuit ruled that the internal pool was appropriate for the purpose of comparison. Id. at 1146-47. Because courts apply Title VII analysis to claims arising under the Fair Housing Act, in some contexts a claim, for example, that an apartment complex owner's facially neutral policy or practice has a disproportionate impact on the ability of members of a protected class to obtain housing would require the plaintiff(s) to Case 2:16-cv-00922-TSZ Document 16 Filed 12/02/16 Page 13 of 26 GEORGE T. HUNTER ATTORNEY AT LAW DEFENDANTS' MOTION TO DISMISS 5900 48th Ave. South (2:16-cv-00922 TSZ) - Page 14 of 26 Seattle, WA 98118 206.851.7700 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 identify an appropriate applicant pool, i.e., applicant flow. See, e.g., Huntington Branch, NAACP v. Huntington, 844 F.2d 926, 938 n. 11 (2d Cir. 1988). Where applicant flow data are not available or do not reflect the population of persons who might have been applicants for positions or promotions, the use of general population statistics may be appropriate for the purpose of comparing protected and non-protected persons adversely affected by a facially neutral policy or practice that determined, at least in part, who the successful applicants were. Dukes v. Wal-Mart Stores, Inc., 222 F.R.D. 137, 162 (N.D. Cal. 2004), reversed on other grounds, Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 131 S. Ct. 2541, 180 L. Ed.2d 374 (2011). Where appropriate for use, general population statistics must, however, "bear a proven relationship" to the "actual applicant flow." Huntington Branch NAACP v. Huntington, 844 F.2d at 938 n. 11, citing New York Transit Authority v. Beazer, 440 U.S. 568, 585, 99 S. Ct. 1355, 59 L. Ed.2d 587 (1979). Thus, in a disparate impact case arising under the Fair Housing Act in which the plaintiff(s) allege that a facially neutral policy or practice of, for example, the owner of an apartment complex disproportionately denies housing members of a protected class, the plaintiff(s) would have to produce applicant flow data. Further the applicant flow data would comprise a population of members of the protected class and similarly situated persons not in the protected class. Gamble v. City of Escondido, 104 F.3d 300, 304 (9th Cir. 1997), illustrates that requirement. In Gamble the plaintiff developer alleged that a city's refusal to grant a building permit for the construction of group housing for physically disabled adults violated the Fair Housing Act. Among other things, the Ninth Circuit noted: Gamble further argues that the physically disabled require group housing to be solvent financially and that such group houses generally must be larger than other single family residences to accommodate the greater numbers. Therefore, he reasons, denial of permits for large houses on small lots in single family Case 2:16-cv-00922-TSZ Document 16 Filed 12/02/16 Page 14 of 26 GEORGE T. HUNTER ATTORNEY AT LAW DEFENDANTS' MOTION TO DISMISS 5900 48th Ave. South (2:16-cv-00922 TSZ) - Page 15 of 26 Seattle, WA 98118 206.851.7700 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 neighborhoods disproportionately and significantly affects the physically challenged. Gamble v. City of Escondido, 104 F.3d at 306. Without invoking the term "similarly situated" the Ninth Circuit made clear, however, that the appropriate comparison required the use of data on a class of non-protected similarly situated persons: [Gamble's] position relies on a comparison between physically disabled groups and single families to establish the discriminatory effect. The relevant comparison group to determine a discriminatory effect on the physically disabled is other groups of similar sizes living together. Otherwise, all that has been demonstrated is a discriminatory effect on group living. [citation omitted.] Id. at 306-307. FAIR HOUSING ACT DISPARATE IMPACT CLAIMS THAT RELY ON STATISTICAL ANALYSIS MUST UTILIZE APPROPRIATELY CONSTRUCTED COMPARISON POOLS IN ORDER TO GENERATE VALID STATISTICAL TESTS. In order to survive a 12(b)(6) motion in the context of a disparate impact claim arising under the Fair Housing Act, a plaintiff must plead a prima facie case: the identification of a facially neutral policy or practice that has a discriminatory effect on members of a protected class "compared to a relevant population." Gallagher v. Magner, 619 F.3d 823, 833 (8th