Sw. Fair Hous. Council, Inc. v. Maricopa Domestic Water Improvement Dist.

• Decision Date: 12 November 2021
• Docket Number: No. 20-15506,20-15506
• Citation: 17 F.4th 950
• Parties: SOUTHWEST FAIR HOUSING COUNCIL, INC., an Arizona nonprofit corporation; Tavita Peña; Jennifer Peters, Plaintiffs-Appellants, v. MARICOPA DOMESTIC WATER IMPROVEMENT DISTRICT, an Arizona municipal corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

17 F.4th 950

SOUTHWEST FAIR HOUSING COUNCIL, INC., an Arizona nonprofit corporation; Tavita Peña; Jennifer Peters, Plaintiffs-Appellants,

v.MARICOPA DOMESTIC WATER IMPROVEMENT DISTRICT, an Arizona municipal corporation, Defendant-Appellee.

No. 20-15506

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 5, 2021 Portland, Oregon

Filed November 12, 2021

Elizabeth Brancart (argued) and Christopher Brancart, Brancart & Brancart, Pescadero, California; Paul Gattone, Law Office of Paul Gattone, Tucson, Arizona; for Plaintiffs-Appellants.

Jeffrey C. Matura (argued) and Melissa J. England, Barrett & Matura P.C., Scottsdale, Arizona, for Defendant-Appellee.

Jeffrey L. Taren and Jesse Wing, MacDonald Hoague & Bayless, Seattle, Washington, for Amici Curiae National Fair Housing Alliance Inc., Fair Housing Council of Oregon, Fair Housing Advocates of Northern California, Fair Housing Center of Washington, Fair Housing Council of Riverside County Inc., Fair Housing Council of San Diego, Fair Housing Foundation, Housing Rights Center, Inland Fair Housing and Mediation Board, Intermountain Fair Housing Council, Montana Fair Housing, Northwest Fair Housing Alliance, Project Sentinel, Silver State Fair Housing Council, Fair Housing Napa Valley, and Legal Aid Society of Hawai‘i.

Before: William A. Fletcher, Carlos T. Bea, and Michelle T. Friedland, Circuit Judges.

ORDER

The Opinion filed on August 23, 2021, is WITHDRAWN and replaced with a superseding Opinion filed concurrently with this Order.

The panel unanimously voted to deny the petition for panel rehearing. Judges Fletcher and Friedland voted to deny the petition for rehearing en banc and Judge Bea so recommends. The full court has been advised of the petition for rehearing on banc and no judge has requested a vote on whether to rehear the matter en banc. Accordingly, appellant's petition for panel rehearing and for rehearing en banc filed September 27, 2021, is DENIED. Fed. R. App. P. 35.

IT IS SO ORDERED.

BEA, Circuit Judge

The federal Fair Housing Act ("FHA") bars discriminatory housing policies and practices, including those that cause a disparate impact according to certain protected characteristics or traits—race, color, religion, sex, handicap, familial status, or national origin. But, absent evidence of intentional discrimination or equally effective and less discriminatory alternatives, the existence of a statistical disparity in a policy's effect on persons with certain protected characteristics, as compared to the wider population, does not authorize courts to invalidate policies that a defendant is able to show serve legitimate governmental or business interests in a significant way. We are empowered to invalidate only artificial, arbitrary, and unnecessary barriers to housing. Tex. Dep't of Hous. & Cmty. Affs. v. Inclusive Communities Project, Inc. , 576 U.S. 519, 540, 135 S.Ct. 2507, 192 L.Ed.2d 514 (2015) (hereinafter, Inclusive Communities ). The policy at issue here is no such barrier.

The Maricopa Domestic Water Improvement District (the "District") is a small municipal corporation in Arizona that supplies water to some three hundred households, including the public housing tenants of one residential complex in Pinal County, Arizona. Property owners like Pinal County are responsible to the District for paying any past tenant's delinquent water accounts. Pinal County acknowledged its responsibility to pay its public housing tenants' delinquent water bills but consistently refused to do so, contending it was immune to that policy based on Pinal County's status as a public municipality. After years of failed tactics and fruitless negotiations with Pinal County, the District imposed a new policy that increased to $180 the refundable security deposit required of new public housing customers before the District would agree to provide water services. New non-public housing customers were subject only to a $55 deposit.

