Tony ARTHUR (Deceased), et al., Plaintiffs,
Peggy Arthur, on her behalf and on behalf of all others
similarly situated; Janice Holloway, Barbara
Richardson and Michael Webb, Plaintiffs-Appellants,
v.
CITY OF TOLEDO, OHIO; Douglas DeGood, in his official
capacity as Mayor of the City of Toledo; Gene Cook, William
Copeland, Andrew Douglas, Sandra Isenberg, Ray Kest, Daniel
McNamara, Raymond Nies, Leo Puccetti, in their official
capacities as Members of the Toledo City Council; Walter
Kane, in his official capacity as City Manager of the City
of Toledo; Eugene Kasper, in his official capacity as
Director of Public Service for the City of Toledo; et al.,
Defendants-Appellees.
No. 84-3898.
United States Court of Appeals,
Sixth Circuit.
Argued Dec. 3, 1985.
Decided Jan. 24, 1986.
Rehearing and Rehearing En Banc Denied April 2, 1986.
Thomas A. Karol (argued), Glenn G. Galbreath, Advocates for Basic Legal Equality, Inc., Toledo, Ohio, for plaintiffs-appellants.
Charles A. Matuszynski, John D. Scouten, Robert G. Young (argued), Sarah McHugh, William Connelly-lead counsel, Connelly, Soutar & Jackson, Toledo, Ohio, Kevin E. Joyce, for defendants-appellees.
Before KENNEDY and KRUPANSKY, Circuit Judges and BROWN, Senior Circuit Judge.
CORNELIA G. KENNEDY, Circuit Judge.
Plaintiffs-appellants brought this class action against the City of Toledo ("the City"), the Lucas Metropolitan Housing Authority ("LMHA"), and various individual defendants in their official capacities as officers and agents of the City and LMHA. The District Court certified a class consisting of "all low and moderate income persons who are on the waiting list for Turnkey III housing" and a sub-class consisting of "all persons on the Turnkey III waiting list who are minority persons." Plaintiffs-appellants alleged violations of the fifth and fourteenth amendments to the United States Constitution; article I, section 10 ("the contract clause") of the United States Constitution; Title VIII of the Civil Rights Act of 1968 ("The Fair Housing Act of 1968"), 42 U.S.C. Secs. 3601-3631; and 42 U.S.C. Secs. 1981, 1982 & 1983. Plaintiffs-appellants challenged two September 13, 1977 referendum votes which repealed two city ordinances granting LMHA the authority to construct sewer extensions to Talmadge Woods and Sunbrook Glen, two proposed public housing sites.
On August 12, 1968, the City adopted a resolution approving the application by the Toledo Metropolitan Housing Authority ("TMHA"), the predecessor of LMHA, to the Housing Assistance Administration of the United States Department of Housing and Urban Development ("HUD") for a preliminary loan to cover the costs of surveys and planning in the development or acquisition of approximately three thousand dwelling units for low-rent public housing in the City. Subsequently, the City and the TMHA entered into a "Cooperation Agreement" which required the City to "provide, or cause to be provided, water mains, and storm and sanitary sewer mains" leading to the low-rent housing sites. As a result of the resolution and the "Cooperation Agreement," between 1970 and 1977 the City applied for and received approximately $225-230 million in urban renewal funds from HUD.
During that period, HUD expressed concern that the City was failing to disperse the low and moderate income housing outside the inner city areas. In 1975, HUD established a requirement that the City develop three new housing units outside the central city renewal areas for every one unit within that area. In a letter from HUD Area Director Paul G. Lydens to Mayor Harry Kessler, Lydens stated: "In arriving at this ratio, [HUD] considered many factors and statistics, but in the end, this ratio is simply an effort to begin to redress the imbalance of housing opportunities for low and moderate income families in the City of Toledo."
