Case Title: Burbank Apartments Tenant Ass’n v. Kargman

Citation: 

Docket Number: SJC-11872

State: massachusetts

Court: Massachusetts Supreme Court

Date: 2016-04-13T00:00:00Z

Document:
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SJC-11872 
 
BURBANK APARTMENTS TENANT ASSOCIATION & others1  vs.  WILLIAM M. 
KARGMAN2 & others.3 
 
 
 
Suffolk.     December 8, 2015. - April 13, 2016. 
 
Present:  Gants, C.J., Spina, Cordy, Botsford, Duffly, Lenk, & 
Hines, JJ. 
 
 
Housing.  Fair Housing Act.  Anti-Discrimination Law, Housing. 
 
 
 
 
Civil action commenced in the Boston Division of the 
Housing Court Department on March 16, 2011. 
 
 
A motion to dismiss was heard by Jeffrey M. Winik, J. 
 
 
The Supreme Judicial Court granted an application for 
direct appellate review. 
 
 
                                                          
 
 
1 Satisha Cleckley, En Ci Guan, Richard Webster, Byron 
Alford, Massachusetts Coalition for the Homeless, and Fenway 
Community Development Corporation. 
 
 
2 Individually and in his capacities as principal of Burbank 
Apartments Corp. and First Realty Management Corp. 
 
 
3 Robert M. Kargman, individually and in his capacity as 
principal of Burbank Apartments Corp.; Burbank Apartments 
Company; Burbank Apartments Corp., as general partner of Burbank 
Apartments Company; and First Realty Management Corp. 
2 
 
 
Ann E. Jochnick (James M. McCreight with her) for the 
plaintiffs. 
 
Janet Steckel Lundberg for the defendants. 
 
The following submitted briefs for amici curiae: 
 
John Cann, of Minnesota, for Sargent Shriver National 
Center on Poverty Law & others. 
 
Harry J. Kelly & Joshua S. Barlow for Greater Boston Real 
Estate Board & others. 
 
Joseph D. Rich & Thomas Silverstein, of the District of 
Columbia, Oren M. Sellstrom, of California, & Laura Maslow-
Armand for Lawyers' Committee for Civil Rights Under Law & 
another. 
 
John J. McDermott, of Virginia, & Eleftherios Papadopoulos 
for National Apartment Association & another. 
 
Esme Caramello, Louis Fisher, Erika Johnson, Aditya Pai, & 
Katie Renzler for Fair Housing Center of Greater Boston & 
others. 
 
Roberta L. Rubin, Special Assistant Attorney General, for 
Department of Housing & Community Development. 
 
 
 
CORDY, J.  This case arises out of a decision made by the 
defendants, the principals and owners of Burbank Apartments 
(Burbank), not to renew Burbank's project-based Section 8 
housing assistance payments contract (HAP) with the United 
States Department of Housing and Urban Development (HUD) when 
its forty-year mortgage subsidy contract expired on March 31, 
2011.  In lieu of those project-based subsidies, the defendants 
opted instead to accept from its tenants Section 8 enhanced 
vouchers, enabling tenants living in units subsidized on a 
project basis to remain as tenants under an alternative Federal 
housing program.4  See 42 U.S.C. § 1437f (2012). 
                                                          
 
 
4 The Section 8 subsidy program, 42 U.S.C. § 1437f (2012), 
is a voluntary program by which eligible low income families are 
able to affordably rent housing units from private property 
3 
 
 
The plaintiffs, comprised of current and potential Burbank 
tenants, complained that Burbank's decision violated § 3604 of 
the Federal Fair Housing Act (FHA or Title VIII), 42 U.S.C. 
§§ 3601 et seq. (2012), and the Massachusetts antidiscrimination 
law, G. L. c. 151B, § 4, both by virtue of intentional 
discrimination as well as disparate impact on members of 
otherwise protected classes of citizens.  In particular, the 
plaintiffs alleged that the defendants' decision not to renew 
their HAP would have a disproportionately negative effect on 
people of color, the disabled and elderly, female-headed 
households, recipients of public and rental assistance, and 
families with children (collectively, members of protected 
classes). 
 
In March, 2011, the plaintiffs moved to enjoin the 
defendants from allowing Burbank's project-based HAP to lapse; 
the defendants demurred, and a Housing Court judge (motion 
judge) denied the injunction.  The plaintiffs filed an amended 
complaint in June, 2011, which the defendants moved to dismiss 
for failure to state a claim, pursuant to Mass. R. Civ. P. 
12 (b) (6), 365 Mass. 754 (1974), and oral arguments were held 
on January 25, 2012.  On December 31, 2014, the motion judge 
                                                                                                                                                                                           
owners using rent subsidies from the Federal government.  See 
Figgs v. Boston Hous. Auth., 469 Mass. 354, 362 (2014). 
4 
 
granted the defendants' motion to dismiss.  The plaintiffs 
appealed. 
 
The plaintiffs' housing discrimination claims, based on the 
theory of disparate impact, raise an issue of first impression 
in Massachusetts concerning the relationship among Section 8, 
the FHA, and the Massachusetts antidiscrimination statute 
(together the fair housing statutes).  Specifically, can a 
private building owner's decision not to renew participation in 
the project-based Section 8 subsidy program in favor of tenant-
based Section 8 subsidies be the basis of a disparate impact 
claim when such decision was otherwise permitted by both Federal 
and State statutes, as well as by contract?  And, if so, what 
are the pleading requirements for making out such a claim? 
 
In his comprehensive memorandum of decision and order, the 
motion judge determined that a disparate impact claim under 
these circumstances is not legally cognizable, and never reached 
the second question.  Subsequently, the United States Supreme 
Court released its decision in Texas Dep't of Hous. & Community 
Affairs v. The Inclusive Communities Project, Inc., 135 S. Ct. 
2507, 2525 (2015) (Inclusive Communities), holding that claims, 
such as this one, based on the theory of disparate impact are 
generally cognizable under the FHA.  We granted the plaintiffs' 
application for direct appellate review to consider their 
allegations in the context of the FHA, as well as the potential 
5 
 
for similar claims under Massachusetts antidiscrimination law, 
and to examine the impact of the Inclusive Communities decision. 
 
We affirm the decision of the motion judge granting the 
motion to dismiss, although on somewhat different grounds.  We 
conclude that even where the property owner has acted in accord 
with statute, regulation, and contract, a disparate impact claim 
under the fair housing statutes can be brought, subject to 
rigorous pleading requirements.  The plaintiffs in the present 
case, however, have not satisfied those requirements.5 
 
1.  Background.  a.  Statutory background.  In 1965, 
Congress, under the auspices of the National Housing Act of 
1934, approved a mortgage insurance program known as § 221(d)(3) 
of the National Housing Act, 12 U.S.C. § 1715l(d)(3) (2012).  
See 12 U.S.C. § 1701s(a).  Pursuant to § 221(d)(3), which was 
"designed to assist private industry in providing housing for 
low and moderate income families and displaced families," 12 
U.S.C. § 1715l(a), HUD can offer below market interest rate 
                                                          
 
 
5 We acknowledge the amicus briefs submitted by the Greater 
Boston Real Estate Board, the National Leased Housing 
Association, the National Affordable Housing Management 
Association, and the Massachusetts Association of Realtors; the 
National Apartment Association and the National Multifamily 
Housing Council; the Sargent Shriver National Center on Poverty 
Law, Housing Justice Center, and National Housing Trust; the 
Department of Housing & Community Development; Lawyers' 
Committee for Civil Rights Under Law and Lawyers' Committee of 
Civil Rights and Economic Justice; and the Fair Housing Center 
of Greater Boston, the Boston Tenant Coalition, City Life/Vida 
Urbana, and the Harvard Legal Aid Bureau. 
6 
 
(BMIR) mortgage loans to private property owners in exchange for 
an agreement from those owners to provide affordable housing.6  
See 12 U.S.C. § 1715l(d)(3).  The regulatory agreements, and the 
attached mortgages, may have up to forty-year terms, 12 U.S.C. 
§ 1701s(a), but permit the owners to opt to pay down those 
mortgages and withdraw from the program after twenty years.  12 
U.S.C. § 1715l(g)(4)(A). 
 
