1998 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

7-30-1998

NJ Coalition Rooming v. Mayor & Cncl Asbury

Precedential or Non-Precedential:

Docket 97-5483

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Recommended Citation

"NJ Coalition Rooming v. Mayor & Cncl Asbury" (1998). 1998 Decisions. Paper 179.

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Filed July 30, 1998 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

NO. 97-5483 

NEW JERSEY COALITION OF ROOMING AND BOARDING 

HOUSE OWNERS; LOUIS COOK; JOHN E. BROWN; 

LEONARD LEVY; CAROL WISE; BRENDA COPELAND; 

MICHAEL BYRNE; BEVERLY DEMING; EUGENE HODAS 

 Appellants 

v. 

MAYOR AND COUNCIL OF THE CITY OF ASBURY PARK; 

THE CITY OF ASBURY PARK, A MUNICIPAL 

CORPORATION OF THE STATE OF NEW JERSEY; MAYOR 

AND COUNCIL OF THE TOWNSHIP OF NEPTUNE; THE 

TOWNSHIP OF NEPTUNE, A MUNICIPAL CORPORATION 

OF THE STATE OF NEW JERSEY; MAYOR AND COUNCIL 

OF KEANSBURG; BOROUGH OF KEANSBURG, A 

MUNICIPAL CORPORATION OF THE STATE OF 

NEW JERSEY 

MAYOR AND COUNCIL OF THE CITY OF ASBURY PARK; 

THE CITY OF ASBURY PARK 

 Defendants/Third-Party Plaintiffs 

v. 

STATE OF NEW JERSEY 

 Third-Party Defendant 

On Appeal From the United States District Court 

For the District of New Jersey 

(D.C. Civ. No. 94-cv-05134) 
Argued: May 4, 1998 

Before: BECKER, Chief Circuit Judge, 

SCIRICA and COWEN, Circuit Judges. 

(Filed July 30, 1998) 

 ROBERT C. GRIFFIN, ESQUIRE 

 (ARGUED) 

 Griffin & Griffin 

 415 Route 10 

 Suite 7 

 Randolph, NJ 07869 

 Attorney for Appellants, 

 New Jersey Coalition of Rooming and 

 Boarding House Owners; Louis Cook; 

 John E. Brown; Leonard Levy; 

 Carol Wise; Brenda Copeland; 

 Michael Byrne; Beverly Deming; 

 Eugene Hodas 

 GLENN C. MOTYCZKA, ESQUIRE 

 (ARGUED) 

 JAMES J. HIGGINS, ESQUIRE 

 Boyar, Higgins & Suozzo, P.A. 

 10 Park Place, Suite 415 

 Morristown, NJ 07960 

 DONALD L. BEEKMAN, ESQUIRE 

 47 Main Avenue 

 P.O. Box 395 

 Ocean Grove, NJ 07756 

 Attorneys for Appellees, 

 Mayor and Council of the Township 

 of Neptune, and Township of 

 Neptune 

 2 
 PETER VERNIERO, ESQUIRE 

 Attorney General of New Jersey 

 JOSEPH L. YANNOTTI, ESQUIRE 

 Assistant Attorney General 

 CHERYL R. CLARKE, ESQUIRE 

 (ARGUED) 

 Deputy Attorney General 

 Office of Attorney General General of 

 New Jersey 

 Richard J. Hughes Justice Complex 

 P.O. Box 112 

 Trenton, NJ 08625 

 Attorneys for Appellee, 

 State of New Jersey 

OPINION OF THE COURT 

BECKER, Chief Circuit Judge. 

The New Jersey Coalition of Rooming and Boarding 

House Owners (the "Coalition"), which represents owners of 

rooming and boarding houses ("R&B houses") in the 

Neptune, New Jersey area, together with a number of

individuals who are residents of those R&B houses, sued in 

the district court to have the Rooming and Boarding House 

Municipal Licensing Law, N.J. Stat. Ann. S 40:52-9 et seq. 

(the "Licensing Law" or the "Act"), and Neptune Ordinances 

Nos. 1658 and 1661 (the "Ordinances"), declared invalid 

under the United States and New Jersey constitutions, the 

New Jersey Law Against Discrimination, N.J. Stat. Ann. 

S 10:5-1 et seq. ("NJLAD"), and the Fair Housing 

Amendments Act of 1988, 42 U.S.C. S 3601 et seq. 

("FHAA"). Defendants are the Township of Neptune and the 

State of New Jersey.1 

The FHAA declares that it is unlawful "to discriminate 

against any person in the terms, conditions, or privileges of 

_________________________________________________________________ 

1. Originally, the City of Asbury Park and the Borough of Keansburg 

were also named as defendants. Before trial, these defendants settled 

with plaintiffs. 

 3 
sale or rental of a dwelling, or in the provision of services 

or facilities in connection with such dwelling, because of a 

handicap of -- (A) that person; . . . or (C) any person 

associated with that person." 42 U.S.C. S 3604(f)(2).2 The 

FHAA further provides that discrimination includes "a 

refusal to make reasonable accommodations in rules,

policies, practices, or services, when such accommodations 

may be necessary to afford such person equal opportunity 

to use and enjoy a dwelling." 42 U.S.C. S 3604(f)(3)(B). It 

also stipulates that "any law of a State, a political 

subdivision, or other such jurisdiction that purports to 

require or permit any action that would be a discriminatory 

housing practice under this subchapter shall to that extent 

be invalid." 42 U.S.C. S 3615. 

