Are United States Courts Allowing a “Business Justification” Defense in Cases of
Intentional Housing Discrimination?
Introduction
Courts across the United States have heard claims of housing discrimination for
many years. As with any other issue, their treatment and analysis of those claims has
evolved and changed over the years. In the last half-century, the fight against housing
discrimination has won major support through statutes such as the Fair Housing Act and
the Minnesota Human Rights Act, whose section on housing mirrors the FHA and in fact,
strengthens it.
Despite steps forward to eliminate housing discrimination, courts across the
country are developing concerning precedent. This precedent essentially allows “business
justifications” to rebut claims of intentional housing discrimination. In other words,
courts are holding that it is legitimate to discriminate if it affects the bottom line, a.k.a.,
your pocketbook.
While this developing precedent is concerning, what is perhaps more concerning
is that courts are applying it inconsistently. For example, courts may allow a business
justification defense in a claim of discrimination based on disability, but not in a similar
claim based on race. The following article explores how the business justification defense
may have evolved, where it is heading today and the implications of its existence.
History of the Fair Housing Act and Minnesota Human Rights Act
Decent, affordable housing is considered by nearly all to be one of the most basic
of human needs. Most would go as far as to say that housing is not only a need, it is a
right of all citizens of the world. Given the importance of housing not only to specific
1
individuals and families, but also to a community as a whole, lawmakers have long
attempted to answer the call of the need for decent and affordable housing for all.
Through various statutes, legislators at both the federal and state level have
passed laws and ordinances that attempt to provide an equal opportunity for all to obtain
suitable housing. These laws include housing codes, zoning codes, rent control and other
regulations that attempt to maintain availability, livability and affordability of housing.
These laws and regulations have been met with varying degrees of success, but save for a
few examples of slum-like conditions; livable and affordable housing generally exists in
abundance in the United States.
Despite the fact that livable and affordable housing exists, many Americans have
historically had a hard time finding decent housing to rent or buy. It is well known that
discrimination has long been a problem in the United States. Discrimination is an issue
that American legislators have attempted to tackle for the greater part of the last century.
Discrimination in the job market or education are the most common examples that come
to mind, but discrimination in the housing market has been, and still is, a major problem
in this country.
In the 1950’s and 1960’s upheaval over discrimination reached a boiling point and
America witnessed the civil rights movement. Out of the civil rights movement came
perhaps one of the most important pieces of legislation that our nation has seen, the Civil
Rights Act of 1964. The Civil Rights act was a broad piece of legislation that barred
intentional discrimination based on race, color, religion, sex, or national origin, in many
aspects of American society, including access to; public services; public facilities; voting;
schools; federally funded programs; and employment. While the Civil Rights Act of 1964
2
was widely regarded as a huge success, it had one glaring omission; it did not bar
discrimination by public or private entities in the sale or rental of housing.
In response to this glaring oversight of the Civil Rights Act, four years later,
President Lyndon Johnson passed the Civil Rights Act of 1968, which is more commonly
referred to as the Fair Housing Act (“FHA”). The FHA attempted to do exactly what the
1964 Civil Rights Act had failed to do, which was protect the rights of individuals
belonging to protected classes in their search for housing. While the FHA is a fairly
lengthy statute, the essence of the law is conveyed in the following:
[I]t shall be unlawful-- (a) To refuse to sell or rent after the making of a
bona fide offer, or to refuse to negotiate for the sale or rental of, or
otherwise make unavailable or deny a dwelling to any person because of
race, color, religion, sex, familial status, or national origin. (b) 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 therewith, because of race, color, religion, sex, familial status,
or national origin.1
The 1968 version of the FHA provided these protections to persons based only on
race, color, religion, sex, and national origin. However, the FHA was amended in 1988 to
bar discrimination based on handicap and familial status. Another important feature of
the 1988 amendment was the addition of the “reasonable accommodation” provision
which requires that a landlord comply with any request for an accommodation by a
disabled person so long as the request is feasible and paid for by the requesting party.2
The Civil Rights Act and the FHA were seen as great successes and giant steps
forward for the nation as a whole. Many states followed suit and passed state laws with
language that mirrored both the Civil Rights Act and the FHA, often including more
1 42 U.S.C.A. § 3604. 2
42 U.S.C.A. § 3604. 3
protected classes than either of the former. Minnesota’s version of these statutes came in
the form of the Minnesota Human Rights act (“MHRA”).
