Opinion ID: 3004697
Heading Depth: 2
Heading Rank: 1

Heading: The 2006 Litigation and Consent Decree

Text: In April 2006, the Anti‐Discrimination Center of Metro New York (“the relator”) filed a qui tam lawsuit alleging that the County violated the False Claims Act12 by submitting “false” certifications to HUD from 2000 to 2006 in order to obtain approximately $52 million in housing grants. Under the relevant statutes and regulations, the County, as a recipient of HUD funds, was required to certify to HUD that it would “affirmatively further fair housing.”13 The relator alleged that the County’s certifications were “false” within the meaning of the False Claims Act because the County failed to analyze impediments to fair housing or to develop strategies to overcome these impediments, despite certifying to HUD that it had done so. During pretrial proceedings, the district court entered several rulings in favor of the relator. On July 13, 2007, it denied the County’s motion to dismiss, holding that relator had stated a claim that the County violated the False Claims Act by falsely certifying that it considered race when evaluating fair housing impediments and corrective actions.14 On February 24, 2009, the district court held 12 31 U.S.C. §§ 3729‐33. 13 See 42 U.S.C. §§ 5304(b)(2), 12705(b)(15). 14 See U.S. ex rel. Anti‐Discrimination Ctr. of Metro N.Y., Inc. v. Westchester Cty., 495 F. Supp. 2d 375 (S.D.N.Y. 2007) (holding that a jurisdiction that certifies that it will affirmatively further fair housing as a condition to its receipt of federal funds must consider the existence and impact of racial discrimination on housing opportunities and choice). 9 that the County’s certifications to HUD were false within the meaning of the False Claims Act, but it denied the relator’s motion for summary judgment on the grounds that the County’s knowledge that the certifications were “false” was a disputed issue of fact for trial.15 On August 10, 2009, the Government intervened in the action in place of the relator and, on the same day, presented the district court with a consent decree that all parties—including the County— agreed to enter.16 By settling the case and agreeing to the consent decree, the County avoided the risk of paying treble damages of more than $150 million. Instead, the decree obligated the County to pay $30 million to the United States—of which $21.6 million would be credited to the County’s account with HUD—and to take numerous steps to further “fair housing.”17 Most relevant here, the County agreed to spend $30 million of its own funds—in addition to the $21.6 million 15 See U.S. ex rel. Anti‐Discrimination Ctr. of Metro N.Y., Inc. v. Westchester Cty., 668 F. Supp. 2d 548 (S.D.N.Y. 2009) (denying cross‐motions for summary judgment and reserving for trial on the County’s scienter). See J.A. 353‐391 (“Stipulation and Order of Settlement and Dismissal”) 16 (“Consent Decree”). 17 Consent Decree ¶¶ 2–3. 10 in its HUD account—to build 750 units of affordable housing over the following seven years.18 The County was required to use all available means as appropriate to achieve the [building of the 750 units], including, but not limited to, developing financial or other incentives for other entities to take steps to promote [those] objectives . . . , and conditioning or withholding the provision of County funds on actions that promote [those] objectives . . . .19 The consent decree “anticipated that the County [would build these 750 units] by leveraging the funds that it is expending pursuant to [the consent decree] with supplemental funds.”20 Moreover, [i]n the event that a municipality does not take actions needed to promote the [building of the 750 units], or undertakes actions that hinder [those] objectives . . . , the County shall use all available means as appropriate to address such action or inaction, including, but not limited to, pursuing legal action.21 Consent Decree ¶ 7. 630 of these 750 units must be built in 18 municipalities that are less than three percent black and seven percent Hispanic. 19 Consent Decree ¶ 7(i). 20 Id. 21 Consent Decree ¶ 7(j). 11 Additionally, the consent decree required the County to complete, within 120 days, an analysis of impediments to fair housing choice (“AI”) “deemed acceptable by HUD.”22 The decree specifically required that the AI (b) identify and analyze, inter alia: (i) the impediments to fair housing within its jurisdiction, including impediments based on race or municipal resistance to the development of affordable housing; [and] (ii) the appropriate actions the County will take to address and overcome the effects of those impediments . . . .23 The County also agreed to “promote, through the County Executive, legislation . . . to ban ‘source‐of‐income’ discrimination in housing.”24 Such legislation prohibits landlords from refusing to rent to a tenant because that tenant’s income comes from Social Security 22 Consent Decree ¶¶ 32, 32(b). 23 Consent Decree ¶ 32(b). These requirements mirror those imposed by statute and regulation on all grant applicants, as discussed at notes 73 to 90, post, and accompanying text. 24 Consent Decree ¶ 33(g). 12 benefits or from state or federal public assistance programs, such as “Section 8.”25 Finally, the consent decree provided for the appointment of a monitor to oversee compliance, to recommended additional actions needed to ensure compliance, and to assess “whether the County has taken all possible actions to meet its obligations . . . including . . . promoting inclusionary and other appropriate zoning by municipalities by offering incentives, and, if necessary, taking legal action.”26 The appointment of the monitor was to last “for so long as the County’s obligations” under the consent decree “remain unsatisfied.”27 The consent decree also created a dispute resolution process whereby the parties could submit grievances for the monitor to resolve.28 25 Section 8 refers to a well‐known program administered by HUD, which provides low‐income housing assistance in the form of vouchers. See Salute v. Stratford Greens Garden Apartments, 136 F.3d 293, 296 (2d Cir. 1998). 26 Consent Decree ¶ 15. 27 Consent Decree ¶ 10. Consent Decree ¶ 14. The consent decree provided for judicial review of 28 the monitor’s decisions: Within ten (10) business days of receipt of the Monitor’s report and recommendation, the County or the Government may seek additional review from the magistrate judge assigned to this case; otherwise, the Monitor’s resolution shall be final, binding and non‐appealable. Should the County or the Government seek such additional review from the assigned magistrate judge, the relevant provisions of the Federal Rules of Civil Procedure, the 13