United States ex rel. Mei Ling v. City of L. A.

• Decision Date: 15 July 2019
• Docket Number: Case No. CV 11-974 PSG (JCx)
• Citation: 389 F.Supp.3d 744
• Parties: UNITED STATES EX REL. MEI LING, et al. v. CITY OF LOS ANGELES, et al.
• Court: U.S. District Court — Central District of California

389 F.Supp.3d 744

UNITED STATES EX REL. MEI LING, et al.

v.CITY OF LOS ANGELES, et al.

Case No. CV 11-974 PSG (JCx)

United States District Court, C.D. California.

Filed July 15, 2019

Eric Schmelzer, William C. Edgar, US Department of Justice, Washington, DC, Lisa A. Palombo, Ross McDougall Cuff, AUSA-Office of US Attorney, David O. Iyalomhe, David Iyalomhe and Associates, Louis A. Rafti, Odion L. Okojie, Law Offices of Odion L Okojie Los Angeles, CA, Anthony Domenic Todero, Scott Parrish Moore, Pro Hac Vice, Baird Holm LLP, Omaha, NE, Donald R. Warren, Warren Benson Law Group, La Jolla, CA, Phillip E. Benson, Warren Benson Law Group, Minnetonka, MN, for United States ex rel. Mei Ling, et al.

Adam B. Fischer, Pepper Hamilton LLP, John C. Hansberry, Jana Volante Walshak, Pro Hac Vice, Fox Rothschild LLP, Pittsburgh, PA, Jeffrey M. Goldman, Pepper Hamilton LLP, Byron J. McLain, Pamela Louise Johnston, Foley and Lardner LLP, Los Angeles, CA, Pamela Louise Johnston, Foley and Lardner LLP, Los Angeles, CA, Amanda Dior Murray, Fox Rothschild LLP, Los Angeles, CA, Tabitha C. Zimbert, Andrues Podberesky, Los Angeles, CA, for City of Los Angeles, et al.

Proceedings (In Chambers): Order DENYING the City of Los Angeles's motion to dismiss

The Honorable Philip S. Gutierrez, United States District Judge

Before the Court is Defendant the City of Los Angeles's ("the City") motion to dismiss. See Dkt. # 219 ("Mot. "). Plaintiff the United States ("the Government") has opposed this motion,¹ see Dkt. # 232 ("Opp. "), and the City replied, see Dkt. # 241 ("Reply "). The Court held a hearing on this matter on July 15, 2019. Having considered the moving papers and the arguments made at the hearing, the Court DENIES the motion.²

I. Background

The Court summarized the allegations underlying this case in its previous order so it repeats only those necessary for deciding the current motion. See United States ex rel. Mei Ling v. City of Los Angeles , No. CV 11-974 PSG, 2018 WL 3814498 (C.D. Cal. July 25, 2018) (" Mei Ling ").

A. Factual Background

Each year, Congress allocates federal funding, distributed by the Department of Housing and Urban Development ("HUD"), to address housing issues in America's cities and promote urban development and affordability. See First Amended Complaint-in-Intervention , Dkt. # 216 ("FACI "), ¶ 1. The City, like all major metropolitan areas, is designated as an "entitlement community," and accordingly receives a statutorily set amount of certain federal grant funds each year. Mei Ling , 2018 WL 3814498, at *1 ; 24 C.F.R. § 570.3. In addition to spending the entitlement grants directly, from 2001 to 2012, the City also provided the funds to the Community Redevelopment Agency of the City of Los Angeles ("CRA"), which has now been succeeded by an entity called CRA/LA.³ See FACI ¶¶ 54–84. During this period, CRA served as the "redevelopment agency for the City" and used a "portion of the [federal] funds" for various "multifamily housing projects." Id. ¶¶ 31–32, 56.

i. The Entitlement Programs

In its First Amended Complaint-in-Intervention ("FACI"), the Government focuses on three programs ("the Entitlement Programs") that issued funds ("the Entitlement Funds") that the City used from February 1, 2005 through November 26, 2017. See id. ¶ 287. These are: (1) the Community Development Block Grant Program ("CDBG") and the Economic Development Initiative Program ("EDI"); (2) the HOME Investments Partnerships Program ("HOME"); and (3) the Housing Opportunities for People with AIDS Program ("HOPWA").⁴ See id. ¶ 4. The FACI also specifically discusses certain Neighborhood Stabilization Program ("NSP") grants, which are a component of CDBG funds. See id. ¶¶ 223–25. Each of these programs was designed to address a range of urban and economic issues. CDBG, for instance, addresses "critical social, economic, and environmental problems" stemming from "the growth of population in metropolitan and urban areas" and "inadequate public and private investment and reinvestment in housing." 42 U.S.C. § 5301(a). The "overall goal" of the programs is "to develop viable urban communities by providing decent housing and a suitable living environment ... principally for low- and moderate-income persons." 24 C.F.R. § 91.1.

ii. The Government's Allegations

The Government alleges that the City and CRA/LA received "many millions of federal taxpayer dollars from HUD by falsely promising to create affordable, accessible housing." FACI ¶ 3. This money was then used to "discriminate against people with disabilities in Los Angeles by depriving them of an equal opportunity to participate in assisted housing programs." Id. ¶ 6.

