Village of Bellwood v. Gladstone Realtors

• Decision Date: 25 January 1978
• Docket Number: Nos. 76-2193,77-1019,s. 76-2193
• Citation: Village of Bellwood v. Gladstone Realtors, 569 F.2d 1013 (7th Cir. 1978)
• Parties: VILLAGE OF BELLWOOD et al., Plaintiffs-Appellants, v. GLADSTONE REALTORS et al., Defendants-Appellees. VILLAGE OF BELLWOOD et al., Plaintiffs-Appellants, v. ROBERT A. HINTZE REALTORS et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1013

569 F.2d 1013

VILLAGE OF BELLWOOD et al., Plaintiffs-Appellants, v. GLADSTONE REALTORS et al., Defendants-Appellees.

VILLAGE OF BELLWOOD et al., Plaintiffs-Appellants, v. ROBERT A. HINTZE REALTORS et al., Defendants-Appellees.

Nos. 76-2193, 77-1019.

United States Court of Appeals Seventh Circuit.

Argued Sept. 16, 1977.

Decided Jan. 25, 1978.

F. Willis Caruso, Chicago, Ill., Robert G. Schwemm, Lexington, Ky., for plaintiffs-appellants.

Russell J. Hoover, Chicago, Ill., for defendants-appellees.

Before PELL, BAUER and WOOD, Circuit Judges.

PELL, Circuit Judge.

We have before us consolidated appeals from summary judgments granted the defendants in two lawsuits. In each suit, the same plaintiffs charged a different set of defendants (two real estate brokers and certain individual salespersons) with illegally "steering" prospective homebuyers to differing residential areas in the vicinity of Bellwood, Illinois, on the basis of their race, in violation of the Fair Housing Act of 1968, 42 U.S.C. § 3601 et seq., and the Civil Rights Act of 1866, 42 U.S.C. § 1982. Judge Decker, being of the view that the plaintiffs in No. 76-2193 lacked standing to maintain the action, granted summary judgment and ordered the cause dismissed. In No. 77-1019, Judge Perry adopted Judge Decker's Memorandum Opinion and entered a similar judgment.

The individual plaintiffs in these cases are four white residents of Bellwood, and two black persons, one a resident of Bellwood and one a resident of adjacent Maywood, Illinois. They asserted in their complaints that they "have been denied their right to select housing without regard to race and have been deprived of the social and professional benefits of living in an integrated society." The Village of Bellwood is also a plaintiff, alleging "injur(y) by having the housing market in such village wrongfully and illegally manipulated to the economic and social detriment of the citizens of such village." The other plaintiff is the Leadership Council for Metropolitan Open Communities, a nonprofit corporation devoted to eliminating housing discrimination in the Chicago metropolitan area, which avers that the racial steering attacked here "hamper(s) and interfere(s)" with the Council's mission, and "cost(s) (it) money" to investigate and attempt to eliminate the practice.

Each of the individual plaintiffs in these cases assisted in the prelitigation investigation of defendants' practices. Their role as testers involved posing as prospective homebuyers in visits to real estate brokers. Couples of different races expressed similar preferences as to type, size, price range, and general location of houses in which they would be interested. The defendants allegedly steered couples making similar requests to houses in different areas, dependent upon the couple's race. All of the tester couples acted solely as investigators; none were making bona fide efforts to purchase homes in the affected area. This fact was deemed critical by both district judges, who held that only the direct victims of actual discriminatory acts had standing to maintain suit under 42 U.S.C. § 3612.

The fact that the individual plaintiffs acted as testers has produced some confusion in these cases, and, before addressing the standing question, it is necessary we clarify the matter. The defendants have argued, e.g., that Congress did not intend to apply the Fair Housing Act to hypothetical cases or to create a remedy for testers, and that the only discrimination attacked produced no injury to anyone because the testers would not have bought a house no matter to what area they were steered. These arguments, at least in part, miss the point. It is true that plaintiffs' discovery admissions that no bona fide homeseekers are in the case negatived the complaints' allegations that personal rights "to select housing without regard to race" are implicated here, but the other injuries alleged by the various plaintiffs can and must be assessed without dispositive reference to the role of the individual plaintiffs qua testers.

What the testers did was to generate evidence suggesting the perfectly permissible inference that the defendants have been engaging, as the complaints allege, in the practice of racial steering with all of the buyer prospects who come through their doors. Racial steering, by its nature, is a subtle form of discrimination that is difficult if not impossible to prove otherwise than by comparing the areas to which homeseekers of different races are directed. The strength of the inference suggested by such a comparison is not affected by whether or not the "homeseeker" has a bona fide intent to purchase a home. To the degree defendants are seeking to saddle plaintiffs with the argument that testers qua testers have a cause of action, they have either misread the complaint or erected a straw man. To the degree the argument is that plaintiffs have failed to comply with Fed.R.Civ.P. 56(e) by showing specifically that racial steering was practiced on true homeseekers, it rings hollow in the light of defendants' refusal to date to provide any of the discovery sought by plaintiffs. Moreover, we think the tester evidence itself creates a triable fact issue.

