Mhany Mgmt., Inc. v. Cnty. of Nassau, Inc., 05-cv-2301 (ADS)(ARL)

CourtUnited States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
Writing for the CourtSPATT, District Judge
PartiesMHANY MANAGEMENT, INC., Plaintiff, -and- NEW YORK COMMUNITIES FOR CHANGE, INC., Intervenor-Plaintiff, v. COUNTY OF NASSAU, INCORPORATED VILLAGE OF GARDEN CITY, and GARDEN CITY BOARD OF TRUSTEES, Defendants.
Decision Date19 September 2017
Docket Number05-cv-2301 (ADS)(ARL)

MHANY MANAGEMENT, INC., Plaintiff, -and-
NEW YORK COMMUNITIES FOR CHANGE, INC., Intervenor-Plaintiff,
v.
COUNTY OF NASSAU, INCORPORATED VILLAGE OF GARDEN CITY, and GARDEN
CITY BOARD OF TRUSTEES, Defendants.

05-cv-2301 (ADS)(ARL)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

September 19, 2017


MEMORANDUM OF DECISION & ORDER

APPEARANCES:
Hogan Lovells LLP
Co-Counsel for the Plaintiffs
875 Third Ave
New York, NY 10022
By: Stanley J. Brown, Esq.
Ira M. Feinberg, Esq.,
Chava Brandriss, Esq.,
Benjamin A. Fleming, Esq., Of Counsel

Law Offices of Frederick K. Brewington
Co-Counsel for the Plaintiffs
556 Peninsula Boulevard
Hempstead, NY 11550
By: Frederick K. Brewington, Esq., Of Counsel

Lawyers' Committee for Civil Rights Under Law
Co-Counsel for the Plaintiffs
1401 New York Avenue, NW
Suite 400
Washington, DC 20005
By: Joseph D. Rich, Esq.,
Thomas Silverstein, Esq., Of Counsel

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Cullen and Dykman, LLP
Attorneys for the Defendants Incorporated Village Of Garden City, And Garden City Board Of
Trustees
100 Quentin Roosevelt Blvd.
Garden City, NY 11530
By: Douglas J. Bohn, Esq.,
James G. Ryan, Esq.,
Jennifer A. McLaughlin, Esq., Of Counsel

Nassau County Attorney's Office
Corporation Counsel for the Defendant County of Nassau
One West Street
Mineola, NY 11501
By: Ralph J. Reissman, Esq., Of Counsel

SPATT, District Judge:

This housing discrimination action has long been before this Court. After an eleven-day bench trial held in June and July of 2013, this Court found that the Defendants—the Incorporated Village of Garden City and the Garden City Board of Trustees (collectively, "Garden City" or the "Village")—were liable under the Fair Housing Act, 42 U.S.C. § 3601 et seq. (the "FHA") based on disparate impact and disparate treatment; 42 U.S.C. § 1981; 42 U.S.C. §1983; and the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution, based on the Village's decision to change the zoning in a certain area of Garden City.

After the Court's final entry of judgment, the parties cross-appealed—the Plaintiffs appealed this Court's grant, before trial, of summary judgment dismissing the claims against the Defendant County of Nassau (the "County"); and Garden City appealed from the Court's post-trial findings. The Second Circuit affirmed the majority of the Court's conclusions, but remanded the case on two points, one of which is addressed in this opinion.

The Second Circuit held that the Court applied an incorrect standard in addressing the Plaintiff's FHA disparate impact claims. The Circuit Court remanded with instructions that this

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Court determine whether the Plaintiffs MHANY Management, Inc. and New York Communities For Change, Inc. (collectively, the "Plaintiffs") proved at trial that the "substantial, legitimate, non-discriminatory interests" proffered by Garden City in support of its zoning shift "could be served by another practice that has a less discriminatory effect." 24 C.F.R. § 100.500(c)(3).

The Circuit Court also vacated this Court's grant of summary judgment to the County on the Plaintiffs' "steering" claims under Section 804(a) of the FHA and Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000d ("Title VII"), and remanded for reconsideration of those claims. Those claims are not addressed in this opinion, because unlike the disparate impact claims, the parties have agreed that further discovery is required.

For the reasons that follow, the Court finds that the Plaintiffs met their burden at trial in demonstrating, by a preponderance of the evidence, that Garden City's proffered reasons for its chosen zoning change could have been met by another practice that had a less discriminatory effect.

I. BACKGROUND

A. Factual Background

The facts of this case are well-known to the parties and the Court. The Court's post-trial memorandum of decision and order, MHANY Mgmt. Inc. v. Inc. Vill. of Garden City, 985 F. Supp. 2d 390, 396 (E.D.N.Y. 2013) (ECF No. 413), as well as the Second Circuit's decision, Mhany Mgmt., Inc. v. Cty. of Nassau, 819 F.3d 581 (2d Cir. 2016), comprehensively state the facts. Therefore, the Court will not engage once again in a complete factual recitation. However, the Court briefly summarizes the facts that are relevant to this opinion.