The Section 8 housing program was enacted in 1974 for the 
purpose of "aiding low-income families in obtaining a decent 
place to live and of promoting economically mixed housing."  42 
U.S.C. § 1437f(a).7  See Figgs v. Boston Hous. Auth., 469 Mass. 
354, 362 (2014); Feemster v. BSA Ltd. Partnership, 471 F. Supp. 
2d 87, 91 (D. D.C. 2007), aff'd, 548 F.3d 1063 (D.C. Cir. 2008).  
Housing assistance through Section 8 is obtained through either 
"tenant-based" or "project-based" subsidies.  24 C.F.R. 
§ 982.1(b)(1) (2015).  Both forms are funded by the Federal 
government and administered by State or local public housing 
agencies (PHAs).  See 42 U.S.C. § 1437f(a); 24 C.F.R. 
                                                          
 
 
6 At the time of the defendants' initial agreement under 
§ 221(d)(3) of the National Housing Act, 12 U.S.C. 
§ 1715l(d)(3), the United States Federal Housing Administration, 
a predecessor to the United States Department of Housing and 
Urban Development, was responsible for insurance under 
§ 221(d)(3). 
 
 
7 We are aware that 42 U.S.C. §§ 1437a and 1437f were 
amended in December, 2015.  The amendments do not apply to the 
portions of the statutes relevant to this case.  See Pub. L. No. 
114-94. 
7 
 
§ 982.1(a)(1).  For project-based assistance, the "rental 
assistance is paid for families who live in specific housing 
developments or units."  24 C.F.R. § 982.1(b)(1).  Tenant-based 
assistance, on the other hand, is appurtenant to the tenant, and 
the "assisted unit is selected by the family," so that the 
tenant may opt to "rent a unit anywhere . . . in the 
jurisdiction of a PHA that runs a voucher program."  Id.  See 42 
U.S.C. §§ 1437f(r); 24 C.F.R. §§ 982.353(a) (2010), 982.355(a) 
(2015).  After Congress enacted the Section 8 program in 1974, 
many of the units built with the assistance of the § 221(d)(3) 
mortgage program were transferred to project-based Section 8 
rent subsidies, including many of those at Burbank.  See 
Feemster, supra. 
 
In 1987, and in response to subsequent concerns that owners 
operating under § 221(d)(3) regulatory agreements were opting to 
pay down their mortgages early and opt out of the Section 8 
program, see Franconia Assocs. v. United States, 536 U.S. 129, 
136 (2002), citing H. R. Rep. No. 100-122, at 53 (1987)  
(interpreting 1994 version of 42 U.S.C. § 1472[c][4][B]). 
Congress enacted the Emergency Low-Income Housing Preservation 
Act of 1987 (ELIHPA) to provide incentives for continued 
participation by property owners.  Franconia Assocs., supra, 
citing 42 U.S.C. § 1472(c)(4)(B) (1994 ed. and Supp. V).  
Congress also later provided further protection for tenants, 
8 
 
including eligibility for tenant-based vouchers on the 
expiration of a project-based HAP.  12 U.S.C. § 4113 (2012).  
Pursuant to that statute, where an owner opted to terminate or 
discontinue project-based subsidies, low income tenants in the 
units previously subject to that program automatically would be 
eligible for Section 8 mobile vouchers, see 12 U.S.C. § 4113(a), 
and, in some instances, enhanced vouchers.  See 12 U.S.C. 
§ 4113(f).  Further, property owners opting out of project-based 
subsidies -- but continuing to maintain the property for 
residential rental occupancy -- are required to accept the 
tenant-based Section 8 subsidies for which their tenants were 
automatically eligible.  12 U.S.C. § 4113(d). 
 
In 2009, the Legislature enacted cognate legislation, G. L. 
c. 40T (c. 40T), which addresses the rights and obligations of 
owners operating with project-based Section 8 subsidies.  See 
G. L. c. 40T, § 1.  See also St. 2009, c. 159, § 1.  Like the 
equivalent Federal statutes, c. 40T provides substantive 
protections for tenants previously occupying units covered by 
project-based subsidies.  See, e.g., G. L. c. 40T, §§ 2 (b), 7.  
See also 42 U.S.C. § 1437f(c)(8)(B).  Also consonant with 
Federal law, however, c. 40T does not restrict owners from 
prepaying their mortgages or opting out of their subsidy 
contracts after doing so.  See G. L. c. 40T, § 2 (a) ("Nothing 
9 
 
herein shall prohibit the owner from taking actions to terminate 
an affordability restriction"). 
 
The distinctions between project-based and tenant-based 
subsidies (and among the various tenant-based subsidies 
themselves) are not insignificant.  Generally, all Section 8 
tenants contribute a portion of their income to the rent based 
on an income indicator, amounting to the higher of thirty per 
cent of their monthly adjusted income or ten per cent of their 
monthly gross income.8  See 42 U.S.C. §§ 1437f(o)(2)(A), 
1437a(a)(1).  There are, however, variations on the general 
scheme depending on the subsidy program, including who is 
responsible for determining a unit's rental price.  For project-
based entities, the PHA is responsible for setting rental prices 
for specific units.  See 24 C.F.R. §§ 983.301 (2014), 983.302 
(2006).9 
 
Rental prices for tenants holding tenant-based vouchers, on 
the other hand, are negotiated between the owner and the tenant.  
24 C.F.R. § 982.506 (1999).  The Secretary of HUD sets a 
"payment standard" applicable to the units selected by the 
tenant, based on the fair market rental value of the unit, and 
                                                          
 
 
8 Gross income is all income, while adjusted income is gross 
income minus deductions and allowances.  See 24 C.F.R. § 5.611 
(2000). 
 
 
9 The PHA will redetermine the rent value upon request of 
the owner or after a decrease in the unit's fair market value.  
24 C.F.R. § 983.302 (2006). 
10 
 
in accordance with HUD regulation.  See 42 U.S.C. 
§ 1437f(o)(1)(A)-(B).  Where the rent established in negotiation 
between the owner and the tenant exceeds the established payment 
standard, the PHA will pay only the difference between the 
income indicator and the payment standard, as opposed to the 
rental value, meaning that holders of tenant-based vouchers may 
be subject to paying a greater portion of their income than 
tenants living in project-based units.  See id. at 
§ 1437f(o)(2)(B). 
 
Enhanced vouchers, a more protective variation on the 
tenant-based subsidy, insulate holders from these rent 
variances, as their rent payments are still determined based on 
the difference between the income indicator and the rent, even 
if that rent exceeds the payment standard.  Id. at 
§ 1437f(t)(1)(B).  In either tenant-based subsidy scenario, 
however, the rental value negotiation between an owner and 
tenant-based subsidy holder is subject to PHA approval, meaning 
that PHAs can opt not to approve a rental agreement and refuse 
to pay the subsidy if the PHA determines that the rent is not 
"reasonable."  See 24 C.F.R. § 982.507 (2014); 42 U.S.C. 
§ 1437f(o)(10)(B).  Because rents are established by the PHA 
under the project-based subsidy program, tenants living in 
11 
 
project-based units are not subject to any reasonableness 
determination.10 
 
b.  Factual and procedural background.11  The seven named 
plaintiffs in the amended complaint are an amalgamation of 
current Burbank tenants, prospective tenants, and organizations 
that represent the interests of other Burbank tenants and more 
prospective Burbank residents in the community.  The four 
individual plaintiffs, En Ci Guan, Richard Webster, Byron 
Alford, and Satisha Cleckley, are all members of protected 
classes.  Prior to the defendants' decision not to renew their 
Section 8 HAP, Guan and Webster lived in units supported by 
Section 8 project-based subsidies.  Alford was a resident of a 
Burbank unit not supported by the Section 8 project-based 
subsidy, and Cleckley was a nontenant who had sought to apply 
for an apartment at Burbank.  Neither Alford nor Cleckley was 
ever in receipt of the project-based subsidy.  The individual 
plaintiffs claimed that the decision to allow the project-based 
subsidy to lapse discriminates against current Burbank tenants 
                                                          
 
 
10 Tenants with tenant-based subsidies may also be subject 
to rescreening for eligibility.  See 42 U.S.C. § 1437f(o)(6)(B).  
This is not true for tenants living in units supported by 
project-based subsidies.  24 C.F.R. § 983.255 (2010). 
 