The language of the housing discrimination sections of the MHRA largely
mirrored the language of the FHA. The main difference between the MHRA and the FHA
is that the MHRA also provided protections to persons based on creed, sexual orientation
and status with regard to public assistance, all classes of persons not covered under the
FHA. The major protections provided by the housing sections of the MHRA are listed in
the following:
It is an unfair discriminatory practice for an owner, lessee, sublessee,
assignee, or managing agent of, or other person having the right to sell,
rent or lease any real property, or any agent of any of these: (1) to refuse
to sell, rent, or lease or otherwise deny to or withhold from any person or
group of persons any real property because of race, color, creed, religion,
national origin, sex, marital status, status with regard to public assistance,
disability, sexual orientation, or familial status; or (2) to discriminate
against any person or group of persons because of race, color, creed,
religion, national origin, sex, marital status, status with regard to public
assistance, disability, sexual orientation, or familial status in the terms,
conditions or privileges of the sale, rental or lease of any real property or
in the furnishing of facilities or services in connection therewith, except
that nothing in this clause shall be construed to prohibit the adoption of
reasonable rules intended to protect the safety of minors in their use of the
real property or any facilities or services furnished in connection
therewith[.]3
Exceptions to the FHA and MHRA
Like many laws, the FHA and the MHRA have various exceptions that are
included in the language of statutes themselves. The major exception to the FHA is a
jurisdictional one. The FHA does not apply to private property owners who own three or
fewer single-family homes, or to units in an apartment building with 4 or fewer units, one
3
M.S.A § 363A.09 4
of which is occupied by the property owner.4 The exception was included to allow small,
private property owners, who have proportionally very little impact on the housing
market as a whole, decide who lived in their properties without being subject to the
regulations of the FHA.
This jurisdictional exception, which is the only major exception granted by the
FHA is in fact, a very narrow one. The exception is further narrowed by the fact that
prohibitions regarding discriminatory statements or language in advertising still apply to
the small, private property owners who are otherwise exempted.5 The narrow and limited
exceptions granted the language of the FHA make it clear that the intent of the statute
was to be applied widely and liberally so as to protect the state interest that it serves.6
In keeping with the tradition of states broadening the protections granted by the
FHA, Minnesota followed suit by granting similar, but even narrower exceptions to the
MHRA. The MHRA provides the following relevant exemptions:
…the rental by a resident owner or occupier of a one-family
accommodation of a room or rooms in the accommodation to another
person or persons if the discrimination is by sex, marital status, status with
regard to public assistance, sexual orientation, or disability… [and] the
rental by a resident owner of a unit in a dwelling containing not more than
two units, if the discrimination is on the basis of sexual orientation.7
Not only does the MHRA narrow the breadth of property owners who are exempted from
the statute, it also limits the classes in which the discrimination may be based. Again the
language of the MHRA mirrors that of the FHA while strengthening the protections it
provides by including narrower exceptions so as to achieve its goal of equal opportunity.
See 42 U.S.C.A § 3603(b)(1-2). 5 42 U.S.C.A. § 3603(b)(1)(B) 6
See e.g. Trafficante v. Metro. Life Ins. Co., 409 U.S. 205 (1972)(holding that the fair
housing act must be construed generously so as to foster integration). 7 M.S.A § 363A.21(2-3). 4
5
So as to leave no doubt of their intent, the drafters of the MHRA began the housing act
with a section titled “Construction and Exclusivity.” The section begins as follows: “The
provisions of this chapter shall be construed liberally for the accomplishment of the
purposes thereof.”8
The FHA and MHRA in the Context of Other Civil Rights Statutes
The purpose of examining these exceptions to the FHA and MHRA, is to set the
stage for later discussion of the “business justification rule,” that has been adopted by
courts all over the United States as an affirmative defense to intentional housing
discrimination. By highlighting the minimal exceptions granted by the language of the
statutes, questions are raised about how the broad “business justification” exception has
been established.
To further lay the groundwork for discussion of the business justification
exception, a brief examination of exceptions to Title VII is required. Title VII is another
section of the Civil Rights Act and much of U.S. court’s treatment and analysis of the
FHA, MHRA and similar statutes has been adopted from the Title VII context.9
Title VII of the Civil Right Act, prohibits discrimination in hiring, firing and
promotion in the workplace. Title VII grants more extensive exceptions than does the
FHA or MHRA section on housing. Most generally, Title VII grants exceptions to
8 M.S.A. § 363A.04. 9
See Shelden Apartments v. U.S. Department of Housing and Urban Development, 785
F.2d 152, 159 (6th Cir.1986)(adopting the test in the Title VII case, McDonell Douglas
Corp. v. Green, 411 U.S. 792 (1973), which allowed for a business justification defense
to a claim of disparate treatment against a member of a protected class). 6
religious organizations that allow them to discriminate in their hiring practices on the
basis of religion.10 Moreover, Title VII allows employers to discriminate based on
religion, sex or national origin if either of those qualities are “a bona fide occupational
qualification reasonably necessary to the normal operation of that particular business or
enterprise.”11
These exceptions are narrowly tailored and seem to justifiably allow religious
organizations, and for that matter strip clubs, either male or female, to operate as the
types of enterprises that they were founded to be. However, where Title VII grants
broader exceptions, is where it addresses the idea of disparate-impact.
Cases of discrimination are generally divided into two separate classes, those of
disparate-treatment, and those of disparate-impact. Disparate-treatment cases or
intentional discrimination cases arise when a defendant is accused of treating members of
a protected class differently than those of other classes, i.e., refusing to rent to a person
based on race even though they are otherwise qualified to rent the property. Disparateimpact cases arise when action by a defendant, or action by the legislature in adopting a
statute, has a proportionally greater effect on members of a protected class. A classic
example of a disparate-impact claim would be a plaintiff challenging a housing
developer’s decision not to accept Section 8 vouchers. If the majority of persons
receiving Section 8 vouchers were black, the decision to not accept Section 8 vouchers
would negatively affect blacks more than it would whites, creating a disparate-impact.
