Dorothy BOYD, Individually and on behalf of all others similarly situated, Plaintiff-Appellee, and Inez Stoney, Intervenor-Plaintiff-Appellee, v. The LEFRAK ORGANIZATION and Life Realty, Inc., Defendants-Appellants.
No. 201, Docket 74--1660
United States Court of Appeals, Second Circuit
Argued Oct. 2, 1974. Decided Jan. 22, 1975. Rehearing En Banc Denied April 17, 1975.
509 F.2d 1110
Edward Brodsky, New York City (Goldstein, Shames & Hyde, New York City, on the brief, Stephen Hochberg and Edwin L. Schwartz, New York City, of counsel), for defendants-appellants.
Before HAYS, ANDERSON and MANSFIELD, Circuit Judges.
HAYS, Circuit Judge:
Plaintiffs commenced this action seeking injunctive and declaratory relief on the ground that the use by The Lefrak Organizatiоn (‘Lefrak‘) and Life Realty, Inc. (‘rental office‘) of certain financial criteria to determine eligibility for tenancy in their apartments violated the Civil Rights Act of 1968,
On August 6, 1970, the United States of America, by the Attorney General, commenced an action under the Fair Housing Act,
In July of 1971, appellee Dorothy Boyd attempted to rent one of appellants’ apartments and was refused.4 Mrs. Boyd thereupon moved to intervene in the original action commenced by the Department of Justice. That mоtion was denied by the court (Weinstein, J.) which directed that Mrs. Boyd‘s application for intervention be treated as commencing a separate action. With leave of court, Mrs. Boyd filed an amended complaint on January 3, 1972.5
In March, 1972, Inez Stoney attempted to rent one of appellants’ apartments and was denied an apartment because she did not meet the 90% rule and did not have an acceptable guarantor. On March 18, 1972, Mrs. Boyd moved to have this action declared a class action and Miss Stoney moved to intervene. Judge Weinstein granted both motions, and the сase was subsequently heard by Mr. Justice Clark who found in favor of plaintiffs.
1 The Fair Housing Act prohibits discrimination in housing because of ‘race, color, religion, or national origin.’
3 The conclusion that defendants’ seemingly neutral rule is in fact aimed at excluding a racial minority finds no support in the record. The percentage of blacks in appellants’ apartments (about 19.8%) closely aрproximates the percentage of blacks in the population of New York City (21%). There is no claim that black public assistance recipients are treated differently from white public assistance recipients. Nor is there any evidence that public assistance recipients have been excluded from Lefrak apartments for any reason other than inability to meet the financial standard. On the other hand, the evidence indicates that when the financial standard could be met as, for example, by obtaining an acceptable co-signer, public assistance recipients, including those belonging to minority ethnic groups, were rented apartments on the same terms as were any other qualifying applicants. To use ethnic distribution of tenants excluded from appellants’ apartments as a basis for inferring discriminatory practices in this situation is like imputing discriminatory motives to producers of high priced goods because such goods more often find their way into the hands of wealthier white consumers than into the hands of the poor. As this court has said in the context of the equal protection clause, ‘(t)he mere fact that a requirement, otherwisе proper, may have a greater impact on the poor, does not render it invalid. . . .’ English v. Town of Huntington, 448 F.2d 319, 324 (2d Cir. 1971).
4 A landlord in the private sector6 is entitled to choose whom he will accept as tenants as long as he does not discriminate on one of the statutorily condemned bases. Certainly he may seek assurance that prospective tenants will be able to meet their rental responsibilities. ‘(T)here is no requirement that welfare recipients, or any other individuals, may secure apartments . . . without regard to their ability to pay.’ Male v. Crossroads Associates, 469 F.2d 616, 622 (2d Cir. 1972).
5 Plaintiffs claim that the 90% rule, and indeed any economic standard computed on a percentage-of-income basis, is an inappropriate measure of a public assistance recipient‘s rent-paying ability because, unlike the working person the amount which a recipient receives for his non-shelter needs remains the same regardless of the amount of his shelter allowance7 and because increased shelter allowances can be obtained by recipients if approved by the New York City Department of Social Services. While it may be true that a public assistance recipient‘s ability to pay rent is related to the Department of Sоcial Services’ willingness to approve shelter allowances, the private landlord in choosing his tenants is free to use any grounds he likes so long as no discriminatory purpose is shown. See Madison v. Jeffers, 494 F.2d 114, 116--117 (4th Cir. 1974); Pughsley v. 3750 Lake Shore Drive Cooperative Building, 463 F.2d 1055, 1056 (7th Cir. 1972). His choice is not limited by any obligation to accommodate a special class of low income applicants.