 
11 We draw the facts from the allegations in the complaint, 
as well as exhibits attached thereto, which we accept as true, 
and matters of public record.  See Ortiz v. Examworks, Inc., 470 
Mass. 784, 785 n.3 (2015); Schaer v. Brandeis Univ., 432 Mass. 
474, 477 (2000). 
12 
 
and potential Burbank tenants in the Fenway community.  The 
three organizational plaintiffs, Burbank Apartments Tenant 
Association, made up of tenants who reside at Burbank; the 
Massachusetts Coalition for the Homeless, a nonprofit 
corporation that works with homeless individuals and families; 
and the Fenway Community Development Corporation, a nonprofit 
corporation devoted to enhancing diversity in the Fenway 
neighborhood, alleged that the loss of low income housing at 
Burbank would harm the neighborhood.  The defendants are the 
principals and owners of Burbank.12 
 
Burbank is a scattered site 173-unit rental development 
located in the Fenway neighborhood of Boston.  Beginning in 
1970, the defendants began renovation of Burbank with the 
assistance of a federally insured and subsidized § 221(d)(3) 
BMIR mortgage loan.  See 12 U.S.C. § 1715l(d)(3).  Pursuant to 
their regulatory agreement with HUD, the defendants were 
obligated to lease the Burbank apartments to low or moderate 
income families for "so long as the contract of mortgage 
insurance continues in effect."  The defendants' mortgage was to 
                                                          
 
 
12 Burbank Apartments is owned and managed by defendant 
Burbank Apartments Company.  Burbank Apartments Corporation is 
the general partner of Burbank Apartments Company; First Realty 
Management Corporation manages Burbank Apartments on behalf of 
Burbank Apartments Company; William K. Kargman is principal of 
Burbank Apartments Corporation and First Realty Management 
Corporation; and Robert M. Kargman is principal of Burbank 
Apartments Corporation. 
13 
 
be fully paid by April 1, 2011, with prepayment of the mortgage 
permitted as of April 1, 1991. 
 
In 1982, the eligible tenants occupying Burbank's units 
began to receive support from project-based Section 8 
subsidies.13  Sixty-seven of the 173 units were designated as 
project-based Section 8 units. 
 
The defendants opted not to prepay their loan in 1991.  
Instead, they signed an ELIPHA use agreement14 in 1994, 
specifying that HUD "shall not require the [defendants] to renew 
or extend any assistance contract beyond [April 1, 2011,] and 
shall not subject the [defendants] to more onerous requirements 
than those which exist under the Section 8 program."  The use 
agreement remained in effect for the balance of the HAP. 
 
In 2010, the defendants provided a one-year notice of 
expiration to HUD and the subsidized tenants at Burbank, as 
required by both Federal and State statute.15  See 42 U.S.C. 
§ 1437f(c)(8); G. L. c. 40T § 2 (b).  As of April, 2011 (when 
the HAP ended), tenants in 129 of the 173 units at Burbank 
                                                          
 
 
13 Prior to 1982, low income tenants at Burbank received 
rental assistance under a predecessor to the Section 8 program. 
 
 
14 The agreement provided that sixty-seven units would be 
set aside to very low income families; seventy-five units for 
lower income families; and twenty-eight units to moderate income 
families (allotting affordability restrictions on 170 of the 173 
units). 
 
 
15 Notice was sent in February, March, and May, 2010.  It is 
undisputed that the defendants satisfied the notice requirement. 
14 
 
(including each of the three individual plaintiffs who were 
existing tenants) were deemed eligible for the enhanced voucher 
program.16  As a consequence of Burbank's decision to leave the 
project-based subsidy program, the Boston Housing Authority 
obtained funding for a total of 171 new Section 8 enhanced 
vouchers, which can be retained by the city of Boston regardless 
of whether they would be used at Burbank. 
 
As alleged in the complaint, Burbank tenants, including 
those receiving Section 8 subsidies, are, on average, more 
diverse than the surrounding neighborhood, and have a lower 
income than the area median.  For example, as of December 16, 
2010, sixty-five per cent of the Section 8 households at the 
development had heads of household who were either persons of 
color, Hispanic, or both.  On the other hand, the population of 
the Fenway zip code area is sixty-six per cent white, and the 
immediate census tract is seventy-three per cent white and only 
six per cent African-American.  In addition, the majority of 
prospective tenants who were on the waiting list for project-
based Section 8 units at Burbank were members of protected 
classes.  As of December, 2009, two-thirds of the prospective 
tenants on the waiting list were persons of color, and in 
                                                          
 
 
16 In addition to the tenants occupying the sixty-seven 
units that were previously part of the project-based Section 8 
program, sixty-two other Burbank apartments also were deemed 
eligible to receive Section 8 enhanced vouchers due to the 
defendants' decision not to renew the project-based subsidies. 
15 
 
December, 2010, only one of the responding eighty prospective 
tenants on the waiting list identified himself or herself as 
"white." 
 
The plaintiffs' amended complaint raised two claims.  The 
first count alleged subsidy discrimination, in violation of 
G. L. c. 151B, § 4 (10), because Guan and Webster, who were 
receiving the project-based subsidies prior to April 1, 2011, 
would no longer be eligible for such subsidies.  Further subsidy 
discrimination was alleged under G. L. c. 151B, § 4 (5) and 
(10), because applicants and prospective applicants for the 
project-based units, including Cleckley and Alford, claimed that 
the defendants' decision rendered them ineligible for a 
sufficient housing subsidy, and they are therefore unable to 
afford market rents at Burbank. 
 
The second count alleged that the defendants' decision not 
to renew the HAP was unlawful because it was discriminatory, 
based on both disparate treatment and disparate impact, in 
violation of G. L. c. 151B, § 4, and 42 U.S.C. § 3604. 
 
The judge granted the defendants' motion to dismiss both 
counts of the amended complaint, pursuant to Mass. R. Civ. P. 12 
(b) (6), for failure to state a claim on which relief can be 
granted.  With respect to the first count, subsidy 
discrimination under G. L. c. 151B, § 4 (10), the judge ruled 
that the defendants "lawfully transitioned from one form of 
16 
 
Section 8 subsidy (project-based) to another form of Section 8 
subsidy (individual enhanced Section 8 vouchers) as [they were] 
permitted to do under [F]ederal law."  The tenant plaintiffs 
were therefore not unlawfully discriminated against when they 
received the enhanced vouchers as opposed to the project-based 
subsidies.  The judge dismissed the prospective applicants' 
G. L. c. 151B, § 4 (10), claims as too speculative and 
indefinite. 
 
As for the second count, the judge dismissed the claim for 
intentional discrimination (a ruling that the plaintiffs have 
not appealed), and adopted a per se rule that precludes 
disparate impact liability where the decision not to renew a 
project-based subsidy was reached in compliance with applicable 
statutes and regulations. 
 
2.  Discussion.  We review the allowance of a motion to 
dismiss de novo, accepting as true the facts alleged in the 
plaintiffs' amended complaint and exhibits attached thereto, and 
favorable inferences that reasonably can be drawn from them, see 
Coghlin Elec. Contractors, Inc. v. Gilbane Bldg. Co., 472 Mass. 
549, 553 (2015).  We also take into consideration matters of 
public record.  See Schaer v. Brandeis Univ., 432 Mass. 474, 477 
(2000).  Those alleged facts, and reasonable inferences drawn 
therefrom, must plausibly suggest an entitlement to relief.  See 
Flagg v. AliMed, Inc., 466 Mass. 23, 26-27 (2013), quoting 
17 
 
Iannacchino v. Ford Motor Co., 451 Mass. 623, 636 (2008).  The 
facts, therefore, "must be enough to raise a right to relief 
above the speculative level."  Iannacchino, supra, quoting Bell 
Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (Twombly).  
While "detailed factual allegations" are not required at the 
pleading stage, mere "labels and conclusions" will not survive a 
motion to dismiss.  Iannacchino, supra, quoting Twombly, supra. 
 