Cir. 2010). The "relevant population" is necessarily a comparable, or similarly situated, group that is like the protected class in all relevant respects except protected status, as we discuss above. In Gallagher the Eighth Circuit "note[d] that a common method of showing a disproportionate adverse effect is to compare levels of dependence on affordable housing." Id. at 835. That comparison requires two sets of factual allegations: The first describes the percentage of persons in the protected class in the appropriate geographical area who depend on affordable housing, using appropriate sampling methods. The second details the percentage of persons, not in the protected class, in the appropriate geographical area who also depend on affordable housing, again with appropriate sample data. The resulting Case 2:16-cv-00922-TSZ Document 16 Filed 12/02/16 Page 15 of 26 GEORGE T. HUNTER ATTORNEY AT LAW DEFENDANTS' MOTION TO DISMISS 5900 48th Ave. South (2:16-cv-00922 TSZ) - Page 16 of 26 Seattle, WA 98118 206.851.7700 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 sample data for the two groups would allow one to use statistical inference to test the null hypothesis that is central to a claim of disparate impact: The proportion of persons in the protected class, who depend on affordable housing, is less than or equal to the percentage of persons not in the protected class, who depend on affordable housing. A result showing a difference at the p = .05 level or better, would call for rejection of the null hypothesis. Because the pool from which the two group samples came displayed the required comparability that Gilmartin explained, the results of the statistical inference test would be valid. Accordingly, one could conclude that a facially neutral policy or practice that affects the ability of similarly situated persons to obtain affordable housing disproportionately adversely affects persons in the protected class compared to similarly situated adversely affected persons not in the protected class. Gilmartin and related case law we discuss above make clear, however, that the validity of the results of the statistical inference test depends on establishing comparability of the two groups for comparison. Consequently, a comparison of the entire proportion of persons in the protected class in the appropriate geographical area and the entire proportion of non-protected persons in the same geographical area would not allow one to make a valid statement about the existence of an alleged disproportionate effect on persons in the protected class who depend on affordable housing. Tsombanidis v. W. Haven Fire Dep't, 352 F.3d 565 (2d Cir. 2003), illustrates how these principles operate to allow meaningful statements as to the existence of disproportionate discrimination. Tsombanidis involved a challenge to a provision in Connecticut's Fire Safety Code. The owner of a single family residence, operated as a group home for recovering alcoholics and drug addicts, alleged that the facially neutral provision had a disproportionate adverse impact on the protected class of persons who need to live in group homes in single family neighborhoods. Case 2:16-cv-00922-TSZ Document 16 Filed 12/02/16 Page 16 of 26 GEORGE T. HUNTER ATTORNEY AT LAW DEFENDANTS' MOTION TO DISMISS 5900 48th Ave. South (2:16-cv-00922 TSZ) - Page 17 of 26 Seattle, WA 98118 206.851.7700 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Demonstrating the disproportionate impact required a comparison of two groups. Somewhat misleadingly, the Second Circuit explained: The basis for a successful disparate impact claim involves comparison between two groups - those affected and those unaffected by the facially neutral policy. Tsombanidis v. W. Haven Fire Dep't, 352 F.3d at 577. In fact, the comparison must be between two groups affected by the facially neutral practice or policy, as the Second Circuit recognized later in the paragraph in which the above-quoted remarks appear: It is unclear from its decision what groups the district court compared. To the extent that the district court compared the handicapped plaintiffs to a "similarly sized family where the individuals were related by blood, marriage or adoption," see Tsombanidis I, 129 F. Supp.2d at 157, that comparison was improper. It fails to include similar-sized groups that are not related by blood - seven college