In returning to the Title VII context, the Title VII statute specifically addresses
defenses to disparate impact claims. The defenses it grants seem to have been interpreted
10 42 U.S.C.A. Ch. 21, Subch. VI § 2000e-2. 11 42 U.S.C.A. Ch. 21, Subch. VI § 2000e-2(e)(1). 7
broadly to grant perhaps unintended exceptions, an issue that will be discussed further on.
Title VII of the Civil Rights Act states:
An unlawful employment practice based on disparate impact is established under
this subchapter only if—
a complaining party demonstrates that a respondent uses a
particular employment practice that causes a disparate impact on
the basis of race, color, religion, sex, or national origin and the
respondent fails to demonstrate that the challenged practice is job
related for the position in question and consistent with business
necessity.12
This exception is perhaps the basis that courts have relied on to create the “business
justification” defense, however, it is important to note that the same section of the Title
VII statute also states: “A demonstration that an employment practice is required by
business necessity may not be used as a defense against a claim of intentional
discrimination under this subchapter.”13
The language above seems to give some guidance as to the basis that courts have
relied upon to adopt the business justification defense. It does not however, give us any
insight as to how the courts have allowed the business justification defense to be used in
cases of intentional discrimination, especially when the statute itself so expressly forbids
it. Moreover, this language gives no insight as to how an exception that is granted in Title
VII cases has been adopted in cases arising out of the FHA and the MHRA. In
questioning how the business justification defense has come to apply to the FHA and
MHRA, it is imperative to note that the FHA and the MHRA contain absolutely no
language or exceptions that refer to a “business necessity.”
With these glaring differences in exceptions granted by Title VII and those
12 42 U.S.C.A. Ch. 21, Subch. VI § 2000e-2(k)(1)(A)(emphasis added). 13 42 U.S.C.A. Ch. 21, Subch. VI § 2000e-2(k)(2)(emphasis added). 8
granted by the FHA or MHRA, the question arises about how an exception granted by
one and not the others has been so widely adopted. The following examination and
discussion of the judicial creation known as the “business justification defense” will
attempt to answer these questions.
Origins of the Business Justification Defense
Like most judicial theories and precedent, the business justification defense has
evolved over the years. As was alluded to above and which will be explained further on,
the business justification defense that has evolved in the housing discrimination setting
has been adopted from the Title VII, employment discrimination context. Thus, the first
case we will discuss is that of McDonnell Douglas Corporation v. Green, which arose out
of Title VII.14
The pertinent facts of McDonnell Douglas are these: The respondent, a black man
named Percy Green had worked for petitioner McDonnell Douglas, a large airplane
manufacturer, as a mechanic for 8 years before he was laid off during a reduction in
petitioner’s workforce. Green was a long time activist in the civil rights movement and
believed that he had been laid off for racially discriminatory reasons. In response, Green
organized a “stall-in” in which he coordinated teams of cars to effectively block traffic on
all roads that granted access to McDonnell Douglas’s manufacturing plant. The stall-in
was executed just before a shift change so as to affect the largest number of employees.
Green was subsequently arrested and pleaded guilty to the charge of obstructing traffic.
Shortly after the stall-in, McDonnell Douglas advertised openings for mechanics.
14
Full citation: McDonnell Douglas Corporation v. Green, 411 U.S. 792 (1973).
9
Being duly qualified, Green applied for the position and was rejected. McDonnell
Douglas provided Green’s illegal conduct against them as their reason for rejecting his
application. Green brought suit, alleging violations of Title VII of the Civil Rights Act of
1964. After extensive litigation, the Supreme Court granted certiorari to hear the case.
Upon hearing the case, the Supreme Court rendered a unanimous decision, written
by Justice Powell. The opinion focused on how to analyze cases alleging intentional
discrimination in the employment context. After lengthy discussion, the court arrived at
the following:
The complainant in a title VII trial must carry the initial burden under the
statute of establishing a prima facie case of racial discrimination. This may
be done by showing (i) that he belongs to a racial minority; (ii) that he
applied and was qualified for a job for which the employer was seeking
applicants; (iii) that, despite his qualifications, he was rejected; and (iv)
that, after his rejection, the position remained open and the employer
continued to seek applicants from persons of complainant’s
qualifications…The burden then must shift to the employer to articulate
some legitimate, nondiscriminatory reason for the employee’s rejection.15
The Court also stated that upon showing of a legitimate nondiscriminatory reason by the
employer, the burden should again shift to the complainant to provide evidence that the
reasoning provided in defense was merely a pretextual disguise of actual discrimination.16
The Court opined that McDonnell Douglas’ reasoning for rejecting Green was valid, but
eventually remanded the case to allow Green the opportunity to introduce evidence that
McDonnell Douglas’ reasoning was simply pretext for racial discrimination.17
The burden shifting approach developed in McDonnell Douglas, has become the
standard test for analyzing Title VII employment discrimination lawsuits. The test has
15 McDonnell Douglas Corporation v. Green, 411 U.S. 792, 802 (1973). 16 McDonnell Douglas Corporation v. Green, 411 U.S. 792, 807 (1973). 17 McDonnell Douglas Corporation v. Green, 411 U.S. 792, 807 (1973). 10
rarely been challenged or attacked, given its similarity to the actual language of Title VII,
which as quoted above, states that an employer may put forth a “business necessity”
defense to rebut a claim of intentional discrimination.18 The test established in
McDonnell Douglas broadens the exception to allow employers to provide “a legitimate,
nondiscriminatory reason” for the rejection, instead of limiting their defense to a only
“business necessity.”19
Another important issue to note is that the McDonnell Douglas decision has been
adopted by nearly all courts in both disparate-treatment and disparate-impact claims.20
The only difference in the tests being that in order for a complainant to establish a prima
facie case in a disparate-impact claim, he would have to put forth evidence to prove a
facially neutral practice’s prejudicial effect on a protected class.