On appeal, the plaintiffs pursue a discrimination claim 
because, as they argue, the defendants' decision has -- and 
inevitably will continue to -- challenge integration efforts and 
perpetuate the segregation that has plagued Boston, generally, 
and the Fenway neighborhood, specifically.17  The plaintiffs 
argue that the defendants' decision not to renew their HAP 
subjects the defendants to subsidy discrimination, in violation 
of G. L. c. 151B, § 4 (10); and housing discrimination, in 
violation of 42 U.S.C. §§ 3604(a), (b) and G. L. c. 151B, §§ 4 
(6), (7), and (11).  Neither shoe fits.18 
                                                          
 
 
17 According to a Boston Globe article summarizing the 
findings of the 2015 Harvard Joint Center for Housing Studies 
report, "[d]evelopers aren’t building enough units suitable for 
families or for senior citizens, and high development costs make 
it hard to produce new housing that a low- or middle-income 
renter can afford."  Study Finds Rents Soaring as Apartment 
Supply Lags, Boston Globe, Dec. 10, 2015, at C3. 
 
 
18 The defendants' argument that § 4122(a) of the Low-Income 
Housing Preservation and Resident Home Ownership Act of 1990, 12 
U.S.C. §§ 4101 et seq. (prohibiting any State law that "[1] 
restricts or inhibits the payment of any mortgage . . . ; [2] 
18 
 
 
a.  Subsidy discrimination under G. L. c. 151B, § 4 (5), 
(10).  The plaintiffs, in the first count of their complaint, 
contend that the defendants' decision not to renew the project-
based Section 8 subsidies constitutes public assistance 
discrimination under G. L. c. 151B, §§ 4 (5) and (10). 
 
It is "an unlawful practice . . . to discriminate against 
any . . . tenant receiving [F]ederal, [S]tate, or local housing 
subsidies . . . because of any requirement of such . . . housing 
                                                                                                                                                                                           
restricts or inhibits an owner . . . from receiving the 
authorized annual return . . . ; [or] [3] is inconsistent with 
any provision of this subchapter") preempts G. L. c. 151B, § 4 
(10), is inapposite.  The defendants argue that G. L. c. 151B, 
§ 4, is preempted both by express preemption and by conflict 
preemption.  Neither applies in this case.  The express 
preemption argument is overcome by 12 U.S.C. § 4122(b), which 
makes clear that the policy covered in § 4122(a) does not affect 
laws of general applicability, such as State fair housing laws, 
which are "not inconsistent with the provisions of this 
subchapter."  Nothing in G. L. c. 151B, § 4, is inconsistent 
with Federal law.  See, e.g., Attorney Gen. v. Brown, 400 Mass. 
826, 829-830 (1987) ("Both G. L. c. 151B, § 4 [10] and 42 U.S.C. 
§ 1437f [1982] share a common goal, i.e., affordable, decent 
housing for those of low income"; no preemption of G. L. 
c. 151B, § 4 [10]).  The conflict preemption argument can 
likewise be disposed of by our case law.  See id. at 830 ("The 
Federal statute merely creates the scheme and sets out the 
guidelines for the funding and implementation of the program. 
. . .  It does not preclude State regulation"). 
 
 
The defendants also argue that G. L. c. 151B, § 4 (10), 
would constitute an unconstitutional regulatory taking under the 
Fifth Amendment to the United States Constitution.  We reject 
this argument, because even if we were to determine that G. L. 
c. 151B, § 4, precluded the defendants from deciding not to 
renew their project-based subsidy contract, the defendants still 
would "continue to derive significant economic benefit from 
their property as a whole."  Blair v. Department of Conservation 
and Recreation, 457 Mass. 634, 645 (2010). 
19 
 
subsidy program," G. L. c. 151B, § 4 (10), or to "aid[ or] abet" 
such a violation.19  G. L. c. 151B, §§ 4 (5), (10).  See DiLiddo 
v. Oxford St. Realty, Inc., 450 Mass. 66, 78 (2007).  General 
Laws c. 151B, § 4 (10), has the goal of providing "affordable, 
decent housing for those of low income."  Attorney Gen. v. 
Brown, 400 Mass. 826, 830 (1987).  "[T]he decision not to enroll 
in a voluntary governmental program by itself [does not] 
constitute[] unlawful discrimination under G. L. c. 151B, § 4 
(10)."  Hennessey v. Berger, 403 Mass. 648, 652 (1988).  
However, the voluntary nature of a program does not preclude the 
application of State law "mandating participation [in the 
voluntary Federal program] absent some valid nondiscriminatory 
reason for not participating."  Brown, supra.20  In short, 
                                                          
 
 
19 Paragraph ninety-six of the plaintiffs' complaint alleges 
subsidy discrimination under G. L. c. 151B, § 4 (5), along with 
§ 4 (10).  A case finding a defendant liable for subsidy 
discrimination under § 4 (5)'s "aid[ing or] abet[ing]" language 
alone has neither been called to our attention nor disclosed by 
our own research; we will therefore consider the subsidy 
discrimination claim under § 4 (5) only as a base line for the 
§ 4 (10) claim. 
 
 
20 We recognize that the defendants' use agreement 
specifically provided that it "shall not require the 
[defendants] to renew or extend any assistance contract beyond 
[April 1, 2011,] and shall not subject the [defendants] to more 
onerous requirements than those which exist under the Section 8 
program."  Federal and State statutes likewise indicate that the 
defendants were under no legal obligation to renew or enter into 
a new project-based HAP contract when the use agreement ended.  
See 42 U.S.C. § 1437f(c)(8)(A) (providing protections for 
tenants after project-based subsidies end, and therefore 
20 
 
although the defendants are not obligated to participate in the 
project-based subsidy program, that fact alone does not shield 
them from an adequately pleaded claim.  The plaintiffs, however, 
have failed to adequately plead such a claim. 
 
The plaintiffs' subsidy discrimination claim plays out 
differently for the various groups.  We begin with the claim 
made by Guan.21  His claim relies largely on the assertion that 
he will be injured by the change in subsidy program because the 
enhanced vouchers he received are less favorable than the 
project-based subsidies.  Beyond bare "labels and conclusions," 
Iannacchino, 451 Mass. at 636, quoting Twombly, 550 U.S. at 555, 
the plaintiffs allege no facts to suggest that the decision to 
opt out of the project-based subsidy program violated the fair 
housing statutes or was discriminatory in nature.  Every 
participant in the project-based subsidy program prior to its 
nonrenewal was deemed eligible for an enhanced voucher, which 
the defendants accepted and encouraged their tenants (both those 
                                                                                                                                                                                           
indicating that Federal government recognized that programs 
would eventually end); G. L. c. 40T §§ 2 (a), 7 (same). 
 
 
21 Richard Webster, who was, like En Ci Guan, living in a 
unit supported by project-based subsidies, passed away during 
pendency of the case, or he would have been included in this 
group. 
21 
 
formerly part of the project-based program and those who were 
not but received enhanced vouchers) to continue to use.22 
 
This case does not present a situation in which the 
property owner has placed a barrier on tenancy due to the 
proffer of a certain form of subsidy, and not provided for an 
alternative means to remain in the unit.  Contrast DiLiddo, 450 
Mass. at 72.  Instead, it is the lawful replacement of one form 
of subsidy (project-based) with another (tenant-based), both of 
which allowed the tenants to remain in their units.  It is 
indeed telling that every former participant in the project-
based subsidy -- including Guan -- continued to occupy his or 
her unit after the HAP lapsed, relying instead on the tenant-
based enhanced voucher subsidies.  It is therefore apparent that 
the defendants were willing to accept, as the Federal statute 
requires, and even accommodate, tenants who were receiving 
housing subsidies. 
 
