Bourbeau v. Jonathan Woodner Co.

• Decision Date: 17 April 2008
• Docket Number: Civil Action No. 07-0164 (PLF).
• Citation: 549 F.Supp.2d 78
• Parties: Sarah BOURBEAU, et al., Plaintiffs, v. The JONATHAN WOODNER CO., Defendant.
• Court: U.S. District Court — District of Columbia

549 F.Supp.2d 78

Sarah BOURBEAU, et al., Plaintiffs, v. The JONATHAN WOODNER CO., Defendant.

Civil Action No. 07-0164 (PLF).

United States District Court, District of Columbia.

April 17, 2008.

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Robert Mark Bruskin, Donald Lee Kahl, Washington Lawyers' Committee, Thomas A. Reed, Kirkpatrick & Lockhart Preston Gates Ellis, LLP, Washington, DC, for Plaintiffs.

Richard W. Luchs, Roger David Luchs, Greenstein Delorme & Luchs, PC, Washington, DC, for Defendant.

OPINION

PAUL L. FRIEDMAN, District Judge.

This matter is before the Court on defendant's motion to dismiss for failure to state a claim upon which relief may be granted pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.¹ Plaintiffs Sarah Bourbeau and the Equal Rights Center ("ERC") allege that defendant violated and continues to violate the District of Columbia Human Rights Act, D.C.Code §§ 2-1401.01 et seq. ("DCHRA"), by discriminating against prospective tenants on the basis of source of income. In addition, plaintiff ERC alleges that defendant is liable for negligent supervision of its employees. On March 31, 2008, this Court issued an Order granting in part and denying in part defendant's motion to dismiss, and noting that an Opinion explaining the Court's reasoning would follow. The Court now sets forth its reasoning.

I. BACKGROUND

A. Parties

Sarah Bourbeau is a Washington, D.C. resident who receives federally funded rental assistance through the Housing Choice Voucher Program ("HCVP"). See Complaint ("Compl.") ¶ 3. The Housing Choice Voucher Program is the largest assisted-housing program administered by the United States Department of Housing and Urban DevelopmentC'HUD. See id. ¶ 11.² Under the program, local public housing authorities receive funds from HUD, which they use to issue vouchers to eligible individuals and families. See id. at ¶ 12; see also 42 U.S.C. § 1437f (setting forth the program). These vouchers provide a "tenant-based subsidy that is not linked to any particular building ... or unit, but permits [voucher holders] to rent housing in the private market provided rents do not exceed the Program's rent limitations." Compl. ¶ 10. The voucher holders must contribute'at least 30% of their adjusted monthly income to rent, which they pay directly to their landlords. The public housing authorities pay the remaining rent directly to the landlords on behalf of participating individuals and families. See id. ¶ 13.

ERC is a non-profit corporation that uses outreach, counseling and advocacy to "advance[] fair housing and public accommodations throughout the United States." Compl. ¶ 4. The ERC also conducts and participates in programs to educate the real estate industry about its obligations under federal, state and local fair housing laws. See id. ¶ 15. In addition, the ERC investigates complaints of housing discrimination by conducting fair housing tests of entities that allegedly discriminate on the basis of source of income. See id. ¶ 16.

The Jonathan Woodner Company ("Woodner") is a New York-based company that owns and manages a Washington, D.C. apartment building called "The Woodner," which is located at 3636 16th Street N.W. See Compl. ¶ 2.

B. Facts

On January 29, 2002, an ERC tester posing as a prospective tenant visited The Woodner and spoke with one of defendant's agents. See Compl. ¶ 18. The tester said that she wished to use a HCVP voucher to rent a studio apartment. See id. According to plaintiffs, defendant's agent informed the tester that the apartment complex had reached its limit on accepting voucher holders as tenants and that it had not processed voucher applications for some time. See id. On the same day, another ERC tester posing as a prospective tenant contacted an agent at The Woodner. The second tester did not say that she wished to use a HCVP voucher to pay part of her rent. She allegedly was told that a studio apartment was available for $770 a month. See id. ¶ 19. Plaintiffs maintain that defendant's agents at The Woodner also turned away testers posing as voucher holders on March 21, 2005 and April 5, 2005. See id. ¶¶ 20, 21. On April 8, 2005, Ms. Bourbeau, a voucher holder, visited The Woodner to inquire about vacancies. See id. ¶ 22.³ According to plaintiffs, she too was turned away because she sought to use a HCVP voucher. See id. Defendant denies all of these charges. See Def.'s Mot. at 2.

