Court Opinion

ID: 8895593
Source: CourtListenerOpinion
Date Created: 2022-11-26 23:56:32.447011+00
Date Added: 2024-06-11T17:07:28.246471
License: Public Domain

MANSFIELD, Circuit Judge
(dissenting):
With due respect, the majority opinion seems to me to be grounded upon the erroneous concept that, in order to establish a violation of the Fair Housing Act, 42 U.S.C. § 3601 et seq., direct evidence of a racially discriminatory motive or purpose on the part of the alleged violat- or must be adduced. In my view such proof is not required.
This case should be governed by the principle, firmly established by the Supreme Court in its interpretation and enforcement of analogous civil rights legislation, to the effect that, where a facially neutral practice has a serious and substantial de facto discriminatory impact, it prima facie violates a statutory prohibition against racial discrimination unless the alleged violator can show that the practice is necessary for non-racial reasons. Griggs v. Duke Power Co., 401 U.S. 424, 91 S.Ct. 849, 28 L.Ed.2d 158 (1971). In Griggs the question was whether an employer’s use of employee-testing procedures which had the effect of excluding a disproportionate number of Negroes from employment violated the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. (Title VII) in the absence of proof of a discriminatory intent on the part of the employer. In holding that the proof was sufficient to establish such a violation, Chief Justice Burger, speaking for a unanimous court, stated:
“The Act proscribes not only overt discrimination but also practices that are fair in form, but discriminatory in operation. The touchstone is business necessity. If an employment practice which operates to exclude Negroes cannot be shown to be related to job performance, the practice is prohibited.
“We do not suggest that either the District Court or the Court of Appeals erred in examining the employer’s intent; but good intent or absence of discriminatory intent does not redeem employment procedures or testing mechanisms that operate as ‘built-in headwinds’ for minority groups and are unrelated to measuring job capability.
“The Company’s lack of discriminatory intent is suggested by special efforts to help the undereducated employees through Company financing of two-thirds the cost of tuition for high school training. But Congress directed the thrust of the Act to the consequences of employment practices, not simply the motivation. More than that, Congress has placed on the employer the burden of showing that any -given requirement must have a manifest relationship to the employment in question.
“Nothing in the Act precludes the use of testing or measuring procedures; obviously they are useful. What Congress has forbidden is giving these devices and mechanisms controlling force unless they are demonstrably a reasonable measure of job performance”. 401 U.S. at 431, 432, 436, 91 S.Ct. at 853, 854, 856. (Emphasis supplied)
See also Olzman v. Lake Hills Swim Club, 495 F.2d 1333, 1340-1341 (2d.Cir. 1974) (holding that a facially neutral rule with respect to club guest privileges prima facie violates the Civil Rights Act of 1964, § 201(a) and (e), 42 U.S.C. § 2000a(a), (e), where its effect is to weed out Black guests, and that the club must bear the burden of showing that the rule has a reasonable non-racial purpose); cf. Chance v. Board of Examiners, *1116458 F.2d 1167 (2d Cir. 1972); Dean v. Ashling, 409 F.2d 754 (5th Cir. 1969).
Congress, in passing the Fair Housing Act, sought to eliminate artificial and arbitrary barriers to housing that operate to discriminate against persons because of their race, just as it had through Title VII acted to remove similar racially discriminatory barriers to employment. It must be recognized that if these laws were to depend for their effectiveness upon proof of the landlord’s subjective intent, which is rarely obtainable, they would largely be rendered useless. Racial discrimination cannot, of course, be condoned because it is accomplished through a sophisticated or indirect method, cf. Lane v. Wilson, 307 U.S. 268, 275, 59 S.Ct. 872, 83 L.Ed. 1281 (1939). Nor should it be excused on the theory that it is the product of thoughtlessness rather than willfulness. In either event, the harmful effect is the same. Enforcement of the anti-discrimination provisions of the Fair Housing Act must therefore be judged by objective standards, in line with the principle that the Act be given a “generous construction,” Trafficante v. Metropolitan Life Insurance Co., 409 U.S. 205, 212, 93 S.Ct. 364, 34 L.Ed.2d 415 (1972). In recognition of the old adage that actions speak louder than words, to make out a prima facie violation of the Act it should be sufficient to show that the challenged practice excludes a disproportionately high percentage of minority persons as compared with non-minority. The burden of going forward with a non-racial justification should then shift to the person using the practice.
Plaintiffs in this case have not suggested that “welfare recipients, or any other individuals, may secure apartments . without regard to their ability to pay,” Male v. Crossroads Associates, 469 F.2d 616, 622 (2d Cir. 1972). Nor does anyone question the importance to a landlord of a prospective tenant’s payment of rent, upon which the landlord depends for the successful operation of his real estate enterprise. Toward that end the landlord, of course, may adopt reasonably appropriate economic standards or tests designed to assure the tenant’s future ability to pay rent on an on-going basis. See, e. g., United States v. Grooms, 348 F.Supp. 1130, 1134 (M.D. Fla.1972). But where the formula has the effect of excluding a disproportionately high percentage of a minority group, the landlord should in fairness be prepared to demonstrate the business necessity of his facially neutral rule. “It is no answer that defendants would have exploited whites as well as blacks,” Clark v. Universal Builders, 501 F.2d 324, 331 (7th Cir. 1974).
