FAIR HOUS. COUN. ETC. v. EASTERN BERGEN CTY. MLS

• Decision Date: 22 November 1976
• Docket Number: Civ. A. No. 76-418.
• Citation: 422 F. Supp. 1071
• Parties: FAIR HOUSING COUNCIL OF BERGEN COUNTY, INC., et al., Plaintiffs, v. EASTERN BERGEN COUNTY MULTIPLE LISTING SERVICE, INC., et al., Defendants.
• Court: U.S. District Court — District of New Jersey

422 F. Supp. 1071

FAIR HOUSING COUNCIL OF BERGEN COUNTY, INC., et al., Plaintiffs, v. EASTERN BERGEN COUNTY MULTIPLE LISTING SERVICE, INC., et al., Defendants.

Civ. A. No. 76-418.

United States District Court, D. New Jersey.

November 22, 1976.

COPYRIGHT MATERIAL OMITTED

Kevin M. Prongay, Jersey City, N. J., and Arthur J. Lesemann, Hackensack, N. J., for plaintiffs.

Smith & DeLucia by Myroslaw Smorodsky, Rutherford, N. J., for defendants Eastern Bergen County Multiple Listing Service, Inc., and Central Bergen County Multiple Listing Service, Inc.

Orbe and Nugent by Alfred S. Nugent, Jr., Ridgewood, N. J., for defendant Pascack Valley Multiple Listing Service, Inc.

Greenberg & Covitz by Morton R. Covitz, Englewood, N. J., for defendants Robert Pogol and Cross County of Bergen.

Leonard Adler, Englewood, N. J., for defendant Handleman Realty Co., Inc.

Victor K. Brown, Bengenfield, N. J., for defendant Carl Cimarosa, d/b/a Country Club Real Estate Organization, Inc. Adams, Adubato, Tafro & Connelly by Maurice H. Connelly, South Orange, N. J., for defendant Joseph G. Spangenberger, Inc.

Barry I. Fredericks, Ridgewood, N. J., for defendant Northeast Bergen Multiple Listing Service, Inc.

OPINION

STERN, District Judge.

Plaintiffs in this lawsuit challenge certain alleged practices in the Bergen County housing market. They charge that the defendants, who allegedly represent the entire real estate industry in Bergen, engage in racial discrimination in the sale and rental of housing in the County. Plaintiffs proceed under the asserted authority of a variety of federal laws, including the Civil Rights Act of 1866, Title 42 U.S.C. § 1982; the Civil Rights Act of 1870, Title 42 U.S.C. § 1981; the Civil Rights Act of 1968, Title 42 U.S.C. §§ 3601 et seq. (the Fair Housing Act of 1968); and the Sherman Act, Title 15 U.S.C. § 1. They invoke the jurisdiction of this Court under the corresponding jurisdictional statutes, Title 28 U.S.C. §§ 1331, 1337, 1343(4), 2201, 2202; Title 42 U.S.C. §§ 3612 and 3617, and Title 15 U.S.C. § 15. Plaintiffs request a declaratory judgment condemning defendants' alleged practices as illegal. They seek an injunction barring any continuation or repetition of such practices. Finally, they ask this Court to mandate a program of affirmative action to redress lingering effects of the asserted violations of law.¹

The defendants moved to dismiss the original complaint on a variety of grounds, including failure to state a claim upon which relief may be granted, failure to resort to available state and federal administrative remedies, lack of standing, failure to join indispensable parties and lack of subject matter jurisdiction. After argument on the motions was heard, the Court granted plaintiffs leave to file an amended complaint. They did so, and defendants now renew their motions.

The amended complaint is voluminous. Its essential elements, however, may be briefly summarized. It is, of course, axiomatic that its well-pleaded allegations are to be accepted as true for purposes of ruling on the motions to dismiss. Jenkins v. McKeithen, 395 U.S. 411, 421, 89 S.Ct. 1843, 23 L.Ed.2d 253 (1969).

The Fair Housing Council of Bergen County is a non-profit membership association dedicated to the promotion of equal opportunity in housing. Its goal is the elimination of racial discrimination in Bergen County. Over three thousand individuals and several social, civic and religious organizations belong to the Council.² The City of Englewood is a municipal corporation of the State of New Jersey, see N.J. S.A. 40:42-1 et seq. There are fourteen individual plaintiffs, eight of whom are black and six of whom are white. All but two of the individuals are residents of Bergen County.

The named defendants fall into two categories. Four of them are multiple listing services. They do business by rendering cooperative listing services to member real estate brokerage firms in connection with residential property in Bergen County. Five licensed real estate brokerage agencies form the second class of defendants. All five agencies are members of one or more of the defendant multiple listing services.

