Discovery House v. Consol. City of Indianapolis

• Decision Date: 30 January 2003
• Docket Number: No. 02-2326.,02-2326.
• Citation: 319 F.3d 277
• Parties: DISCOVERY HOUSE, INC., Plaintiff-Appellee, v. CONSOLIDATED CITY OF INDIANAPOLIS and Metropolitan Board of Zoning Appeals of Marion County, Indiana, Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 277

319 F.3d 277

DISCOVERY HOUSE, INC., Plaintiff-Appellee, v. CONSOLIDATED CITY OF INDIANAPOLIS and Metropolitan Board of Zoning Appeals of Marion County, Indiana, Defendants-Appellants.

No. 02-2326.

United States Court of Appeals, Seventh Circuit.

Argued November 4, 2002.

Decided January 30, 2003.

David C. Jensen (argued), Eichhorn & Eichhorn, Hammond, IN, for Plaintiff-Appellee.

Anthony W. Overholt (argued), Office of the Corp. Counsel, City Counsel Legal Div., Indianapolis, IN, for Defendants-Appellants.

Before BAUER, KANNE, and EVANS, Circuit Judges.

TERENCE T. EVANS, Circuit Judge.

Most people are in favor of programs that help drug addicts shake their addictions. But a lot of people also do not want drug treatment programs operating in their neighborhoods. These programs, some fear (whether the fear is rational or not is another question), will bring hoards of drug addicts, many of whom are embroiled in the criminal justice system, to "centers" that dispense one drug, methadone for instance, to the addicts who are trying to free themselves from the grip of another, more dangerous drug, like heroin. Today's case is about the drug treatment business and a million dollar judgment against Indiana's capital city in a dispute that started as a zoning squabble. It raises interesting questions about the scope of remedies available under various laws when a zoning dispute delays the opening of a drug treatment clinic.

Discovery House, Inc. is a for-profit corporation that operates drug-addiction rehabilitation programs. It (and its corporate affiliates) operate about a dozen substance abuse clinics in three states, including one in Indiana. In the fall of 1995, Discovery House hoped to open a methadone distribution facility in Indianapolis. It was told by an employee of the Department of Metropolitan Development that zoning regulations would allow a facility in the site it had chosen. That decision was later challenged by persons opposed to the facility, and in 1996 the Metropolitan Board of Zoning Appeals (BZA) of Marion County, Indiana, determined, after a contested hearing, that the Discovery House facility was not a permitted use for the area, which was zoned for doctor's offices and hospitals. Discovery House filed a writ of certiorari, and an Indiana state trial judge upheld the BZA determination. Discovery House appealed to the Indiana Court of Appeals, which overturned the decision holding that a methadone treatment center was a permitted use under the zoning laws at the requested location. The court of appeals decision was issued in 1998.

One month before the Indiana Court of Appeals decision, Discovery House filed suit in state court, claiming that the BZA and the City (we will refer to both as BZA) violated its civil and constitutional rights under the Americans With Disabilities Act (ADA), the Rehabilitation Act (RA), and the Equal Protection Clause by determining that a methadone treatment center was not a permitted use. The case was removed to federal court, a trial was held, and the jury awarded a little over a million dollars to Discovery House. The damages were awarded for the time between the BZA denial of a zoning permit and the decision of the Indiana Appeals Court giving Discovery House the green light to open its clinic.

BZA sees a number of things wrong with the result. Its eyesight, as we shall see, is pretty good. One problem involves whether Discovery House has standing to bring this suit under the ADA, the RA, and § 1983. BZA's argument is that the corporation is not protected under the ADA and the RA; for instance, it is not a "qualified individual with a disability" and thus it lacks standing, and because in these circumstances the § 1983 claim tracks the other claims, standing is lacking under that statute as well.

As a constitutional matter, standing involves whether a plaintiff has made out a "case or controversy" between himself and the defendant within the meaning of Article III. Put otherwise, it involves whether the plaintiff has "`alleged such a personal stake in the outcome of the controversy' as to warrant his invocation of federal-court jurisdiction and to justify exercise of the court's remedial powers on his behalf." Warth v. Seldin, 422 U.S. 490, 498-99, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975), quoting Baker v. Carr, 369 U.S. 186, 204, 82 S.Ct. 691, 7 L.Ed.2d 663 (1962). In addition to constitutional requirements, standing may exist because of statutorily created rights: "[T]he standing question in such cases is whether the constitutional or statutory provision on which the claim rests properly can be understood as granting persons in the plaintiff's position a right to judicial relief." Warth, at 500, 95 S.Ct. 2197.

