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A New Jersey federal court has ruled that a jury should decide whether the allegedly discriminatory practices of a leasing agent violated of the federal fair housing laws and demonstrated a pattern of discriminatory conduct. The court also considered whether an individual owner could be personally liable for the actions of the leasing agent.
The United States Department of Justice ("Government"), along with the Northern New Jersey Fair Housing Council, began investigating three apartment complexes in Parsippany, New Jersey. The apartment complexes- Lakeview Garden Apartments, Redstone Garden Apartments, Westgate Garden Apartments (collectively, "Apartments")- were all managed by Garden Homes Management Corporation, and also all shared the same leasing agent, Cathy Rosenstein ("Leasing Agent"). Joseph Wilf was a partner in the apartment complex that employed the Leasing Agent, was an officer in another one of the apartment complexes, and was also a partner in the property management company.
The investigation involved three separate tests at the Apartments' leasing office over a period of a month. In each test, an African-American tester would first make inquiries about apartment availability and shortly thereafter, a white tester would follow with the same inquiry. In each instance, the Leasing Agent would inform the black tester that there were no apartments available and would not give the tester an application form, while the white tester would be shown an apartment, given an application, and encouraged to rent the apartment. Also, during the tests, the Leasing Agent asked the testers if they had children, telling them if they had children, they could only lease an apartment on the first floor. In addition to the three tests described above, the Government also obtained information from two other individuals demonstrating additional instances of racial and familial discrimination.
Based on the test results, the Government filed a lawsuit alleging violations of the federal Fair Housing Act ("Act"), based on a pattern of discrimination. The lawsuit named the Apartments, Leasing Agent, and Wilf individually. The Apartments and Leasing Agent moved for judgment in their favor, arguing that the Government's evidence failed to establish a pattern of racial and familial discrimination. Wilf also moved for judgment, arguing that he could not be personally liable for the actions of the Leasing Agent.
The United States District Court, District of New Jersey, denied the motions for judgment and ruled that a jury would decide the outcome of this case. The Act is intended to eliminate from the housing marketplace discrimination against protected classes, including discrimination in the "sale or rental" of property based on race or familial status. "Familial status" is defined as "one or more individuals (who have not attained the age of 18 years) being domiciled with...a parent." The Act allows the Government to bring a lawsuit to enforce the Act, so long as the Government demonstrates that the person or group "engaged in a pattern or practice of resistance to the full enjoyment of any of the rights" granted in the Act. A "pattern or practice" is established when the Government shows that the discriminatory behavior was more than an isolated incident and was instead the standard operating procedure of the individual or group.
The court first considered whether a jury could find that the Government's evidence established a pattern or practice of race discrimination. The Apartments and Leasing Agent argued that three tests were insufficient to establish a pattern or practice of conduct. The court rejected this argument, ruling that a jury could decide that the evidence did establish a pattern or practice of conduct. First, the court found that the evidence showed in every instance, the white testers were treated differently than the black testers. Second, the actions taken in each test by the Leasing Agent were nearly identical and so a jury could conclude that the evidence did establish a pattern or practice of conduct, despite the fact there were only three tests. Third, the court found that the additional testimony of two other individuals corroborated the testers results, and so could also lead a jury to conclude that there was a pattern or practice of conduct. Thus, the court ruled that the race discrimination claims should be decided by a jury and so the court denied the Apartments and Leasing Agent's motion for judgment.
The court next considered the familial discrimination claims. The court ruled that a jury could conclude that the evidence supported allegations for familial discrimination. The Leasing Agent testified in a deposition that she tried to steer families with children to the first floor, which the court found could support a jury finding that the Apartments and Leasing Agent had an unlawful housing policy. The court rejected the argument that the Leasing Agent lacked the authority to establish a housing policy, as a landlord's duty to not discriminate is nondelegable and thus there could be liability for discriminatory practices employed by the Leasing Agent. The evidence also showed that the Leasing Agent's supervisor knew of her steering families towards the first floor, which could also influence a jury's determination. Thus, the court allowed the familial discrimination claims to proceed to the jury, denying the Apartments and Leasing Agent's motion for judgment.
Finally the court considered the argument made by Wilf that he could not be liable for the actions of the Leasing Agent, arguing that he had nothing to do with the day-to-day activities of the Leasing Agent. Wilf also argued that even if he was liable for Act violations, he could not be liable for punitive damages because his conduct was not egregious. The court rejected both of these arguments, ruling that property owners have a nondelegable duty to not discriminate and will be vicariously liable for the discriminatory actions of their rental agents. However, an owner can avoid liability if the owner has engaged in active antidiscrimination efforts. Wilf was the owner of one of the properties and was involved in the management of the others. Therefore, if the Leasing Agent violated the Act, Wilf could be liable for compensatory as well as punitive damages, unless he could show that he took antidiscrimination measures. The court ruled that the measures that Wilf claimed to have taken (a single phone call to an employee of the property management company) would need to be considered by a jury if it determined the Act had been violated. The court also stated that the Government would not need to show that Wilf engaged in egregious conduct to be liable for punitive damages. Thus, the court denied Wilf's motion for judgment and ruled that a jury should consider the Government's allegations against him.
United States v. Garden Homes Mgmt., Corp, 156 F. Supp.2d 413 (D.N.J. 2001).