This application to both disparate-treatment and disparate-impact claims is an
issue of note because the McDonnell Douglas test clearly has some basis in the language
of Title VII listed above, yet Title VII expressly prohibits the use of a “business
necessity” defense in cases of intentional, or disparate-treatment claims.21 Even though
the McDonnell Douglas test does not call for a business necessity to rebut claims of
intentional discrimination, it clearly does not prohibit it. This has led in some part to the
phenomenon of the business justification defenses being disguised as other “legitimate
nondiscriminatory reasons.”
Adoption of Title VII Analysis to Housing Discrimination Claims
U.S.C.A. Ch. 21, Subch. VI § 2000e-2(k)(1)(A). 19 McDonnell Douglas Corporation v. Green, 411 U.S. 792, 802 (1973); 42 U.S.C.A. Ch.
21, Subch. VI § 2000e-2(k)(1)(A). 20
See Kovacevich v. Kent State University, 224 F.3d 806, 830 (6th Cir.2000) 21 42 U.S.C.A. Ch. 21, Subch. VI § 2000e-2(k)(2). 18 42
11
Given that Title VII and the FHA came out of the same era, and that both are
statutes designed to protect the civil rights of marginalized classes, it is no surprise that
judicial analysis of the two statues has some overlap. As alluded to above, much of the
judicial analysis of the FHA has been exported and adopted from case law arising out of
Title VII.
All of the Federal Circuits that have spoken to the issue have adopted the Title
VII approach, and specifically, the McDonnell Douglas burden-shifting test. Instead of a
reciting of case law from all ten Circuits, the following are a few examples from the
Circuits that have most clearly stated their reasoning for adopting the Title VII approach.
Graoch
Associates
v.
Louisville/Jefferson
County
Metro
Human
Relations
Commission,22 a housing discrimination case out of the 6th circuit, lays out it’s reasoning
as follows:
In disparate treatment cases under the FHA, we apply the three-part
burden of proof test established in McDonnell Douglas Corp. v.
Green…The two statutes [Title VII and the FHA] are part of a coordinated
scheme of federal civil rights laws enacted to end discrimination; the
Supreme Court has held that both statutes must be construed expansively
to implement that goal.23
The Graoch Court also based their reasoning on a decision in the Second Circuit
that came to the same conclusion based not only on the similarity in language and intent
of Title VII and the FHA, but on other grounds as well.
Courts and commentators have observed that the two statutes require
22 Full Citation: Graoch Associates v. Louisvill/Jefferson County Metro Human Relations
Commission, 508 F.3d 366 (6th Cir.2000). 23 Graoch Associates v. Louisvill/Jefferson County Metro Human Relations Commission,
508 F.3d 366 (6th Cir.2000)(quoting McDonnell Douglas Corporation v. Green, 411 U.S.
792 (1973); citing Trafficante v. Metro Life Insurance Co., 409 U.S. 205, 211-12 (1972);
Griggs v. Duke Power Co., 401 U.S. 424, 429-36 (1971)(internal citations and quotations
omitted). 12
similar proof to establish a violation. Thus, just as title VII is violated by a
showing of discriminatory effect, we hold that a Title VIII (FHA)
violation can be established without proof of discriminatory intent.24
The Huntington Court draws the connection between the FHA and Title VII through a
comparison of the proof formulas required to create a prima facie case of discrimination.
The connection is made by comparing the matching FHA and Title VII proof formulas
required in disparate-impact cases, but the prima facie elements of disparate-treatment
cases in both Title VII and FHA cases are also nearly identical.
For example, a complainant alleging a violation of the FHA based on racial
discrimination would have to prove the following elements to establish a prima facie
case:
(1) That he or she is a racial minority;
(2) That he or she applied for and was qualified to rent or purchase certain
property or housing;
(3) That he or she was rejected; and
(4) That the housing or rental property remained available thereafter.25
These elements are nearly identical in form and language to the prima facie elements of a
Title VII discrimination claim that are listed on page 9. The fact that Title VII prima facie
elements are identical makes any argument that the Huntington Court intended only to
extend the comparison to examples of disparate-impact, a moot one.