students wanting to live together, for example - but are still affected by the policy. See Gamble, 104 F.3d at 304. The district court also erred by merely comparing handicapped and non-handicapped persons. Rather, in this case, the proper comparison is between (1) recovering alcoholics and recovering drug abusers ("recoverings") and (2) people who are neither recovering alcoholics nor recovering drug abusers ("non-recoverings"). Such a comparison identifies the handicap and allows for a causal analysis between the claim of discrimination based on the handicap in question and the facially neutral policy. Id. The Second Circuit summarized, in symbolic terms, the necessary comparison between two carefully defined groups who were allegedly adversely affected by the subject provision in the Fire Safety Code: In this case, plaintiffs might have been able to meet their burden by providing statistical evidence (1) that x% of all of the recoverings in West Have need (or have good reason) to live in the "group settings" prohibited by the facially neutral regulations at issue, (2) that y% of all the non-recoverings in West Haven need (or have good reason) to live in such group settings prohibited by the fire regulations, and, crucially, (3) that x is significantly greater than y. Id. Consistent with earlier discussion in this motion, three principles essential to any claim of disparate impact discrimination find expression in the above-quoted language from Tsombanidis: Case 2:16-cv-00922-TSZ Document 16 Filed 12/02/16 Page 17 of 26 GEORGE T. HUNTER ATTORNEY AT LAW DEFENDANTS' MOTION TO DISMISS 5900 48th Ave. South (2:16-cv-00922 TSZ) - Page 18 of 26 Seattle, WA 98118 206.851.7700 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A plaintiff must demonstrate a significant difference in the proportionate adverse effect a facially neutral policy or practice has on a protected class. Second, showing a difference in proportionate adverse effect requires comparing the proportionate effect on a protected class with the proportionate effect on a non-protected class. Third, the two groups chosen for comparison must be alike in all relevant respects other than protected, as opposed to non-protected, status. The importance of the third principle cannot be overstated because, again, as we discuss above, if the two groups are not alike in all relevant respects other than protected status, results of the comparison based on "statistics" will be invalid. The three principles apply to disparate impact claims arising out of, for example, a landlord's applying a maximum occupancy policy that allegedly disproportionately adversely affects families with children under age 18. Rhode Island Commission for Human Rights v. Graul, 120 F. Supp.3d 110 (D. R. I. 2015), illustrates that reality. Graul arose after an apartment building owner learned that a married couple who rented a one-bedroom apartment in the Brentwood Apartments (Brentwood) had become parents of a newborn baby. Brentwood had a maximum occupancy policy that limited one-bedroom apartments to two persons. After learning of the birth of the infant, Brentwood notified the couple that they would have to either move into a two-bedroom apartment or vacate the premises. Because the maximum occupancy policy applied to any set of renters comprising two or more persons, disparate impact analysis was appropriate for analyzing a claim of discrimination arising from the application of that policy. The trial court explained the comparison that the plaintiffs' expert, who relied on statistical analysis, successfully advanced in support of the claim. That analysis was consistent with the three "Tsombanidis" principles set forth above. Case 2:16-cv-00922-TSZ Document 16 Filed 12/02/16 Page 18 of 26 GEORGE T. HUNTER ATTORNEY AT LAW DEFENDANTS' MOTION TO DISMISS 5900 48th Ave. South (2:16-cv-00922 TSZ) - Page 19 of 26 Seattle, WA 98118 206.851.7700 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 The expert used care to define the pool from which the two groups for comparison would come. He did so by limiting the pool to renter households in an appropriate market. Next, he refined that set to include only renter households of the size that Brentwood's maximum occupancy policy adversely affected. That limitation resulted in the generation of several sub-pools, i.e., three person households, four person