Pacific Shores Properties, LLC v. City of Newport Beach
730 F.3d 1142
| 9th Cir. | 2013Background
- Newport Beach restricted new addiction recovery facilities by enacting Ordinance 2008-5 after moratoria, conditioning permits on neighborhood concentration and other criteria.
- Prior to 2008, group homes operated as single housekeeping units; the Ordinance redefined them as residential care facilities with strict location and permit requirements.
- Group Homes Pacific Shores, NCR, and Yellowstone—unlicensed and licensed facilities—suffered closure pressures and substantial revenue declines after the Ordinance took effect.
- City conducted surveillance and enforcement via a task force, leading to selective permit denials and abatement notices for nonconforming group homes.
- Plaintiffs alleged the Ordinance was enacted and enforced with discriminatory intent to target disabled individuals and reduce housing opportunities, contrary to FHA/FEHA/ADA.
- District court granted summary judgment to City on many claims; plaintiffs appealed, challenging discriminatory intent, enforcement, and damages.
- On appeal, court held that Arlington Heights-style analysis applies to discriminatory intent in FHA/ADA/FEHA cases and that triable issues existed as to motive, causation, and damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was discriminatory intent shown to survive summary judgment? | Group Homes: evidence of discriminatory purpose suficiente. | City: neutral ordinance; no proof of discriminatory motive. | Triable issue of material fact remains. |
| Can plaintiffs establish causation for damages without proving a specific better-treated comparator under McDonnell Douglas? | Direct/circumstantial evidence shows City’s actions caused harm. | Need for comparator or traditional causal chain to prove damages. | Arlington Heights framework supports causation; triable issue exists. |
| Are there triable issues about the City’s enforcement and damages for emotional distress? | Distress damages eligible; Wiseman shown anxiety; Bridgeman not. | Emotional distress claims insufficient for Bridgeman; no damages for others. | Wiseman: triable distress issue; Bridgeman: not proved. |
| Did the District Court err in dismissing disparate impact/damages claims related to permit regime? | Damages from permit regime and enforcement flow from discriminatory ordinance. | Waiver and causation issues defeat damages claims. | District Court reversed on disparate treatment and damages claims. |
Key Cases Cited
- Arlington Heights v. Metropolitan Housing Corp., 429 U.S. 252 ( Supreme Court 1977) (multifactor test for discriminatory intent)
- McDonnell Douglas Corp. v. Green, 411 U.S. 792 (Supreme Court 1973) (burden-shifting framework for disparate treatment)
- Flores v. Pierce, 617 F.2d 1391 (9th Cir. 1980) (injury from discriminatory action; permits to challenge process)
- Walker v. City of Lakewood, 272 F.3d 1114 (9th Cir. 2001) (standards for FHA/FEHA disparate treatment claims)
- Mead v. Retail Clerks Int’l Ass’n., Local Union No. 839, 523 F.2d 1371 (9th Cir. 1975) (damages and causation in discriminatory conduct cases)
- Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555 (Supreme Court 1931) (damages quantum can be set by just and reasonable inferences)
- Budnick v. Town of Carefree, 518 F.3d 1109 (9th Cir. 2008) (disparate treatment standards; similar entity not always needed)
- City of Modesto, 583 F.3d 690 (9th Cir. 2009) (Arlington Heights factors applied to municipal discrimination)
- Tsombanidis v. West Haven Fire Dept., 352 F.3d 565 (2d Cir. 2003) (Arlington Heights factors applied in FHA/ADA contexts)