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granting leave to amend because "the failure to adequately plead standing may be a mere pleading defect and because events subsequent to the filing of Plaintiffs' Second Amended Complaint may have rendered Plaintiffs' claim ripe for consideration"
Summary of this case from Sartin v. EKF Diagnostics, Inc.Opinion
No. 3:03-CV-2223-M.
September 9, 2004
MEMORANDUM OPINION AND ORDER
Before the Court is Defendant's Rule 12(b)(1) Motion to Dismiss Second Amended Complaint and Rule 12(b)(6) Motion to Dismiss Second Amended Complaint, filed on January 15, 2004. After considering the parties' briefing and the argument of counsel at the April 8, 2004 hearing, the Court grants in part and otherwise denies Defendant's Motions to Dismiss.
I. BACKGROUND
Plaintiffs are African-American and Hispanic owners and occupants of single family houses in the Cadillac Heights neighborhood of Dallas, Texas. In Plaintiffs' Second Amended Complaint, Plaintiffs first contend that the City of Dallas has provided and continues to provide different and inferior municipal services to the dwellings in Cadillac Heights, because of the race of its residents. (Compl. ¶ 35). Rather than being zoned for the provision of services and facilities essential to create "basic neighborhood units," Cadillac Heights is zoned as a substandard area. (Compl. ¶ 38). As a result, Cadillac Heights allegedly receives the following municipal services on a discriminatory basis: zoning and land use policies and practices, flood protection, environmental protection, and the provision of adequate streets and stormwater drainage facilities. (Compl. ¶ 39). Plaintiffs cite numerous resultant injuries, including exposure to hazardous substances, elevated birth defect rates, exposure to burning and gagging odors and sights and smells of animal parts and blood spills, and diminished property values. (Compl. ¶ 44-57).
When citing portions of Plaintiffs' Second Amended Complaint, the Court will abbreviate Plaintiffs' pleading as "Compl."
Second, Plaintiffs contend that the City of Dallas has made dwellings unavailable in Cadillac Heights, on the basis of the race of Cadillac Heights's residents, by zoning portions of Cadillac Heights for industrial use rather than residential use, (Compl. ¶ 14), tolerating industrial pollution, (Compl. ¶ 12), and refusing to provide flood protection, thus turning Cadillac Heights into a flood plain where construction of dwellings is prohibited (Compl. ¶ 15). Plaintiffs list similar resultant injuries to those listed above. (Compl. ¶ 17-31).
Third, Plaintiffs contend that the City of Dallas is implementing a land acquisition plan to acquire dwellings which occupy land that the City will use for the construction of a new Police Academy. (Compl. ¶ 77). City officials have publicly stated that a similar land acquisition plan will be implemented for all of the other dwellings in Cadillac Heights. (Compl. ¶ 77). The acquisition plans use the fair market value of a dwelling as a limiting factor in the total amount of relocation assistance that the City will provide. (Compl. ¶ 82). The fair market values of all the dwellings in Cadillac Heights have allegedly been reduced as a result of the City's prior race discrimination and because of private discrimination against predominantly minority neighborhoods. (Compl. ¶ 82, 88-89). Thus, Plaintiffs claim to be injured by the use of the fair market value measure in the land acquisition plans, and claim they will be unable to find new housing, except in other "predominantly minority areas with similar conditions of blight and hazards." (Compl. ¶ 90).
Plaintiffs seek to assert claims on behalf of the class of owners of approximately 150 single family homes in Cadillac Heights, under the following laws: 42 U.S.C. § 3604(a), 42 U.S.C. § 3604(b), 42 U.S.C. § 2000d, 42 U.S.C. § 1981, 42 U.S.C. § 1982, 42 U.S.C. § 1983, and the Fourteenth Amendment. Plaintiffs seek a permanent injunction requiring the City to do the following:
(i) Eliminate the discriminatory policies and practices and the hazardous, nuisance and substandard conditions caused by those discriminatory policies and practices;
(ii) Modify the City's existing relocation assistance and replacement housing program and ordinance by eliminating the fair market value for the acquired dwelling and providing a total amount of assistance that will make comparable dwellings available throughout the Dallas market area without regard to race, color, ethnicity, or national origin; and
(iii) Implement the modified City relocation assistance program for all class members willing to transfer their property to the City.
II. ANALYSIS
Defendant moves to dismiss Plaintiffs' claims under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). Because many of Defendant's arguments overlap with respect to the asserted claims, the Court will address Defendant's various arguments on a claim-by-claim basis.