households, etc. He further limited the pool of renter households of equivalent size to those likely to be in the market for apartments in the rental range that Brentwood encompassed: $900 to $1400 per month. Id. at 114, 125. Although not discussed in the court's decision, data for the pool came from the U.S. Census, as the expert explained in his affidavit submitted in support of the plaintiff, cited at ECF 52 and 53 in the decision. Consistent with typical data generated by the U.S. Census Bureau, those data represent estimates from samples accompanied by sampling error. Consequently, determining the existence of a disproportionate impact on the protected group compared to the similarly situated non-protected group using those data required the application of a test of statistical significance. The expert's analysis showed a statistically significant disproportionate impact that the court accepted. Again, the validity of the results of the statistical analysis depended on the careful definition of the comparison pool. Had, as Tsombanidis and Gilmartin teach, the expert defined the comparison pool to include all households, any resulting statistical analysis would have failed to determine anything about the alleged disparate impact of the maximum occupancy policy on the relevant subpopulations within the pool. APPLICATION OF THE IQBAL/TWOMBLY STANDARD TO FHCW'S COMPLAINT REVEALS THAT FHCW HAS FAILED TO ALLEGE FACTS NECESSARY TO (A) SUPPORT A CLAIM OF INTENT TO DISCRIMINATE ON THE BASIS OF FAMILY STATUS OR (B) CONSTRUCT AN APPROPRIATE COMPARISON POOL FOR Case 2:16-cv-00922-TSZ Document 16 Filed 12/02/16 Page 19 of 26 GEORGE T. HUNTER ATTORNEY AT LAW DEFENDANTS' MOTION TO DISMISS 5900 48th Ave. South (2:16-cv-00922 TSZ) - Page 20 of 26 Seattle, WA 98118 206.851.7700 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PURSUING A CLAIM OF DISPARATE IMPACT DISCRIMINATION ON THE BASIS OF FAMILY STATUS. Application of the teaching of the case law discussed above to an examination of the complaint in the above-captioned lawsuit reveals that FHCW has failed to "set forth enough facts to state a claim that is plausible on its face" as Iqbal and Twombly require. To begin, it is not clear whether the complaint alleges one or two forms of prohibited discrimination under the Fair Housing Act. In Paragraph 4.5 FHCW alleges that it "performed tests to determine whether the Granada Apartments discriminates against housing applicants based on their familial status." In Paragraph 4.18 FHCW alleges that "Defendant Breier-Scheetz confirmed that Defendants have a policy of refusing to rent their studios to families with children." In Paragraphs 4.16, 4.17, and 4.18 FHCW refers to Defendants' policy of refusing to rent studio apartments to families with children. It is clear, however, that as to FHCW's disparate impact claims, FHCW relies on "statistics," through an apparent incorporation of the "statistics" in Exhibit A to the complaint, the Seattle Office of Civil Rights (SOCR) Findings of Fact and Determination and Offer to Conciliate. ECF 1 at 13-14. In Paragraphs 4.6 and 4.8 FHCW alleges that two property managers informed FHCW testers of Defendants' policy of not renting studio apartments to more than one person. In Paragraph 4.12 FHCW alleges that "Defendant Breier-Scheetz acknowledged that the [property managers] were 'instructed to tell prospective tenants that studios are not rented to two people.'" In Paragraph 4.17 FHCW alleges: "The SOCR determined that Defendants' policy, although facially neutral, resulted in a disparate, adverse impact on persons based on their familial status, a protected class." In Paragraph 4.16 FHCW alleges: "Defendants' policy of prohibiting families with children from renting its studio apartments has a disproportionately adverse impact on families." As noted above, a plaintiff who brings a disparate impact claim under the Fair Housing Act must identify a defendant's facially neutral Case 2:16-cv-00922-TSZ Document 16 Filed 12/02/16 Page 20 of 26 GEORGE T. HUNTER ATTORNEY AT LAW DEFENDANTS' MOTION TO DISMISS 5900 48th Ave. South (2:16-cv-00922 TSZ) - Page 21 of 26 Seattle, WA 98118 206.851.7700 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 policy or practice that allegedly has a disproportionate adverse effect on a protected class. FHCW's complaint, as indicated above, repeatedly refers to