The reasoning in the case law above is logical, practical and derives mainly from
statutory construction and comparison. Thus, it has been universally accepted by the
circuits and has rarely been challenged. However, it raises the issue that if the evolution
of the burden-shifting test is traced all the way back to McDonnell Douglas, it appears
24
Huntington Branch N.A.A.C.P. v. Town of Huntington, 844 F.2d 926 (2nd
Cir.1988)(citations omitted). 25 Shelden Apartments v. U.S. Department of Housing and Urban Development, 785 F.2d
152, 159 (6th Cir.1986). 13
that the “legitimate nondiscriminatory reason” language is really derived from the
language of Title VII that allows employers to rebut claims of discrimination with a claim
of “business necessity.” The problem with this is that in applying this test to the FHA,
Courts seem to ignore the fact that the FHA contains no similar language that grants such
a defense in the same context. In affect, by applying the McDonnell Douglas test to the
FHA, courts are effectively granting an exception that is simply not provided by the
statute.
Regardless of the arguments on either side, the fact remains that courts all across
the United States apply Title VII analysis when addressing claims under the FHA. This is
a reasonable development given the similarities of Title VII and the FHA, but it could be
argued that granting an exemption that is not statutorily provided could be seen as a
violation of the separation of powers. After all, if congress had intended the statute to
grant such an exception, would it not have written it expressly?
Business Justification Defense in the Context of the FHA and MHRA
Having explored the history and development of judicial analysis of FHA
discrimination claims, we will now turn to courts’ specific applications of that analysis in
the housing discrimination field. As referenced above, courts have not typically used
specific language such as “legitimate business justification” to grant a defense that rebuts
a claim of intentional discrimination. Instead, courts have either intentionally or
unintentionally granted the defense without often using specific language. The fact that
courts have been reluctant to use such straightforward language in their opinions has
made research difficult, but the cases examined below should give some insight into how
courts have utilized the business justification defense in housing discrimination claims.
14
Upon beginning my research, my thesis was simply that courts have allowed the
business justification defense to rebut claims of intentional discrimination. However,
after analyzing the case law, it appears that there is more to the thesis than simply that.
Analysis of case law has shown that courts are allowing the business justification defense
to rebut claims of discrimination against some protected classes, but not against others.
More specifically, it appears that courts are willing to grant the business justification
defense to rebut discrimination claims based on handicap or source of income, but not to
claims based on race.
The question this raises is; why are courts seemingly treating protected classes in
a hierarchical manner? The FHA and similar state civil rights statutes such as the MHRA
do not create any hierarchy within the protected classes, yet the courts are treating the
classes differently. The obvious reasoning that comes to mind when pondering this
question is that courts appear to be adopting the analysis used in claims raised under the
Equal Protection Clause, which has provided different levels of analysis for courts to
apply to the various protected classes. Again, vagueness of judicial opinions makes it
difficult to determine if that theory is in fact correct, but nonetheless it raises an
interesting question that could be examined through further research.
In no particular order, the following will examine cases from across the country,
raised under the FHA and similar state statutes, which apply the business justification
defense. For no reason other than it arose out of Minnesota, the first case analysis will be
that of Familystyle of St. Paul, Inc. v. City of St. Paul, Minnesota.26 Familystyle
challenged the validity of a local zoning ordinance that regulated the number of group 26
Full Citation: Familystyle of St. Paul, Inc. v. City of St. Paul, Minnesota, 728 F.Supp.
1396 (United States District Court, D. Minnesota 3rd Div.1990). 15
home type facilities for persons with handicaps that could operate in the City of St. Paul.
Minnesota.
The pertinent facts are these: Plaintiff Familstyle, Inc. (“Plaintiff”) was a
Minnesota corporation that was in the business of operating small group-home facilities
for persons with disabilities, in residential neighborhoods of St. Paul.27 In 1983, Plaintiff
purchased 3 multi-family homes in close proximity to each other.28 Plaintiff intended to
operate those homes as group-homes but was denied permits to do so when they applied
for them.29 The reason for the denial was two statutes, one a Minnesota Statute, and the
other, a City of St. Paul Zoning Ordinance. The Minnesota Statute provides as follows:
The commissioner shall not grant an initial license to any residential
program if the residential program will be within 1,320 feet of an existing
residential program unless the town, municipality, or county zoning
authority grants the residential program a conditional use or special use
permit.30
The rejection was also based on the City of St. Paul Zoning Code.
The City of St. Paul Zoning Code similarly provides that community
residential facilities serving six or fewer people are permitted, subject to
the condition that a minimum distance of 1,320 feet will be required
between zoning lots used for community residential facilities.31
Plaintiff challenged the validity of both statutes, basing its argument on the
express language of the FHA, which provides:
Nothing in this subchapter shall be construed to invalidate or limit any law
of a State or political subdivision of a State, or of any other jurisdiction in
27 Id. at 1398. 28
Id. at 1398. 29 Id. at 1398.
