McQueen v. Druker

• Decision Date: 24 February 1971
• Docket Number: No. 7726.,7726.
• Citation: 438 F.2d 781
• Parties: William McQUEEN et al., Plaintiffs, Appellees, v. Bertram DRUKER et al., Defendants, Appellants.
• Court: U.S. Court of Appeals — First Circuit

438 F.2d 781 (1971)

William McQUEEN et al., Plaintiffs, Appellees, v. Bertram DRUKER et al., Defendants, Appellants.

No. 7726.

United States Court of Appeals, First Circuit.

February 24, 1971.

Robert J. Sherer, Boston, Mass., with whom Thomas D. Garvin Jr., and Michael Putziger, of Roche, Carens & DeGiacomo, Boston, Mass., were on brief, for appellants.

Michael L. Altman and Brian Michael Olmstead, Dorchester, Mass., for appellees.

Before ALDRICH, Chief Judge, McENTEE and COFFIN, Circuit Judges.

COFFIN, Circuit Judge.

Appellees are tenants in a 500 unit apartment complex, Castle Square, in the South End of Boston — the same subsidized housing facility constructed and operated under section 221(d) (3) of the National Housing Act, 12 U.S.C. § 1715l(d) (3), which was involved in Hahn v. Gottlieb, 430 F.2d 1243 (1st Cir. 1970). This suit originated when appellant landlord,¹ in accordance with the terms of the lease, notified these tenants in May, 1970, that it was not to be renewed after the July 31, 1970 termination date. Appellees brought this action under 42 U.S.C. § 1983, asserting jurisdiction under 28 U.S.C. §§ 1331, 1343, and seeking an injunction against their threatened eviction; a declaration that eviction must be predicated on cause, with notice, hearing and assurance of alternative housing; and compensatory and punitive damages.²

The district court found sufficient federal and state involvement to make applicable the due process clauses of the Fifth and Fourteenth Amendments and the First Amendment. It enjoined the eviction, and made two declarations of rights and responsibilities. First, it declared that the statutory scheme for § 221(d) (3) housing impliedly requires a good-cause notice to evict and that state court proceedings, observing this substantive federal ruling, would provide procedural due process. Second, it declared that, since "the chief reason" for the landlord's notice to quit was "associational activities" on behalf of fellow tenants, petitions to the Federal Housing Authority, and litigation, the First and Fourteenth Amendments barred any eviction so grounded. 317 F.Supp. 1122 (D.Mass. 1970).

The large problem for us is whether the landlord's action in exercising his contractual right under the lease not to renew and in seeking to evict appellees, can rationally be said to be such "state action" as to call into play the Fourteenth Amendment.³ More precisely, the question is whether the landlord, though not an ostensible agent of the state, has such a relationship with the state that his activities take on the color of state law. United States v. Price, 383 U.S. 787, 794 n. 7, 86 S.Ct. 1152, 16 L.Ed.2d 267 (1966). The district court, relying on Colon v. Tompkins Square Neighbors, 294 F.Supp. 134 (S.D. N.Y.),⁴ as well as on Burton v. Wilmington Parking Authority, 365 U.S. 715, 81 S. Ct. 856, 6 L.Ed.2d 45 (1961), and Marsh v. Alabama, 326 U.S. 501, 66 S.Ct. 276, 90 L.Ed. 265 (1946), reasoned that "With respect to Castle Square, the federal and state governments have elected to place their power, property, and privilege behind the landlords' authority over the tenants, and have insinuated themselves into a position of interdependence with the landlords."

The landlord claims that this case involves only "a regulation of the operations of a private business, not a vesting in it of the functions of government" and argues, citing Grossner v. Trustees of Columbia University in the City of New York, 287 F.Supp. 535, 548 (S.D. N.Y. 1968), that "the receipt of money from the State is not, without a good deal more, enough to make the recipient an agency or instrumentality of the Government". He attacks the court's finding in the words of Mr. Justice Harlan's dissent in Wilmington Parking Authority,supra, 365 U.S. at 727, 81 S.Ct. at 862, as the result of "undiscriminatingly throwing together various bits and pieces". We do not agree. Our scrutiny of the landlord-state relationship indicates far less privateness in the landlord's enterprise, far more of a governmental function, and "a good deal more" than receipt of governmental financial help. They are inescapably the "bits and pieces" on which an ultimate judgment must rest after "sifting facts and weighing circumstances", Wilmington Parking Authority,supra, 365 U.S. at 722, 81 S.Ct. 856. We concede that little guidance in making a principled decision is found in such serpentine words as "insinuated", Wilmington Parking Authority,supra, 365 U.S. at 725, 81 S.Ct. 856, "involved", Reitman v. Mulkey, 387 U.S. 369, 380, 87 S.Ct. 1627, 18 L.Ed.2d 830 (1967), "entwined", Evans v. Newton, 382 U.S. 296, 301, 86 S.Ct. 486, 15 L.Ed.2d 373 (1966), or "intertwining", Grossner,supra, 287 F.Supp. at 548. Commentators have varied in approving or disapproving this lack of precision, but all have recognized it.⁵ Recognizing that the state coloration required by § 1983 is inevitably opaque, we nevertheless hazard our analysis.

