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A Michigan federal court has ruled in favor of the Dearborn Area Board of REALTORS® ("Board") on allegations that it violated both the federal and state fair housing laws as well as other federal civil right's statutes.
In 1997, a group of twenty-one individuals joined together to form an organization named "Citizens for Inkster Justice" ("Citizens"). The Citizens formed this group in response to actions allegedly taken by James Carman, a broker associated with Coldwell Banker Prestige Real Estate ("Brokerage") whose office was located in Dearborn, Michigan. In July 1997, Carman allegedly steered a white tester from the Fair Housing Center of Metropolitan Detroit ("Housing Group") away from a listing located in the town of Inkster. In another instance, Carman allegedly told an African-American tester that he could not help her find a home in the area. Some of this was captured on videotape, and these tapes were seen by the Citizens, who then formed their organization in order to file four lawsuits alleging violations of both federal and state fair housing laws. One of the lawsuits was filed against the Board and the Brokerage. The Board and Brokerage filed a motion with the trial court seeking judgment in their favor.
The United States District Court, Eastern District of Michigan, ruled in favor of the Board and the Brokerage. In the first count of their lawsuit, the Citizens argued that both the Brokerage and the Board were responsible for the actions of the Carman, and thus would be liable for his alleged violations of the federal Fair Housing Act ("Act"), violations of other federal civil rights laws, and Michigan's fair housing laws. The second count of their lawsuit was directed only at the Board and alleged that the Board's actions have unlawfully restricted residential real estate transactions in Inkster.
The Board and Brokerage argued the Citizens did not have "standing" to make the allegations in their lawsuit. Standing is a judicially-created doctrine which requires that an actual "controversy" exist between the parties involved in the lawsuit. The court stated that an individual could demonstrate standing by making one of the three following showings: injury in fact; causation between the injury and the conduct in question; and the likelihood that a favorable decision will remedy the alleged harm. The Board and Brokerage argued that the Citizens lacked standing because they could not demonstrate any harm that came to them from their actions or even from the actions of Carman.
The court first considered whether the Citizens had "organizational standing" to bring their claims under the Act. A fair housing organization has standing to bring a fair housing lawsuit when it demonstrates that it diverted its resources in response to a discriminatory practice. However, the Citizens have never formally organized themselves into a legally-recognized entity nor did they have any resources to divert to remedy Carman's actions. Thus, the Citizens did not have "organizational standing" to bring an Act claim.
The court next considered whether the Citizens generally had standing to bring a claim under the Act. The Act is broadly-worded legislation designed to eliminate discrimination from the housing market. In Havens Realty Corp. v. Coleman, 455 U.S. 614 (1973), the United States Supreme Court stated that the standing requirements for claims under the Act extended to the constitutionally-permissible limit, with the Supreme Court ruling in that case allegations of false information on the availability housing was sufficient to bring a claim under the Act in that case. In this case, the Citizens were bringing their claims based on the fact that they lived in a neighborhod which was allegedly impacted by the discriminatory practices. However, the Citizens did not allege any facts demonstrating any actual injury caused to them by these allegedly discriminatory practices, and so the court ruled that the Citizens did not have standing to bring an Act lawsuit. The Citizens did not demonstrate any connection between the Board and Carman, and did not produce any evidence demonstrating harm caused by the Board to the Citizens. The Board did not buy or sell real estate, does not employ anyone who buys or sells real estate, and the only geographic boundary that the Board has relates to its enforcement of the REALTOR® trademark. Thus, no housing discrimination could be traced to the Board and so the Citizens lacked standing under the Act to bring a lawsuit against the Board. Similarly, the Citizens had not alleged any facts which demonstrated any harm they suffered based on actions taken by the Brokerage. Thus, the Citizens lacked standing to bring a lawsuit under the Act.
The court next considered whether the Citizens had standing to bring their remaining claims. Sections 1981 and 1982 of Chapter 42 of the United States Code are civil rights statutes which guarantee the rights of all citizens "to make and enforce contracts," and gives all citizens the right to "inherit, purchase, lease, sell, hold, and convey real and personal property." The Citizens did not allege that they were denied the right to enter into a contract or that they were denied the ability to enter into a property transaction. Thus, the Citizens lacked standing to bring a lawsuit under the federal civil rights statutes. The court ruled that Citizens had not demonstrated that the Brokerage or the Board had failed to do business with them, and so the Citizens lacked standing to bring a lawsuit under Michigan's fair housing laws. Thus, the court dismissed the Citizens' lawsuit because they did not have standing to bring a lawsuit against the Board and the Brokerage.
Citizens of Inkster for Justice v. Coldwell Banker Prestige Real Estate, No. 99-CV-76341 (E.D. Mich. filed Sept. 6, 2001).