The amended complaint alleges that nearly all sales of residential property in Bergen County are effected through licensed real estate brokerage agencies. Typically, a prospective seller "lists" the property with a broker, who undertakes to advertise and to show the house to prospective purchasers. The broker is generally compensated for his services by a commission paid by the seller. While brokers may act independently, the amended complaint asserts that approximately half of all Bergen County brokerage transactions involve the use of a multiple listing service.

The multiple listing services are associations of real estate brokers. When residential real property is placed for sale with a brokerage agency which is a member of a multiple listing service, the property may be "listed" by all members of the service, thereby increasing the exposure of the property. Members of the multiple listing services circulate daily bulletins and engage in cooperative advertising. When a sale is made through the services of a multiple listing service, the brokerage commission is apportioned between the broker who lists the property with the service and the broker who actually effects the sale.

The plaintiffs allege that all defendants discriminate on the basis of race among prospective customers. They charge that defendants engage in racial steering, directing white customers away from black or interracial neighborhoods and directing black customers away from white or interracial neighborhoods. This practice of steering is allegedly implemented through a variety of tactics, including selective listing and viewing of property, misleading statements made to prospective purchasers, limited and selective advertising, discriminatory treatment of black sales personnel, and discriminatory treatment of brokers dealing regularly with black clients.

Plaintiffs contend that the influence of the defendants on the housing market in Bergen County is so pervasive that their policy of racial steering has distinctively shaped the demographic patterns of the County and has resulted in racial segregation in housing. Each of the plaintiffs claims some quantum of personal injury from these practices. Defendants move to dismiss the amended complaint and to terminate the lawsuit.

The defendants' first contention is that the complaint fails to state a claim upon which relief may be granted. Such an assertion must be tested against a rigorous legal standard. The question is whether plaintiffs would be entitled to relief under any set of facts which could be proved in support of the claims advanced in the amended complaint. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Scott v. Plante, 532 F.2d 939, 945 (3rd Cir. 1976); Gray v. Creamer, 465 F.2d 179, 182 (3rd Cir. 1972). Plaintiffs invoke the jurisdiction of this Court under a number of statutes. Since the core allegations of the complaint deal with racial discrimination in the sale and rental of housing, this Court turns first to the claims under the Fair Housing Act, Title VIII of the Civil Rights Act of 1968.

The operative provision of Title VIII is Title 42 U.S.C. § 3604(a). In pertinent part that statute makes it unlawful

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 makes unavailable or deny, a dwelling to any person because of race, color, religion, or national origin.

This prohibition is broadly drafted. It clearly reflects Congressional intent to extirpate the poisonous influence of racial, religious, and ethnic prejudice in the Nation's housing markets. The Courts have spoken with one voice in interpreting this mandate broadly. See United States v. Youritan Construction Co., 370 F.Supp. 643 (N.D.Cal.1973), aff'd in part, remanded in part on other grounds, 509 F.2d 623 (9th Cir. 1975); Williams v. Matthews Co., 499 F.2d 819 (8th Cir.), cert. denied, 419 U.S. 1021, 95 S.Ct. 507, 42 L.Ed.2d 302 (1974).

The tactics of "racial steering" as described in paragraphs 37 to 40 of the amended complaint constitute, in the view of this Court, a clear violation of § 3604(a). The real estate broker and the multiple listing service are crucial intermediaries between buyers and sellers of residential real estate. The complaint fairly pleads that the influence of these intermediaries extends far beyond any one meeting of the minds between an individual purchaser and an individual seller. The plaintiffs allege that these real estate intermediaries actively and passively mislead potential purchasers in an effort to preserve or extend segregated housing patterns. In such a situation the factor of racial prejudice which Congress sought to eliminate is not merely introduced into the housing market in a discrete incident. It is given an effect extending beyond any one transaction involving a single bigoted purchaser or seller. To insulate the intermediary from Title VIII liability is to retreat from the affirmative mandate of § 3604(a). The Court holds that this complaint adequately pleads that the right to be free from racial discrimination in housing conferred by § 3604(a) has been infringed by defendants. Accord: Zuch v. Hussey, 394 F.Supp. 1028 (E.D.Mich.1975); United States v. Robbins, 1974 P-H EOH Rep. ¶ 13,655 (S.D.Fla.1974). See also Note, "Racial Steering: The Real Estate Broker and Title VIII," 85 Yale L.J. 808, 818-821 (1976).

Having found a right secured by Title VIII, the next issue is one of remedy. Title VIII provides two methods of enforcement. Title 42 U.S.C. § 3610 provides that a person who claims to have been injured by discrimination in housing may file a complaint with the Secretary of the Department of Housing and Urban Development.³ The Secretary must then investigate the...