922 F.3d 872
8th Cir.2019Background
- Khan owned 43 rental-dwelling licenses and rented to roughly 350 tenants, most of whom were members of FHA-protected classes.
- Minneapolis revoked two of Khan’s licenses in 2010 and 2014 for housing-code violations; Minnesota state courts upheld those revocations on appeal.
- Under a Minneapolis ordinance, revocation of two or more licenses bars a person from holding rental-dwelling licenses for five years; the city revoked Khan’s remaining licenses under that provision, and state appellate review again upheld the revocations.
- Khan sued in federal court, ultimately pursuing only a disparate-impact claim under the Fair Housing Act (FHA), alleging the city’s code-enforcement policies disproportionately harmed protected classes.
- Khan also alleged (briefly) that the city required him to refuse applicants with criminal records, but his complaint lacked factual detail showing a citywide policy or that he followed such a directive.
- The district court granted judgment on the pleadings for the city; the Eighth Circuit reviewed that decision de novo and affirmed, finding Khan’s complaint failed to plead a plausible disparate-impact claim and was controlled by Ellis v. City of Minneapolis.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Khan plausibly pleaded an FHA disparate-impact claim | Khan: revocations and aggressive code enforcement by the city disproportionately impacted protected-class tenants (a city policy discouraging for‑profit rentals) | City: actions enforce health/safety codes and previous state-court rulings; no artificial/arbitrary policy, so no disparate-impact claim | Court: dismissed—Khan failed to allege an artificial, arbitrary, unnecessary policy; claim controlled by Ellis |
| Whether a purported directive to deny housing to people with criminal records supports a disparate-impact claim | Khan: city required him to refuse tenants with criminal records, which would disparately impact protected classes | City: document referenced does not direct refusals; merely inquired about background-check policies and criteria | Court: allegation insufficient—no factual showing the city issued a policy or that Khan complied; not a plausible disparate-impact claim |
| Whether discovery should be allowed to develop evidence of a broader policy | Khan: requested discovery to show other landlords received similar directives | City: complaint lacks allegations suggesting a citywide policy; discovery not warranted at pleading stage | Court: rejected—pleading fails to allege a policy; discovery cannot cure a deficient complaint |
| Whether Ellis v. City of Minneapolis compels dismissal | Khan: attempted to distinguish his case from Ellis (e.g., criminal‑record allegation) | City: facts and theory are essentially the same as Ellis—challenge to code‑enforcement practices | Court: Ellis controls; similar allegations fail to state a disparate-impact claim |
Key Cases Cited
- Ellis v. City of Minneapolis, 860 F.3d 1106 (8th Cir. 2017) (rejecting landlords’ FHA disparate-impact challenge to city code‑enforcement practices)
- Porous Media Corp. v. Pall Corp., 186 F.3d 1077 (8th Cir. 1999) (a complaint may incorporate documents it references for pleading-stage review)
- Texas Department of Housing & Community Affairs v. Inclusive Communities Project, Inc., 576 U.S. 519 (Sup. Ct. 2015) (recognizing FHA disparate-impact claims but limiting them to challenges to artificial, arbitrary, and unnecessary barriers)