Court Opinion

ID: 4120441
Source: CourtListenerOpinion
Date Created: 2017-01-27 22:47:36.783257+00
Date Added: 2024-06-11T14:37:32.205610
License: Public Domain

January 25, 1978

78-4       MEMORANDUM OPINION FOR THE
           GENERAL COUNSEL, DEPARTMENT OF
           HOUSING AND URBAN DEVELOPMENT

           Fair Housing— Civil Rights Act— Civil
           Penalties— Application of Seventh
           Amendment—Jury Trial

   This is in response to your request for our opinion concerning the constitu­
tionality of the civil damages provisions of the Edwards-Drinan bill (H.R.
3504). Specifically, you have inquired whether the bill’s administrative
complaint procedure offends the Seventh Amendment guarantee that “ In suits
at common law, where the value in controversy shall exceed twenty dollars, the
right o f trial by jury shall be preserved . . . . ” For the reasons that follow, it is
our opinion that the provisions in question are suspect under the recent Supreme
Court decisions interpreting the Seventh Amendment. The issue is a close one
and almost certainly will be litigated. W ith these considerations in mind, we
have suggested several ways in which the language of the provision could be
altered to improve its chances o f withstanding scrutiny.

                                          1.
   H .R. 3504, 95th C ong., 1st sess. (1977), would amend Title VIII of the
Civil Rights Act of 1968, 42 U .S .C . § 3601 et seq., by creating three
alternative mechanisms for enforcem ent of its fair housing provisions. Section
812 preserves private enforcem ent by means of civil suit; § 811 provides for
“ pattern or practice” actions by the Attorney General. Most importantly, for
purposes of this discussion, § 810 o f the bill authorizes the Secretary of
Housing and Urban Development (HUD), either in response to a private
complaint or on his or her own initiative, to investigate allegations of
discriminatory housing practices. If he finds reasonable cause to believe the
charges to be true, he is required either to refer the matter to the Attorney
General for the filing o f a civil action against the offender, or to file an
administrative complaint. If the administrative procedure is followed, the
respondent is entitled to notice and to the opportunity for a hearing on the

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record; the person conducting the hearing may also allow any aggrieved person
to intervene. The hearing officer, after making findings of fact and conclusions
of law, may award various forms of relief including money damages, equitable
and declaratory relief, and punitive damages up to $10,000; temporary or
preliminary relief is also available pending final disposition of the complaint.
Review is in the courts o f appeal using a “ substantial evidence” standard. The
bill also authorizes the Secretary to assess a civil penalty of $1,000 for each day
during which a violation continues after the date on which the administrative
order becomes unreviewable. Section 8 1 1(b) empowers the Attorney General,
at the request of the Secretary, to institute civil proceedings to enforce either
final orders or civil penalties o f this sort.
   In applying the Seventh Amendment to this statutory scheme, two principles
are immediately clear. First, it is firmly established that the Seventh Amend­
ment “ does apply to actions enforcing statutory rights, and requires a jury trial
upon demand, if the statute creates legal rights and remedies, enforceable in an
action for damages in the ordinary courts o f law. ” Curtis v. Loether, 415 U.S.
 189, 194 (1974). Thus, the Supreme Court has held that a jury may be
demanded in suits in the Federal courts for actual and punitive damages under
§ 812 of the Civil Rights Act of 1968. Id. Similarly, in'P ernell v. Southall
Realty, 416 U .S. 363 (1974), the Court held that the Seventh Amendment
applied in civil suits in the District of Columbia courts for recovery of
possession o f real property.
   A second principle also has emerged— the Seventh Amendment does not
apply where Congress has properly assigned the functions of factfinding and
initial adjudication to an administrative tribunal where the use of a jury would
be inappropriate. Thus, in Atlas Roofing Co. v. Occupational Safety and
Health Review Com mission, 430 U.S. 442 (1977), the Supreme Court upheld
Congress’ choice of a specialized administrative body to ascertain whether
employers were maintaining unsafe, working conditions and to impose civil
penalties. The Court found no constitutional right to a jury under such
circumstances:
     . . . when Congress creates new statutory “ public rights,” it may
     assign their adjudication to an administrative agency with which a
     jury trial would be incompatible, without violating the Seventh
     Am endm ent’s injunction that jury trial is to be “ preserved” in “ suits
     at common law .” Congress is not required by the Seventh Amend­
     ment to choke the already crowded federal courts with new types of
     litigation or prevented from committing some new types o f litigation
     to administrative agencies with special competence in the relevant
     field. This is the case even if the Seventh Amendment would have
     required a jury where the adjudication of those rights is assigned to a