At issue is the decision by Garden City to rezone a parcel of land, the "Social Services Site," that was previously occupied by numerous governmental offices. The Social Services Site

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was previously zoned for Public Use ("P") and was part of an area known as the "P zone." The planning firm hired by Garden City to propose a new zoning plan, Buckhurst Fish and Jacquemart ("BFJ"), recommended a "CO-5(b)" zone with multi-family residential group ("R-M") restrictions. In effect, the firm recommended R-M zoning controls. The R-M zoning would have allowed for the construction of up to 311 residential units, including the development of multi-family housing such as apartment buildings. After many residents complained to public officials on several occasions about the effect of high rise buildings on traffic and schools, Garden City relented and rezoned the Social Services Site "Residential-Townhouse" ("R-T"), which was an entirely new zoning classification. Townhouses were defined as single family dwelling units, and the development of multi-family dwellings was limited to less than 15% of the Social Services Site.

The Plaintiffs complained that the R-T zoning would not allow for any affordable multi-family housing. Nevertheless, MHANY, which was then known as New York Acorn Housing Company ("NYAHC"), submitted a bid to build a non-conforming multi-family development on the Social Services Site, "in protest." The County awarded the development contract to a developer of single-family homes. The winning bid, for $56.5 million, proposed to build 87 single-family detached homes on the site. Notably, the proposal did not include any townhouses.

After the contract was awarded to another development company, NYAHC prepared four proposals under the R-M zoning control. NYAHC would have been able to pay $56.1 million for a proposal that would have included affordable housing and it is estimated that 18% of the units would have been occupied by minorities.

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B. Relevant Procedural History

1. The Court's Post-Trial Decision

On June 3, 2013, the Court concluded an eleven day bench trial, and issued its findings of fact and conclusions of law on December 6, 2013. As stated above, among other issues of liability, the Court found that the Village was liable under the FHA based on disparate impact.

In its decision, the Court employed the burden-shifting analysis outlined in the Second Circuit's decision in Tsombanidis v. W. Haven Fire Dep't, 352 F.3d 565, 575 (2d Cir. 2003). Under that standard, a plaintiff is required to prove a prima facie case of disparate impact by showing "(1) the occurrence of certain outwardly neutral practices, and (2) a significantly adverse or disproportionate impact on persons of a particular type produced by the defendant's facially neutral acts or practices." Id. (quoting Reg'l Econ. Cmty. Action Program, Inc. v. City of Middletown, 294 F.3d 35, 52-53 (2d Cir. 2002)). If a plaintiff establishes a prima facie case, the burden shifts to the defendant to "prove that its actions furthered, in theory and in practice, a legitimate, bona fide governmental interest and that no alternative would serve that interest with less discriminatory effect." Id. (quoting Huntington Branch, N.A.A.C.P. v. Town of Huntington, 844 F.2d 926, 936 (2d Cir. 1988)).

The Court found that the Plaintiffs met their prima facie burden; that Garden City identified several legitimate non-discriminatory interests—namely, eliminating office use; reducing traffic; facilitating the development of townhouses; and controlling overcrowding in public schools; and that Garden City failed to meet its burden in demonstrating "the absence of a less discriminatory alternative." MHANY Mgmt., 985 F. Supp. 2d at 427-28. To that end, the Court found that R-M zoning was a less discriminatory alternative that would have reduced traffic and provided for the construction of townhouses.

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The Court entered its final judgment on April 22, 2014. Garden City filed its appeal on May 5, 2014.

2. The Second Circuit's Decision

On March 23, 2016, the Second Circuit issued its decision. On the issue of disparate impact, the Second Circuit held that this Court employed the incorrect burden-shifting standard. Instead of employing the Huntington Branch standard, the Circuit stated that the Court should have utilized the standard announced by the Secretary of Housing and Urban Development ("HUD") in 2013, see Implementation of the Fair Housing Act's Discriminatory Effects Standard, 78 Fed. Reg. 11,460 (Feb. 15, 2013) (codified at 24 C.F.R. § 100.500), because that standard abrogated the Second Circuit precedent. See Mhany Mgmt., 819 F.3d at 618-20 (citing, inter alia, Chevron U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 842-43, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984) (holding that where Congress is silent on the question at issue, courts must defer to an agency's reasonable interpretation of a statute)). The Circuit court found that the statute was ambiguous on the relative burdens of the parties, and therefore HUD's interpretation was entitled to deference. Id. at 619.

Under HUD's framework, the first two steps of the burden-shifting analysis are "substantially the same as in our case law . . . ." Id. at 617. At the first step, the plaintiff must present a prima facie case of disparate impact. The burden then shifts to the defendant to demonstrate that the "challenged practice is necessary to achieve one or more substantial, legitimate, nondiscriminatory interests of the respondent or defendant." 24 C.F.R. § 100.500(c)(1)-(2). Of importance, at the third step, unlike in Huntington Branch, the burden shifts back to the plaintiff to prove that the...

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