a policy that "on its face applies less favorably to a protected group," and is, as a result, facially discriminatory. Cmty. House v. City of Boise, 490 F.3d 1041, 1048 (9th Cir. 2007). At the same time, in Paragraph 4.16 FHCW alleges that the facially discriminatory policy has a "disproportionately adverse impact on families." Further compounding the confusion inherent in Paragraph 4.16 is the Fair Housing Act's definition of "family" to include single persons. Single persons do not, however, enjoy protected status under the Fair Housing Act. Finally, nowhere other than in Paragraphs 4.16 and 4.17 does the term "disparate impact" appear. For example, in Paragraphs 5.1 and 5.2 FHCW refers to Defendants' "discriminatory practices." In Paragraph 6.5 FHCW refers to Defendants' "discriminatory conduct." While the term "disparate impact" rarely appears in the complaint, the term disparate treatment is absent altogether despite the repeated allegation as to Defendants' facially discriminatory policy of refusing to rent studio apartments to families with children. These features of the complaint render difficult, if not impossible, Defendants' task of determining how to defend against FHCW's claims. We submit, that the complaint does not identify clearly a facially neutral policy that has an adverse impact on a protected class. Further, the repeated allegation that Defendants have a policy of refusing to rent to families with children is contradicted by Exhibit A to the complaint. Exhibit A reveals the SOCR concluded that Defendants' policy applied to all persons regardless of protected status. ECF 1 at 13. That conclusion follows from Finding 10 in Exhibit A that "Defendant Breier- Scheetz, LLC's policy is to only allow one person per studio apartment." ECF 1 at 12. Although a court must accept as true for the purposes of a motion to dismiss the factual allegations in a complaint, a court "need not accept as true allegations that contradict matters properly subject to judicial notice or by exhibit." (citations omitted.) Gonzalez v. Planned Parenthood of L.A., 759 F.3d 1112, 1115 (9th Case 2:16-cv-00922-TSZ Document 16 Filed 12/02/16 Page 21 of 26 GEORGE T. HUNTER ATTORNEY AT LAW DEFENDANTS' MOTION TO DISMISS 5900 48th Ave. South (2:16-cv-00922 TSZ) - Page 22 of 26 Seattle, WA 98118 206.851.7700 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Cir. 2014). Application of this principle to the above-captioned lawsuit supports the conclusion that there is no disparate treatment claim before the Court. That conclusion combined with FHCW's reliance on "statistics" to support its disparate impact claims necessitates an examination of the complaint for an understanding of the composition of the pool from which the two groups for comparison must come. At a broad level the protected group contains families with children who are unable to rent studio apartments as a result of the application of the policy limiting rentals of those apartments to single individuals. The corresponding comparator group includes multi-person prospective renters, without children under age 18, who are also unable to rent studio apartments as a result of the application of the policy limiting rental of studio apartments to single individuals. Several paragraphs in the complaint help to refine the comparison pool. In Paragraph 4.7 FHCW alleges, "Residential property manager Gary Huth told [a tester] a seventh floor studio apartment was available for $870 per month, including utilities." ECF 1 at 4. In Paragraphs 4.17, 4.18, and 4.20 the complaint cites Exhibit A. Exhibit A provides the source for FHCW's allegation that the SOCR determined Defendants violated the Fair Housing Act through the application of the policy of only renting studio apartments to single individuals. Examination of Exhibit A reveals, again, that SOCR based its determination of a violation on an implicit comparison using "statistics." Specifically, [T]he adverse impact of this policy lands on families with children, such as testers with children referenced in the complaint. According to 2010 U. S. Census data, there are a total of 283,510 "households" in the City of Seattle. Households with individuals under 18 years of age consist of 19.5% total households. Of those households, 5% are of single families with children under the age of 18. In the City of Seattle, 57.1% of households