The Supreme Court’s decision in James v. Val tierra, 402 U.S. 137, 91 S.Ct. 1331, 28 L.Ed.2d 678 (1971), so heavily relied upon by the majority, is inapposite. That case did not deal with the interpretation of a federal civil rights statute, which is the issue before us, but with the constitutionality of a state law under attack as violative of the Equal Protection Clause, an entirely different issue requiring application of totally different principles.1 In deciding that a state’s constitutional provisions for community referenda with respect to proposed housing *1117projects did not violate the Equal Protection Clause, the Court was not concerned with statutory interpretation but with the constitutionality of a presumptively valid statute. It concluded that the community’s interest in determining the level of local governmental expenditure justified the state constitutional amendment under attack, even though some persons might be disadvantaged by the mandatory referendum procedure. Here we are dealing with the entirely different question of determining the scope and meaning of a statute which expressly prohibits discrimination in housing because of “race, color, religion, or national origin.” In my view, in order to give effect to Congress’ objective, this legislation must be interpreted as prohibiting conduct which, according to objective standards, has the effect of discriminating because of race, unless a non-racial justification is shown. See United States v. Grooms, 348 F.Supp. 1130 (M.D.Fla.1972). Otherwise the law would become for the most part a dead letter, in view of the difficulty of proving discriminatory intent upon the part of the person alleged to have violated it.
Applying these principles here, plaintiffs made out a clear prima facie showing that the 90% Rule2 has had a disproportionately high racial impact. The evidence is undisputed that the effect of the 90% Rule is to exclude from appellant’s apartments all but a handful of welfare recipients who apply. Indeed there was direct evidence that the rental agent for Lefrak apartments, Anthony Cuccia, told plaintiff Boyd, “We don’t rent to welfare recipients.” Jerry Richter, Vice-President of Lefrak, further advised plaintiff’s attorney that Lefrak had a policy of not renting to public assistance recipients.
To exclude public assistance recipients in New York City is the equivalent of excluding minority persons. According to the 1970 census 77% of all welfare recipients in New York City were minority persons, the great majority of whom were Black and Puerto Rican. Since that time the figure has increased. A 1971 study, for instance, reveals that 90.1% of those receiving assistance under the program for Aid to Dependent Children are minority persons. A review of all categories of public assistance, see Goodwin v. Wyman, 330 F.Supp. 1038 (S.D.N.Y.1971), aff’d per curiam, 406 U.S. 964, 92 S.Ct. 2420, 32 L.Ed.2d 664 (1972), indicates that minorities predominate substantially.
Although minority persons would, under the 90% Rule, continue to be eligible to rent appellants’ apartments, they constitute but a small number of those, minority and non-minority, who are eligible. There was expert testimony to the effect that 92.5% of Black and Puerto Rican households would be excluded. Such testimony indicated that under the 90% Rule eligibility of white households in New York City would be four times as great as that of Black households and ten times as great as that of Puerto Rican households.3 Furthermore, accept*1118ing the fact that appellants have rented apartments to a substantial number of wealthier minority persons, not on welfare, who can satisfy the 90% Rule,4 the percentage of minority households in appellants’ apartments would be much higher under a less stringent rule. To compound the disproportionately high racial impact of the 90% Rule, the evidence before the trial judge further disclosed that of the public assistance recipients who applied to appellants for apartments the percentage of non-minority appellants who were accepted was approximately twice the percentage of Black applicants accepted. The 90% Rule, therefore, operates as “built-in headwinds” for minority groups.
Faced with the discriminatory consequences of their conduct appellants failed to offer any satisfactory non-racial explanation, such as business necessity. There was no showing, for instance, that experience in the rental of apartments of the type here under consideration had demonstrated that the 90% Rule was reasonably necessary to insure tenants’ payment of rent and that there had been losses, substantial defaults, or failure to collect back rental payments under less stringent rules. Nor was there proof that welfare recipients as tenants have a greater incidence of rent failures or defaults than other tenants. Plaintiffs, in contrast, offered persuasive evidence that the 90% Rule was not adopted as a “business necessity” measure. Fifty-six percent of all New York City households renting apartments in the Lefrak rental range here under consideration do not meet the 90% Rule, i. e., the household’s weekly net income is not equal to at least 90% of the monthly rental of its apartment. Indeed, in New York City 47.4% of the white renters and 57.6% of the Black and Puerto Rican renters exceed that ratio. The trial judge further found that 53.1% of the white households renting apartments in the Lefrak rental range, 70.4% of the Black households, and 74.8% of the Puerto Rican households, do not satisfy the 90% Rule. Still there is no showing that landlords renting to these tenants have suffered losses or been faced with bankruptcy. Furthermore, the 90% Rule fails to take into consideration the fact that the amount allocated by the Department of Social Services (“DSS”) to a welfare recipient for payment of his rent is not fixed at a specific figure but is equal to the recipient’s actual rent when approved by DSS, and, in the event he defaults in the payment of his rent, the rent is thereafter paid by a “two party” DSS check (i. e., payable jointly to the recipient and landlord), which does not affect the level and amount of subsistence separately paid to the recipient. Indeed DSS may even pay the rent directly to the landlord, N.Y. Social Services Law § 131 — a(7). The welfare recipient's ability to pay, therefore, is not properly measurable by his or her aggregate income. Furthermore, the recipient’s income includes non-cash benefits (e. g., food stamps, Medicaid)5 not available to the non-welfare tenant. Id., § 131 — a. The ability of welfare recipients to pay Lefrak rents is also attested to by the existence, unknown to Lefrak, of some 461 welfare-recipient households in its apartments in 1972 and the fact that, out of 15,484 Lefrak apartments, only 108 dispossess notices were issued in 1972 and 43 in 1973.
Thus, according to the trial judge’s findings of fact, which are fully supported and are not asserted by the majority to be clearly erroneous, the 90% Rule has a disproportionately high racially discriminatory impact and appellants have failed to show that the Rule is based on business necessity or other nonracial grounds. Application of the principles prescribed by the Supreme Court in Griggs therefore mandates affirmance of the district court’s decision.