On March 12, 1976, the City passed an ordinance authorizing the City Manager to submit an application for a $11,017,000 Block Entitlement Grant to HUD. The application stated that the proposed new construction "would meet Toledo's objective of dispersing housing that is affordable by low and moderate income families as well as meet HUD's criterion." An LMHA Site Selection Committee composed of various agencies including plaintiffs' counsel selected the Talmadge Woods and Sunbrook Glen sites for Turnkey III housing. HUD developed the Turnkey Home Ownership Program to enable limited-income families to purchase homes and obtain an upward mobility advantage in society. Under the program, a family pays for utilities, including water and sewage, and then also pays twenty percent of the family's income for housing. Essentially, the family buys the home under a thirty-year lease-purchase agreement. If the family can later finance the balance owed through a conventional mortgage, the family can own the home in less than thirty years.
LMHA proposed to build sixteen single family detached homes at Talmadge Woods and seventeen single family detached homes at Sunbrook Glen, which is also known as Mellwood Court. LMHA hired Collaborative, Inc., an architectural firm to design homes for the two locations. Collaborative, Inc. designed thirty-three single family dwellings, which varied in design between wood and brick, to fit in with the existing neighborhoods. The Toledo City Plan Commission approved the Talmadge Woods plat on August 5, 1976 and the Sunbrook Glen plat on September 23, 1976.
The City Council referred the ordinances authorizing LMHA to construct sewer extensions to both sites to the City Services Committee for review and recommendation. Although the City Council had not previously referred any other sewer extension ordinances to the City Services Committee, the District Court found that on January 30, 1975 the Ohio Environmental Protection Agency notified the City that Sanitary Sewer # 49, which would have served Talmadge Woods and Sunbrook Glen, was at or very near maximum flow capacity. Consequently, the District Court found that the Ohio Environmental Protection Agency warning mandated the City's departure from "established procedure" and that a discriminatory purpose did not motivate the referrals to the City Services Committee. After the City Services Committee recommended disapproval of the sewer extension ordinances to both Talmadge Woods and Sunbrook Glen, the City Council rejected the ordinances on March 1, 1977 by a five to four vote.
After HUD threatened not to recertify the City's housing program and to withhold previously approved federal money in response to the rejection of the sewer ordinances, the City resubmitted the sewer extension ordinances to the City Council. On March 24, 1977, the City Council passed the ordinances authorizing LMHA to construct the necessary sewers to both sites by five to four votes. Opponents of the projects, however, filed petitions requesting referendums on the two sewer ordinances with the City's Clerk of Council on April 23 and April 24, 1977. The City Council certified the two referendum petitions to the Lucas County Board of Elections, which held the referendums on September 13, 1977. By a vote of approximately three to one, the voters repealed the sewer extension ordinances.
The District Court tried the case on the issue of liability only. Over plaintiffs' objections, the District Court allowed defendants to introduce evidence of events occurring after the date of the challenged referendums. The District Court entered judgment for defendants and dismissed plaintiffs' complaint with prejudice. The District Court concluded that plaintiffs' claims were moot because the District Court could not order relief because the City had spent the federal funds on comparable units on scattered sites and no federal funds were currently available. The District Court also concluded that the breach of the "Cooperation Agreement" occurred by operation of law. The District Court found plaintiffs had not demonstrated either racial bias in the total electorate or discriminatory intent by the defendants. Finally, the District Court found that plaintiffs had not shown discriminatory impact because the referendums affected whites and minorities equally.
Plaintiffs-appellants raise five issues on appeal: (1) Whether the District Court properly held that plaintiffs-appellants' claims were moot; (2) Whether a referendum vote can excuse the City of Toledo from a breach of its contractual obligations with LMHA; (3) Whether the District Court's finding that plaintiffs-appellants had not demonstrated racial discrimination as a motivating factor in the referendum votes was clearly erroneous; (4) Whether the District Court's finding that the referendums did not have a racially discriminatory effect and consequently did not violate the Fair Housing Act was clearly erroneous; and (5) Whether the District Court improperly admitted post-referendum evidence for the purpose of absolving defendants from liability for the alleged discriminatory acts. For the reasons set forth below, we hold that although plaintiffs' claims are not moot, the City did not breach its contractual obligations with the LMHA. We also hold that the District Court's findings that plaintiffs-appellants did not prove that the referendums had a racially discriminatory intent or effect are not clearly erroneous. Finally, we hold that the District Court properly admitted post-referendum evidence. Accordingly, we affirm the District Court decision entering judgment for defendants and dismissing plaintiffs' complaint with prejudice.