Plaintiffs filed suit in this Court on January 23, 2007. In Count I, Ms. Bourbeau and ERC allege that Woodner, through its agents, violated and continues to violate the DCHRA by discriminating on the basis of the actual or perceived source of income of potential renters. See Compl. ¶ 36. In Count II, ERC alone alleges that Woodner is liable for negligent supervision of its employees because Woodner "knew or should have known that its employees and/or agents were behaving in an illegal manner by refusing to consider any voucher-holder applicants" and it failed to prevent its employees and/or agents from engaging in illegal discrimination. Id. ¶ 39-40. Plaintiffs seek declaratory relief, injunctive relief, compensatory and punitive damages, costs and fees. See id. at 12.

C. Nature of Claims

Under the DCHRA, it is "an unlawful discriminatory practice" to "refuse or fail to initiate or conduct any transaction in real property ... or to represent falsely that an interest in real property is not available for transaction" if such a practice is "wholly or partially ... based on the actual or perceived ... source of income ... of any individual." D.C.Code § 2-1402.21(a)(1).

Plaintiffs allege that Woodner violated and is violating the DCHRA by discriminating against individuals who wish to make rental payments (in part) with HCVP vouchers by refusing to rent to those individuals and/or falsely representing that qualifying apartment units are not available. See Compl. ¶ 36. ERC further argues that it was injured (and continues to be injured) by Woodner's allegedly discriminatory conduct because that conduct "interfer[ed] with its mission, efforts, and programs," and forced ERC to "commit[] scarce resources, including substantial staff time, to counsel complainants, investigate complaints, engage in an education and outreach campaign, and develop and disseminate educational materials." Compl. ¶ 25. Defendant responds that (1) ERC lacks standing; (2) to whatever extent the DCHRA compels landlords to participate in the Housing Choice Voucher Program it is preempted by federal law; and (3) HCVP voucher payments were not protected "source[s] of income" under the DCHRA when Woodner allegedly discriminated against ERC's testers and Ms. Bourbeau. See Def.'s Mot. at 2, 5. The Court addresses these arguments in turn.

II. STANDARD OF REVIEW

In Bell Atlantic Corp. v. Twombly, ___ U.S. ___, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), the Supreme Court clarified the standard of pleading that a plaintiff must meet in order to survive a motion to dismiss under Rule 12(b)(6). The Court noted that "Federal Rule of Civil Procedure 8(a)(2) requires only`a short and plain statement of the claim showing that the pleader is entitled to relief,' in order to`give the defendant fair notice of what the ... claim is and the grounds upon which it rests[.]'" Id. at 1965 (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)); see also Erickson v. Pardus, ___ U.S. ___, ___, 127 S.Ct. 2197, 2200, 167 L.Ed.2d 1081 (2007). Although "detailed factual allegations" are not necessary to survive a Rule 12(b)(6) motion to dismiss, to provide the "grounds" of "entitle[ment] to relief," a plaintiff must furnish "more than labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Bell Atlantic Corp. v. Twombly, 127 S.Ct. at 1964-65; see also Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986). The Court stated that while there was no "probability requirement at the pleading stage," Bell Atlantic Corp. v. Twombly, 127 S.Ct. at 1965, "something beyond ... mere possibility ... must be alleged[.]" Id. at 1966. The facts alleged in the complaint "must be enough to raise a right to relief above the speculative level," id. at 1965, or must be sufficient "to state a claim for relief that is plausible on its face." Id. at 1974. The Court referred to this newly clarified standard as "the plausibility standard." Id. at 1968 (abandoning the "no set of facts" language from Conley v. Gibson).

On a motion to dismiss for failure to state a claim under Rule 12(b)(6), the Court "must accept as true all of the factual allegations contained in the complaint." Erickson v. Pardus, 127 S.Ct. at 2200; see also Bell Atlantic Corp. v. Twombly, 127 S.Ct. at 1965; Summit Health, Ltd. v. Pinhas, 500 U.S. 322, 325, 111 S.Ct. 1842, 114 L.Ed.2d 366 (1991). The complaint "is construed liberally in the plaintiffs' favor, and [the Court should] grant plaintiffs the benefit of all inferences that can be derived from the facts alleged." Kowal v. MCI Communications Corp., 16 F.3d 1271, 1276 (D.C.Cir.1994); see also Browning v. Clinton, 292 F.3d 235, 242 (D.C.Cir. 2002); Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C.Cir.2000). While the complaint is to be construed liberally in plaintiffs' favor, the Court need not accept inferences drawn by plaintiffs if those inferences are unsupported by facts alleged in the complaint; nor must the Court accept plaintiffs' legal conclusions. See Kowal v. MCI Communications Corp., 16 F.3d at 1276; Browning v. Clinton, 292 F.3d at 242.

III. DISCUSSION

A. ERC's Standing⁴

Under D.C.Code §§ 29-301.85.and 29-301.86, when a nonprofit corporation's articles of incorporation are revoked for failure to comply with certain reporting rules, then all powers conferred on it are inoperative and it must cease all business activities (because it is deemed to be dissolved), except for those activities necessary for winding up...