consist of single individuals. These statistics show that the policy disparately impacts families with children under the age of 18. ECF 1 at 13-14. Case 2:16-cv-00922-TSZ Document 16 Filed 12/02/16 Page 22 of 26 GEORGE T. HUNTER ATTORNEY AT LAW DEFENDANTS' MOTION TO DISMISS 5900 48th Ave. South (2:16-cv-00922 TSZ) - Page 23 of 26 Seattle, WA 98118 206.851.7700 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Thus, SOCR relied on a statistical comparison for its conclusion of discrimination in the form of disparate impact. Nowhere in the complaint does FHCW allege statistics that, if true, would enable a comparison of two carefully defined groups: the proportion of the protected class adversely affected by Defendants' facially neutral policy and the proportion of the non-protected class adversely affected by that policy. Regardless, it appears that without stating such, the complaint incorporates SOCR's statistics. The statistics fail, however, to provide a basis for a comparison of appropriate groups. That fact derives from the absence of an appropriately defined comparison pool. As Gilmartin explains and both Tsombanidis and Graul teach, the appropriate comparison pool must comprise multiple person rental households that have an income enabling them to afford apartments that rent for approximately $870 per month. A necessary further refinement of the comparison pool would result in the creation of sub-pools that control for group size. Those sub-pools would allow a comparison of, for example, two person families, one of whose members is a child under the age of 18, and two person households without a child under the age of 18. The policy at issue would prevent both sets of households from renting Defendants' studio apartments. Further, neither the complaint nor Exhibit A contains any factual allegations as to applicant flow. Thus, even if all the allegations in the complaint prove to be true, it will be impossible to ascertain from those allegations whether members of the protected class depend on the availability of studio apartments renting for approximately $870 per month. Without those data FHCW will be unable to determine both the proportion of the protected class adversely affected by the policy at issue and the proportion of the similarly situated non- protected class adversely affected by the same policy. In Paragraph 6.5 of the complaint FHCW alleges: Upon information and belief, there are victims of Defendants' discriminatory conduct or actions that are aggrieved persons within the meaning of 42 U.S.C. §3612(o). Case 2:16-cv-00922-TSZ Document 16 Filed 12/02/16 Page 23 of 26 GEORGE T. HUNTER ATTORNEY AT LAW DEFENDANTS' MOTION TO DISMISS 5900 48th Ave. South (2:16-cv-00922 TSZ) - Page 24 of 26 Seattle, WA 98118 206.851.7700 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 We submit that the allegation in Paragraph 6.5 fails to identify facts as to applicant flow data. In Arista Records, LLC v. Doe, 604 F.3d 110 (2d Cir. 2010), the Second Circuit examined the use of "upon information and belief" language in a complaint in the aftermath of Twombly and Iqbal. As a result, the Second Circuit now subscribes to the following rule: "upon information and belief" language in a complaint qualifies as a factual allegation under two circumstances: where the facts are peculiarly within the possession and control of the defendant, see, e.g.,Boykin v. KeyCorp, 521 F.3d 202, 215 (2d Cir. 2008), or where the belief is based on factual information that makes the inference of culpability plausible, see Iqbal, 129 S. Ct. at 1949 ("A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."). Arista Records, LLC v. Doe, 604 F.3d at 119. In Fitzgerald v. Bosco Credit, LLC, No. 16-cv-01473- MEJ, 2016 U.S. Dist. LEXIS 137967, at *23 (S.D. Cal. Oct. 4, 2016), the court noted, "Several district courts in the Ninth Circuit have adopted the Second Circuit's standard [in Arista Records]" regarding the limited acceptability of the "upon information and belief" language in a complaint. In addition to the cases cited in Fitzgerald v. Bosco see, e.g., Pathfinder Aviation, Inc. v. XTO Energy, Inc., No. 3:15-cv-0200- HRH, 2016 U.S. Dist. LEXIS 59176, at *14 (D. Alaska May 4, 2016), and Hand & Nail Harmony, Inc. v. Int'l Nail Co., No. CV 15-02718 SJO, 2015 U.S. Dist. LEXIS 67421, at *8 n. 2 (C.D. Cal. May 22, 2015). Application of the