Village of Bellwood v. Dwivedi

• Decision Date: 02 March 1990
• Docket Number: No. 89-1229,89-1229
• Citation: 895 F.2d 1521
• Parties: VILLAGE OF BELLWOOD, et al., Plaintiffs-Appellees, v. Chandra DWIVEDI, et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1521

895 F.2d 1521

VILLAGE OF BELLWOOD, et al., Plaintiffs-Appellees, v. Chandra DWIVEDI, et al., Defendants-Appellants.

No. 89-1229.

United States Court of Appeals,

Seventh Circuit.

Argued Oct. 25, 1989.

Decided Jan. 30, 1990.

As Amended Feb. 28, 1990.

Rehearing and Rehearing En Banc Denied March 2, 1990.

F. Willis Caruso (argued), Keck, Mahin & Cate, Susan L. Jantorni, Staehlin, Jantorni & Sullivan, Elizabeth Shuman-Moore, Michael J. Kalven, Chicago, Ill., Jeffrey A. Jens (argued), Wheaton, Ill., for plaintiffs-appellees.

Milo W. Lundblad (argued), Pellett, Lundblad & Baker, Chicago, Ill., for defendants-appellants.

Before WOOD, Jr., and POSNER, Circuit Judges, and ESCHBACH, Senior Circuit Judge.

POSNER, Circuit Judge.

The defendants in this civil rights suit--a real estate brokerage firm (Raj Realty), its owner (Chandra Dwivedi), and two of its employees--appeal from a judgment, entered after a jury verdict, for $12,000 in compensatory damages, attorney's fees of almost $72,000, and an injunction. The defendants had been charged with violating two statutes. The first, 42 U.S.C. Sec. 1982, part of the Civil Rights Act of 1866, grants all citizens of the United States the same rights as white people with respect to property. The second, 42 U.S.C. Sec. 3604, part of Title VIII of the Civil Rights Act of 1968, forbids (so far as potentially relevant to this case) making a dwelling unavailable to any person because of his race, Sec. 3604(a); discriminating on racial grounds against any person in the provision of services in connection with the sale of a dwelling, Sec. 3604(b); or falsely representing to any person because of his race that any dwelling is not available for inspection or sale. Sec. 3604(d). The parties agree that both section 1982 and each of the above subsections of section 3604 forbid racial steering by real estate brokers, but they do not agree on what "racial steering" is.

A suburban community of some 20,000, located thirteen miles west of downtown Chicago, Bellwood was once all white but by the time of trial in 1987 was 45 percent black. The adjoining suburbs continue to have very few black residents. Many people in Bellwood are concerned that if the percentage of blacks in the community continues to increase, a point will soon be reached where the remaining whites become so uncomfortable that they exit en masse, making the community all black. The Village has energetically employed the legal tools available to it to prevent this "tipping" from taking place. Whether and by what means a community can or should prevent racial tipping, at inevitable cost to those blacks who would like to move into it even if it ends up with fewer or even no whites, is a profound social question, but is not directly presented by this appeal.

Raj Realty opened in Bellwood in 1982. More than 90 percent of its customers are black, and this has been true from the agency's inception. In 1985, officials of the Village, learning that 80 percent of the Village's new residents were black, decided to investigate a number of real estate agencies, including Raj Realty, to determine whether any of them were steering black home seekers to Bellwood and white ones to the adjoining suburbs. It retained the Leadership Council for Metropolitan Open Communities, a nonprofit corporation that promotes integrated housing, to conduct the investigation. The Council hired both black and white couples to serve as "testers." Twenty-eight of these couples went to Raj Realty, posing as customers. Their reports convinced the Council that Raj Realty was encouraging blacks to buy in Bellwood and whites to buy in the other suburbs--more precisely that Raj Realty was encouraging blacks to buy in east Bellwood and whites in west Bellwood (which is still mainly white) as well as in the white suburbs that surround Bellwood, but we ignore west Bellwood to simplify the opinion. Village, Council, and testers joined together as plaintiffs to bring this suit. (Similar suits were brought against three other real estate agencies.) The jury's verdict did not distinguish between the two statutes the defendants were charged with violating, and did not award the testers any damages.