. Citizens Committee for Faraday Wood v. Lindsay, 507 F.2d 1065 (2d Cir. 1974), and Acevedo v. Nassau County, 500 F.2d 1078, 1080 (2d Cir. 1974), also relied on by the majority, likewise deal with constitutional claims, not enforcement of a civil rights law. Even in our interpretation of the Equal Protection and Due Process Clauses we have stated:
“Even were we to accept the City’s allegation that any discrimination here resulted from thoughtlessness rather than a purposeful scheme, the City may not escape responsibility for placing its black citizens under a severe disadvantage which it cannot justify. Norwalk CORE [ [Norwalk CORE v. Norwalk Redevelopment Agency], 395 F.2d 920 (2d Cir. 1968)]; Southern Alameda Spanish Speaking Organization v. City of Union City, California, 424 F.2d 291 (9th Cir. 1970).” Kennedy Park Homes Assn. v. City of Lackawanna, N. Y., 436 F.2d 108, 114 (2d Cir. 1970), cert. denied, 401 U.S. 1010, 91 S.Ct. 1256, 28 L.Ed.2d 546 (1971).

. The “90% Rule” refers to a ratio of net income (i. e., gross income less taxes, obligations and debts) to rent. Under it the applicant for lease of an apartment must show that his weekly net income is at least equal to 90% of the monthly rent of the apartment.
The “90% Rule” is not to be confused with the older 25% rent-income ratio, under which a prospective tenant’s weekly gross income must equal one month’s rent. Appellee’s contention that these so-called rules or standards have been generally or widely applied is not supported by persuasive proof. Statutory references to the 25% limitation, see, e. g., 12 U.S.C. § 1715z-l(f); 42 U.S.C. § 1402(1) are in connection with the establishment of rent levels and not the determination of eligibility of applicants. An attempt to use such ratios for determining eligibility was invalidated in Findrilakis v. Secretary of the Department of Housing and Urban Development, 357 F.Supp. 547 (N.D.Cal.1973).

. These statistics as well as the impact of the 90% Rule must also be considered in light of an earlier history of alleged racial discrimination that led to the institution by the government in August 1960 of its suit against appellants under the Fair Housing Act, alleging a pattern and practice of discrimination, which was settled by entry of a consent decree in January 1971.

. The majority’s statement that 19.8% of appellants’ apartments are rented to Blacks is open to question. It assumes that once an apartment was rented to a Black family the occupancy did not thereafter change to a white family. The figure was also based only on appellants’ Brooklyn buildings.

. See N.Y. Social Services Law § 363 et seq.; Title 18 N.Y.C.R.R. Part 435.