Rule 12(b)(1) demands dismissal if the court lacks jurisdiction over the subject matter of the plaintiff's complaint. FED. R. CIV. P. 12(b)(1). Motions filed under Rule 12(b)(1) allow a party to challenge the subject matter jurisdiction of the district court based on the allegations on the face of the complaint. Barrera-Montenegro v. United States, 74 F.3d 657, 659 (5th Cir. 1996). In ruling on a motion to dismiss under Rule 12(b)(1), the court may rely on (1) the complaint alone, presuming the allegations to be true, (2) the complaint supplemented by undisputed facts, or (3) the complaint supplemented by undisputed facts and the court's resolution of disputed facts. MCG, Inc. v. Great Western Energy, 896 F.2d 170, 176 (5th Cir. 1990). In this case, Defendant has made a facial challenge to the Court's subject matter jurisdiction, and the Court when ruling on Defendant's motion to dismiss will rely solely on Plaintiffs' Second Amended Complaint, taking all of its allegations to be true.
Dismissal is proper under Rule 12(b)(6) if the complaint fails to state a claim on which relief can be granted. FED. R. CIV. P. 12(b)(6). In reviewing a motion to dismiss under Rule 12(b)(6), the court must accept as true all well-pleaded allegations, viewing them in the light most favorable to the plaintiff. Am. Waste Pollution Control Co. v. Browning-Ferris, 949 F.2d 1384, 1386 (5th Cir. 1991).
A. 42 U.S.C. § 3604(a)
42 U.S.C. § 3604(a) provides:
It shall be unlawful to refuse to sell or rent after the making of a bona fide offer, or to refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or national origin.
Plaintiffs assert that, based on the race of the residents of Cadillac Heights, Defendant has taken the following actions, thus violating § 3604(a): (1) zoned land for industrial uses, thus making the industrially-zoned land unavailable for dwellings; (2) tolerated industrial pollution that renders the land uninhabitable and unavailable for dwellings, (3) refused to provide flood protection for Cadillac Heights, thus making the land unavailable for dwellings, and (4) made land unavailable for dwellings by acquiring it for public projects. To the extent Plaintiffs' § 3604(a) claim is premised on Defendant's rendering Plaintiffs' own dwellings unavailable, Defendant argues: (1) to the extent Plaintiffs assert a claim based on injury to the value of their already-owned dwellings, Plaintiffs' claim should be dismissed under Rule 12(b)(1) for failure to state a claim, and (2) to the extent Plaintiffs assert a claim based on acquisition for public projects, Plaintiffs' claim should be dismissed under Rule 12(b)(1) for lack of standing and ripeness. To the extent Plaintiffs' § 3604(a) claim is premised on Defendant's making dwellings unavailable to third persons, Defendant argues: (3) Plaintiffs' claim should be dismissed under Rule 12(b)(1) for lack of standing, (4) Plaintiffs' claim should be dismissed under Rule 12(b)(6) for failing to adequately plead that Defendant made dwellings unavailable to third persons, and (5) Plaintiffs' claim should be dismissed under Rule 12(b)(6) for failing to plead adequately that the unavailability of dwellings was causally linked to race.
First, according to Plaintiffs' Second Amended Complaint, Plaintiffs are owners of homes in Cadillac Heights. Section 3604(a) does not protect a property owner's "intangible interests in the already-owned property." Southend Neighborhood Improvement Assoc. v. County of St. Clair, 743 F.2d 1207, 1210 (7th Cir. 1984). In Southend, the County's failure to properly manage the properties it had acquired by tax deed did not make the plaintiffs' already-owned property "unavailable," and thus the County's actions were not redressable under § 3604(a). Id. ("[T]he plaintiffs here do not allege that they have been hindered in an effort to acquire a dwelling, but rather that the County's conduct toward certain properties damaged their own property."). Similarly, in Miller v. City of Dallas, the court found that the alleged provision of municipal services in a discriminatory way did not make the plaintiffs' already-owned property "unavailable" under § 3604(a). Miller v. City of Dallas, 2002 WL 230834, at *13 (N.D. Tex. Feb. 14, 2002) (Fitzwater, J.) ("To recover under § 3604(a) . . ., plaintiffs must therefore show the City has 'otherwise ma[de] unavailable or den[ied], a dwelling' to them on a prohibited basis. Because they own their homes, they cannot meet this burden."). The Court agrees with that analysis. Therefore, to the extent Plaintiffs' § 3604(a) claim is premised on the contention that their own property has been rendered unavailable because of the lower property values resulting from industrial zoning, industrial pollution, and lack of flood protection, Plaintiffs' § 3604(a) claim is dismissed with prejudice under Rule 12(b)(6).
Second, Plaintiffs allege that their already-owned property is being made unavailable as a result of the implementation of discriminatory land acquisition programs. Defendant argues that this claim should be dismissed because "Plaintiffs have suffered no concrete and particularized injury as a result of the City's relocation assistance and replacement program" and because it is "extraordinarily premature." (Def. Mot. at 8). Defendant is thus challenging whether Plaintiffs have standing and whether Plaintiffs' claim is ripe.