1. There is a nonwaivable question of subject-matter jurisdiction: whether all the plaintiffs have standing under Article III of the Constitution to maintain this suit. That the Village does is settled by Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91, 110-11, 99 S.Ct. 1601, 1613-14, 60 L.Ed.2d 66 (1979), an earlier steering suit by the Village in which the Supreme Court detailed the various types of injury (for example to the tax base) that tipping, brought about by racial steering, can inflict--injury being the essential requirement of Article III standing. Valley Forge Christian College v. Americans United for Separation of Church & State Inc., 454 U.S. 464, 472, 102 S.Ct. 752, 758, 70 L.Ed.2d 700 (1982). The Council's standing is established by Havens Realty Corp. v. Coleman, 455 U.S. 363, 379, 102 S.Ct. 1114, 1124, 71 L.Ed.2d 214 (1982); our contrary ruling in Village of Bellwood v. Gladstone Realtors, 569 F.2d 1013, 1017 (7th Cir.1978), on which the Supreme Court did not pass in affirming our decision, cannot stand in the face of Havens. South Suburban Housing Center v. Santefort Real Estate, Inc., 658 F.Supp. 1450 (N.D.Ill.1987), which we affirmed in part and reversed in part without issuing a published opinion citable as precedent, 857 F.2d 1476 (7th Cir.1988) (table); 7th Cir.R. 53(b)(2)(iv), rejected the standing of a fair-housing agency similar to the Leadership Council because the agency's ability to provide counseling had not been impaired by the defendant's discriminatory practices. Havens makes clear, however, that the only injury which need be shown to confer standing on a fair-housing agency is deflection of the agency's time and money from counseling to legal efforts directed against discrimination. These are opportunity costs of discrimination, since although the counseling is not impaired directly there would be more of it were it not for the defendant's discrimination. That is especially clear in a case such as the present, where the Council was paid less by the Village than the costs incurred in the Council's investigation. Had it been paid more, it might actually have profited from the defendants' alleged misconduct!

The standing of the testers is, as an original matter, dubious. They are investigators; they suffer no harm other than that which they invite in order to make a case against the persons investigated; there is no suggestion in this case that they were paid less to be testers than the opportunity costs of their time. The idea that their legal rights have been invaded seems an arch-formalism. Havens, however, holds that a tester to whom a real estate agent makes a misrepresentation forbidden by 3604(d) has standing to complain about the misrepresentation, because the statute creates a right to be free from such misrepresentations. 455 U.S. at 374, 102 S.Ct. at 1121. Congress created this right so that private persons could enforce the statute as private attorneys general without running afoul of Article III. The objective and the method are permissible. If Congress had created a system of bounties for bringing offenders to justice, bounty-hunters would have a justiciable interest in offenses committed against other persons, just as government informers have a stake in the rewards offered informers, though in both cases the plaintiff's claim is a contract claim against the government rather than a tort claim against the offender. Like the standing of informers and bounty hunters, tester standing is within the scope of the principle that "Congress may enact statutes creating legal rights, the invasion of which creates standing, even though no injury would exist without the statute." Linda R.S. v. Richard D., 410 U.S. 614, 617 n. 3, 93 S.Ct. 1146, 1148 n. 3, 35 L.Ed.2d 536 (1973).

It is true that these must be substantive rights. Congress may not circumvent Article III by authorizing someone whose substantive rights have not been invaded to sue to redress an invasion of someone else's substantive rights. The statute invalidated in McClure v. Carter, 513 F.Supp. 265 (D.Idaho) (three-judge court), aff'd without opinion, 454 U.S. 1025, 102 S.Ct. 559, 70 L.Ed.2d 469 (1981), authorized a member of the United States Senate (Senator McClure) to bring a federal suit challenging the legality of the appointment of a federal judge (Judge Mikva). No substantive right of Senator McClure's had been invaded by that appointment; such harm as he might have sustained in common with the rest of the nation's population as a result of a judicial appointment arguably in violation of the emoluments clause (Art. I, Sec. 6, cl. 2) was too diffuse to invade any of his legally enforceable rights. (He was not, for example, a party to any proceeding before Judge Mikva.) But Congress can create new substantive rights, such as a right to be free from misrepresentations, and if that right is invaded the holder of the right can sue without running afoul of Article III, even if he incurs no other injury (for example, the loss of a home-buying opportunity). The distinction may seem tenuous but it is the distinction between Havens and McClure, and it binds us.

No misrepresentations were proved here. But the logic of Havens embraces discrimination in the provision of services, forbidden explicitly by section 3604(b) and implicitly by section 3604(a). If the plaintiffs' evidence is believed, the testers were treated in a racially discriminatory fashion, even though they sustained no harm beyond the discrimination itself, just as testers are not fooled by the misrepresentations made to them.

2. A second threshold question is whether this suit is barred by the 180-day statute of limitations in 42 U.S.C. Sec. 3612(a) as it existed before the Fair Housing...