Defendant purchased the Castle Square property from the Boston Redevelopment Authority (BRA), which had condemned it in connection with its urban renewal program. The federal incentive to private entrepreneurs, inducing them to take part in helping achieve the national objective of providing housing for needy and displaced families, is insurance of mortgage loans up to 90 per cent of a project's cost, supplementation of mortgagors' interest payments above 3 per cent, and assurance of a 6 per cent return on investment through rent adjustments. In addition to limiting the exposure of private enterprise, the federal law imposes requirements which must be adopted by participating states. For example, federal law requires that, in disposing of urban renewal property, the BRA must place restrictions on the use of property in order to ensure that it is used in accordance with approved urban renewal plans or for low or moderate income housing. 42 U.S.C. §§ 1460(c) (4), 1455, and 1457. State law requires similar restrictions. Mass.Gen.Laws ch. 121, §§ 26YY and 26 LL.

Consequently, the BRA has required the landlord through a lengthy Land Disposition Agreement to adhere to many standards governing the physical plant (e.g., prior approval for construction, improvements and demolition, a minimum investment in works of art, facilities for the handicapped, equal employment opportunity); limitations on rental agreements as to amount, duration, and increases; admissions policies (e.g., income levels of applicants, priority to four classes of displaced persons and four classes of commercial occupants, and allowing the Boston Housing Authority to select tenants for 10 per cent of the residential units);⁶ management (e.g., use solely in accordance with the South End Urban Renewal Plan, consultation with BRA "with respect to its rental program, including preparation of advertising matter, brochures, leases, establishment of rental offices, and all aspects of said program which relate to or have an effect upon the selection of tenants", inspection at all reasonable hours); transfer of title (e. g., compliance with any "conditions * * * the Authority may find desirable in order to achieve and safeguard the purposes of the Massachusetts Housing Authority Law, and the Plan.").

The state supervision of the "private" operations here seems to us to be more than the placing of state "power, property and prestige" behind the discriminatory action of a private restaurateur-lessee in a public building. Burton v. Wilmington Parking Authority, supra, 365 U.S. at 725, 81 S.Ct. 856. Here the landlords are, in return for an assured consideration, and subject to specific and continuing oversight, helping the state realize its specific priority objective of providing for urban renewal displacees and its more general goal of providing good quality housing at rents which can be afforded by those of low and moderate income. The stronger posture of government supervision present in this case is not unrelated to the fact that the government has chosen to attract the participation of private persons in carrying out a specific governmental purpose. In Evans v. Newton, 382 U.S. 296, 86 S.Ct. 486, 15 L.Ed. 2d 373 (1966), the Court held that a park, serving the community and having a municipal purpose, could not be insulated from the effect of the Fourteenth Amendment by transfer of title to private trustees.⁷ It also observed that "If the municipality remains entwined in the management and control of the park, it remains subject to the restraints of the Fourteenth Amendment just as the private utility in Public Utilities Comm'n v. Pollak, 343 U.S. 451, 462, 72 S.Ct. 813, 96 L.Ed. 1068, remained subject to the Fifth Amendment because of the surveillance which federal agencies had over its affairs." 382 U.S. at 301, 86 S.Ct. at 489. Here the function, while perhaps not so traditionally governmental as parks, fire or police services, or libraries, is today one of the major concerns of most cities of substantial size. And to the performance of that function by the landlord, governmental authority contributes significant operational surveillance.

We view our task of "sifting facts and weighing circumstances" as one to be done to the end of determining when it is fair and reasonable to hold an individual subject to the same duties of observance of constitutional rights as are imposed on a governmental unit. Mere receipt of financial subsidy and subjection to some regulation are the conditions of much of our societal life. Neither factor — or both together — is dispositive of "state action". But, while we disavow any effort to be definitive, we conclude that at least when a specific governmental function is carried out by heavily subsidized private firms or individuals whose freedom of decision-making has, by contract and the reserved governmental power of continuing...