The question here is whether the ADA and the RA (which run along the same path and can be treated in the same way) grant standing to Discovery House. Title II of the ADA prohibits a public entity from denying equal services to individuals because of their disabilities. The enforcement provision found in § 12133 extends relief not just to "qualified individuals with a disability," but to "any person alleging discrimination on the basis of disability...." The RA at § 794a(a)(2) extends remedies to "any person aggrieved" by discrimination on the basis of disability.

That a plaintiff in the position of Discovery House qualifies as an entity which may sue to enforce the rights of others under these provisions, or in fact has standing on its own behalf, has been the conclusion of other courts. See Regional Econ. Cmty. Action Program, Inc. v. City of Middletown, 294 F.3d 35 n. 2 (2d Cir.2002); MX Group, Inc. v. City of Covington, 293 F.3d 326 (6th Cir.2002); Innovative Health Sys., Inc. v. City of White Plains, 117 F.3d 37 (2d Cir.1997), overturned on other grounds, Zervos v. Verizon New York, Inc., 252 F.3d 163 (2d Cir.2001). For purposes of this case, we have no need to agree or disagree with those courts because the reasoning advanced in those cases does not address the problem posed by this case.

For the most part, the cases we just cited concern equitable relief to allow facilities to exist where they had been prohibited. In the case of Discovery House, relief of that kind is unnecessary because the Indiana appellate court has already determined that Discovery House can open its clinic at its desired location. So, Discovery House does not seek equitable relief in this case.

Which brings us to the fact that Discovery House seeks relief which perhaps indirectly will benefit its clients, but which primarily is designed to benefit its for-profit business. Discovery House has won over a million dollars in damages for lost profits for the time period between the BZA decision and its reversal of the BZA decision by the appellate court. The trial record, including the arguments of counsel and the jury instructions, leaves no doubt that it is only lost profits we are concerned with. So our question becomes, does either the ADA or the RA grant Discovery House standing to recover lost profits?

That the nature of the relief sought is a relevant consideration in evaluating standing cannot seriously be contested. In discussing associational standing, the Court says in Warth that

whether an association has standing to invoke the court's remedial powers on behalf of its members depends in substantial measure on the nature of the relief sought. If in a proper case the association seeks a declaration, injunction, or some other form of prospective relief, it can reasonably be supposed that the remedy, if granted, will inure to the benefit of those members of the association actually injured. Indeed, in all cases in which we have expressly recognized standing in associations to represent their members, the relief sought has been of this kind.

Warth, at 515, 95 S.Ct. 2197. Even more clearly, the Court stated in Friends of the Earth, Inc. v. Laidlaw Environmental Services (TOC), Inc., 528 U.S. 167, 120 S.Ct. 693, 706, 145 L.Ed.2d 610 (2000) that "a plaintiff must demonstrate standing separately for each form of relief sought."

Looking, then, to the nature of the relief sought and the statutes under which standing is asserted, we see no way that either the ADA or the RA contemplates a recovery for lost profits for a business like that of the Discovery House. The remedy provisions of the statutes send us on a maze-like journey that starts with the ADA, § 12133, which states:

The remedies, procedures, and rights set forth in section 505 of the Rehabilitation Act of 1973 (29 U.S.C. § 794a) shall be the remedies, procedures, and rights this title provides to any person alleging discrimination on the basis of disability in violation of section 202 [42 U.S.C. § 12132].

Looking at § 505 of the Rehabilitation Act (29 U.S.C. § 794a), we find that subsection (a)(1) provides for remedies for employment discrimination, which are clearly not relevant for our purposes. Subsection (a)(2) tells us that

[t]he remedies, procedures, and rights set forth in title VI of the Civil Rights Act of 1964 [42 U.S.C. §§ 2000d et seq.] shall be available to any person aggrieved by any act or failure to act by any recipient of Federal assistance or Federal provider of such assistance under section 504 of this Act [29 USCS § 794].

Continuing our journey, we get to § 2000d, which is not at all helpful. It provides for judicial review in some circumstances, § 2000d-2, but beyond that we look to cases discussing remedies and find, once again, that equitable relief is the order of the day. See, e.g., Hills v. Gautreaux, 425 U.S. 284, 96 S.Ct. 1538, 47 L.Ed.2d 792 (1976). The one thing that is clear, however, is that lost profits are not expressly provided for.

That is not the end of the inquiry, however, for we also know that "federal courts may use any available remedy to make good the wrong done." Bell v. Hood, 327 U.S. 678, 684, 66 S.Ct. 773, 90 L.Ed. 939 (1946). This principle,...