30
Minn.Stat. § 245A.11, subd. 4. 31 Familystyle of St. Paul, Inc. v. City of St. Paul, Minnesota, 728 F.Supp. 1396 (United
States District Court, D. Minnesota 3rd Div.1990)(quoting City of St. Paul Zoning Code
60.413)(internal quotations ommited.) 16
which this title shall be effective, that grants, guarantees, or protects the
same rights as are granted by this title; but any law of a State, a political
subdivision, or other such jurisdiction that purports to permit any action
that would be a discriminatory housing practice under this title shall to that
extent be invalid.32
Plaintiff argued that because the statutes in question limited persons with disabilities
choices about where to live, that they constituted a “discriminatory housing practice.”33
Plaintiff further argued that because the statutes had the affect of denying housing to
persons with disabilities, a protected class, that they were in direct opposition of the FHA
and its intent.34
In conformity with the test established in McDonnell Douglas, the Court allowed
the Defendant, The City of St. Paul, to rebut the claim of Plaintiffs by putting forth a
legitimate nondiscriminatory reason for the facially discriminatory statute.35 The City of
St. Paul argued that their reasoning for enacting the zoning laws was to further the state
interest and policy of integration of persons with disabilities.
This space limitation coexists with subdivision 1 of section 245A which
states that it is the policy of the state that persons shall not be excluded by
municipal zoning ordinances or other land use regulations from the
benefits of normal residential surroundings.36
The City of St. Paul further argued that the intent of the statute was to allow
disabled persons to live in integrated communities, and to avoid isolation in
32
42 U.S.C. § 3615. 33 Familystyle of St. Paul, Inc. v. City of St. Paul, Minnesota, 728 F.Supp. 1396, 1399
(United States District Court, D. Minnesota 3rd Div.1990). 34
Id. at 1400. 35 See Familystyle of St. Paul, Inc. v. City of St. Paul, Minnesota, 728 F.Supp. 1396
(United States District Court, D. Minnesota 3rd Div.1990). 36 See Familystyle of St. Paul, Inc. v. City of St. Paul, Minnesota, 728 F.Supp. 1396
(United States District Court, D. Minnesota 3rd Div.1990)(quoting Minn.Stat. §
245A.11(1)). 17
neighborhoods with only handicapped persons.37 The Familystyle Opinion shows no
record that The City of St. Paul put forth any evidence that there did in fact exist
handicapped or disabled “ghettos.”
What the Opinion does show is that Plaintiff argued the following to prove that
The City of St. Paul’s legitimate nondiscriminatory reasoning was merely pretext for a
discriminatory practice: “[T]hese distance requirements are nothing but a tool which
property owners may use to exclude the handicapped from their communities because of
their fears of harm or decline in property value.”38 The Opinion also states that Plaintiff
put into evidence the minutes of a St. Paul City Council meeting regarding the licensing
of Plaintiff, in which many citizens and officials expressed their concern over property
values in connection with the group-homes.39
Without much discussion, the court quickly dismisses this argument, holding that
despite the concern over land values, the true intent of the legislature and zoning body
was to foster integration of persons with disabilities.40 The Court’s dismissal of this
argument is troubling, because despite the fact that Plaintiff put forth evidence that
property values were a real concern, the Court chooses to accept The City of St. Paul’s
argument regarding integration, despite the fact that they introduced no evidence to show
that persons with disabilities were becoming isolated or ghettoized.
The Familystyle opinion is only one example of how a court disguises the
business justification defense. It is clear from the opinion that evidence was put forth
regarding the concern over land values, yet the court diminishes that reasoning, instead
37 Id. 38 Id. at 1403. 39 Id. at 1403. 40 Id. at 1403. 18
choosing to rely on the arguably more valid reasoning of integration of the handicapped.
The opinion spends several pages discussing the integration issue, yet gives the land
value issue only a cursory paragraph.
It is impossible to determine the real motives of a judge through a single opinion.
Nonetheless, the analysis by the Familystyle Court is troubling because it seems to show
that the Court was reluctant to discuss the issue of a business justification for a
discriminatory statue, despite the clear evidence that financial concerns played a role in
the denial of Plaintiff’s licenses to operate the group-homes.
Another class of persons that is often affected by housing discrimination is
recipients of housing subsidies such as Section 8 vouchers. Briefly, Section 8 is a federal
program that provides vouchers to low-income persons, and those persons can in turn
apply those vouchers to pay a portion or all of their rent at a home of their choosing.
Persons who receive these vouchers, or other types of housing subsidies, are not
protected by the FHA, but the MHRA prohibits the following:
[T]o refuse to sell, rent, or lease or otherwise deny to or withhold from any
person or group of persons any real property because of race, color, creed,
religion, national origin, sex, marital status, status with regard to public
assistance, disability, sexual orientation, or familial status.41
A much more concrete example of a court accepting a business justification
defense to a discrimination claim is the case of Salute v. Stratford Greens Garden
Apartments.42 The facts of Salute are quite simple. The Defendants, Stratford Greens
Garden Apartments (“Stratford”) refused to rent to two disabled applicants who were
§ 363A.09(emphasis added). Full citation: Salute v. Stratford Greens Garden Apartments, 136 F.3d 293 (C.A.2
N.Y.1998). 41 M.S.A
42
19
recipients of Section 8 vouchers.43 The Defendants offered no other reasoning for the
denial other than the fact that the Plaintiffs received housing subsidies. According to
federal law, participation of landlords in the Section 8 program is completely voluntary.44
45
Despite the fact that the FHA does not provide protection to persons who receive
housing subsidies, at the time of this lawsuit, the FHA included a provision known as the
“take one-take all” provision. That provision provided that if a landlord accepted any
persons with Section 8 vouchers, they could not refuse to rent or sell to other applicants
solely because they are holders of Section 8 vouchers.46 The factual significance of the
“take one-take all” provision in this case is that Stratford had other tenants in the building
who were section 8 voucher holders.47
To rebut the claim of discrimination in this case, Stratford offered the argument
that “the refusal to accept Section 8 tenants in terms of a general reluctance to become
involved with the federal government and its rules and regulations.”48 In language that is
clear as day, the Court agreed with Stratford and stated the following:
43
Id. at 296. 44
Id. at 296. 45
As will be later discussed, the validity of the voluntary nature of Section 8 is arguable
because of the fact that states such as Minnesota have prohibited the denial of housing to
persons based on their status with regard to public assistance and the FHA expressly
states that it “shall [not] be construed to invalidate or limit any law of a State...that grants,
guarantees, or protects the same rights as are granted by this title.”42 U.S.C. § 3615. 46 42 U.S.C. § 1437f(t)(1)(A). 47 It is important to note, that at the time of the Salute decision, the take one-take all
provision had been repealed. Despite this, the significance of this decision is still great
because the Opinion did not rely only on the fact that the provision had been repealed, it
relied heavily on the fact that the landlords did not wish to burden themselves by entering
into a Section 8 contract with the federal government. 48 Salute v. Stratford Greens Garden Apartments, 136 F.3d 293, 301 (C.A.2 N.Y.1998).