Arista Records rule leads to the following conclusion: Data on the pool of families with children, in Seattle, who depend on the availability of studio apartments for rent at the rate of approximately $870 per month are not the kind of data that Defendants should be expected to possess. Second, neither the complaint nor the attached Exhibit A contains any factual allegation that would provide a plausible basis for an inference that Defendants are liable for disparate impact discrimination based on statistical evidence. Case 2:16-cv-00922-TSZ Document 16 Filed 12/02/16 Page 24 of 26 GEORGE T. HUNTER ATTORNEY AT LAW DEFENDANTS' MOTION TO DISMISS 5900 48th Ave. South (2:16-cv-00922 TSZ) - Page 25 of 26 Seattle, WA 98118 206.851.7700 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CONCLUSION In order to state a claim for relief, based on statistics, for alleged disproportionate impact discrimination under the Fair Housing Act, a plaintiff must allege facts that would enable a statistical comparison of a group consisting of members of an identified protected class and a group of similarly situated non-protected persons, with both groups being adversely affected by the operation of a clearly identified facially neutral policy or practice. FHCW's claims of disparate impact under the Washington Law Against Discrimination, Chapter 49.60 RCW, and the Seattle Municipal Code rely on being able to make the same statistical comparison. Careful construction of the comparison pool from which the two groups come is a prerequisite for the validity of any test of statistical inference for difference in proportionate impact of the identified policy or practice. Although FHCW relies on "statistics" to support its claim of disproportionate impact discrimination, it has failed to allege facts that would allow a valid test for difference in proportionate impact. Consequently, dismissal of the complaint is appropriate. Dated this 1st day of December 2016. GEORGE T. HUNTER ATTORNEY AT LAW By: s/George T. Hunter George T. Hunter WSBA No. 14388 5900 48th Ave. South Seattle, WA 98118 Phone: 206.851.7700 Email: gthunter7700@gmail.com Case 2:16-cv-00922-TSZ Document 16 Filed 12/02/16 Page 25 of 26 GEORGE T. HUNTER ATTORNEY AT LAW DEFENDANTS' MOTION TO DISMISS 5900 48th Ave. South (2:16-cv-00922 TSZ) - Page 26 of 26 Seattle, WA 98118 206.851.7700 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CERTIFICATE OF SERVICE I hereby certify that on December 2, 2016, I electronically filed the foregoing with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the following: Jesse Wing WSBA No. 27751 701 Second Avenue, Suite 1500 Seattle, WA 98104 Phone: 206.622.1604 FAX: 206.343.3961 Email: JesseW@MHB.com Angela Galloway WSBA No. 45330 701 Second Avenue, Suite 1500 Seattle, WA 98104 Phone: 206.622.1604 FAX: 206.343.3961 Email: AngelaG@MHB.com By: s/George T. Hunter George T. Hunter WSBA No. 14388 5900 48th Ave. South Seattle, WA 98118 Phone: 206.851.7700 Email: gthunter7700@gmail.com Case 2:16-cv-00922-TSZ Document 16 Filed 12/02/16 Page 26 of 26 GEORGE T. HUNTER ATTORNEY AT LAW [Proposed] ORDER OF DISMISSAL 5900 48th Ave. South (2:16-cv-00922 TSZ) - Page 1 of 2 Seattle, WA 98118 206.851.7700 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 HON. THOMAS S. ZILLY UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE FAIR HOUSING CENTER OF WASHINGTON, Plaintiff, v. BREIR-SCHEETZ PROPERTIES, LLC, a Washington corporation; and FREDERICK BREIER-SCHEETZ, an individual, Defendants. NO: 2:16-cv-00922 TSZ [Proposed] ORDER GRANTING DEFENDANTS' MOTION TO DISMISS Having reviewed Defendants' Motion to Dismiss, Plaintiff's opposition to the motion, and Defendants' reply, the Court GRANTS Defendants' motion and ORDERS that Plaintiff's' complaint is DISMISSED WITH PREJUDICE. Dated this _______ day of _______ _ 2017. __________________________________________ United States District Judge Case 2:16-cv-00922-TSZ Document 16-1 Filed 12/02/16 Page 1 of 2 GEORGE T. HUNTER ATTORNEY AT LAW [Proposed] ORDER OF DISMISSAL 5900 48th Ave. South (2:16-cv-00922 TSZ) - Page 2 of 2 Seattle, WA 98118 206.851.7700 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Presented by: s/George T. Hunter George T. Hunter WSBA No. 14388 5900 48th Ave. South Seattle, WA 98118 Phone: 206.851.7700 Email: gthunter7700@gmail.com Case 2:16-cv-00922-TSZ Document 16-1 Filed 12/02/16 Page 2 of 2