I.
The District Court concluded that "[p]laintiffs [sic] claims are moot because the Court can offer no relief where no federal funds are available." Plaintiffs-appellants argue that since they sought damages as part of their prayer for relief from the alleged unlawful discriminatory actions, their claims are not moot because a violation of Title VIII of the Civil Rights Act of 1968 would at least entitle them to damages. Title 42 U.S.C. Sec. 3612 permits private plaintiffs to bring civil actions to redress Title VIII violations. Title 42 U.S.C. Sec. 3612(c) authorizes various remedies for fair housing violations and provides in pertinent part:
The court ... may award to the plaintiff actual damages and not more than $1,000 punitive damages, together with court costs and reasonable attorney fees in the case of a prevailing plaintiff....
Although the District Court found that LMHA used the federal funds that LMHA would have spent at Talmadge Woods and Sunbrook Glen on other low-income public housing sites, plaintiffs-appellants still have a claim for damages if they can establish a violation of Title VIII. In McDonald v. Verble,
The fact that subsequent to the filing of a lawsuit, the sale of property was consummated with the McDonalds, does not alter the prior discriminatory conduct. Nor does that fact wipe out the need for consideration of damages. Much less does it serve to justify the award of costs to the offending parties on this record and against the McDonalds who were the offended parties.
Id. at 1233. See also Smith v. Anchor Building Corporation,
II.
Plaintiffs-appellants contend that the referendums repealing the sewer extension ordinances breached the 1968 "Cooperation Agreement" between the City and TMHA in which the City agreed to provide sanitary sewer mains to LMHA projects, as the successor of TMHA, at LMHA expense. The "Cooperation Agreement" provides in pertinent part:
6. In respect to any Project the Municipality further agrees that within a reasonable time after receipt of a written request therefore from the Local Authority:
....
(c) It will provide, or cause to be provided, water mains, and storm and sanitary sewer mains, leading to such Project and serving the bounding streets thereof (in consideration whereof the Local Authority shall pay to the Municipality such amount as would be assessed against the Project site for such work if such site were privately owned).
7. If by reason of the Municipality's failure or refusal to furnish or cause to be furnished any public services or facilities which it has agreed hereunder to furnish or to cause to be furnished to the Local Authority or to the tenants of any Project, the Local Authority incurs any expense to obtain such services or facilities, then the Local Authority may deduct the amount of such expense from any Payment in Lieu of Taxes due or to become due to the Municipality in respect to any Project or any other low-rent housing projects owned or operated by the Local Authority.
The District Court concluded that although the City breached the "Cooperation Agreement," "the breach of contract came about by operation of law." We hold, however, that the City did not breach the "Cooperation Agreement."
