Nat'l Fair Hous. All. v. Bank of Am.
| Decision Date | 08 February 2023 |
| Docket Number | Civil Action SAG-18-1919 |
| Parties | NATIONAL FAIR HOUSING ALLIANCE, et al., v. BANK OF AMERICA, N.A., et al. |
| Court | U.S. District Court — District of Maryland |
A collection of fair housing advocacy groups and individual plaintiffs filed this lawsuit against Bank of America, N.A and Safeguard Properties Management, LLC for their allegedly discriminatory maintenance and marketing of real estate owned properties in the wake of the 2008 financial crisis. The plaintiffs' case is predicated on a proprietary investigation of properties owned by Bank of America and serviced by Safeguard in 37 cities between 2011 and 2018. The plaintiffs' study purports to demonstrate a statistically significant racial disparity in the defendants' management of real estate owned properties, which, in the plaintiffs' view, evinces disparate impact and disparate treatment in violation of the Fair Housing Act. Given the centrality of their study to the claims in this case, the plaintiffs supply at least four expert witnesses to opine on the validity of the investigation and to interpret its results. The defendants move to exclude the opinions of each of those four experts, as well as the opinion of National Fair Housing Alliance Senior Associate Director of Enforcement Lindsay Augustine. Safeguard's Mot. to Strike, ECF 205; BANA's Mot. to Strike, ECF 206. The motions are fully briefed, and no oral argument is necessary. See Local Rule 105.6 (D. Md. 2021). For the reasons explained below, the motions to exclude experts will be granted in part and denied in part.[1]
The factual background to this case has been detailed in two prior opinions, so only a short summary is necessary here. See Mem., ECF 66; Mem., ECF 226. Following the 2008 mortgage crisis, Bank of America assumed ownership of foreclosed properties across the country, many of which it engaged Safeguard to service on its behalf. Properties under this ownership structure are referred to as “real estate owned properties” or “REOs.”
The plaintiffs, a group of fair housing organizations assembled by the National Fair Housing Alliance, or “NFHA,” claim that as early as 2009, they started fielding complaints that the defendants were failing to hold REOs in minority communities to the same standard as those in white communities. Decl. of Lindsay Augustine ¶ 2, ECF 184-1 (“Augustine Decl.”). “As a result of those concerns, NFHA developed a large-scale investigation to determine whether the racial makeup of a neighborhood had an impact on the quality of [the defendants'] maintenance and marketing of REO properties.” Id. The investigation found, in the plaintiffs' view, a “substantial and statistically significant” disparity “between the routine exterior maintenance and marketing of Bank of America-owned homes in communities of color and the routine exterior maintenance and marketing of Bank of America-owned homes in predominantly white neighborhoods” that cannot be “explained by non-racial factors.” See Compl. ¶¶ 65, 80, 87, ECF 1.
To reach this conclusion, NFHA measured the number of observed “deficiencies” in REOs in white and non-white communities, ultimately finding “an average of 3.06 more deficiencies among properties in non-white tracts than in white tracts.” Rugh Report at 2, ECF 208-2. A “deficiency,” for purposes of this case, is the presence of one of 37 criteria developed by the plaintiffs as a proxy for the quality of “routine exterior maintenance, marketing, and [] overall curb appeal of” a particular property. Decl. of Shanna L. Smith, ECF 184-3 (“Smith Decl.”). For example, a property might accrue deficiencies for exhibiting features like overgrown grass, damaged steps, missing “For Sale” signs, or other similar problems. Id. at Ex. A. The more deficiencies visible on a property, the worse its score. And, on the plaintiffs' theory, the greater the disparity between average deficiencies of REOs in white and non-white neighborhoods, the stronger the evidence of disparate impact and disparate treatment.
As this overview suggests, the plaintiffs' top-line conclusions are the product of a bottomsup approach. First, the plaintiffs identified 37 metropolitan areas with high foreclosure rates across the United States in which to conduct their study. Augustine Decl. ¶¶ 3-12. Next, they developed the 37 criteria against which to score each property. Smith Decl. ¶¶ 3-5. They then dispatched teams of trained investigators to the field to evaluate the deficiencies on pre-identified REOs. Augustine Decl. ¶¶ 14-17. Investigators visited each property in pairs, tallied each observed deficiency on an evaluation form, and photographed each deficiency to document their conclusions. Id. ¶ 17. After completing an assignment, investigators returned to a local field office to upload the evaluation results and supporting photographic evidence to a centralized database. Id. ¶ 19. NFHA executives reviewed these uploads for quality control purposes, and in some cases edited the results for accuracy and standardization. Id. ¶ 25. Once the results for each of the 1,405 properties currently at issue were uploaded, the plaintiffs analyzed them to compare the effectiveness of the defendants' property maintenance and marketing between white and minority neighborhoods. Id. ¶¶ 26-30.
