Lessons From a $76,000 Fair Housing Settlement

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December 13, 2013
Jo Becker
Education/Outreach Specialist
Fair Housing Council of Oregon

In May 2013, Connecticut complainants were awarded over $76K (before attorneys’ fees) by the courts in The U.S.A v. Hylton. This is a rental case but the ruling holds several important legal lessons for any housing provider.

The complaint alleged that the Hyltons, a Black married couple, violated the Fair Housing Act (FHA) by refusing to allow a mixed-race couple, the Bilbos, to sublet their unit to a Black woman with children because they did not want "too many Blacks" at the property.

The decision awarded the following damages:
• $31,750 to Mr. And Mrs. Bilbo because their landlord made discriminatory statements to them about being a mixed-race couple, and about the race of their prospective subtenant refusing to allow them to sublet the home to an African American woman and her children because of race.
o $10K of this sum was awarded for emotional distress.
• Because Ms. Wilson, the prospective subtenant, was denied the home she sought and was qualified for, she continued to live in a racially concentrated area of poverty. Her damages were awarded at $44,431.05
o As part her damages, the court awarded Ms. Wilson $20K for compensation for the lost opportunity to live in a neighborhood of lower crime, higher educational opportunities, and greater upward mobility.
• Nearly half of the judgment, before attorneys’ fees, was for punitive damages.
• An additional $37,422 in attorneys’ fees brings the total judgment against the defendants to over $113K.
Details of the case can be found online.
• A summary of the case is available on the HUD site: http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advi....
• A summary of the ruling is posted on the DOJ’s site: http://www.justice.gov/usao/ct/Press2013/20130812.html (DOJ).
• The court’s decision can be read at http://law.justia.com/cases/federal/district-courts/connecticut/ctdce/3:...

The Hyltons were independent rental owners managing their own property. They initially rented to the Bilbos; however, the Bilbos found that their personal circumstances required them to move and to break the lease agreement. The Bilbos agreed to find a suitable renter to sublease to. When they did the defendant asked if the person is white. When told she was Black, Hylton stated that he “did not want too many Blacks at the property” and that “the neighbors would not want to see too many Blacks there.” The defendant also told the Bilbos the only reason they were rented the house was because his wife is white and it was “a good mix.”

There are several salient points in this case, none of them new but none-the-less noteworthy.

MRS. MURPHY’S EXEMPTION
First, the housing providers in this case were ‘mom and pop’ landlords representing themselves. Their blatant disregard for the law and others’ civil rights is clear from the case but the harm they caused – to the complainants and to their own pocketbook – may have been avoided with fair housing education and / or by hiring a professional manager who’s practice it was to know and abide by all federal, state, and local laws.

As their defense, the defendants argued they were not subject to the Fair Housing Act given what is commonly referred to as the ‘Mrs. Murphy’s Exemption’ which states:
Any single-family house sold or rented by an owner provided that such private individual does not own more than three such single-family homes at anyone time… if such house is sold or rented (A) without the use in any manner of the sales or rental facilities or the sales or rental services of any real estate broker, agent, or salesman, or of such facilities or services of any person in the business of selling or renting dwellings… and (B) without the publication, posting or mailing, after notice of any advertisement or written notice in violation of [the FHA].
Put plainly, small, independent landlords can discriminate based on protected class only if they do not hire a professional (thereby enjoining someone else in the act of discrimination) and if they do not ‘advertise’ a discriminatory preference. Here, ‘advertising’ means, essentially, any outward expression ranging from verbal or written statements (ads whether printed or online, flyers, etc.). Interestingly, in this case the property in question was held by Hylton Real Estate Management, which only Mrs. Hylton had an ownership interest in. Because her husband, Mr. Hylton did not have an ownership interest in the company that owned the property only she, not he, qualified for this exemption. Mrs. Hylton argued that the Mr. acted as her husband and not as ‘someone in the business of renting dwellings’ in dealing with the Bilbos. However, Mr. Hylton himself stipulated that he was in the business of renting dwellings and detailed the tasks he performs in such capacity and, indeed, his behavior substantiated this. All of that aside, his outward expression, or ‘publication’ of a discriminatory intent trumped the Mrs. Murphy’s Exemption binding him to the full responsibilities of the FHA, even if he had had an ownership interest in the property.