Moreover, it is not apparent that receipt of the enhanced 
vouchers has, or will, disadvantage these plaintiffs.23  At any 
                                                          
 
 
22 The February 18, 2010, notification sent to the tenants 
by the defendants explicitly stated that "[w]e want our 
residents to stay at Burbank Apartments" and that "[t]he owners 
and staff are working to provide assistance to our residents." 
 
 
23 Allegations in the complaint imply that the protection 
afforded low income tenants by enhanced vouchers are not 
equivalent to that offered by project-based subsidies.  Those 
allegations include that the enhanced vouchers lose their 
enhanced status if the tenant leaves Burbank, that tenants can 
22 
 
rate, even if we were to assume that receipt of the project-
based subsidies is more favorable than the enhanced vouchers, 
what the law requires is that the defendants not discriminate 
against public assistance recipients in general, not that they 
must provide the best -- or any particular -- form of rental 
assistance. 
 
The next group consists of the nonparticipating plaintiffs, 
Alford and Cleckley.  These plaintiffs allege that the decision 
not to renew the project-based subsidy constituted 
discrimination because they sought to apply for the project-
based subsidy.  They further allege that they and others will be 
excluded from Burbank at some time in the future, whether or not 
they have tenant-based subsidies. 
 
We agree with the motion judge that these plaintiffs have 
failed to state a claim under G. L. c. 151B, §§ 4 (5) and (10).  
                                                                                                                                                                                           
be deemed ineligible for the enhanced vouchers, that the units 
in which tenants were previously living would no longer be 
subsidized, and that they are more politically vulnerable, more 
likely to be the target of budget cuts, and have more 
detrimental program rules.  Such allegations are, as they apply 
to the to the participating tenant plaintiffs, both speculative 
and indefinite in nature.  See Iannacchino v. Ford Motor Co., 
451 Mass. 623, 636 (2008), quoting Bell Atl. Corp. v. Twombly, 
550 U.S. 544, 555 (2007) (Twombly).  The plaintiffs also allege 
that tenants using tenant-based subsidies are subject to a 
greater extent to fluctuations in rent prices.  However, nothing 
in the complaint indicates that the defendants raised the rental 
value beyond any level of reasonableness, such that a PHA may 
opt not to approve the lease or cover the rent.  In any event, 
these concerns border on being "labels and conclusions," which 
carry less weight in our analysis.  See Iannacchino, supra, 
quoting Twombly, supra. 
23 
 
It is not only the speculative and indefinite nature of the 
claims that is their death knell.  Simply put, the complaint 
contains no allegations that the defendants have discriminated 
against any tenant receiving Section 8 subsidies, or that the 
defendants have refused to consider the applications of 
prospective tenants because of such subsidies.  As to the 
allegation that the defendants will no longer accept the 
project-based subsidies, which these plaintiffs claim may be the 
basis of their claim of subsidy discrimination, those subsidies 
are appurtenant not to the tenant (or prospective tenant), but 
to the rental unit.24 
 
The plaintiffs have therefore failed to allege facts 
"plausibly suggesting," Iannacchino, 451 Mass. at 636, quoting 
Twombly, 550 U.S at 555, that the defendants' decision violated 
G. L. c. 151B, §§ 4 (5) or (10).  The defendants did not 
discriminate against "a tenant receiving" a housing subsidy, but 
instead lawfully transitioned from one form of Section 8 subsidy 
to another, as is permitted under the Federal regulations. 
 
b.  Discriminatory housing accommodation.  The plaintiffs 
take issue with the motion judge's determination that the 
defendants' decision not to renew their HAP contract is immune 
from a disparate impact challenge under the fair housing 
                                                          
 
 
24 This same analysis precludes Cleckley's "independent 
basis" for relief under G. L. c. 151B, § 4 (10), for 
discrimination against a "recipient of . . . public assistance." 
24 
 
statutes.  They contend that precluding such a claim would be 
akin to reading an unwarranted exception for otherwise legal 
nonrenewal of a Section 8 HAP into the overriding discrimination 
proscriptions of the fair housing statutes.  We agree. 
 
i.  Disparate impact claims under the FHA and the cognate 
Massachusetts fair housing statute.  Disparate impact occurs 
when a decision "disproportionately disadvantage[s]" members of 
a protected class.  See Lopez v. Commonwealth, 463 Mass. 696, 
712 (2012).  See also Inclusive Communities, 135 S. Ct. at 2513, 
2521.  There is no "single test" to demonstrate disparate 
impact.  Langlois v. Abington Hous. Auth., 207 F.3d 43, 50 (1st 
Cir. 2000). 
 
We begin with the general framework for Federal housing 
discrimination claims pursuant to the FHA.  Claims under the FHA 
may be alleged under either disparate treatment or disparate 
impact theories.  See Inclusive Communities, 135 S. Ct. at 2518, 
2524-2525 (extrapolating disparate impact theory under Title 
VIII from similar precedent, set by Griggs v. Duke Power Co., 
401 U.S. 424, 431 [1971], construing Federal employment 
discrimination statute claims under Title VII).  However, while 
the Supreme Court has concluded that discrimination claims based 
on a disparate impact theory may be brought under the FHA, we 
have yet to determine whether such a fair housing claim could 
also be pleaded based on discriminatory impact under the 
25 
 
Commonwealth's antidiscrimination law.  We conclude that such a 
claim is cognizable. 
 
In School Comm. of Braintree v. Massachusetts Comm'n 
Against Discrimination, 377 Mass. 424 (1979) (Braintree), we 
recognized that, like Title VII, the Massachusetts employment 
discrimination statute, G. L. c. 151B, § 4 (1), "proscribes not 
only overt discrimination but also practices that are fair in 
form, but discriminatory in operation."  Id. at 429 n.10, 
quoting Griggs, supra.  We later expanded our disparate impact 
jurisprudence to claims under G. L. c. 151B, § 4A (interference 
claims).  See Lopez, 463 Mass. at 710-711.  Although we have not 
considered whether disparate impact claims apply to G. L. 
c. 151B, § 4, in its entirety, the Appeals Court has further 
broadened disparate impact application to other subsections of 
G. L. c. 151B.  See Porio v. Department of Revenue, 80 Mass. 
App. Ct. 57, 68-69 (2011) (reviewing disparate impact claim 
under § 4 [1C]). 
 
Our decision to amplify our disparate impact analysis 
derives from the language of the statute and the purpose of our 
housing discrimination laws, which, like those preventing 
employment discrimination, seek to eradicate discrimination in 
all its forms, be they based on intent or effect.  
"[A]ntidiscrimination laws must be construed to encompass 
disparate-impact claims when their text refers to the 
26 
 
consequences of actions and not just to the mindset of actors, 
and where that interpretation is consistent with statutory 
purpose."  Inclusive Communities, 135 S. Ct. at 2518.  
General Laws c. 151B, §§ 4 (6), (7) and (11), prohibit conduct 
that results in a "refus[al] to rent or lease or sell or 
negotiate for sale" on the basis of membership in a protected 
class.  This language indicates that it is not only the intent 
behind discriminatory housing actions that the Legislature 
sought to punish, but also the consequences of such actions. 
 
Our conclusion is also tethered to the policy underlying 
the fair housing statutes.  See Inclusive Communities, supra at 
2521 ("[r]ecognition of disparate-impact claims is consistent 
with the FHA's central purpose").  After all, it is a steadfast 
principle in the affordable housing context that "[c]onduct that 
has the necessary and foreseeable consequence of perpetuating 
segregation can be as deleterious as purposefully discriminatory 
conduct in frustrating the national commitment to replace the 
ghettos by truly integrated and balanced living patterns" 
(quotation and citation omitted).  Metropolitan Hous. Dev. Corp.  
v. Village of Arlington Heights, 558 F.2d 1283, 1289 (7th Cir. 
1977), cert. denied, 434 U.S. 1025 (1978).  Therefore, just as 
the Supreme Court deduced, based on precedent from Title VII, 
that a disparate impact theory of liability could appropriately 
be brought under Title VIII in the housing context, we too 
27 
 
conclude from our employment discrimination precedent that such 
a theory of liability is cognizable under G. L. c. 151B, §§ 4 
(6), (7), and (11). 
 
ii.  Disparate impact claims under fair housing statutes 
where the defendant acted in accord with law.  Having concluded 
that disparate impact claims are generally cognizable under the 
fair housing statutes, we must determine whether they may arise 
in the context before us.  The defendants urge us to embrace a 
per se rule precluding disparate impact liability under the fair 
housing statutes where a property owner has acted in accord with 
statute, regulation, and contract, absent evidence of 
intentional discrimination.  We decline to adopt such a rule. 
 