The plaintiffs have retained at least four experts to offer opinions in support of the investigation at the heart of their case. Dr. Michael D. Fetters, M.D., M.P.H., M.A., opined “on the mixed methods methodology used by the plaintiffs to conduct their investigation.” Fetters Report at 4, ECF 206-2. Fair Housing Center of Southeast & Mid Michigan Executive Director Pamela A. Kisch offered opinions on the “use of testers and the role of fair housing organizations in uncovering illegal discrimination” and the “design and execution of fair housing tests.” Kisch Report at 2, ECF 206-3. Brigham Young University Professor Dr. Jacob S. Rugh, Ph.D., provided a regression analysis for the purpose of attributing the plaintiffs' observed disparities to potential causal factors, concluding that the racial disparity in deficiencies “is highly statistically significant, practically significant, and is not fully explained by” any variable other than race. Rugh Report at 2-3, ECF 208-2. Finally, former A&D Property Services, Inc., Executive Vice President and Chief Financial Officer Deavay Tyler provided a report applying his expertise in the “preservation and maintenance of REOs and post-foreclosure HUD properties, including industry standards, policies, and procedures,” to the defendants' management of the REOs at issue in this case. Tyler Report at 2-3, ECF 183-3 Ex. A.
In addition to proffering these formal expert reports, the plaintiffs also introduced the declaration of NFHA Senior Associate Director of Enforcement Lindsay Augustine. Augustine Decl. ¶ 1.
In her declaration, Ms. Augustine explained under oath the plaintiffs' investigation methodology and provided an analysis of the study's results in Microsoft Excel. See generally Augustine Decl.
The defendants now seek to exclude the opinions of each of the plaintiffs' proffered experts. They also ask this Court to exclude Ms. Augustine's data analysis as improper testimony for a lay witness.
Federal Rule of Evidence 702 governs the admissibility of expert witness testimony. A qualified expert may give testimony if: “(a) the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; (b) the testimony is based on sufficient facts or data; (c) the testimony is the product of reliable principles and methods; and (d) the expert has reliably applied the principles and methods to the facts of the case.” Fed.R.Evid. 702. The trial court's core duty under Rule 702 is to ensure that proposed expert testimony is both “reliable” and “relevant.” Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 597 (1993). In Daubert, the Supreme Court provided five non-exhaustive factors to guide courts in making this assessment: (1) “whether a theory or technique . . . can be (and has been) tested”; (2) “whether the theory or technique has been subjected to peer review and publication”; (3) “the known or potential rate of error”; (4) “the existence and maintenance of standards controlling the technique's operation”; and (5) whether the technique or theory has gained “general acceptance.” 509 U.S. at 592-94; Pugh v. Louisville Ladder, Inc., 361 Fed.Appx. 448, 452 (4th Cir. 2010).[2] Ultimately, however, the inquiry is “a flexible one,” with the relevant factors varying with the needs of each case. Daubert, 509 U.S. at 594.
For an expert's proffered testimony to be sufficiently reliable, it “must be derived using scientific or other valid methods” and not based on mere “belief or speculation.” Casey v. Geek Squad Subsidiary Best Buy Stores, L.P., 823 F.Supp.2d 334, 340 (D. Md. 2011) (first quoting Oglesby v. Gen. Motors Corp., 190 F.3d 244, 250 (4th Cir. 1999); then quoting Bryte ex rel. Bryte v. Am. Household, Inc., 429 F.3d 469, 477 (4th Cir. 2005)). The analysis focuses on experts' methods, not their conclusions, but an expert opinion that relies on “assumptions which are speculative and not supported by the record,” is inadmissible. Tyger Const. Co. Inc. v. Pensacola Const. Co., 29 F.3d 137, 142 (4th Cir. 1994); see Gen. Elec. Co. v. Joiner, 522 U.S. 136, 146 (1997).
For an expert opinion to be relevant, it “must be ‘sufficiently tied to the facts of the case that it will aid the jury in resolving a factual dispute.'” Casey, 823 F.Supp.2d at 340 (quoting Daubert, 509 U.S. at 591). Expert testimony “is...
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