Plaintiffs challenged a number of provisions in the Act 

and Ordinances. The district court granted relief on several 

of the plaintiffs' claims and invalidated portions of the Act 

and Ordinances, specifically provisions that imposed 

onerous inspection, licensing, bonding, and zoning 

requirements. Defendants have not appealed from those 

aspects of the district court's order. The court denied relief 

on the plaintiffs' other claims because it determined that 

they lacked standing in view of certain grandfathering 

provisions in the Act. Plaintiffs seek here to overturn the 

_________________________________________________________________ 

2. Plaintiffs assert, and the district court apparently found, that a 

significant percentage of the residents of the R&B houses and a number 

of the individual plaintiffs are handicapped individuals, many of whom 

have been deinstitutionalized from state mental hospitals. New Jersey 

contends that the FHAA does not apply because only a very small 

percentage of handicapped persons live in R&B houses. It supports this 

contention with statistics from certain government reports. New Jersey's 

assertion is controverted, however. In Finding of Fact ("FOF") 14, the 

district court found that a disproportionately high number of people in 

R&B houses have disabilities. See New Jersey Coalition of Rooming and 

Boarding House Owners v. Mayor and Council of the City of Asbury Park, 

Civ. No. 94-5134, at *5 (D.N.J. Jul. 8, 1997). Similarly in FOF 15, the 

district court cited legislative findings that R&B houses are occupied 

primarily by the elderly, disabled and poor. See id. And in FOF 16, the 

district court quoted several R&B owners who testified that most of their 

residents were disabled or otherwise unable to care for themselves. See 

id. The district court's finding that the FHAA applies here is thus 

supported in the record. 

 4 
district court's standing determination so that the court 

may reach the merits of the remaining provisions, 

especially the "distance and density" provisions, which limit 

the number of new R&B houses that can be licensed in a 

municipality and cap the total number of R&B house 

residents to one-half of one percent of the total population 

of each municipality in New Jersey. For reasons that will 

appear, we conclude that the district court made 

insufficient factual findings for us to review its standing 

determination. Because there are several plausible theories 

upon which standing may exist, we will vacate and remand 

for further factual development and a new determination by 

the district court regarding plaintiffs' standing. 

To fully review this case, we must also address a number 

of dispositive rulings on various aspects of plaintiffs' claims 

that would be controlling on remand. In particular, we 

examine the district court's decisions not to award plaintiffs 

compensatory damages, punitive damages, or counsel fees, 

and we highlight several statutory and constitutional claims 

that may require further consideration by the district court. 

In the end, we will reverse the district court's determination 

that it need not award compensatory damages once actual 

damages have been shown; we will affirm on the punitive 

damages issue because the district court's factualfinding 

that Neptune did not act outrageously or with reckless 

disregard for plaintiffs' federal rights is not clearly 

erroneous; and we will vacate and remand on the counsel 

fees issue for de novo consideration because of confusion 

surrounding certain procedural issues. 

I. 

The Act and Ordinances complained of here are the 

progeny of the Rooming and Boarding House Act of 1979, 

N.J. Stat. Ann. S 55:13B-1 et seq. ("RBHA") adopted by the 

New Jersey Legislature "to provide for the health, safety and 

welfare of all of those who reside in rooming and boarding 

houses in the State. . . ." N.J. Stat. Ann. S 55:13B-2. 

Specifically, the legislature found that because R&B house 

residents were predominately elderly, disabled, and poor, 

they required protection from building and safety hazards, 

as well as from unscrupulous and predatory neighbors and 

 5 
owners. See id. To accomplish this, the RBHA requires any 

person who owns or operates an R&B house first to obtain 

a license from the Commissioner of the Department of 

Community Affairs (the "DCA"). See N.J. Stat. Ann. 

S 55:13B-7(a). It also provides standards to ensure that 

every R&B house is constructed in a manner that will 

protect the health, safety, and welfare of its residents while 

at the same time promoting a homelike atmosphere 

appropriate to such facilities. See N.J. Stat. Ann. S 55:13B6. Those standards include, for example: safety fromfire; 

safety from structural, mechanical, plumbing and electrical 

deficiencies; adequate light and ventilation; physical 

security; protection from harassment, fraud, and eviction 

without due cause; clean and reasonably comfortable

surroundings; the adequate rendering of personal and 

financial services in boarding houses; disclosure of owner 

identification information; and maintenance of orderly and 

sufficient financial and occupancy records. See id. To 

ensure compliance with these standards, the regulatory 

scheme provides for annual inspections by the State of all 

licensed R&B houses. See N.J. Stat. Ann.S 55:13B-9.

In December 1993, New Jersey enacted the Licensing 

Law, which gave the governing body of each municipality in 

New Jersey the option of assuming from the State the 

licensing responsibility for R&B houses. See N.J. Stat. Ann. 

S 40:52-10. Upon exercising that option, a municipality 

becomes responsible for ensuring compliance with State 

and local laws and therefore for protecting the health, 

safety, and welfare of the residents of those facilities. The 

Act requires that municipality to create an authority, in 

accordance with N.J. Stat. Ann. S 40:52-18, to assume the 

State's former duty of investigating applicants and their 

proposed R&B houses to determine, among other things, 

whether the facilities in question "are in compliance with all 

applicable building, housing, health and safety code 

regulations." N.J. Stat. Ann. S 40:52-13(a). Also, the 

licensing authority verifies that the applicant has never 

been convicted "of a crime involving moral turpitude, or any 

crime under any law of the State licensing or regulating a 

rooming and boarding house" and has never had its license 

revoked under the RBHA. N.J. Stat. Ann. S 40:52-13(b). 