Plaintiffs-appellants contend that the City cannot avoid its contractual obligations through a referendum and that the referendums could not direct the City to breach its contractual obligations. Citing Cuyahoga Metropolitan Housing Authority v. Harmody,
The Ohio courts, however, have held that the sewer extension ordinances involved in this case were legislative, rather than administrative, in nature. In Lucas Metropolitan Housing Authority v. Boyle, C.A. No. L-77-173 (Ohio Ct.App. Sept. 9, 1977), LMHA appealed from the judgment of the Lucas County Common Pleas Court denying preliminary and permanent injunctive relief to prohibit the Lucas County Board of Elections from certifying the sewer extension ordinances for referendum vote. The Court of Appeals of Ohio, Sixth District, affirmed the judgment of the Lucas County Common Pleas Court, and the Supreme Court of Ohio refused to certify the record. Since the Ohio Constitution limits municipal referendum powers to legislative matters,1 the court of appeals reasoned that LMHA's request for injunctive relief turned upon the question whether the sewer extension ordinances were legislative or administrative in nature. The court held that the sewer extension ordinances were legislative in nature stating:
Plaintiffs-appellants [LMHA] argue that these ordinances merely administer or implement the previously enacted Resolution No. 257-68 and the subsequent Cooperation Agreement. However, the Resolution was a general policy statement recognizing the need in Toledo for low-rent housing, approving [LMHA's] application to HUD for a preliminary loan, and declaring Council's intention to enter into a cooperation agreement with [LMHA]. Likewise, the Cooperation Agreement executed by the Mayor on the same date was a statement of general intention. Neither the Resolution nor the Agreement was self-executing. Both contemplated further legislative enactment to designate and approve specific projects.
Id., slip op. at 3-4.
We hold that the "Cooperation Agreement" expressed the City's intention to cooperate with LMHA in sewer extensions. Since the "Cooperation Agreement" was not self-executing, the "Cooperation Agreement" did not guarantee that the City would accept every request for a sewer extension. Furthermore, previously quoted paragraph seven of the "Cooperation Agreement" indicates that the City and TMHA contemplated the City's "failure or refusal to furnish" public services to TMHA and provided a remedy for such failure or refusal. In fact, by law and as a matter of public policy, the City could not contract to enact future legislation. In essence, the "Cooperation Agreement" contained an implied term that the City would provide sanitary sewers, at LMHA's expense, if the City enacted the necessary enabling legislation. Under Ohio law, however, by referendum, the City's electorate could repeal the necessary enabling legislation. Since the referendums repealed the necessary enabling legislation, the City did not breach the "Cooperation Agreement."
III.
Fed.R.Civ.P. 52(a) sets forth the appropriate standard governing appellate court review of a district court's findings of fact by providing in pertinent part: "Findings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses." In United States v. United States Gypsum Co.,
Plaintiffs-appellants contend that the District Court's finding that racial discrimination was not a motivating factor in the referendums was clearly erroneous. In Village of Arlington Heights v. Metropolitan Housing Development Corp.,
The Supreme Court has considered several cases involving referendums or initiatives and charges of racial discrimination. In Hunter v. Erickson,
In James v. Valtierra,
Id. at 142-43,
More recently, in Washington v. Seattle School District No. 1,
To be sure, "the simple repeal or modification of desegregation or antidiscrimination laws, without more, never has been viewed as embodying a presumptively invalid racial classification." As Justice Harlan noted in Hunter, the voters of the polity may express their displeasure through an established legislative or referendum procedure when particular legislation "arouses passionate opposition." Had Akron's fair housing ordinance been defeated at a referendum, for example, "Negroes would undoubtedly [have lost] an important political battle but they would not thereby [have been] denied equal protection."
Id. at 483,
In this case, we conclude that the City did not reallocate "the authority to address a racial problem--and only a racial problem--from the existing decisionmaking body, in such a way as to burden minority interests." Id. at 474,
Plaintiffs-appellants contend that the District Court did not "make a sensitive inquiry as to whether race was a factor in the referendum election." Brief for Plaintiffs-Appellants at 30. While this Court recognizes that the City's "electorate as whole, whether by referendum or otherwise, could not order city action violative of the Equal Protection Clause ... and the City may not avoid the strictures of that Clause by deferring to the wishes or objections of some fraction of the body politic," City of Cleburne, Texas v. Cleburne Living Center, --- U.S. ----,
Several important policy considerations limit a court's examination of the factors motivating the electorate in a referendum election. Initially, this country has traditionally protected the "secret ballot." See, e.g., Kirksey v. City of Jackson, Mississippi,
Plaintiffs-appellants cite Village of Arlington Heights v. Metropolitan Housing Development Corp.,
The equal protection clause, however, would require this Court to set aside a referendum if the referendum, although facially neutral, engendered discrimination based on an obvious racial classification. See, e.g., Washington v. Seattle School District No. 1,
IV.