20
A landlord may consider that participation in a federal program will or
may entail financial audits, maintenance requirements, inspection of the
premises, reporting requirements, increased risk of litigation, and so on.49
The court relies on the argument that participation in the Section 8 program is
burdensome on landlords throughout its opinion. In addition to allowing the defense in
the intentional discrimination context, it also allows it as a defense to the Plaintiffs’
disparate-impact claim.
[N]on-participation constitutes a legitimate reason for their refusal to
accept section 8 tenants and ... we therefore cannot hold them liable for ...
discrimination under the disparate impact theory.50
While the Salute Court does not specifically use the term “business justification”
it is clear that it considers the administrative and financial burdens of the Section 8
program to be a legitimate non-discriminatory reasons to refuse to rent to person who
receive housing subsidies.
The Minnesota Court of Appeals recently heard a case, Edwards v. Hopkins Plaza
Limited Partnership,51 which involves very similar issues to those raised in Salute. The
important difference in the Edwards case is that it was brought under the MHRA because
the MHRA prohibits the refusal to rent to persons because of their status with regards to
public assistance. The facts of Edwards are again, quite simple. The Appellant, Jimmy
Edwards was a resident of Hopkins Plaza Apartments for over five years. During those
five years, he was the recipient of a Section 8 voucher with which he paid his rent.
at 301. 50 Salute v. Stratford Greens Garden Apartments, 136 F.3d 293, 302 (C.A.2
N.Y.1998)(quoting Knapp v. Eagle Property Management Corp., 54 F.3d 1272 (C.A.7
Wis.1995)). 51 Edwards v. Hopkins Plaza Limited Partnership was argued at the Minnesota Court of
Appeals on May 4, 2010, and is as of yet undecided. All factual information regarding the
case was taken from direct observation of the oral arguments on May 4, 2010, and the
Appellant’s brief. 49 Id.
21
Throughout his tenancy at Hopkins Plaza Apartments, Mr. Edwards was described by the
property manager as an “excellent tenant.”
In 2006, Hopkins Plaza Apartments made a policy to stop accepting Section 8
vouchers and refused to renew Mr. Edwards lease despite the fact that he had not once
violated any term of the lease. In addition to refusing to renew the lease, Hopkins Plaza
also quoted a price to Mr. Edwards of $895 per month, knowing that $895 was $25 more
than the voucher he currently received (the price quoted was contingent on Mr. Edwards
being able to pay the rent without a Section 8 voucher). For the previous lease term, Mr.
Edwards had paid $870 per month and similar apartments in the same complex were
being rented for $870 per month. Eventually Mr. Edwards’ apartment was rented to
another party, who did not hold a Section 8 voucher, for $875 a month.
After his lease was terminated, Mr. Edwards brought suit in Hennepin County
District Court, alleging multiple violations of the MHRA. Those pertinent violations were
discriminatory refusal to rent based on status with regard to public assistance and unequal
terms and conditions based on status with regard to public assistance.
The District Court granted Defendant Hopkins Plaza Apartments’ motion for
summary judgment, basing much of its opinion on the fact that Hopkins Plaza was free to
abstain from the Section 8 voucher program according to federal law. This argument was
further accepted on the grounds that non-participation in the Section 8 program was valid
because of the financial and administrative burden placed on landlords who participate in
the Section 8 program.
As noted above, Mr. Edwards filed a timely appeal, which was heard recently in
the Minnesota Court of Appeals. It is impossible to speculate as to how the Court will
22
decide, but a decision against Mr. Edwards will be a troubling development. A decision
against Mr. Edwards will insure that Minnesota Courts can grant the business
justification defense in cases of housing discrimination, at least if the claims relate to
status with regards to public assistance.
This precedent will be highly detrimental to the MHRA and will essentially
invalidate the protections it extends to person who receive public assistance. It will also
set dangerous precedent, allowing courts to allow other financially motivated “legitimate
nondiscriminatory reasons” to rebut claims of intentional discrimination.