 6 
In early 1994, the Neptune Town Council, acting under 

the authority vested in it by the Licensing Law, adopted two 

Ordinances, Nos. 1658 and 1661, and assumed local 

control over R&B licensing in Neptune. Ordinance No. 1661 

established a "Site Licensing Board" consisting of three 

persons and adopted virtually all of the essential elements 

of the Licensing Law. Ordinance No. 1658 required, among 

other things, that each R&B house owner secure a 

Certificate of Inspection prior to leasing, renting, or 

otherwise allowing the occupancy of any unit, room, or 

rental dwelling space within its facility. 

II. 

The district court found that a number of provisions of 

the Act and Ordinances violated the FHAA. The invalidated 

provisions had required: (1) R&B house owners to get 

Certificates of Inspection each time a new tenant occupied 

a room in their house; (2) public hearings before the Site 

Licensing Board would issue operating licenses to R&B 

house owners; (3) R&B house owners to secure bonding to 

cover relocation costs in the event that their R&B house 

was forced to close; and (4) applicants for site licensing to 

obtain zoning approvals for premises that had already been 

shown to have been properly zoned. See New Jersey 

Coalition of Rooming and Boarding House Owners v. Mayor 

and Council of the City of Asbury Park, Civ. No. 94-5134, at 

*34 (D.N.J. Jul. 8, 1997) ("District Court Opinion"). The 

district court found that these provisions were freighted 

with discriminatory intent, were unduly burdensome to 

plaintiffs, and that the Township had failed to make 

reasonable accommodations to allow handicapped persons 

to live in the residences and communities of their choice. 

See id. at 26-29. As we have observed, defendants have not 

appealed those aspects of the district court's order that 

invalidated portions of the Act and Ordinances. 

With respect to the balance of their claims, however, the 

district court ruled against plaintiffs. Most notably, on the 

ground that plaintiffs lacked standing, the court did not 

reach their claims challenging the distance and density 

provisions of the Act. The district court also made several 

other rulings that are perforce before us now. The court 

 7 
found that it had discretion to award compensatory 

damages but decided that this was an inappropriate case in 

which to exercise that discretion because the R&B owners 

(the only plaintiffs for whom the district court found any 

standing) were not members of the protected group of 

handicapped individuals. The district court also rejected 

plaintiffs' claims for punitive damages in view of its 

determination that defendants did not act with the requisite 

outrageousness and reckless disregard of plaintiffs' federal 

rights. Finally, the court failed to mention (and thus 

effectively denied) plaintiffs' request for counsel fees and 

costs as a prevailing party under the FHAA. 

III. 

As noted above, the district court refused to consider 

plaintiffs' challenges to the distance and density provisions 

of the Licensing Law on the grounds that plaintiffs lacked 

standing to assert them. The distance provision states that 

no license shall be issued for any R&B house when any 

part of the boundary line of any other R&B house is within 

1,000 feet (in the case of a municipality with a population 

greater than 100,000, the standard may be increased to 

2,000 feet). See N.J. Stat. Ann. S 40:52-14(c). The density 

section provides that no license shall be issued that would 

result in increasing the total number of persons authorized 

to be residents in R&B houses within the municipality to: 

(1) more than 100 in a municipality having a population of 

20,000 or fewer, or (2) to more than one-half of one percent 

of the population in any other municipality. See N.J. Stat. 

Ann. S 40:52-14(b). Clearly, the evident purpose of both of 

these provisions is to permit municipalities to limit the 

number of R&B residents and/or homes within their 

borders. Plaintiffs assert that this scheme is as patently 

illegal as would be one that limited the number and/or 

housing options of members of an ethnic group within a 

particular municipality. 

The ground upon which the district court found that

plaintiffs lacked standing was that the Act and the

Ordinances contained a "grandfather" clause that exempted 

all existing R&B homes from application of the distance and 

density provisions. See N.J. Stat. Ann.S 40:52-14(b) & (c) 

 8 
("but nothing in this subsection shall warrant refusal of a 

license or license renewal for premises where a rooming or 

boarding house has been in lawful operation prior to the 

enactment of this act"). The court reasoned that there was, 

therefore, no way in which plaintiffs, all of whom are 

owners or residents of existing R&B homes in Neptune, 

could be harmed by these provisions. There are, however, a 

number of other possible bases under which plaintiffs could 

establish standing to challenge the distance and density 

provisions, but these have either been inadequatelyfleshed 

out in the record or lack sufficient factual findings by the 

district court to facilitate our review. While there is an 

extensive section of the district court's opinion labeled 

"Findings of Fact," in reality, the numbered "findings" are, 

for the most part, no more than recitations of various 

witnesses' testimony. 

First, plaintiffs maintain that there has been a decline in 

the R&B housing stock in Neptune due to the distance and 

density provisions of the Act, and that it will therefore be 

difficult for disabled individuals to find lodging in the 

future. There is evidence in the record to this effect. For 

example, Ms. Andress testified that the Ordinances reduced 

the number of R&B houses in the community. See District 

Court Opinion, at *12. In addition, other evidence indicates 

that current R&B owners, despite the grandfather clauses, 

may have been detrimentally affected by the distance and 

density provisions. Notably, Mr. Mumford testified that his 

business volume and the financial rewards he could obtain 

decreased because of the Act, see id. at 11, and Ms. 

Andress opined that, although her R&B house was fully 

rented, the Act and Ordinances hurt her because the value 

of her property declined and consequently she could no 

longer sell her property and retire as planned. See id. at 13. 