Plaintiffs-appellants also sought relief under the Fair Housing Act of 1968. In Arlington II, supra at 1290, the Seventh Circuit held that "at least under some circumstances a violation of [the Fair Housing Act] can be established by a showing of discriminatory effect without a showing of discriminatory intent." See also Robinson v. 12 Lofts Realty, Inc.,
(1) how strong is the plaintiff's showing of discriminatory effect; (2) is there some evidence of discriminatory intent, though not enough to satisfy the constitutional standard of Washington v. Davis; (3) what is the defendant's interest in taking the action complained of; and (4) does the plaintiff seek to compel the defendant to affirmatively provide housing for members of minority groups or merely to restrain the defendant from interfering with individual property owners who wish to provide such housing.
Id.
We adopt three of the four factors pronounced in Arlington II. Under the second factor, the Seventh Circuit inquired whether plaintiffs introduced some evidence of discriminatory intent. The court, however, concluded that this factor was "the least important of the four factors." Id. at 1292. We agree and additionally decide not to consider this factor in our analysis. Since plaintiffs-appellants did not present sufficient evidence to allow the conclusion that the electorate racially discriminated in the referendums, plaintiffs-appellants should not receive "half-credit" for discriminatory intent under their Fair Housing Act claim. Accordingly, we adopt only the first, third, and fourth factors that the Seventh Circuit established in Arlington II.
Applying those factors to the present case, we conclude the electorate did not violate the Fair Housing Act. Initially, we reiterate that plaintiffs-appellants have challenged the results in two referendum votes. Under the third factor of the Arlington II test, a court considers the defendant's interest in taking the challenged action. Given the strong policy considerations underlying referendums, we fear that recognizing a cause of action in such instances goes far beyond the intent of Congress and could lead courts into untenable results. Accordingly, we hold that, absent highly unusual circumstances, the discriminatory effect of a referendum cannot establish a violation of the Fair Housing Act.3
We further conclude that even if we also considered the first factor, which considers the strength of plaintiff's showing of discriminatory effect, and the fourth factor, which examines plaintiff's requested relief, in the Arlington II test, the District Court did not err in concluding that plaintiffs-appellants had not established a violation of the Fair Housing Act. Under the first factor, the Seventh Circuit recognized two types of discriminatory effects which a facially neutral housing decision can have.
The first occurs when that decision has a greater adverse impact on one racial group than on another. The second is the effect which the decision has on the community involved; if it perpetuates segregation and thereby prevents interracial association it will be considered invidious under the Fair Housing Act independently of the extent to which it produces a disparate effect on different racial groups.
Id. at 1290 (citation omitted). In Arlington II, the Seventh Circuit found a relatively weak discriminatory effect of the first type. Although "the Village's refusal to rezone had an adverse impact on a significantly greater percentage of the nonwhite people in the Chicago area than of the white people in that area," "the class disadvantaged by the Village's action was not predominantly nonwhite, because sixty percent of the people in the Chicago area eligible for federal housing subsidization in 1970 were white." Id. at 1291. Likewise, in this case, we conclude that plaintiffs-appellants did not demonstrate a significant effect.
The District Court held that plaintiffs-appellants failed to demonstrate adverse impact because based on 1980 United States Census data 84.3 percent of the low-income households in Toledo eligible for the Turnkey program were white. The District Court rejected plaintiffs-appellants' claim that the referendums had a racially discriminatory effect because "more whites than minorities were denied housing in Talmadge Woods and Sunbrook Glen, based on the population eligible." The District Court continued: "The plaintiffs' claim that approximately 50% of the affected households were minorities would produce the conclusion that whites and minorities were equally impacted, based on the LMHA waiting list for Turnkey III housing." Finally, the District Court concluded:
[T]he Referendum impacted at best the whites and minority equally, and at worst on the white eligibles by a 5 to 1 ratio. Disparate minority impact has not been proved, nor has any intent by the authorities been shown. On the contrary, the evidence overwhelmingly shows an intense effort on the part of the City and LMHA to desegregate Toledo.