7 Plaintiffs have contended that the 90% rule is unevenly applied in that the income of welfare recipients was, in effect, dismissed out of hand as insufficient while the income of the working family was carefully explored and all non-cash bonuses included in order to enhance the possibility of acceptance. Not only is this contention irrelevant to the issue of racial discrimination but defendants have denied that their rule is thus applied. In any event, plaintiffs’ contention ignores the fact that even if liberal allowanсe is made for non-cash benefits and increased shelter allowances, welfare recipients would still have to pay a disproportionate amount (from 47.8% to 64.8%) of their income for rent in order to live in appellants’ apartments. Conversely, if an individual could meet the minimum income level necessary to comply with the 90% rule, calculated at trial to be $10,500 per annum, he would be precluded from remaining a welfare recipient. Consequently, defendants’ so-called ‘uneven application’ of their rule, if it occurred, is merely an acknowledgment of irrefutable mathematical facts and is certainly not indicative of racially discriminatory behavior.
8 Similarly because there has been no finding of racially-motivated discrimination, appellants have not violated the Civil Rights Act of 1866,
9 Accordingly, the judgment of the district court is reversed.
MANSFIELD, Circuit Judge (dissenting):
10 With due respect, the majority opinion seems to me to be grounded upon the erroneous concept that, in order to establish a violation of the Fair Housing Act,
11 This case should be governed by the principle, firmly established by the Supreme Court in its interpretation and enforcement of analogous civil rights legislation, to the effect that, where a facially neutral practice has a serious and substantial de facto discriminatory impact, it prima facie violates a statutory prohibition against racial discrimination unless the alleged violator can show that the practice is necessary for non-racial reasons. Griggs v. Duke Power Co., 401 U.S. 424, 91 S.Ct. 849, 28 L.Ed.2d 158 (1971). In Griggs the question was whether an employer‘s use of employeetesting procedures which had the effеct of excluding a disproportionate number of Negroes from employment violated the Civil Rights Act of 1964,
12 ‘The Act proscribes not only overt discrimination but also practices that are fair in form, but discriminatory in operation. The touchstone is business necessity. If an employment practice which operates to exclude Negroes cannot be shown to be related to job performance, the practice is prohibited. 13 ‘We do not suggest that either the District Court or the Court of Appeals erred in examining the employer‘s intent; but good intent or absence of discriminatory intent does not redeem employment procedures or testing mechanisms that operate as ‘built-in headwinds’ for minority groups and are unrelated to measuring job capability.
14 ‘The Company‘s lack of discriminatory intent is suggested by special efforts to help the undereducated employees through Company financing of two-thirds the cost of tuition for high school training. But Congress dirеcted the thrust of the Act to the consequences of employment practices, not simply the motivation. More than that, Congress has placed on the employer the burden of showing that any given requirement must have a manifest relationship to the employment in question.
15 ‘Nothing in the Act precludes the use of testing or measuring procedures; obviously they are useful. What Congress has forbidden is giving these devices and mechanisms controlling force unless they are demonstrably a reasonable measure of job performance‘. 401 U.S. at 431, 432, 436, 91 S.Ct. at 853, 854, 856. (Emphasis supplied)
16 See also Olzman v. Lake Hills Swim Club, 495 F.2d 1333, 1340--1341 (2d Cir. 1974) (holding that a facially neutral rule with respect to club guest privileges prima facie violates the Civil Rights Act of 1964, § 201(a) and (e),
17 Congress, in passing the Fair Housing Act, sought to eliminate artificial and arbitrary barriers to housing that operate to discriminate against persons because of their race, just as it had through Title VII acted to remove similar racially discriminatory barriers to employment. It must be recognized that if these laws were to depend for their effectiveness upon proof of the landlord‘s subjective intent, which is rarely obtainable, they would largely be rendered useless. Racial discrimination cannot, of course, be condoned because it is accomplished through a sophisticated or indirect method, cf. Lane v. Wilson, 307 U.S. 268, 275, 59 S.Ct. 872, 83 L.Ed. 1281 (1939). Nor should it be excused on the theory that it is the product of thoughtlessness rather than willfulness. In either event, the harmful effect is the same. Enforcement of the anti-discrimination provisions of the Fair Housing Act must therefore be judged by objective standards, in line with the principle that the Act be given a ‘generous construction,’ Trafficante v. Metropolitan Life Insurance Co., 409 U.S. 205, 212, 93 S.Ct. 364, 34 L.Ed.2d 415 (1972). In recognition of the old adage that аctions speak louder than words, to make out a prima facie violation of the Act it should be sufficient to show that the challenged practice excludes a disproportionately high percentage of minority persons as compared with non-minority. The burden of going forward with a non-racial justification should then shift to the person using the practice.