Similarly, the Act and Ordinances preclude current owners 

from expanding their facilities into adjacent lots because 

only existing R&B houses are grandfathered. Finally, 

plaintiffs adduced evidence that they are harmed not only 

by the Act and Ordinances themselves, but also by the 

hostile manner in which defendants administered them. 

See id. at 12-13. 

Although further factual development is necessary, the 

evidence and theories just described might be sufficient to 

 9 
establish standing by the R&B owners and/or the resident 

plaintiffs to challenge the distance and density provisions of 

the Act. However, because these possible bases for standing 

may well be factually challenged and, at all events, have 

been inadequately fleshed out in the record and lack 

sufficient findings to facilitate our review, we will vacate the 

judgment of the district court and remand for further 

proceedings at which the plaintiffs will have the opportunity 

to attempt to establish standing in the first instance. If they 

succeed, the district court will then reach the merits. 

IV. 

A. Compensatory Damages 

Although it granted relief on certain claims, the district 

court declined to award compensatory damages, which are 

said by plaintiffs to flow from emotional harm resulting 

from: (1) the distress to owners and residents caused by not 

knowing whether they would be forced to close or move, 

and (2) the distress to the residents caused by not being 

able to live in the housing units which they desired, and/or 

fearing they would have to leave a place that could

accommodate their needs and in which they felt safe. 

Specifically, plaintiffs point to several findings of fact and 

conclusions by the district court that they claim 

demonstrate the intangible damages that they suffered. 

These include repeated public meetings in Neptune 

Township denouncing R&B houses (FOF 43); meetings 

between Neptune and state officials intended to reduce the 

number of deinstitutionalized in Neptune (FOF 28); the 

appointment of biased members to the Site Licensing Board 

(FOF 31), which caused owners and residents to live in fear 

of having their R&B houses closed by a "corrupted" local 

licensing system (FOF 35); and the adoption of onerous and 

unnecessary provisions designed to discourage R&B house 

owners from remaining in the community, such as 

mandating the fingerprinting of R&B house owners and 

requiring R&B owners to prove their pre-existing, nonconforming zoning status to retain their licenses (FOF 45, 

38-40; Conclusion of Law 40). See District Court Opinion, 

at 8-12, 26. 

 10 
Apparently, the district court believed that the FHAA 

conferred upon it the discretion to decide whether to award 

compensatory damages. See District Court Opinion, at *31 

("The plaintiff owners claim that they were harmed due to 

the distress caused by not knowing whether they would be 

forced to close. I find that such damages are not 

appropriate in this case. . . . Damages for emotional 

distress in discrimination cases are generally granted to the 

members of the protected group . . . . This rationale simply 

does not apply in this case . . . ."). This conclusion is 

understandable given the wording of the compensatory 

damage provision in the FHAA: "In a civil action under 

subsection (a) of this section, if the court finds that a 

discriminatory housing practice has occurred or is about to 

occur, the court may award to the plaintiff actual and 

punitive damages," 42 U.S.C. S 3613(c)(1) (emphasis added), 

and the surprisingly sparse case law in this area. 

While at first glance this language ("may award") appears 

discretionary, we decline to accept the district court's 

reading, and instead endorse the Ninth Circuit's thoughtful 

opinion in United States v. Hayward, which concluded that 

the compensatory damages provisions of the FHAA are 

mandatory.3 See United States v. Hayward, 36 F.3d 832, 

839-40 (9th Cir. 1994). In Hayward, the Ninth Circuit 

relied on the Supreme Court's reasoning in Curtis v. 

Loether, 415 U.S. 189, 197 (1974), which found no 

discretion with respect to actual damages under a 

predecessor damages provision of the Fair Housing Act of 

1968, 42 U.S.C. S 3610 et seq. ("FHA"), and the legislative 

history of the FHAA, which parroted the language of the old 

damage provision when it amended the FHA without 

making any substantial changes or mentioning the Curtis 

decision. In deciding that a party could demand a jury trial 

in a civil action under the FHA, a unanimous Supreme 

Court in Curtis had analyzed the formerS 3612, the 

predecessor damage provision to the one at issue here, and 

found that "if a plaintiff proves unlawful discrimination and 

_________________________________________________________________ 

3. Our discussion with respect to counsel fees, see infra S IV.C, is 

another example where statutory language that appears discretionary on 

its face has been construed in a such way as to restrict trial courts' 

judgment. 

 11 
actual damages, he is entitled to judgment for that

amount." Curtis, 415 U.S. at 197. The court based this 

conclusion upon its characterization of the claim as a legal 

claim for damages, rather than an equitable claim for 

restitution. See id. 

As the Ninth Circuit points out, when Congress amended 

the FHA in 1988 and replaced the damage provision at 

issue in Curtis with S 3613, it did not substantially change 

any language therein, nor did it indicate any displeasure 

with the Curtis decision. The former S 3612(c) provided: 

"The court . . . may award to the plaintiff actual damages 

and not more that $1,000 punitive damages . . . ." The new 

S 3613(c) provides: "[T]he court may award to the plaintiff 

actual and punitive damages . . . ." The wording in the 

amended damage provision is virtually identical to old 

language except that Congress eliminated the $1,000 cap 

on punitive damages. The legislative history of the new 

enforcement provisions in the FHAA confirms this reading: 

 Section [3613(c)] provides for the types of relief a court 

 may grant. This section is intended to continue the 

 types of relief that are provided under current law, but 

 removes the $1,000 limitation on the award of punitive 

 damages. The Committee believes that the limit on 

 punitive damages served as a major impediment to 

 imposing an effective deterrent on violators and a 

 disincentive for private persons to bring suits under 

 existing law. 