It should be clearly noted here that Oregon state law provides greater protection than federal and does not allow for the Mrs. Murphy’s Exemption. Essentially, all housing providers must comply with federal, state, and local fair housing laws in Oregon.

VICARIOUS LIABILITY
Secondly, this case reaffirms what preexisting case law has already established in terms of vicarious liability. As stated in the court’s decision, “Although Mr. Hylton is the individual who directly discriminated against Ms. Wilson and the Bilbos, both Mrs. Hylton and [the company] may be held vicariously liable for this discriminatory actions.” …‘It is clear under the FHA, owners of real estate may be held vicariously liable for discriminatory acts by their agents and employees.’ Glover v. Jones Therefore, if Mr. Hylton was acting as Mrs. Hylton’s agent, Mrs. Hylton, as sole owner of [the property] is also liable for his discriminatory actions. See Cabrera v. Jakabovitz”

DAMAGES FOR EMOTIONAL DISTRESS
Here, the court said it best in its decision: “Third, as to the request for damages for emotional distress, ‘it is axiomatic that civil rights plaintiffs may recover compensatory damages for emotional distress.’ Ragin It is not necessary for a plaintiff to provide evidence of treatment by a healthcare professional or use of medication to be entitled to damages for emotional distress. See Parris v. Pappas… (distinguishing “significant” and “egregious” claims for emotional distress from “garden variety” claims…). In the context of Fair Housing Act violations, courts have ‘recognized the severe mental trauma associated with unlawful discrimination and have upheld large compensatory awards for the victims in such cases.’ Broome v. Biondi ‘The key factors in determining emotional distress damages are the complainant’s reaction to the discriminatory conduct and the egregiousness of the respondent’s behavior.’ HUD v. Walker When claims have been categorized as “garden variety” – meaning the claim for distress is devoid of evidence of medical treatment or physical manifestation – the amount of damages authorized ranges from $5,000 to $125,000. Parris”

PUNITIVE DAMAGES
As stated above, the judge found in this case that the defendant acted with evil motive and showed no remorse justifying an award of punitive damages amounting to tens of thousands of dollars.

LOST HOUSING OPPORTUNITY DAMAGES
Finally, the issue of lost housing opportunity damages is also interesting. Here the court found that Ms. Wilson suffered based on key testimony from an expert in the field of “neighborhood effects.” The court concluded that there were “vast differences between the neighborhoods” in which she sought to leave and that which the subject property was located in amounting to “fewer ‘life chances’.”

It’s clearly not only important to be familiar with the federal FHA, but to know applicable state, local, and case law, as well. Issues such as vicarious liability, and what kinds of damages may be awarded, as well as other legal precedents such as disparate impact, what constitutes illegally discriminatory advertising, etc., should all be relevant to housing providers both at the company or organizational level and at the individual level. As this case illustrates, the owner was personally liable for her agent’s actions, even though she did not directly violate the law. This is true for ‘rank and file’ staff / employees / contractors as well, not just owners – that is, if a maintenance tech. or leasing agent violates the law, not only is the company and property owner liable, that individual may personally be sued as well.

It is important to follow fair housing case law and to commit to a regular educational routine for yourself and all who work with you. Start today by signing up for our free, electronic, periodic newsletter (this you can do at the bottom of any page of our website, www.FHCO.org) and by following us on FaceBook or Twitter (www.facebook.com/FairHousingCouncilOregon and @FairHousingOR, respectively).

We also invite and encourage you to check out the range of courses we offer at www.FHCO.org/pdfs/classlist.pdf. Our classes include, of course, Fair Housing Basics, as well as Fair Housing BINGO, Fair Housing Jeopardy The Game and Fair Housing and Advertising. In addition, we have developed advanced classes for repeat trainees such as 50 Shades of Fair Housing and the RA/RM Intensive.
This article brought to you by the Fair Housing Council; a nonprofit serving the state of Oregon and SW Washington. All rights reserved © 2013. Write jbecker@FHCO.org to reprint articles or inquire about ongoing content for your own publication.

Contact Jo Becker at jbecker@FHCO.org or 800/424-3247 Ext. 150

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