The examination of the cases above have shown that in some instances courts are
willing to allow a business justification to rebut a claim of housing discrimination.
However, these cases relate to only claims of discrimination based on disability or status
with regards to public assistance. As will be discussed below, courts seem to take a
different approach when dealing with discrimination claims based on race.
An example of a case that demonstrates this difference in approach is United
States v. City of Birmingham, Michigan.52 The facts of Birmingham are lengthy and quite
complicated, but can be boiled down to the following. A developer desired to purchase a
vacant school building, owned by the City of Birmingham, to turn it into a senior living
center. To purchase the building, the Developer needed funding assistance from the
Department of Housing and Urban Development (“HUD”), as well as the Michigan State
Housing Development Authority (“MSHDA”).53
A condition of the proposed funding from HUD and MSHDA, was that the
52 Full citation: United States v. City of Birmingham, Michigan, 538 F.Supp. 819
(United States District Court E.D. Mich.1982). 53 Id. at 821. 23
developer would also have to develop “family housing” for low income persons at a ratio
of 2 senior units to 1 “low income” family unit.54 When the city learned of the conditions
attached to the public funding, they refused to sell the Developer the school building if
they were to develop low-income units along with it.55 Throughout the process of
negotiations it became clear that the City’s primary concern was that low-income units
would attract black families and poor people, causing property values to suffer.56
The court had no trouble concluding that the evidence clearly supported the
conclusion that The City of Birmingham’s reasons for denying the sale were racially
motivated. As a defense to rebut such a conclusion, The City argued that the presence of
low-income housing units, regardless of the race of those who occupied those units,
would decrease property values in the area. The City argued that this was in effect, a
legitimate business reason for denying the sale.
The court did not agree with this argument and stated:
A city that takes steps to exclude black people violates the Fair Housing
Act, regardless whether they do so out of a desire to protect property
values and not out of any animus against black people generally. A person
who attempts to prevent a black family from buying the house next door
because the presence of the black family on the block will decrease
property values violates the Fair Housing act just as assuredly as a person
who attempts to prevent a black family from buying the house next door
because that person dislikes all black people.57
This approach is very different from the approach found in cases where the
discrimination was based on disability or status with regards to public assistance. While
not so expressly stating it, the Familystyle case basically allowed a concern for property
54 Id. at 824‐25. 55 Id. at 828. 56 Id. at 828. 57Id. at 830. 24
values to rebut a claim of intentional discrimination against persons with disabilities,
whereas the City of Birmingham case does not allow the same defense when the
discrimination is based on race. This inconsistency is disturbing because it seems to grant
protections in a hierarchical manner between the classes, a result that was surely not
intended by the FHA or similar state statutes.
Conclusion
Although it has taken many years to develop, courts across the United States now
have a fairly concrete structure to analyze claims of housing discrimination. This
structure was adopted from the Title VII context and today is the widely accepted manner
in which to analyze FHA claims. Although it is not provided for in the statute, entities
that are accused of housing discrimination can now rebut those claims with “a legitimate
nondiscriminatory reason.”
The problem with this analysis is that it has opened the door for business or
economic reasons to fall into the “nondiscriminatory” category. The case law set forth by
Familystyle, Salute, and the District Court in Edwards, shows that courts are willing to
accept that the size of people’s pocketbooks as a sufficient reason to allow intentional
discrimination. This precedent should be disturbing for anyone who advocates for the
rights of the protected classes, and for that matter, anyone who values civil rights.
The opinion in City of Birmingham is a bright spot on the radar of housing
discrimination and no doubt is a victory for minorities who seek suitable and affordable
housing. However, this victory must be taken with a grain of salt, because despite the fact
that courts are not willing to grant the business justification defense to rebut claims of
racial discrimination, they are willing to grant the same defense when the discrimination
25
is based on disability or source of income.
This inconsistency is perhaps a result of an unspoken feeling in the United States.
That unspoken feeling is this: Many people are more appalled and offended when they
see discrimination against persons because of their race, whereas when the discrimination
is based on something less obvious, people are more inclined to turn a blind eye. This is
by no means a description of every person in America, but whether we like to admit it or
not, that feeling seems to be prevalent.
Regardless of how Americans feel about discrimination against the various
protected classes, the FHA and MHRA have no language that indicates the classes should
be treated differently. Despite this, courts are treating the classes differently. This
analysis by the courts is simply wrong. Civil rights statutes are designed to protect the
rights of all equally, yet that goal is not being met.
Because courts are ignoring the language and intent of the FHA and MHRA,
perhaps it is time to add express language to the statutes to assure that their intents are
carried out. To be perfectly clear, this language should expressly convey that an
economic or business reason for denying housing cannot be a legitimate
nondiscriminatory justification for discrimination. The language should also convey that
the protected classes of the FHA and MHRA are to be treated equally and that no
preference or hierarchy shall be granted. While these additions will surely not end the
problem of housing discrimination, they will help ensure that people’s pocketbooks
cannot be a legitimate reason to discriminate, and that regardless if you are black, gay,
disabled, poor, or any other class, your treatment under the FHA and MHRA will be the
same.
26