Fair Housing of Marin v. Combs

• Decision Date: 09 April 2002
• Docket Number: No. 00-15925.,No. 00-17040.,00-15925.,00-17040.
• Citation: 285 F.3d 899
• Parties: FAIR HOUSING OF MARIN, a California non-profit corporation, Plaintiff-Appellee, v. Jack COMBS, d.b.a. Waters Edge Apartments, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

285 F.3d 899

FAIR HOUSING OF MARIN, a California non-profit corporation, Plaintiff-Appellee, v. Jack COMBS, d.b.a. Waters Edge Apartments, Defendant-Appellant.

No. 00-15925.

No. 00-17040.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted October 19, 2001.

Filed April 9, 2002.

COPYRIGHT MATERIAL OMITTED

Michael K. Johnson, Lewis, D'Amato, Brisbois & Bisgaard LLP, San Francisco, CA, for defendant-appellant.

Thomas V. Loran III, Kim Zeldin, Pillsbury Winthrop, LLP, San Francisco, CA; D. Scott Chang, Belmont, CA, for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of California; Martin J. Jenkins, District Judge, Presiding. D.C. No. CV-97-1247-MJI.

Before: RONEY^*, HUG and THOMAS, Circuit Judges.

RONEY, Circuit Judge.

Plaintiff Fair Housing of Marin ("Fair Housing") brought action for illegal housing discrimination on the basis of race against Jack Combs, owner of the Waters Edge apartment complex in San Rafael, California. Fair Housing alleged that Combs violated the Fair Housing Act of 1968 (42 U.S.C. § 3604), the Civil Rights Act of 1866 (42 U.S.C. § 1982), the California Fair Employment and Housing Act (CAL. GOV'T CODE § 12955), and the California Unfair Business Practices Act (CAL. BUS. & PROF. CODE § 17200, et seq.). In his answer Combs claimed, inter alia, that Fair Housing lacked standing to sue. The district court (N.D.Cal., Jenkins, J.) found that Fair Housing had standing and later sanctioned Combs for discovery abuses by striking his answer and entering default judgment against him prior to trial. The district court awarded the plaintiff compensatory damages of $24,377 and punitive damages of $74,400, and adopted the magistrate judge's recommendation, made after a full hearing, of attorney's fees and costs in the amount of $508,606.78.

Combs appeals, claiming that the district court erred in the following ways: 1) finding that Fair Housing had standing to sue; 2) imposing sanction against Combs with default judgment and damages; and 3) awarding attorney's fees of $508,606.78. We affirm.

Fair Housing of Marin is a non-profit community organization in San Rafael, California. Among its many activities to further its mission of promoting equal housing opportunities, Fair Housing investigates allegations of discrimination, conducts tests of housing facilities to determine whether equal opportunity in housing is provided, takes such steps as it deems necessary to assure equal opportunity in housing and to counteract and eliminate unlawful discriminatory housing practices, and provides outreach and education to the community regarding fair housing.

Jack Combs owned and managed the Waters Edge apartment complex which had eighteen (18) rental units. Fair Housing received complaints that Combs was racially discriminating against black tenants and black potential tenants. In response, Fair Housing conducted two sets of controlled tests where a black tester was shown a unit at Waters Edge followed by a white tester. The tests indicated that Combs discriminated against black applicants.

I. Whether Fair Housing Has Standing.

We review the district court's decision regarding standing de novo. Harris v. Itzhaki, 183 F.3d 1043, 1049 (9th Cir. 1999) (citing San Pedro Hotel Co., Inc. v. City of L.A., 159 F.3d 470, 474-75 (9th Cir.1998); and Johns v. County of San Diego, 114 F.3d 874, 876 (9th Cir.1997)). Whether a community fair housing organization has standing to sue a private party for violations of the Fair Housing Act is a question of first impression for this circuit.

Fair Housing claims first-party standing as an organization on the grounds of diversion of resources and frustration of mission.

The Supreme Court set out the standard for organizational first-party standing in Havens Realty Corp. v. Coleman, 455 U.S. 363, 102 S.Ct. 1114, 71 L.Ed.2d 214 (1982), holding that Congress intended standing under the Fair Housing Act to extend to the full limits of Article III. In Havens, a fair housing organization called Housing Opportunities Made Equal (HOME) and two of its employed testers brought an action against Havens Realty, the owner of an apartment complex. The plaintiffs alleged that Havens Realty engaged in racial steering in violation of § 3604(d) of the Fair Housing Act. Racial steering is the "practice by which real estate brokers and agents preserve and encourage patterns of racial segregation in available housing by steering members of racial and ethnic groups to buildings occupied primarily by members of such racial and ethnic groups and away from buildings and neighborhoods inhabited primarily by members of other races or groups." Havens, 455 U.S. at 367 n. 1, 102 S.Ct. 1114. (citation omitted).