(Emphasis in original).
Plaintiffs-appellants argue that since blacks comprised seventy-one percent of those on the waiting list for the homeownership program, the referendums had a racially discriminatory effect. The District Court, however, specifically found that: "Those class members who were eligible for the proposed 33 units of Talmadge Woods and Sunbrook Glen were offered 35 units of comparable housing." LMHA Deputy Director Charles Matuszynski testified that the LMHA took the applicants for those thirty-five homeownership units from the same waiting list which would have governed the selection process at Talmadge Woods and Sunbrook Glen. Matuszynski also testified that an August 1983 LMHA study of the thirty-five units of comparable housing showed that whites occupied fifteen units and blacks occupied eighteen units, while two units remained unoccupied. The District Court, however, found that the "racial makeup of the LMHA homeownership eligibility list does not accurately reflect the racial makeup of the households in Toledo that could have occupied Turnkey III housing at Talmadge Woods or Sunbrook Glen or who currently occupy the dispersed site homeownership units." Although the District Court should have focused on the waiting list for the Turnkey III projects, rather than on the general population, we conclude that plaintiffs-appellants presented, at best, only relatively weak evidence of discriminatory effect of the first type.
While discussing the second prong of the first factor, the factor which considers the discriminatory effect of an action, the Arlington II court stated that the fact that conduct adversely affected white as well as nonwhite people does not by itself preclude relief under the Fair Housing Act.
Under the Arlington II court's third factor, a court should next examine the defendant's interest in taking the action that produces a discriminatory impact. Any discriminatory effect in this case arose out of two referendums. The policy considerations underlying referendum elections do not require any additional discussion. Finally, under Arlington II 's fourth factor, we again note that the referendums only rejected sewer extensions to two particular public housing projects. Since the City has provided low-income housing in other predominantly white neighborhoods, we reject the invitation to order the City to construct low-income housing at the Talmadge Woods and Sunbrook Glen sites. Accordingly, we hold that the District Court's finding that the referendums did not have a racially discriminatory impact is not clearly erroneous.
V.
Plaintiffs-appellants repeatedly objected to the District Court's rulings permitting defendants to introduce evidence of events occurring after the September 13, 1977 referendums. If plaintiffs-appellants had brought only an equal protection claim, this argument may have some merit. Plaintiffs-appellants, however, also brought a claim under the Fair Housing Act of 1968. As previously mentioned, plaintiffs-appellants could succeed on this latter claim by showing a discriminatory effect. When examining the effect of an action, a district court must examine the action in the context of the totality of the circumstances. Accordingly, the City's efforts to supply alternative low-income housing in racially segregated white areas after the referendums was relevant in determining whether the referendums had a racially discriminatory effect. Consequently, the District Court did not err in admitting evidence of post-referendum events.
Accordingly, we affirm the decision of the District Court entering judgment for defendants and dismissing plaintiffs-appellants' complaint with prejudice.
Notes
See also Myers v. Schiering,
Hunter v. Erickson, supra, invalidated an amendment to the city charter which, on its face, mentioned racial discrimination. In Washington v. Seattle School District No. 1, supra, the Supreme Court concluded that since the initiative permitted almost all of the busing previously taking place in the state, except for desegregative busing, the initiative organizers effectively drew the initiative for racial purposes. Id. at 471,
In United States v. City of Parma, Ohio,
A plaintiff can challenge a referendum on equal protection grounds if the referendum had a discriminatory intent. See supra pp. 570-573. Furthermore, a plaintiff can also establish a Fair Housing Act violation by proving discriminatory intent