The requirement that a litigant have standing to institute litigation in federal court has evolved from two sources: (1) Article III of the Constitution, which limits the jurisdiction of federal courts to actual "cases and controversies," and (2) prudential considerations imposed by the courts. Hanson v. Veterans Admin., 800 F.2d 1381, 1384 (5th Cir. 1986). However, congressional legislation may expand standing to the full extent permitted by Article III. Gladstone, Realtors v. Village of Bellwood, 442 U.S. 91, 100 (1979). Under the Fair Housing Act, for example, any "aggrieved person" may bring an action to obtain relief for an alleged discriminatory housing practice. 42 U.S.C. § 3616(a)(1)(A). The Fair Housing Act defines "aggrieved person" as anyone who "claims to have been injured by a discriminatory housing practice" or "believes that such person will be injured by a discriminatory housing practice that is about to occur." 42 U.S.C. § 3602(i)(1). This definition of aggrieved person confers standing as broad as is permitted by Article III of the Constitution. See Havens Realty Corp. v. Coleman, 455 U.S. 363, 372 (1982); Gladstone, Realtors, 442 U.S. at 100; Trafficante v. Metropolitan Life Ins. Co., 409 U.S. 205, 211 (1972). "[S]tanding under the Fair Housing Act extends to the full limits of Article III of the Constitution, and is not restricted by any of the doctrines of prudential standing." Isaac v. Norwest Mortgage, 153 F. Supp. 2d 900, 904 (N.D. Tex. Mar. 31, 2001) (Lindsay, J.). As a result, to avoid dismissal for lack of standing, Plaintiffs must sufficiently allege the following elements of constitutional standing: (1) an injury in fact, (2) a causal connection between the defendant's conduct and the alleged injury, and (3) a likelihood that the injury will be redressed by a favorable decision. Rivera v. Wyeth-Ayerst Labs., 283 F.3d 315, 318 (5th Cir. 2002). Additionally, a court should dismiss a case for lack of jurisdiction for lack of "ripeness" when "the case is abstract or hypothetical." Orix Credit Alliance v. Wolfe, 212 F.3d 891, 895 (5th Cir. 2000).
In Plaintiffs' Second Amended Complaint, Plaintiffs make the following allegations about the implementation of land acquisition programs:
[The] City has announced and begun to implement its plan to acquire the Cadillac Heights dwelling units currently occupying the land that will be used for the construction of the new Police Academy. City officials have publicly stated that a City land acquisition program will be initiated for all of the dwelling units in Cadillac Heights. . . . If the owners of these homes do not accept the City's offer for voluntary transfer of their property, the City will acquire the land through the exercise of eminent domain.
(Compl. at ¶ 77-78.)
Although Plaintiffs allege that the Police Academy acquisition program is already being implemented, Plaintiffs fail to allege that any of their dwellings are subject to that program. Therefore, to the extent Plaintiffs' § 3604(a) claim is premised on the Police Academy acquisition program, Plaintiffs have failed to allege an injury in fact. Additionally, although Plaintiffs allege that their dwellings will be subject to other City land acquisition programs, Plaintiffs' allegations with respect to those other programs are abstract and hypothetical. Therefore, to the extent it is premised on the implementation of land acquisition programs, Plaintiffs' § 3604(a) claim is dismissed without prejudice under Rule 12(b)(1) for lack of standing and ripeness. Because the failure to adequately plead standing may be a mere pleading defect and because events subsequent to the filing of Plaintiffs' Second Amended Complaint may have rendered Plaintiffs' claim ripe for consideration, the Court grants Plaintiffs leave to amend with respect to this claim.
Third, Plaintiffs allege that the City violated § 3604(a) by making other plots of land in the Cadillac Heights neighborhood unavailable to third persons on the basis of race. In particular, Plaintiffs contend that Defendant made these other plots of land unavailable by zoning them for industrial use, by tolerating industrial pollution that renders the land uninhabitable, and by refusing to provide flood protection. Defendant argues that Plaintiffs lack standing to assert a § 3604(a) claim premised on the City's making land unavailable to third persons.
In order to survive Defendant's Motion to Dismiss, Plaintiffs must sufficiently allege the previously described three elements of constitutional standing. Plaintiffs' allegations of exposure to hazardous substances, elevated birth defect rates, exposure to burning and gagging odors, exposure to the sights and smells of animal parts and blood spills, and diminished property values constitute allegations of injuries that are concrete, particularized, and actual. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). Therefore, the Court finds that Plaintiffs have sufficiently alleged the first element of constitutional standing — injury in fact. Id. Further, Plaintiffs seek a permanent injunction requiring the City to "eliminate the discriminatory policies and practices and the hazardous, nuisance and substandard conditions caused by those discriminatory policies and practices." If the Court grants Plaintiffs' requested relief, it is likely that Plaintiffs' injuries will be redressed, and Plaintiffs have thus sufficiently alleged the third element of constitutional standing — likelihood of redress by a favorable decision.