H.R.Rep. No. 711, 100th Cong., 2d Sess., 39-40 (1988), 

reprinted in, 1988 U.S.C.C.A.N. 2173, 2200-01 (footnotes 

omitted). On the basis of this language and the unanimous 

mandate of the Supreme Court, we agree with the Ninth 

Circuit that "Congress did not intend the courts to have 

discretion to award actual compensatory damages if a party 

has actual damages," for if it did, "it would have changed 

the language of the new damages provisions when it 

enacted the 1988 Amendments." Hayward, 36 F.3d at 839. 

Thus, "if a party proves actual damages, a district court's 

award of compensatory damages is mandatory, not 

discretionary." Id. 

Defendants advance several alternative arguments in the 

 12 
event that we were to conclude, as we have, that the award 

of damages under S 3613(c)(1) is mandatory. First, they 

contend, and the district court held, that damages for 

emotional distress should only be available to the 

deinstitutionalized, and not to the R&B owners, because 

the owners are not members of a protected group under the 

FHAA. We find nothing in the statute, however, that

distinguishes between handicapped plaintiffs and those 

who are not. The statute directs that the court "may award 

to the plaintiff actual and punitive damages."4 42 U.S.C. 

S 3613(c)(1) (emphasis supplied). Given thatS 3613(c)(1) 

requires the district court to award damages if they are 

proven, we see no basis in the language or history of the 

statute to carve out groups of legitimate plaintiffs to which 

S 3613(c)(1) does not apply (and defendants have not 

identified any precedent to the contrary). 

We find support for this conclusion in United States v. 

Scott, 809 F. Supp. 1404, 1406-07 (D. Kan. 1992), where 

the court permitted the seller of a home intended to be 

used as a group home for physically and mentally 

handicapped adults to sue as an "aggrieved person" under 

the FHAA and to recover actual compensatory damages for 

emotional distress based upon specific instances of "cool 

treatment and social shunning" by the defendants. 

Therefore, should plaintiffs ultimately prevail on remand 

over defendants' alternative positions discussed next (as 

well as on the distance and density provisions if they can 

establish standing), the district court will be required to 

calculate damages. 

Defendants also make several fact-based arguments why 

compensatory damages are not warranted here. For 

example, defendants claim that there is not enough 

evidence of emotional distress related to actions taken by 

Neptune officials (as opposed to the Ocean Grove 

_________________________________________________________________ 

4. 42 U.S.C. S 3604(f)(2) declares that it is unlawful "to discriminate 

against any person in the terms, conditions, or privileges of sale or 

rental 

of a dwelling, or in the provision of services or facilities in connection 

with such dwelling, because of a handicap of -- (A) that person; . . . or 

(C) any person associated with that person." Thus, under the FHAA, 

plaintiffs can be both handicapped and non-handicapped individuals. 

 13 
Homeowners Association) to justify compensation. 

Defendants also urge that, because plaintiffs ultimately 

received their licenses and zoning approvals, they could not 

possibly have suffered emotional distress due to defendants' 

discriminatory practices which only threatened their 

livelihoods. Finally, defendants contend that, because the 

Department of Community Affairs could have closed down 

the R&B houses for legitimate violations prior to the 

passage of the Act and Ordinances, any argument by 

plaintiffs that they suffered emotional distress based upon 

the threat of closure by the Site Licensing Board after 

passage of the Act and Ordinances is unavailing. These 

arguments may in fact prevail, and plaintiffs' damage 

claims may prove ephemeral. However, given the district 

court's erroneous conclusion that it had discretion under 

S 3613(c)(1) to decide whether to award damages, these 

arguments should be considered by the district court on 

remand. 

B. Punitive Damages 

The district court also declined to award punitive 

damages. In so doing, the court concluded that defendants 

were not motivated by "evil motive or intent" and did not 

act with the requisite outrageousness and reckless 

disregard of plaintiffs' federal rights to justify an award of 

punitive damages. See District Court Opinion, at *32. As 

factual findings, we review these conclusions to determine 

if they are clearly erroneous. See Anderson v. Bessemer 

City, 470 U.S. 564, 573 (1985). Under this narrow review, 

we cannot disturb the district court's determination. 

Furthermore, it is not clear that punitive damages can ever 

be awarded against a municipal defendant. See Newport v. 

Fact Concerts, Inc., 453 U.S. 247, 267 n.29 (1981) ("It is 

perhaps possible to imagine an extreme situation where 

taxpayers are directly responsible for perpetrating an 

outrageous abuse of constitutional rights."). We agree with 

the district court that, if they can be, they are not 

warranted here. That is because plaintiffs have not adduced 

evidence of the "widespread and knowledgeable 

participation by the taxpayers" sufficient to meet the 

Supreme Court's Newport exception. See Heritage Homes of 

 14 
Attleboro, Inc. v. Seekonk Water Dist., 670 F.2d 1, 2 (1st 

Cir. 1982). 

C. Counsel Fees 

The district court failed to address plaintiffs' motion for 

counsel fees and costs to which, as the prevailing party, 

they were entitled under 42 U.S.C. S 3613(c)(2).5 As with 

S 3613(c)(1), this provision, which sounds fully 

discretionary -- "the court, in its discretion, may allow the 

prevailing party, other than the United States, a reasonable 

attorney's fee and costs" -- actually is not. 42 U.S.C. 