Our analysis begins again with the policy behind the fair 
housing statutes, namely, to "provide[] a clear national policy 
against discrimination in housing."  H. R. Rep. No. 100-711, 
100th Cong., 2d Sess., 15 (1988).  See 42 U.S.C. § 3601 ("It is 
the policy of the United States to provide, within 
constitutional limitations, for fair housing throughout the 
United States"); G. L. c. 151B, § 9 (Commonwealth's 
antidiscrimination statutes, including its fair housing 
statutes, "shall be construed liberally for the accomplishment 
of its purposes, and any law inconsistent with any provision of 
this chapter shall not apply").  See also Trafficante v. 
Metropolitan Life Ins. Co., 409 U.S. 205, 211 (1972) (FHA 
28 
 
implements "policy that Congress considered to be of the highest 
priority"); Massachusetts Bay Transp. Auth. v. Boston Carmen's 
Union, Local 589, Amalgamated Transit Union, 454 Mass. 19, 26 
(2009) (antidiscrimination policy under G. L. c. 151B is "well 
defined and dominant" and "the overriding governmental policy 
proscribing various types of discrimination"); Dahill v. Police 
Dep't of Boston, 434 Mass. 233, 241 (2001) ("We construe G. L. 
c. 151B, § 4, to . . . the fullest effect").  The statute's 
"broad and inclusive compass," therefore, is accorded "generous 
construction" (quotations omitted).  Edmonds v. Oxford House, 
Inc., 514 U.S. 725, 731 (1995), quoting Trafficante, supra at 
209, 212. 
 
Our canons of statutory construction militate toward the 
same result.  The defendants argue that, where "a general 
statute and a specific statute cannot be reconciled, the general 
statute must yield to the specific statute" (citation omitted).  
Hennessey, 403 Mass. at 651.  They also assert that we must give 
full effect and force to the legislative intent in managing the 
subsidy program, such that property owners would have some 
flexibility in choosing to eschew participation in the Section 8 
subsidy program.  This would require a determination that the 
specific statutes (those allowing for nonrenewal of project-
based HAPs) take precedence over general fair housing policies 
(against discrimination in housing).  The judge below agreed, 
29 
 
determining that, although the general policy behind the fair 
housing statutes is to stamp out discrimination, Congress and 
the Legislature indicated a specific intent to manage the manner 
in which the Federal subsidy programs should be operated. 
 
But support for such an interpretation is not so clear cut.  
Although a fundamental precondition to satisfying the goals of 
the fair housing statutes is incentivizing private owners, 
through federally subsidized loans and tax breaks, to offer 
affordable housing,25 it is also a goal to ensure that such 
programs and the private owners they subsidize do not act in a 
discriminatory manner with regard to such housing.  It is a 
balance of those interests that Congress and the Legislature 
sought to strike with the fair housing statutes and regulations. 
 
Adopting a bright-line rule prohibiting disparate impact 
liability where a property owner follows the project-based 
                                                          
 
 
25 This goal has become increasingly important recently in 
Boston.  See City Will Raise its Fees on Builders, Boston Globe, 
Dec. 9, 2015, at A1 ("Developers will have to pay nearly double 
the current fees to put up luxury buildings in Boston's hottest 
neighborhoods, with the money going to expand the city's stock 
of affordable housing, according to an executive order to be 
signed [December 9, 2015,] by Mayor Martin J. Walsh"); Lower 
Price Housing On Rise, Boston Globe, July 7, 2015, at A1 ("So 
far in 2015, the city has permitted 450 units of low-income 
families, up 25 percent from the same period last year"); 
Boston's Struggle With Income Segregation, Boston Globe, March 
6, 2016, at A1 ("In 1970, just 8 percent of families in Boston 
and the surrounding cities and towns lived in the poorest 
neighborhoods.  Now, the figure is more than twice as high -- 20 
percent.  Over the same period, the proportion of families 
living in the wealthiest neighborhoods has nearly tripled, from 
6 percent to 16 percent"). 
30 
 
Section 8 statutory scheme, absent evidence of intentional 
discrimination, would run counter to those policies preventing 
housing discrimination in all forms that were delineated by both 
Congress and the Legislature.  We will not shoehorn into the 
fair housing statutes what HUD would describe as an "additional 
exemption[] [that] would be contrary to Congressional intent."  
78 Fed. Reg. 11460, 11477 (2013).  See id. at 11460; Inclusive 
Communities, 135 S. Ct. at 2514 (citing HUD regulations 
favorably).  See also DiLiddo, 450 Mass. at 77 (declining to 
read exception into G. L. c. 151B, § 4 [10], as contrary to "the 
statute's clear terms").  Therefore, although the defendants 
never committed a breach of their Section 8 contract, followed 
the Federal and State requirements in deciding not to renew the 
project-based subsidies, and subsequently accepted the enhanced 
vouchers, this alone does not end the inquiry.  Instead, our 
disparate impact analysis will consider whether such actions 
were sufficient to insulate protected classes from 
discriminatory negative impacts the defendants might have 
caused.  Graoch Assocs. No. 33, L.P. v. Louisville/Jefferson 
County Metro Human Relations Comm'n, 508 F.3d 366, 377 (6th Cir. 
2007) (Graoch) ("The mere fact that a landlord often can 
withdraw from Section 8 without violating the terms of Section 8 
or the FHA does not mean that withdrawal from Section 8 never 
can constitute a violation of the FHA"); Brown, 400 Mass. at 830 
31 
 
("It does not follow that, merely because Congress provided for 
voluntary participation, the States are precluded from mandating 
participation absent some valid nondiscriminatory reason for not 
participating"). 
 
We therefore choose not to adopt the motion judge's 
interpretation.  Although, "[i]n the absence of explicit 
legislative commands to the contrary, we construe statutes to 
harmonize and not to undercut each other," School Comm. of 
Newton v. Newton Sch. Custodians Ass'n, Local 454, 438 Mass. 
739, 751 (2003), we perceive no contrary commands in the fair 
housing statutes, nor a specific intent supplied to trump the 
overarching general principle.  Indeed, the statutes are 
harmonious:  Congress created a comprehensive incentive program 
to encourage property owners to continue to offer Section 8 
subsidies in order to increase affordable housing.  See 42 
U.S.C. § 1437f.  Because it became obvious that those property 
owners would inevitably opt to prepay their mortgages -- or 
eventually not renew their Section 8 contract -- Congress, and 
then the Legislature, through G. L. c. 40T,26 again stepped in to 
ensure that the previously contracted property owners would 
maintain an efficient, fair, and nondiscriminatory post-HAP 
                                                          
 
 
26 In an amicus brief, the Department of Housing & Community 
Development expresses the policy behind G. L. c. 40T as "both 
encourag[ing] the continuing existence of affordable housing and 
protect[ing] tenants in the event that an affordability 
restriction is terminated." 
32 
 
rental regime.  In so doing, a notice requirement was 
instituted, and Congress obligated the owners to accept the 
mobile or enhanced vouchers.  See 42 U.S.C. § 1437f; G. L. 
c. 40T, § 2 (b). 
 