The allegedly false representations were made in various ways. For example, each year, an entitlement community must submit an Annual Action Plan ("AAP") that "describe[s] the activities the jurisdiction will undertake during the next year to address priority needs and objectives, including the housing and supportive service needs of people with disabilities." Id. ¶ 172. The AAP "serves as the application for CDBG, HOME, and HOPWA funds." Id. ¶ 173. As part of submitting an AAP, a community must certify that it will "administer the grant in compliance with Section 504 of the Rehabilitation Act of 1973," "comply with the Fair Housing Act ... and the implementing regulations ... which prohibit discrimination in housing on the basis of disability," and "affirmatively further fair housing." Id. ¶¶ 147, 173–75. A community seeking CDBG funds must additionally certify that the grant "will be conducted and administered in conformity with title VI of the Civil Rights Act of 1964 ( 42 U.S.C. § 2000d ), the Fair Housing Act ( 42 U.S.C. § 3601 – 3619 ), and implementing regulations." Id. ¶ 179.

Further, the Government alleges that the funding agreements for the Entitlement Programs were premised on regulatory compliance. See id. ¶ 188 ("In each grant agreement for CDBG funds, the jurisdiction expressly acknowledges that CDBG Program regulations ‘constitute part of the agreement,’ and HUD agrees to make CDBG funds available to the jurisdiction ‘subject to the provisions of the agreement.’ "); id. ¶ 196 (same for HOME funds); id. ¶ 202 ("[T]he City's HOPWA agreements included the requirement that it comply with ... nondiscrimination provisions ...."). It contends that despite making these certifications, "the City failed to enforce the federal accessibility laws in its housing program, resulting in systemic noncompliance, including inaccessible housing projects assisted with federal funds and a housing program inaccessible to people with disabilities in the City." Id. ¶ 253.

In support, the Government points to several specific failures. For example, it alleges that a survey of ten multifamily properties constructed by CRA/LA with Entitlement Funds showed that each and every one of them failed to meet the requirements of federal accessibility laws. See id. ¶¶ 314–21. Namely, these properties had (1) slopes, ramps, and thresholds that were too steep for safe passage by persons with mobility disabilities; (2) balconies too narrow for wheelchair access; (3) mounted objects that prohibited access to common areas for individuals with mobility disabilities; (4) kitchen cabinets, sinks, mailboxes, shelves, and surfaces outside the reach of individuals who use wheelchairs; (5) pipes below sinks and lavatories that were uninsulated, posing threats to persons in wheelchairs; (6) insufficient numbers of designated accessible parking spaces; and (7) a lack of visual alarms and tactile signs for persons with hearing and visual impairments. Id. ¶ 322; see also FACI Attachment D , Dkt. # 216-4. As a result, the Government contends that the City and CRA/LA failed to make "at least five percent of all units per multifamily housing project accessible for people with mobility impairments, and an additional two percent ... accessible for people with hearing or vision impairments," as required by Section 504 of the Rehabilitation Act. FACI ¶ 257.

In November and December 2011, HUD's Office of Fair Housing and Equal Opportunity conducted a review of the City and CRA/LA's compliance with Section 504 of the Rehabilitation Act and the ADA in their affordable housing programs, which included interviewing witnesses and conducting onsite surveys of thirty-one units at eleven projects funded with federal assistance. Id. ¶¶ 407–08. After finding significant instances of noncompliance, HUD sought to enter into a voluntary compliance agreement ("VCA") with the City and CRA/LA under which they would voluntarily remedy their accessibility violations. See id. ¶ 418. While it was able to reach a VCA with CRA/LA in 2014, it has not yet been able to do so with the City, and negotiations are ongoing to this day. See id. ¶¶ 418, 445.

B. Procedural History

i. Nature of the Claims

In February 2011, two private whistleblowers, Relators Mei Ling and the Fair Housing Council of San Fernando Valley, filed a qui tam complaint against the City and CRA/LA, bringing claims under the False Claims Act ("FCA"), 31 U.S.C. § 3729. See Dkt. # 1. The Government exercised its statutory right to intervene in the action and filed its Complaint-in-Intervention in July 2017. See Dkt. # 98. That complaint asserted seven causes of action, which are the same causes of action asserted in the now-operative FACI:

First Cause of Action: Presentation of false claims for conduct occurring on or after May 20, 2009, in violation of the FCA, 31 U.S.C. § 3729(a)(1)(A). FACI ¶¶ 536–38.

Second Cause of Action: Presentation of false claims for conduct occurring before May 20, 2009, in violation of the FCA, 31 U.S.C. § 3729(a)(1). Id. ¶¶ 539–41.

Third Cause of Action: Making or using false records or statements for claims for payment pending on or after June 7, 2008, in violation of the FCA, 31 U.S.C. § 3729(a)(1)(B). Id. ¶¶ 542–44.

Fourth Cause of Action: Making or using false records or statements for claims for payment

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