Public housing residents Tavita Peña and Jennifer Peters, along with Southwest Fair Housing Council, Inc., an Arizona nonprofit corporation which describes itself as having a mission to achieve equal access to housing (together, "Appellants"), challenge this policy as impermissibly discriminatory under the FHA. Appellants' primary argument alleges the policy caused a disparate impact because it applied only to the District's public housing customers, who are disproportionately African American, Native American, and single mothers. The district court granted the District summary judgment on the basis that Appellants failed to provide evidence sufficient to establish a triable issue of fact that the policy caused the claimed disproportionate effect (an element of a prima facie disparate impact case). We hold the district court erred and we conclude that Appellants established a prima facie disparate impact claim. However, we nonetheless affirm the district court's judgment because the District established by undisputed evidence that the policy served in a significant way the District's legitimate business interests and because Appellants failed to establish a triable issue of fact that there existed an equally effective, but less discriminatory, alternative.

Appellants also bring a disparate-treatment claim, alleging that discriminatory animus was a motivating factor behind the District's decision to implement its policy. We affirm the district court's holding that Appellants did not adduce evidence sufficient to establish a triable issue of fact with respect to that claim.

BACKGROUND

Appellee Maricopa Domestic Water Improvement District is a small nonprofit municipal corporation created by Pinal County, Arizona, in 1986. The District is a public utility, providing water services to private residents within the town of Maricopa, Arizona, as well as to some public property owned by Pinal County within the town limits. The District services approximately 300 households.

Among those are the households at Edwards Circle. The Edwards Circle complex is a federally funded public housing complex owned and managed by Pinal County. Each of Edwards Circle's twenty public housing units receives water service from the District.

The demographics of the District's customers at Edwards Circle diverge from those of the District's full customer base. The households that comprise the District's full customer base are 45.0% White, 2.9% African American, 2.2% Native American, and 49.7% Hispanic, with 34.3% of households headed by women with children. In 2017, the households that comprised Edwards Circle were 11.1% White, 38.9% African American, 16.7% Native American, and 33.3% Hispanic, with 89% of households headed by women with children.

In addition to having dissimilar demographics, the customers at Edwards Circle are unique among District customers in another respect: they are tenants of Pinal County. Though they are both public entities, the District and Pinal County have had a rather disharmonious relationship. The source of that strife, and the subject of this case, is how to confront the issue of delinquent water bills left over the years by Edwards Circle tenants.

For each of its customers, the District requires an upfront, refundable (when the customer terminates water service and is fully paid-up) deposit as a condition to providing water services. Of course, all property owners are responsible to the District for their own water service fees, but, since at least 2000, the District has maintained a policy, to which Pinal County initially assented, that requires property owners renting their property also to pay any delinquent water service bills left by their tenants in excess of the tenants' forfeited deposits. If the property owner refuses to pay its tenant's delinquency, District procedure is to place a lien on the property. Ultimately, execution of the lien can lead to foreclosure and loss of title to the property.

In accordance with the District's said property owner policy, Pinal County (as owner of the Edwards Circle complex) avowed that it was indeed responsible for its tenants' delinquent accounts. Unfortunately for the District, it would not be so easy to get Pinal County to comply with that admission.

In 2001, to prevent excessive delinquent accounts and thereby limit its own potential liability, Pinal County authorized the District to shut off water service to Edwards Circle tenants who were late on their water payments. But Pinal County soon reversed that position and requested that the District reactivate water services to tenants with late accounts. Thereafter, in 2002, the district raised the security deposit for Edwards Circle residents to $100, a decision which appears to have gone unchallenged.

The issue of delinquent water accounts at Edwards Circle soon again raised its head, but Pinal County responded by burying its own head in the sand. From 2011 through 2013, the District sent multiple notices of tenant delinquency to Pinal County, requesting that the County pay off the balances. One such outstanding delinquent bill amounted to $184.45. Although Pinal County had previously acknowledged responsibility for paying its tenants' delinquent bills, it consistently refused to pay the District.

Pursuant to the District's delinquency policy, it threatened Pinal County with a lien on the Edwards Circle property. The County responded that, unlike all other District customers, the County's property was immune to liens, stating that "[i]t is unlawful in Arizona to lien public property." The District then changed tacks. The District decided it would withhold providing new water service accounts to any unit whose prior tenant vacated with a delinquent balance until the prior tenant's unpaid bills were paid off. The County again refused to pay, again on the basis of its status as a public entity, but this time the County claimed that paying off debts of ex-tenants would "violate the anti-gift clause in the [Arizona] Constitution." Soon thereafter, a...