The statutes and regulations creating Section 8 contracts, 
and those regarding ending such contracts, are therefore 
harmonious in their goals:  incentivizing efforts to combat 
segregation, and protecting residents living in affordable 
housing while maintaining economical mechanisms by which 
property owners can effectuate such a purpose.  Because the 
defendants in this case have benefited -- starting with the 
federally subsidized loans to undertake substantial renovations 
on Burbank Apartments in the early 1970s -- from the incentives 
afforded by the Section 8 project-based subsidies, it is 
incumbent on them, should they choose to eschew such benefits, 
to do so in a manner that is in conformity with the legislative 
aspirations based on which they initially entered into the 
Section 8 contract.  This is evidenced by the fact that Congress 
has provided a program of enhanced vouchers, under which 
property owners like the defendants must act if they do not 
renew their HAP.  See 12 U.S.C. § 4113(d).  This Federal 
requirement underscores that, although Section 8 participation 
is initially voluntary, the policy ramifications that attend 
such participation endure beyond the term of the contract.  See 
33 
 
Graoch, 508 F.3d at 376-377 ("[T]o say that Section 8 
participation is 'voluntary' is only to say that a landlord does 
not break the law by declining to participate. . . .  [A]lmost 
every action that could create disparate-impact liability under 
the FHA is voluntary").27 
 
This result is in accord with fair housing precedent, as 
violating a regulation or breaking the law has never been a 
prerequisite to disparate impact liability.  See, e.g., Graoch, 
supra at 376 n.5, 377 (court "reject[ed] a categorical rule 
against disparate-impact challenges to withdrawals" of private 
property owners from Section 8 voucher program, even though such 
withdrawal from voluntary program was in accordance with statute 
and regulation:  "[a]lthough Congress created the Section 8 
program six years after passing the FHA, . . . it did not 
include language indicating that Section 8 landlords should be 
exempt from any FHA requirements").  We therefore do not agree 
with the judgment below that the defendants' compliance with 
Federal and State regulations and statutes is a per se bar to 
disparate impact liability.  Instead, we conclude that the 
                                                          
 
 
27 We acknowledge the decisions in Salute v. Stratford 
Greens Garden Apartments, 136 F.3d 293, 302 (2d Cir. 1998), and 
Knapp v. Eagle Prop. Mgt. Corp., 54 F.3d 1272, 1280-1281 (7th 
Cir. 1995), concluding that disparate impact claims cannot 
result from an owner's decision not to renew a project-based 
Section 8 subsidy contract.  It is our view, however, that these 
decisions, in concluding that an action need be otherwise 
violative of the law before facing a disparate impact claim, 
ignore the legislative policies behind the fair housing regime. 
34 
 
general and the specific interests of the fair housing statutes 
are not mutually exclusive, and a disparate impact claim is 
cognizable even if a defendant who is a private owner adheres to 
statutory, regulatory, and contractual obligations. 
 
iii.  Pleading requirements.  Having concluded that 
disparate impact claims are cognizable under G. L. c. 151B, § 4 
(6), (7), and (11), as they are under the FHA, we must now 
explicate pleading requirements for such claims.  In so doing, 
we will follow the burden-shifting framework laid out by HUD and 
adopted by the Supreme Court in Inclusive Communities, 135 S. 
Ct. at 2424-2425.28  See Chevron U.S.A., Inc. v. Natural 
Resources Defense Council, 467 U.S. 837, 843 (1984) (court 
defers to HUD's implementing regulations as long as they are 
"permissible construction of the statute").  See also 
Implementation of the Fair Housing Act's Discriminatory Effects 
Standard, 78 Fed. Reg. 11460, 11461 (2013); Inclusive 
Communities, 135 S. Ct. at 2514-2516.  The first step in the 
burden-shifting analysis is germane to the present case.  To 
establish a prima facie case for disparate impact housing 
discrimination under the FHA, and therefore survive a motion to 
dismiss, the plaintiffs bear the burden of alleging facts 
                                                          
 
 
28 "When interpreting . . . specific provisions of G. L. 
c. 151B . . . we consider Federal case law construing cognate 
provisions of the Fair Housing Act unless we discern a reason to 
depart from those decisions."  Andover Hous. Auth. v. Shkolnik, 
443 Mass. 300, 306 (2005). 
35 
 
showing that the "challenged practice caused or predictably will 
cause a discriminatory effect."  Inclusive Communities, supra at 
2514, quoting 24 C.F.R. § 100.500 (c) (1) (2014). 
 
The Supreme Court emphasized the need to balance the 
interests of both property owners and protected classes by 
requiring a rigorous examination on the merits at the pleading 
stage.  See Inclusive Communities, 135 S. Ct. at 2523.  To avoid 
the risk of "interpreting disparate-impact liability to be so 
expansive as to inject racial considerations into every housing 
decision," id. at 2524, courts must "examine with care whether 
plaintiff[s] ha[ve] made out a prima facie case of disparate 
impact."  Id. at 2523.  Fair housing claims based on the theory 
of disparate impact should therefore be limited to "avoid the 
serious constitutional questions that might arise."  Id. at 
2522.  Such a showing, for instance, may not be "imposed based 
solely on a showing of a statistical disparity."  Id.  More 
particularly, the plaintiffs cannot satisfy this burden "[i]f a 
statistical discrepancy is caused by factors other than the 
defendant's policy."  Id. at 2514.  Instead, the plaintiffs must 
meet a "robust causality requirement," id. at 2523, by 
"point[ing] to a defendant's policy or policies causing that 
[statistical] disparity."  Id.  A practice or policy is 
"contrary to the disparate-impact requirement [if it creates] 
'artificial, arbitrary, and unnecessary barriers'" that create 
36 
 
discriminatory effects or perpetuate segregation.   Id. at 2524, 
quoting Griggs, 401 U.S. at 431.29 
                                                          
 
 
29 The explication of the Supreme Court's pleading 
requirements established in Texas Dep't of Hous. & Community 
Affairs v. The Inclusive Communities Project, Inc., 135 S. Ct. 
2507 (2015) (Inclusive Communities), for disparate impact claims 
under the FHA leaves a number of questions unanswered.  Our 
understanding is that the Court's call for "adequate 
safeguards," including a "robust causality requirement," id. at 
2523, indicates a higher burden for disparate impact plaintiffs 
under the FHA than under Title VII.  Contrast Swierkiewicz v. 
Sorema N.A., 534 U.S. 506, 511 (2002) (plaintiffs need not plead 
prima facie case to survive motion to dismiss under Title VII); 
Lopez v. Commonwealth, 463 Mass. 696, 712 n.20 (2012) 
("Statistical data, which generally is the source of evidence of 
disparate impact, will be required at later stages of the 
proceedings . . . but is not required at the pleading stage" 
[citation omitted]).  The Court justifies such a heightened 
pleading requirement by surmising that "prompt resolution of 
these cases is important."  Inclusive Communities, supra at 
2523. 
 
 
A handful of courts have interpreted the pleading 
requirements imposed by the Court in Inclusive Communities.  
Each one has subjected the disparate impact claims to the 
rigorous prima facie consideration called for by the Supreme 
Court.  See, e.g., Merritt vs. Countrywide Fin. Corp., U.S. 
Dist. Ct., No. 09-cv-01179-BLF (N.D. Cal. Sept. 17, 2015) 
(allowing plaintiffs to amend complaint after dismissal for 
failure to show disparate impact or to identify specific policy 
that causally links to alleged disparity); Ellis vs. 
Minneapolis, U.S. Dist. Ct., No. 14-cv-3045(SRN/JJK), slip op. 
at 21 (D. Minn. Aug. 24, 2015) (dismissing disparate impact 
claim because "allegations of a statistical disparity alone are 
insufficient to make out a prima facie case" without causal link 
between challenged policy and disparity, particularly because 
lack of "factual support[] that [plaintiffs] have been prevented 
from renting any of their units or that any tenants have been 
displaced"); Los Angeles vs. Wells Fargo & Co., U.S. Dist. Ct., 
No. 2:13-cv-09007-ODW(RZx), slip op. at 28 (C.D. Cal. July 17, 
2015) (allowing defendant's motion for summary judgment on 
plaintiffs' FHA claims). 
37 
 
 
iv.  Application to the present case.  The fair housing 
statutes make it unlawful to "make unavailable or deny[] a 
dwelling to any person because of race, color, religion, sex, 
familial status, or national origin," and bar discrimination 
"against any person in the terms, conditions, or privileges of 
. . . rental of a dwelling . . . because of race, color, 
religion, sex, familial status, or national origin."  42 U.S.C. 
§§ 3604(a)-(b).  See G. L. c. 151B, § 4 (6), (7), and (11).  
Based on the Supreme Court's pleading requirements, the 
plaintiffs must meet a "robust causality requirement" in order 
to show that a policy by the defendants created a 
disproportionately negative statistical discrepancy in available 
housing for members of a protected class.  See Inclusive 
Communities, 135 S. Ct. at 2523; 42 U.S.C. §§ 3604(a)-(b); G. L. 
c. 151B, § 4 (6), (7), and (11).  The plaintiffs have failed to 
satisfy such pleading requirements. 
 