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       federal court o f law instead o f an administrative agency, 430 U .S ., at
       4 5 5 .1
   W hile it is, therefore, clear that juries need not be imported into administra­
tive proceedings designed by Congress to give effect to agency expertise, it is
also apparent that Congress may not be altogether free to elect such administra­
tive forums under all circum stances. Thus, in Atlas Roofing, the Court was
careful to go no further than to approve a jury-free administrative proceeding
where “ public rights” were involved. 430 U.S. at 458. Unfortunately, this
talismanic phrase was not well defined. Instead, the Court spoke somewhat
circularly i.n terms o f examples— “ e .g ., cases in which the Government sues in
its sovereign capacity to enforce public rights created by statutes within the
power o f Congress to enact” {id ., at 450); “ e .g ., where the Government is
involved in its sovereign capacity under an otherwise valid statute creating
enforceable public rights” (id., at 458).
   The sovereign’s prerogative to sue and to be sued as it deems appropriate was
recognized and discussed at length in M urray's Lessee v. Hoboken Land Co.,
 18 How. 272, 284 (1855): “ [TJhere are m atters, involving public rights, which
may be presented in such form that the judicial power is capable of acting on
them , and which are susceptible of judicial determination, but which Congress
may or may not bring within the cognizance of the courts of the United States as
it may deem proper.” See also, Ex Parte Bakelite, 279 U.S. 438, 451 (1929):
“ Legislative courts also may be created as special tribunals to examine and
determine various m atters, arising between the government and others, which
from their nature do not require judicial determination and yet are susceptible to
it. The mode of determining matters of this class is completely within
congressional control. Congress may reserve to itself the power to decide, may
delegate that power to executive officers, or may commit it to judicial
tribunals.” Accordingly, C ongress’ choice o f administrative forums as means
for collecting civil penalties to be deposited into the public treasury has
repeatedly been upheld. See, e .g ., Helvering v. M itchell, 303 U.S. 391 (1938).
   So,     too, has the use of administrative bodies which, in the course of
enforcing public policy, incidentally provide relief to private citizens. Thus, in
NLRB v. Jones & Laughlin Steel C orp., 301 U.S. 1 (1937), the Court upheld
agency action under the National Labor Relations Act in requiring a private
em ployer to reinstate an employee with back pay following an unfair labor
practice. Likewise, in Block v. H irsh, 256 U .S. 135 (1921), the Court rejected
a Seventh Amendment challenge to a statute temporarily suspending the legal
remedy o f ejectm ent and establishing an administrative tribunal to determine

   'In reaching this broad conclusion, the Court recharacterized the holding of an earlier case,
Kachen v. L andy. 382 U .S. 323 (1966), which had upheld the pow er o f a bankruptcy court,
exercising sum m ary jurisdiction without a ju ry , to adjudicate the otherwise legal issue o f voidable
preferences. Rather than treating this holding as com pelled by the traditional distinction between
courts o f law and courts o f equity, the Court observed that this specialized court of equity
“ constituted a forum before which a jury would be out of place and would go far to dism antle the
statutory s c h e m e .'’ 430 U .S . at 454, n . l l .

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  fair rents at which tenants would be allowed to hold over despite the expiration
 of their leases.
     Nevertheless, it cannot be concluded, based on these rather limited prece­
 dents, that administrative proceedings initiated by a public agency but provid­
 ing the full panoply of judicial relief to private parties are necessarily permitted
 under the Seventh Amendment. The proceedings before the NLRB at issue in
 Jones & Laughlin were spurred by private complaint, yet the relief available—
 reinstatement with back pay or an award o f back pay alone— was basically
 equitable in nature. C f., Slack v. H avens, 522 F. (2d) 1091, 1094 (9th Cir.
  1975) (Title VII). M oreover, the Governm ent agency authorized to hear and
 decide private com plaints, not private individuals who might receive relief in
 the administrative forum, was alone empowered to trigger proceedings with
 respect to unfair employment practices and to seek enforcement of its orders in
 subsequent court proceedings. See, Am algam ated Utility Workers v. Consoli­
 dated Edison C o., 309 U.S. 261 (1940). The holding o f Block v. Hirsh, supra,
 also appears to be narrow. Although the result in that case subsequently has
 been characterized broadly,2 the C ourt’s reasoning may be misunderstood
 unless seen in its context. Mr. Justice Holmes, writing for the Court, spoke
 specifically in terms of Government regulation of the wartime housing
 industry. Thus, he emphasized that “ (i]f the power of the Commission
 established by the statute to regulate the relation is established, as we think it
 is . . . this objection |concerning the unavailability of trial by jury] amounts to
 little. To regulate the relation and to decide the facts affecting it are hardly
 separable.” 256 U .S ., at 158. [Emphasis added.] In Block, therefore, the rent
 commission played a role com parable to that o f the Interstate Commerce
 Commission or other Federal agencies which control the prices charged by
 private entrepreneurs and thereby incidentally benefit members o f the public by
 requiring those regulated to comply with certain Government standards. The
 Commission did not afford all-purpose relief to complaining private parties.
     An even more important warning is found in Crowell v. Benson, 285 U.S. 22
 (1932), which, while sustaining the role o f an administrative tribunal in finding
 facts and awarding relief under the Longshorem en’s and Harbor W orkers’
 Compensation Act, characterized the case at bar as “ one of private right, that
 is, of the liability o f one individual to another under the law as defined,” id., at
 5 1. Thus, although the role o f the administrative tribunal in Crowell was solely
 adjudicatory rather than prosecutorial, the Court did not dwell on this
 distinction but focused instead on the nature of the liability created. While the
 proceedings in Crowell were deemed to be adjunct to the admiralty jurisdiction
 of the Federal courts and therefore to present no Seventh Amendment problem,
 two conclusions relevant to our consideration here are suggested by this
 statement: (1) more than a simple “ public interest” sufficient to sustain
 congressional legislation is necessary to come within the phrase “ public right”