S 3613(c)(2) (emphasis supplied). In fact, a district court's 

discretion not to grant attorney's fees and costs in civil 

rights cases is tightly cabined. See Newman v. Piggie Park 

Enters., Inc., 390 U.S. 400, 402 (1968) ("It follows that one 

who succeeds in obtaining an injunction under that Title 

should ordinarily recover an attorney's fee unless special 

circumstances would render such an award unjust."); see 

also Blanchard v. Bergeron, 489 U.S. 87, 89 n.1 (1989); 

_________________________________________________________________ 

5. Section 3602(o) provides that " `Prevailing Party' has the same meaning 

as such term has in section 1988 of this title." Defendants contend that 

plaintiffs were not a "prevailing party" for the purposes of the FHAA. 

They argue that, although plaintiffs have won, they have obtained only 

de minimis relief in comparison with what they sought. For example, 

defendants argue that while plaintiffs have gotten certain parts of the 

Act 

and Ordinances enjoined, they sought a permanent injunction barring 

enforcement of the Act and Ordinances in their entirety. Thus, with 

respect to "their real goal," defendants contend that plaintiffs suffered 

"total defeat." We find no merit to this argument. Plaintiffs have easily 

satisfied the "prevailing party" standards set forth in Metropolitan 

Pittsburgh Crusade for Voters v. Pittsburgh, 964 F.2d 244, 250 (3d Cir. 

1992). Namely, plaintiffs " `achieved some of the benefit sought by the 

party bringing the suit' " and the " `litigation constituted a material 

contributing factor in bringing about the events that resulted in 

obtaining the desired relief.' " Id. (quoting Dunn v. United States, 842 

F.2d 1420, 1433 (3d Cir. 1988)). Indeed, the relief realized by plaintiffs 

to this point is far from de minimis, and upon remand, they may be 

successful in invalidating even more of the Act and Ordinances. Of 

course, the district court will have to determine, consistent with Hensley 

v. Eckerhart, 461 U.S. 424, 436 (1983), whether plaintiffs' counsel fee 

request should be reduced because plaintiffs only achieved partial 

success. 

 15 
Hatfield v. Hayes, 877 F.2d 717, 719 (8th Cir. 1989); 

DiFilippo v. Morizio, 759 F.2d. 231, 234 (2d Cir. 1985); 

Leeds v. Watson, 630 F.2d 674, 677 (9th Cir. 1980); David 

v. Travisono, 621 F.2d 464, 468 (1st Cir. 1980); Robinson v. 

Kimbrough, 620 F.2d 468, 474 (5th Cir. 1980); Bonnes v. 

Long, 599 F.2d 1316, 1318 (4th Cir. 1979).6 The district 

court did not find any "special circumstances" justifying its 

decision not to award attorney's fees and costs (in fact, it 

offered no explanation whatever), and we find none.

That being said, we cannot direct an award of counsel 

fees because the procedural history surrounding this aspect 

of the case is murky. Plaintiffs included a request for 

counsel fees and costs in the prayer for relief of their 

complaint. On July 8, 1997, the district court entered a 

judgment in favor of plaintiffs on several issues, against 

them on others, that simply did not mention plaintiffs' 

request for attorneys fees and taxed costs. On July 22, 

1997, plaintiffs filed a timely Notice of Appeal appealing 

from "the final judgment entered in this action on the 8th 

day of July, 1997." App. at iii. On July 29, 1997, twentyone days after the judgment was entered, plaintiffs filed a 

timely "Motion for Relief From Judgment or Order, 

_________________________________________________________________ 

6. In Piggie Park, the Supreme Court was interpreting the fee-shifting 

language contained in S 204(b) of the Civil Rights Act of 1964, 42 U.S.C. 

S 2000a-3(b). In the other cases cited above, the courts were interpreting 

similar language found in 42 U.S.C. S 1988. The language in both 

S 204(b) and S 1988 is almost identical to the language at issue here, and 

under Independent Fed'n of Flight Attendants v. Zipes, 491 U.S. 754, 

758-59 & n.2 (1989) (citation omitted), we are directed that "fee-shifting 

statutes' similar language is `a strong indication' that they are to be 

interpreted alike." See also Bell v. United Princeton Properties, Inc., 

884 

F.2d 713, 719 (3d Cir. 1989) (applying the same standards for sua 

sponte reductions in attorneys' fees requests in ERISA cases as apply in 

civil rights cases); Delaware Valley Citizens' Council for Clean Air v. 

Pennsylvania, 762 F.2d 272, 275 (3d Cir. 1985) (applying same 

standards for setting "reasonable" attorney's fees under the Clean Air Act 

as apply under S 1988), modified on other grounds, 478 U.S. 546 (1986), 

rev'd on other grounds, 483 U.S. 711 (1987). Therefore, we believe that 

the standard enunciated in Piggie Park and Blanchard regarding the 

extent of the district court's discretion to award a prevailing party 

counsel fees is the proper one to apply to cases brought under the 

FHAA. 

 16 
Pursuant to [Fed. R. Civ.] Rule 60, and Motion to Tax 

Costs, Including Attorney Fees, Pursuant to [N.J. Civ.] 

Local Rule 54.1." In paragraphs 10 through 12 of his 

certification accompanying these motions, plaintiffs' 

counsel stated (underscoring in original): 

 I called the Clerk to discuss the taxing of costs under 

 these circumstances. I inquired as to the manner of 

 filing the motion to reform the judgment and obtain 

 attorney fees in light of the 3 day return in [N.J. Civ.] 

 Rule 54.1. Obviously the Clerk would not be entitled to 

 reform a judgment or to assess attorney fees. 