The plaintiffs' housing discrimination claims are applied 
to two classes of individuals, the current tenants (with 
project-based subsidies before the HAP lapsed) and the 
prospective tenants (whether or not they are on the waiting 
list).  The claim for the current tenants boils down to two 
facts:  (1) the defendants' decision not to renew their project-
based Section 8 subsidy contract has denied and will deny or 
38 
 
withhold housing from current low income tenants; (2) such 
tenants are disproportionately members of protected classes. 
 
The plaintiffs have not sufficiently pleaded disparate 
impact discrimination as to the existing tenants at Burbank.  
Indeed, the amended complaint does not set forth any harm to 
plausibly suggest an entitlement to relief.  See Flagg, 466 
Mass. at 26-27.  All of the tenants previously enjoying the 
Section 8 project-based subsidies were deemed eligible for 
enhanced vouchers, which not only allow them to remain in their 
apartments at Burbank, but also to choose to live at another 
property while still receiving Section 8 benefits.  The 
plaintiffs have not pointed to anything other than speculative 
prospective harm to these tenants.  See part 2.a, supra.  The 
suggestion that at some point in the future rents might increase 
beyond the level covered by the enhanced vouchers, or, because 
enhanced vouchers are subject to rescreening, some tenants might 
be found ineligible at some point in the future, is inadequate 
to state a claim under Mass. R. Civ. P. 12 (b) (6). 
 
The claim that the defendants' decision disproportionately 
disadvantaged the prospective tenants is also tenuous.  This 
claim likewise is premised on two facts:  (1) the prospective 
tenants on the waiting list are disproportionately members of 
protected classes; (2) without the benefit of project-based 
subsidies, the prospective tenants will almost invariably not be 
39 
 
able to afford to live in the sixty-seven project-based 
subsidized units in which they might at some point in time have 
had the chance to live absent the defendants' decision.  The 
claim presents two problems.  First, it is speculative and 
indefinite.  There is no guarantee that any of the individuals 
on the waiting list would have had the opportunity to take 
advantage of the Section 8 housing at Burbank even if the 
project-based HAP was renewed; prospective tenants' eligibility 
to move into the sixty-seven project-based units does not 
necessarily mean they would actually, at some point in the 
future, have such an opportunity.  Indeed, the complaint offers 
no facts, beyond bare "labels and conclusions," Iannacchino, 451 
Mass. at 636, quoting Twombly, 550 U.S. at 555, that, even if 
those sixty-seven units did become available in the future, the 
prospective tenants who are members of a protected class would 
have the opportunity to move in.  Second, and more importantly, 
the allegations do not meet the "robust causality requirement" 
in showing that the defendants' actions resulted in a 
statistical disparity, thereby supporting a claim that the 
defendants disproportionately disadvantaged members of a 
protected class.  See Inclusive Communities, 135 S. Ct. at 2523.  
In the present case, it is apparent that, as of April 1, 2011, 
when the project-based subsidy ended, more tenants inhabiting 
Burbank units were eligible for Section 8 subsidies (129) than 
40 
 
ever before (sixty-seven when the project-based subsidies 
ended).  There were, then, more low and middle income tenants 
(who, based on the plaintiffs' statistics, are 
disproportionately members of protected classes) eligible for 
federally subsidized Section 8 housing (whether the enhanced 
vouchers are as beneficial as the project-based subsidies or 
not) because of the defendants' decision.  The plaintiffs 
therefore have not shown that the defendant's decision not to 
renew their HAP has resulted in a disproportionately negative 
impact on members of protected classes, and, in any event, they 
cannot meet the robust causality requirement necessary to 
satisfy a prima facie disparate impact claim. 
 
The effect of the defendants' decision not to renew the 
project-based subsidies is therefore distinguishable from the 
"heartland" cases of disparate impact liability, id. at 2522, in 
which the defendant's actions unfairly function to "exclude 
[members of protected classes] from certain neighborhoods 
without any sufficient justification," id., by, say, demolishing 
a development and making it wholly unavailable.  See Charleston 
Hous. Auth. v. United States Dep't of Agric., 419 F.3d 729, 733-
734 (8th Cir. 2005) (owner's decision to discontinue Section 8 
subsidies, prepay mortgage, and demolish building would have 
been illegal as resulting in disparate impact on existing and 
prospective African-American tenants).  See also Huntington v. 
41 
 
Huntington Branch, Nat'l Assoc. for the Advancement of Colored 
People, 488 U.S. 15, 16-18 (1988) (overturning zoning law 
restricting construction of multifamily housing projects to part 
of town where fifty-two per cent of residents were people of 
color in town that was ninety-eight per cent Caucasian and four 
per cent African-American).  It is likewise different from other 
cases in which the defendant's actions did or would alone have 
caused a statistical disparity based on membership in a 
protected class.  See, e.g., Greater New Orleans Fair Hous. 
Action Ctr. v. St. Bernard Parish, 641 F. Supp. 2d 563, 569, 
577-578 (E.D. La. 2009) (invalidating ordinance allowing only 
"blood relative[s]" to rent housing units in section of city 
where residents were "88.3% Caucasian and 7.6% African-
American"). 
 
We are not presented here with a case in which the property 
owner's actions exacerbated the differences between the project-
based and tenant-based subsidies.  The complaint does not, for 
instance, indicate that the defendants raised the rent for the 
Burbank units to such a degree that the PHA refused to pay them 
as unreasonable.  See 24 C.F.R. § 982.507; 42 U.S.C. 
§ 1437f(o)(10)(B) (PHAs allowed to refuse to pay unreasonable 
rents).  Had the defendants done so, thereby causing a 
disproportionate disadvantage for tenants of protected classes 
who had no other means to supplement the rental costs, it is 
42 
 
possible that such actions would have resulted in a complaint 
that satisfied the "robust causality requirement" necessary to 
plead a disparate impact liability claim.  Here, however, there 
is no evidence to show that the tenants occupying the sixty-
seven units previously subsidized by project-based Section 8 
subsidies are negatively affected by the currently offered 
Section 8 enhanced vouchers, nor is there any indication that 
the defendants' decision will lead to a disproportionate 
disadvantage to members of protected classes living in Burbank, 
specifically, and the Fenway neighborhood, generally (whether 
they sought to rent a project-based unit at Burbank or not). 
 
We do not discern any alleged action by the defendants that 
justifies the imposition of disparate impact liability under the 
circumstances, as the plaintiffs have not sufficiently pleaded 
that the defendants' decision will cause any discriminatory 
effect.  See Inclusive Communities, 135 S. Ct. at 2514, quoting 
24 C.F.R. § 100.500(c)(1) (2014).  As a consequence, the 
plaintiffs have failed sufficiently to plead a prima facie case 
of disparate impact discrimination under 42 U.S.C. §§ 3604(a) 
and (b), as well as under G. L. c. 151B, § 4 (6), (7), and (11). 
 
3.  Conclusion.  For the foregoing reasons, the allowance 
of the defendants' motion to dismiss both counts of the 
plaintiffs' amended complaint is affirmed. 
 
 
 
 
 
 
 
So ordered.