    2“ W e may assum e that the Seventh Am endm ent would not be a bar to a congressional effort to
entrust landlord-tenant disputes, including those over the right to possession, to an adm inistrative
a g en cy ." P ernell v. Southall R ealty, supra, 416 U .S ., at 383.

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as used in Atlas R oofing; and (2) the nature o f relief afforded by an
administrative tribunal may not necessarily be irrelevant for Seventh Amend­
ment purposes merely because a government agency plays a formal role in
instituting those administrative proceedings.
   The constitutionality of the adm inistrative proceedings envisioned by the
Edwards-Drinan bill must be tested against these rather inconclusive standards.
Because the proposal and the context in which it arises differ sufficiently from
administrative procedures approved under existing case law, at the very least, it
leaves some room for doubt. Although HUD, rather than a private plaintiff,
would actually be responsible for filing the administrative complaint, and
would do so only if it found a charge to be supported by reasonable cause, it
would not be the sole enforcer of the statutorily created guarantee of fair
housing practices as was true in NLRB v. Jones & Laughlin. Nor would it act in
a regulatory capacity akin to that of the rent commission in Block v. Hirsh.
Moreover, the Department would enter the fray, not at the outset, but nearly 10
years after the creation o f a private cause of action in the district court which
provides for identical rem edies, and nearly 4 years after the Supreme Court
expressly ruled that under such circum stances trial by jury must be available on
demand. It is therefore unlikely that removing the obvious cross-reference from
§ 810 to § 812— civil cause of action or the adoption of cosmetic changes in
nomenclature— would suffice to obviate the potential constitutional questions
inherent in the proposal.
   It may well be that the courts, when asked to apply the Seventh Amendment
in this context, would adopt a broad rule based on the specialized forum
approach taken in Atlas Roofing3 and the sovereign prerogative analysis of
M urray’s Lessee. If so, as long as an adm inistrative agency, and not simply
private parties, played a prosecutorial as well as adjudicatory role in administra­
tive proceedings, the Seventh Amendment would not apply. The existence of a
related private right o f action need not undercut the legitimacy of Congress’
choice in this regard; rather, the continued availability of such a judicial forum
merely provides alternative means by which private citizens can vindicate the
public interest also enforced by the sovereign.
   Different reasoning could, however, dictate a different result. It could be
argued that Congress should not be able, under the vague rubric “ public
righ t,” to circumvent the Seventh Amendment completely by creating a chain
of administrative courts capable of giving traditional common law remedies to
private litigants seeking relief from wrongs (such as dignitary torts) traditionally
regarded as private in character. Plainly, the Seventh Amendment question here
is a close and difficult one. Were we to opine one way or the other, our
conclusion would probably favor a finding that § 810 is unconstitutional.
   Rather than conclude on this equivocal note, we have considered whether it
might be possible to modify § 810 to improve its chances of withstanding

  3Such a ruling could also rest on the expansive dictum in M r. Justice W hite's opinion in that
case, em phasizing the breadth o f C ongress’ prerogative to select the m anner in which it will go
about resolving im portant “ p u b lic " issues. 430 U .S . at 455.

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constitutional attack. It should be understood, at the outset, that we do not
profess to share your D epartm ent's expertise on and sensitivity to the policy
and administrative considerations that would inevitably come into play here.
Our advice should be seen as merely suggestive of ways in which the
constitutional hurdles could be reduced.