 I was instructed to submit a Bill of Taxed Costs on the 

 presumption that if the judgment was silent, it was 

 intended that costs should be awarded to the

 prevailing party, and make the motion for the 

 remainder of the relief to the Court. 

 I have proceeded in this fashion, therefore, filing this 

 motion pursuant to [Fed. R. Civ.] Rule 60 and Rule 

 54.1 of the local rules, for costs, including attorney 

 fees, which I believe to be appropriate pursuant to 42 

 U.S.C. S 3613(c)(2), to be read in conjunction with 42 

 U.S.C. S 1988. 

The district court denied these motions on October 6, 1997. 

It appears to us that plaintiffs filed a viable (and timely) 

petition for counsel fees pursuant to N.J. Civ. R. 54.1 

within 30 days of the judgment.7 However, when the matter 

came before Judge Brown, to whom the case was assigned 

following the death of Judge Fisher, the only issue that was 

apparently presented to him was the question whether 

Judge Fisher had intentionally or inadvertently left counsel 

fees and costs out of the judgment. Judge Brown concluded 

that the omission was deliberate, and he consequently 

_________________________________________________________________ 

7. It is not clear to us whether plaintiffs should have moved for counsel 

fees under Local Rule 54.1, "Costs", or Local Rule 54.2, "Compensation 

for Services Rendered and Reimbursement of Expenses," and the issue 

has not been briefed. At all events, it was clear from the face of the 

motion what plaintiffs were seeking, so to the extent that they may have 

mislabelled their motion, any mistake is of no moment. 

 17 
denied plaintiffs relief under Rule 60. In his judgment, 

delivered from the bench, Judge Brown concluded: 

 It seems to me that a Rule 60 motion clearly does not 

 lie here. There is no evidence whatsoever of any clerical 

 mistake, rather the order and the findings and 

 conclusions are clear, except to the very limited extent 

 set forth therein; the plaintiff's request for relief was 

 denied and judgment was entered for the defense. 

From these statements, it appears that Judge Brown only 

considered the Rule 60 motion, and not the Local Rule 54.1 

motion, which was timely filed and properly before the 

court. Moreover, it is possible that plaintiffs will prevail on 

additional claims in light of our discussion with regard to 

their standing to challenge the distance and density 

provisions, and hence the district court may have to 

consider counsel fees and costs on those issues in the 

future. 

Given the foregoing circumstances, we think that the best 

approach is to send back this entire matter for 

reconsideration of the Local Rule 54.1 motion. This

disposition will not prejudice defendants because plaintiffs' 

fee request was included in their complaint and was

preserved in their Notice of Appeal filed on July 22, 1997. 

D. Statutory and Constitutional Claims 

Assuming plaintiffs can establish standing upon remand, 

the district court will have to consider several troubling 

aspects of the Act and Ordinances, most notably the

distance and density provisions contained in N.J. Stat. 

Ann. S 40:52-14. If standing is established, the district 

court will have to determine whether these provisions 

violate the FHAA, the United States and New Jersey 

constitutions, and the NJLAD.8 Of course, the court will 

_________________________________________________________________ 

8. While plaintiffs contend that the Licensing Act and Ordinances were 

the result of a malicious, five year effort by defendants to reduce the 

number of mentally handicapped in Neptune to an "acceptable" number 

and therefore served no cognizable interest under the FHAA or the 

United States and New Jersey constitutions, we are satisfied that the 

 18 
take up the statutory claims first and may not have to 

reach the constitutional issues. As noted above, plaintiffs 

contend that the distance and density provisions were 

motivated by discriminatory animus and are unduly 

burdensome on the deinstitutionalized who wish to live in 

the residences and communities of their choice. They 

further submit that the Township has not attempted to 

reasonably accommodate them as required under the FHAA 

and has offered no rational basis or legitimate government 

_________________________________________________________________ 

state and local defendants have established a valid justification for the 

overall regulatory scheme -- namely, to promote the health and safety of 

R&B residents, many of whom require state protection. We therefore 

reject plaintiffs' argument that the Act and Ordinances must be rejected 

in toto because they were the product of discriminatory intent. 

Moreover, since the FHAA provides for the severability of statutes, see 

42 U.S.C. S 3615 ("[A]ny law of a State. . . that purports to require or 

permit any action that would be a discriminatory housing practice under 

this subchapter shall to that extent be invalid.") (emphasis supplied), 

the 

district court properly examined each provision of the Act and 

Ordinances separately when determining whether there were any 

statutory violations. Likewise, a review of New Jersey law indicates that 

ordinances and statutes should be preserved against constitutional or 

other attack to the greatest extent possible. See N.J. Stat. Ann. S 1:1-10 

("If any title, subtitle, chapter, article or section of the Revised 

Statutes, 

or any provision thereof, shall be declared to be unconstitutional, 

invalid 

or inoperative, in whole or in part, by a court of competent jurisdiction, 

such title, subtitle, chapter, article, section or provision shall, to the 

extent that it is not unconstitutional, invalid or inoperative, be 

enforced 

and effectuated, and no such determination shall be deemed to 

invalidate or make ineffectual the remaining titles, subtitles, chapters, 

articles, sections or provisions"); Barone v. Department of Human 

Services, 526 A.2d 1055, 1063 (N.J. 1987) (power to declare statutes 

void must "be delicately exercised"); see also New Jersey v. Patton, 607 

A.2d 191, 194 (N.J. Super. Ct. App. Div. 1992) (if necessary, a court 

" `may engage in a judicial surgery to excise a constitutional defect or 

engraft a needed meaning.' ") (citation omitted), rev'd on other grounds, 

627 A.2d 1112 (N.J. 1993); Gilman v. Newark, 180 A.2d 365, 386-87 

(N.J. Super. Ct. Law. Div. 1962) (when provisions of an ordinance are 

severable, the invalidity of the severable parts does not render the 

entire 

ordinance invalid). Therefore, contrary to plaintiffs' contention, the Act 

and Ordinances do not rise or fall together -- the district court properly 

analyzed each section separately. 