Turning to the standing problems in the case, we assume, for the present purposes, that defendants have engaged in racial steering and that such a practice violates the federal statutes invoked here. ¹ Inquiry into standing focuses on the litigant, not on the merits of his claim. The question is "whether the plaintiff has 'alleged such a personal stake in the outcome of the controversy' as to warrant his invocation of federal-court jurisdiction and to justify exercise of the court's remedial powers on his behalf. Baker v. Carr, 369 U.S. 186, 204 (82 S.Ct. 691, 7 L.Ed.2d 663 (1962))." Warth v. Seldin, 422 U.S. 490, 498-99, 95 S.Ct. 2197, 2205, 45 L.Ed.2d 343 (1975) (footnote omitted; emphasis in original).

The constitutional limitation of the federal judicial power to cases and controversies engenders the first rule of standing: that the plaintiff must show actual or threatened injury to himself that is likely to be redressed or avoided by a favorable decision. Simon v. Eastern Kentucky Welfare Rights Organization, 426 U.S. 26, 38, 96 S.Ct. 1917, 48 L.Ed.2d 450 (1976); Warth, supra, 422 U.S. at 498, 505, 95 S.Ct. 2197 (1975). As to the individual plaintiffs, there is no real doubt that the complaints satisfy this requirement. ² Trafficante v. Metropolitan Life Insurance Co., 409 U.S. 205, 93 S.Ct. 364, 34 L.Ed.2d 415 (1972), demonstrates that. Plaintiffs therein attacked the discriminatory rental practices of the large apartment complex in which they lived, asserting injury in their loss of social and professional benefits from living in an integrated community and in their stigmatization as residents of a "white ghetto." Id. at 208, 93 S.Ct. 364. The Supreme Court expressly found these averments to establish injury in fact. Id. at 209, 211, 93 S.Ct. 364. We reach the same conclusion about the virtually identical allegations of the individual plaintiffs in the cases which are now before us. ³

Trafficante does not control the issue of standing of a municipal corporation to challenge illegal manipulation of its housing market to the "economic and social detriment" of its citizens, although some guidance is provided by the Court's recognition that

(t)he person on the landlord's blacklist is not the only victim of discriminatory housing practices; it is, as Senator Javits said in supporting the (Fair Housing) bill, "the whole community," . . ..

Id. at 211, 93 S.Ct. at 368 (citation omitted). That much is implicit in our determination that the individual plaintiffs here have alleged actual injury. We need not determine, however, whether or not the Village of Bellwood would have standing if the sole injury alleged was the deprivation to its citizens of the benefits of integrated living. Taking the complaints' allegations as true, and construing them liberally in a light favorable to the Village, Warth, supra, 422 U.S. at 501, 95 S.Ct. 2197, it is apparent that specific concrete injury with a substantial nexus to the Village's status as a unit of government could be proved under these complaints. See Flast v. Cohen, 392 U.S. 83, 102, 88 S.Ct. 1942, 20 L.Ed.2d 947 (1968). An area targeted as a "changing neighborhood" to which minority homeseekers may be steered could experience unnaturally rapid population turnover, with destabilized and possibly negative effects on property values and thus on its municipal tax base, and a conceivable increase in certain municipal problems to which a town such as Bellwood would have to commit resources in attacking them. See Zuch v. Hussey, supra, 394 F.Supp. 1028; cf. Linmark Associates Inc. v. Township of Willingboro, 431 U.S. 85, 97 S.Ct. 1614, 52 L.Ed.2d 155 (1977); Barrick Realty, Incorporated v. City of Gary, Indiana, 354 F.Supp. 126 (N.D.Ind.1973), aff'd, 491 F.2d 161 (7th Cir. 1974).

By comparison, the actual injury alleged by the Leadership Council is rather slight. The complaints do not set out specific injury to Council members which, arguably, the Council might be accorded standing to assert. The sole allegations are that racial steering interferes with the Council's mission and costs it funds to attack. But the Council's interest in open housing matters and its asserted commitment to effectuating that interest, albeit commendable, do not substitute for the concrete injury constitutionally required to invoke the jurisdiction of the federal courts. See Simon,supra, 426 U.S. at 39-40, 96 S.Ct. 1917; Warth, supra, 422 U.S. at 511-17, 95 S.Ct. 2197; Sierra Club v. Morton, 405 U.S. 727, 739-40, 92 S.Ct. 1361, 31 L.Ed.2d 636 (1972); Mulqueeny v. National Commission on the Observance of International Women's Year, 1975, 549 F.2d 1115, 1120-22 (7th Cir. 1977). The alleged dollar cost to the Council of attacking defendan...