                                                  II.
   First, private actions in a district court seeking actual and punitive damages
and other relief might be preserved, but the nature of the proposed administra­
tive proceedings altered. Use of an administrative forum to impose civil
penalties without recourse to trial by jury was expressly approved in Atlas
Roofing. Provision for equitable relief in the form of temporary or permanent
injunctions in no way offends the Seventh A m endm ent’s preservation o f juries
in “ Suits at common law .” It could be contended that thus to limit the
administrative relief available, by omitting any provision for awards o f actual
or punitive damages, would not seriously undercut the efficacy o f the proposal.
Actual damages resulting from a dignitary tort are difficult to prove, and the
threat of a civil penalty due the government would do as much to encourage
compliance with the law as would the possible imposition of punitive dam ­
ages.4 This option would seem almost certainly to avoid any possible problem
under the Seventh Amendment.
   Second, the private action in a district court might be eliminated, and the
remedies now available in that forum instead provided in the course of
administrative proceedings. The development of legislative history dem onstrat­
ing a belief by Congress in the necessity for a strong governmental role in order
to vindicate the public interest in nondiscriminatory housing practices would
provide added support for the claim that the choice of an administrative forum
was more than a ruse to eliminate Seventh Amendment rights incident to the
existing civil cause of action. This option would be strengthened if the
provision for punitive damages were eliminated and civil penalties imposed to
run in favor of the government rather than the private complainant.
   Third, the b ill’s treatment of the mechanism by which administrative awards
are to be enforced could be modified. Section 811(b) indicates that the
Secretary may request the Attorney General to institute civil proceedings for
this purpose; it may be inferred that no power to sue for enforcement is meant to
lie in the private complainant. Express language disallowing such claims by
other than the Attorney General could enhance the claim that a public right, not
a private right, is being vindicated. Consideration also might be given to vesting
the reviewing circuit court o f appeals with the power to enforce such awards
(see, e .g ., 15 U .S.C . § 45(d) (the review provision applicable to orders o f the

   4M oreover, the bill as presently drafted seems to invite m oney-m inded plaintiffs to bring charges
in the adm inistrative forum , then to return to the district court if their initial efforts prove
unsuccessful. The resulting duplicative effort by adm inistrative and judicial officers, costs to
defendants, and problem s o f res judicata would seem ingly be at least somewhat reduced if
injunctive relief w ere the only remedy available in both forums.

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 Federal Trade Com mission under § 5 o f the Federal Trade Commission Act)),
 instead o f simply incorporating the provision authorizing such courts to enjoin,
 set aside, suspend, or determ ine the validity o f orders as set forth in 28 U.S.C.
 § 2342. The awkward asymmetry o f a civil suit in which jury trial is guaranteed
 pursuant to C urtis, and an enforcem ent action also in the district court, which
 provides absolutely identical relief, would therefore be avoided.5
    Finally, a requirem ent that the Secretary determine that administrative
 proceedings are in the public interest, as is the case in FTC proceedings under
  15 U .S.C . § 45, would enhance the emphasis upon the “ public right” (as
 opposed to “ private right” ) aspects o f this bill, which are now left to be
 inferred from the statutory scheme. Although such a change is unlikely to be
 determinative in a cou rt’s interpretation of the measure, it may weigh the
 balance in favor o f sustaining the proposed administrative procedure.
    As stated above, we are not in a position to judge the practical merits of any
 of these options. Nor are we able to assure you that the adoption of any
 alterations would obviate the possibility o f a successful challenge to the
 administrative procedures contemplated here. We would urge that, whatever
 course you follow, steps be taken during the legislative process to underline
 wherever possible the public benefit aspects o f this bill.

                                                          Larry A . H am      mond

                                                 Deputy Assistant Attorney General
                                                               Office o f Legal Counsel

  5W hile such an enforcem ent action is arguably m erely an extension o f the adm inistrative
proceedings, and would not, therefore, trigger a right to a jury determ ination o f the underlying
facts, a contrary rule has. in the past, been adopted by at least one court w ith regard to suits to
enforce the im position o f civil penalties under the Federal T rade Com m ission Act. See, U nited
States v. J .B . W illiams, C o.. In c.. 498 F. (2d) 414 (2d Cir. 1974). A court faced with the
incongruous availability o f jury trials in suits by private plaintiffs, but not in actions brought by
HUD to provide private com plainants with identical relief, m ight well determ ine that jury trials
should be afforded in both cases. Such a result could significantly limit the efficacy o f the
adm inistrative tribunal as a m eans o f speeding the disposition o f housing discrim ination cases.

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