 19 
interest served by "declustering" the deinstitutionalized. 

Although the merits are not properly before us, we note 

that provisions similar to these have already been struck 

down under the FHAA based upon many of the same 

factual findings that the district court in this case has 

already made with respect to the portions of the Act and 

Ordinances on which it found that plaintiffs had standing. 

See e.g., ARC of New Jersey, Inc. v. New Jersey, 950 F. 

Supp. 637 (D.N.J. 1996); Association for Advancement of 

the Mentally Handicapped, Inc. v. Elizabeth, 876 F. Supp. 

614 (D.N.J. 1994); Horizon House Developmental Serv's, Inc. 

v. Township of Upper Southampton, 804 F. Supp. 683, 693- 

95 (E.D. Pa. 1992).9 

Insofar as the plaintiffs continue to challenge the

remainder of the provisions of the Act and Ordinances, we 

_________________________________________________________________ 

9. In Horizon House, the court determined that a township ordinance 

that imposed a distance requirement of 1,000 feet between group homes 

for mentally retarded people was facially invalid under the FHAA 

regardless of the motive of the drafters, and even if it incidentally 

affected some unrelated groups of non-disabled individuals such as 

juveniles and ex-criminal offenders. See Horizon House, 804 F. Supp. at 

694. The court rejected the Township's rationale that "declustering" 

promoted integration into the community and was thus benign. See id. 

at 695. In addition, the Horizon House court found discriminatory intent 

on the part of the Township based upon animus similar to that found by 

the district court in this case. See id. at 696 (determining that the 

ordinance was passed in "response to community opposition and to 

outmoded fears about people with mental retardation"). 

The Horizon House court also concluded that the challenged ordinance 

had a discriminatory effect which would have been grounds for 

invalidation even if it were not facially invalid or the product of 

discriminatory intent. See id. at 697. The discriminatory effects found by 

the court were that the spacing requirement limited the number of 

people with disabilities who could live within the Township, limited their 

choices on where to live, limited their access to essential community 

resources, and thwarted efforts to treat people with handicaps equally in 

the community thereby negatively affecting their self-esteem. See id. 

Finally, the court in Horizon House determined that the spacing 

requirement failed to provide persons with disabilities with a reasonable 

accommodation because it was a blanket and categorical rule under 

which the process of obtaining variances was lengthy, costly, and 

burdensome. See id. at 700. 

 20 
consider them to be unexceptional, and find that they were 

properly upheld by the district court, including sections 

that: (1) permit municipalities to license R&B houses locally 

in the place of the Department of Community Affairs, see 

N.J. Stat. Ann. S 40:52-10; (2) require a licensing fee and 

provide for the submission of information and supporting 

documentation so the licensing authority can conduct an 

investigation of the applicant, see N.J. Stat. Ann. S 40:52- 

12; (3) provide for the inspection of R&B house premises for 

health and safety violations, and prohibit ownership of R&B 

houses by persons convicted of crimes of moral turpitude, 

see N.J. Stat. Ann. S 40:52-13; (4) provide for the term of 

the licenses, see N.J. Stat. Ann. S 40:52-15; (5) provide 

when licenses may be revoked, see N.J. Stat. Ann. S 40:52- 

16, (6) provide for appeals to the Department of Community 

Affairs and Appellate Division of the New Jersey courts in 

the event of a revocation of a license, see N.J. Stat. Ann. 

S 40:52-17; and (7) establish the requirements for 

municipal licensing authorities, see N.J. Stat. Ann. S 40:52- 

18. 

As the district court concluded, none of these provisions 

is unduly burdensome on plaintiffs, and they do not violate 

the FHAA. Their essential impact is to shift the oversight 

and enforcement of R&B houses from the state to local 

level. Similar provisions for licensing, inspections, 

revocation, et cetera, existed under the state-administered 

regime, and we will not invalidate provisions of a statute 

whose only effect is to authorize local communities to 

assume an enforcement role at their election -- even if 

there was discriminatory animus behind the legislation -- 

without some evidence that the provisions were unduly 

burdensome. In addition, the provisions are rationally 

related to the government's legitimate purpose of protecting 

the mentally ill and aged who live in R&B houses, and thus 

they do not violate either the United States or the New 

Jersey constitutions. 

Finally, we note that N.J. Stat. Ann. S 40:52-13(d), which 

requires each owner of a R&B house to establish a 

"sufficient guarantee of financial and other responsibility to 

assure appropriate relocation of the residents of the 

rooming or boarding house to suitable facilities in the event 

 21 
that the license is subsequently revoked or its renewal 

denied," also seems problematic under the FHAA and 

possibly the United States and New Jersey constitutions. As 

with the bonding provision in Neptune Ordinance 1661, 

this was inadequately briefed and explained to both the 

district court and to us; we simply highlight it for scrutiny 

on remand. 

For the foregoing reasons we will affirm in part, reverse 

in part, and remand for further proceedings consistent with 

this opinion. Parties to bear their own costs. 

A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

 22