The Court found that HOME suffered an injury sufficient to confer standing. Id. at 379, 102 S.Ct. 1114. HOME devoted significant resources to identifying and counteracting Havens Realty's discriminatory steering practices, and this diversion of resources frustrated the organization's counseling and referral services. The Court concluded that "[s]uch concrete and demonstrable injury to the organization's activities — with the consequent drain on the organization's resources — constitutes far more than simply a setback to the organization's abstract social interests." Id. at 379, 102 S.Ct. 1114 (citing Sierra Club v. Morton, 405 U.S. 727, 739, 92 S.Ct. 1361, 31 L.Ed.2d 636 (1972)).

Combs cites three cases to support his claim that Fair Housing lacks standing, but these cases are distinguished from the one at bar, and the law of those circuits is not different from the law we apply here.

(1) Fair Hous. Council of Suburban Phila. v. Montgomery Newspapers, 141 F.3d 71 (3d Cir.1998), an action against a newspaper alleging that the newspaper had published discriminatory advertisements, simply held that plaintiff Fair Housing Council failed to meet its burden of proving a causal link between the alleged wrongdoing and the injury and failed to substantiate any perceptible impairment to its mission. Montgomery Newspapers, 141 F.3d at 76-77. In a later case, the Third Circuit in Alexander v. Riga, 208 F.3d 419 (3d Cir.2000), held that plaintiff Fair Housing of Pittsburgh, a fair housing organization, had standing because it "diverted resources to investigate and to counter [the defendants' discriminatory] conduct." Alexander, 208 F.3d at 427 n. 4.

(2) In Fair Employment Council of Greater Wash., Inc. v. BMC Mktg. Corp., 28 F.3d 1268 (D.C.Cir.1994), a fair employment case, the D.C. Circuit rejected the argument that the "mere expense of testing" constitutes injury in fact fairly traceable to the discriminatory conduct. BMC Marketing, 28 F.3d at 1276. The fair housing law for the D.C. Circuit concerning standing had been established by Spann v. Colonial Vill., Inc., 899 F.2d 24 (D.C.Cir.1990), where then-Circuit Judge Ruth Bader Ginsburg held that

[a]n organization cannot, of course, manufacture the injury necessary to maintain a suit from its expenditure of resources on that very suit.... Havens makes clear, however, that an organization establishes Article III injury if it alleges that purportedly illegal action increases the resources the group must devote to programs independent of its suit challenging the action. See Havens, 455 U.S. at 379, 102 S.Ct. 1114.... Plaintiffs crucially alleged that these [discriminatory] advertising practices "interfered with plaintiff [Fair.Housing Council] and [Metropolitan Washington Planning & Housing Association's] efforts and programs intended to bring about equality of opportunity for minorities and others in housing" and required plaintiffs "to devote scarce resources to identify and counteract defendants' advertising practices" (citations omitted).... The organizations instead allege concrete drains on their time and resources. Expenditures to reach out to potential home buyers or renters who are steered away from housing opportunities by discriminatory advertising, or to monitor and to counteract on an ongoing basis public impressions created by defendants' use of print media, are sufficiently tangible to satisfy Article III's injury-in-fact requirement.

Id. at 27-29 (citations omitted).

(3) In Ass'n for Retarded Citizens of Dallas v. Dallas County Mental Health & Mental Health Retardation Ctr. Bd. of Trs., 19 F.3d 241 (5th Cir.1994), the Fifth Circuit held that

[t]he mere fact that an organization redirects some of its resources to litigation and legal counseling in response to actions or inactions of another party is insufficient to impart standing upon the organization. [Plaintiff's] argument implies that any sincere plaintiff could bootstrap standing by expending its resources in response to actions of another.

Ass'n for Retarded Citizens, 19 F.3d at 244. Since that case was decided, the Fifth Circuit has held that "an organization could have standing if it had proven a drain on its resources resulting from counteracting the effects of the defendant's actions." La. ACORN Fair Hous. v. LeBlanc, 211 F.3d 298, 305 (5th Cir.2000).

Five other circuits which have addressed the question of organizational first-party standing in a fair housing context have held that the type of injuries alleged by Fair Housing satisfy standing requirements. See Ragin v. Harry Macklowe Real Estate Co., 6 F.3d 898 (2d Cir. 1993) (fair housing organization had standing to sue real estate company for placing newspaper advertisements depicting white people only because the fair housing organization was forced to devote significant resources to identify and counteract the defendants' advertising practices and did so to the detriment of their efforts to obtain equal access to housing through counseling and other services); Hooker v. Weathers, 990 F.2d 913 (6th Cir.1993) (fair housing organization established standing by devoting resources to investigating and confirming defendant's discriminatory practices); Vill. of ...