18 Plaintiffs in this case have not suggested that ‘welfare recipients, or any other individuals, may secure apartments . . . without regard to their ability to pay,’ Male v. Crossroads Associates, 469 F.2d 616, 622 (2d Cir. 1972). Nor does anyone question the importance to a landlord of a prоspective tenant‘s payment of rent, upon which the landlord depends for the successful operation of his real estate enterprise. Toward that end the landlord, of course, may adopt reasonably appropriate economic standards or tests designed to assure the tenant‘s future ability to pay rent on an on-going basis. See, e.g., United States v. Grooms, 348 F.Supp. 1130, 1134 (M.D.Fla.1972). But where the formula has the effect of excluding a disproportionately high percentage of a minority group, the landlord should in fairness be prepared to demonstrate the business necessity of his facially neutral rule. ‘It is no answer that defendants would have exploited whites as well as blacks,’ Clark v. Universal Builders, 501 F.2d 324, 331 (7th Cir. 1974).
20 Applying these principles here, plaintiffs made out a clear prima facie showing that the 90% Rule2-1 has had a disproportionately high racial impact. The evidence is undisputed thаt the effect of the 90% Rule is to exclude from appellant‘s apartments all but a handful of welfare recipients who apply. Indeed there was direct evidence that the rental agent for Lefrak apartments, Anthony Cuccia, told plaintiff Boyd, ‘We don‘t rent to welfare recipients.’ Jerry Richter, Vice-President of Lefrak, further advised plaintiff‘s attorney that Lefrak had a policy of not renting to public assistance recipients.
21 To exclude public assistance recipients in New York City is the equivalent of excluding minority persons. According to the 1970 census 77% of all welfare reсipients in New York City were minority persons, the great majority of whom were Black and Puerto Rican. Since that time the figure has increased. A 1971 study, for instance, reveals that 90.1% of those receiving assistance under the program for Aid to Dependent Children are minority persons. A review of all categories of public assistance, see Goodwin v. Wyman, 330 F.Supp. 1038 (S.D.N.Y.1971), aff‘d per curiam, 406 U.S. 964, 92 S.Ct. 2420, 32 L.Ed.2d 664 (1972), indicates that minorities predominate substantially.
22 Although minority persons would, under the 90% Rule, continue to be eligible to rent appellants’ apartments, they constitute but a small number of those, minority and non-minority, who are eligible. There was expert testimony to the effect that 92.5% of Black and Puerto Rican households would be excluded. Such testimony indicated that under the 90% Rule eligibility of white households in New York City would be four times as great as that of Black households and ten times as great as that of Puerto Rican households.3-1 Furthermore, accepting the fact that appellants have rented apartments to a substantial number of wealthier minority persons, not on welfare, who can satisfy the 90% Rule,4-1 the percentage of minority households in appellants’ apartments would be much higher under a less stringent rule. To compound the disproportionately high racial impact of the 90% Rule, the evidence before the trial judge further disclosed that of the public assistance recipients who applied to appellants for apartments the percentage of non-minority appellants who were accepted was approximately twice the percentage of Black applicants accepted. The 90% Rule, therefore, operates as ‘built-in headwinds’ for minority groups.
24 Thus, accоrding to the trial judge‘s findings of fact, which are fully supported and are not asserted by the majority to be clearly erroneous, the 90% Rule has a disproportionately high racially discriminatory impact and appellants have failed to show that the Rule is based on business necessity or other non-racial grounds. Application of the principles prescribed by the Supreme Court in Griggs therefore mandates affirmance of the district court‘s decision.
Notes
Citizens Committee for Faraday Wood v. Lindsay, 507 F.2d 1065 (2d Cir. 1974), and Acevedo v. Nassau County, 500 F.2d 1078, 1080 (2d Cir. 1974), also relied on by the majority, likewise deal with constitutional claims, not enforcement of a civil rights law. Even in our interpretation of the Equal Protection and Due Process Clauses we have stated:
‘Even were we to accept the City‘s allegation that any discrimination here resulted from thoughtlessness rather than a purposeful scheme, the City may not escape responsibility for placing its black citizens under a severe disadvantage which it cannot justify. Norwalk CORE ((Norwalk CORE v. Norwalk Redevelopment Agency, 395 F.2d 920 (2d Cir. 1968))); Southern Alameda Spanish Speaking Organization v. City of Union City, California, 424 F.2d 291 (9th Cir. 1970).’ Kennedy Park Homes Assn. v. City of Lackawanna, N.Y., 436 F.2d 108, 114 (2d Cir. 1970), cert. denied, 401 U.S. 1010, 91 S.Ct. 1256, 28 L.Ed.2d 546 (1971).
The ‘90% Rule’ refers to a ratio of net income (i.e., gross income less taxes, obligations and debts) to rent. Under it the applicant for lease of an apartment must show that his weekly net income is at least equal to 90% of the monthly rent of the aрartment
The ‘90% Rule’ is not to be confused with the older 25% rent-income ratio, under which a prospective tenant‘s weekly gross income must equal one month‘s rent. Appellee‘s contention that these so-called rules or standards have been generally or widely applied is not supported by persuasive proof. Statutory references to the 25% limitation, see, e.g.,