In order to satisfy the second prong of constitutional standing, Plaintiffs must allege a causal connection between the defendant's conduct and the alleged injury. Here, Plaintiffs allege that Defendant made dwellings unavailable to third parties by zoning property for industrial use, by tolerating industrial pollution that renders the land uninhabitable, and by refusing to provide flood protection. Plaintiffs further allege that this industrial zoning, industrial pollution, and lack of flood protection caused Plaintiffs' injuries. Therefore, Plaintiffs' alleged injuries do not arise from the unavailability of the dwellings; rather, Plaintiffs' alleged injuries arise from the means by which the dwellings are rendered unavailable. If prudential standing requirements were applicable to claims under the Fair Housing Act, this alleged causal connection might fail the prudential requirement that a plaintiff's complaint "fall within the zone of interests protected by the law invoked." Hanson, 800 F.2d at 1384. However, prudential standing requirements are not applicable to Plaintiffs' claims, and the Court finds that Plaintiffs have satisfied the constitutional standing requirement by alleging a connection between Defendant's alleged conduct (zoning property for industrial use, tolerating industrial pollution, and failing to provide flood protection) and Plaintiffs' alleged injuries. See Duke Power Co. v. Carolina Envtl. Study Group, Inc., 438 U.S. 59, 78 (1978) ("It is further contested that in addition to proof of injury and of a causal link between such injury and the challenged conduct, appellees must demonstrate a connection between the injuries they claim and the constitutional rights being asserted. . . . No cases have been cited outside the context of taxpayer suits where we have demanded this type of subject-matter nexus between the right asserted and the injury alleged, and we are aware of none. . . . We continue to be of the same view and cannot accept the contention that, outside the context of taxpayers' suits, a litigant must demonstrate something more than injury in fact and a substantial likelihood that the judicial relief requested will prevent or redress the claimed injury to satisfy the 'case or controversy' requirement of Art. III."). Therefore, the Court denies Defendant's Rule 12(b)(1) motion to dismiss Plaintiffs' § 3604(a) claim to the extent that claim is premised on the City's making other plots of land in the Cadillac Heights neighborhood unavailable to third persons on the basis of race.
Fourth, Defendant argues that Plaintiffs have failed to plead adequately that Defendant made dwellings unavailable to third persons. However, "[t]he prohibition against making a residence 'unavailable' has been applied to situations where government agencies take actions that prevent construction of housing when the circumstances indicate a discriminatory intent or impact against anticipated future residents who are members of a class protected under the Act." Arbor Bend Villas Housing, L.P. v. Tarrant County Housing Fin. Corp., No. 4:02-CV-478-Y, 2002 WL 1285564, at *3 (N.D. Tex. June 6, 2002) (Means, J.). This Court similarly concludes that by alleging that by zoning, tolerating pollution, and failing to provide flood protection, Defendant made dwellings unavailable to third parties, Plaintiffs have adequately pled that Defendant made dwellings unavailable to third persons.
Finally, Defendant argues that Plaintiffs have failed to plead adequately that the unavailability of dwellings to third persons was causally linked to race. In Plaintiffs' Second Amended Complaint, Plaintiffs allege: "The City's actions making the land in Cadillac Heights unavailable for dwellings is (sic) because of the race, color, and national origin of the residents of Cadillac Heights." (Compl. ¶ 34). The stated policy of the Fair Housing Act is "to provide, within constitutional limitations, for fair housing throughout the United States." 42 U.S.C. § 3601. In light of this policy, the Court interprets § 3604(a) as containing a prohibition on making housing unavailable to persons on the basis of those persons' race. See Arbor Bend Villas Housing, L.P., 2002 WL 1285564, at *3 ("The prohibition against making a residence 'unavailable' has been applied to situations where government agencies take actions that prevent construction of housing when the circumstances indicate a discriminatory intent or impact against anticipated future residents who are members of a class protected under the Act."). Plaintiffs have alleged that the City made dwellings unavailable based on the race "of the residents of Cadillac Heights," not based on the race of the third persons allegedly denied dwellings. Under Rule 12(b)(6), the Court dismisses without prejudice Plaintiffs' § 3604(a) claim to the extent it is premised on the unavailability of dwellings to third parties. However, because this may be a mere pleading defect, the Court dismisses this claim without prejudice and with leave to amend.
B. 42 U.S.C. § 3604(b)
42 U.S.C. § 3604(b) provides:
It shall be unlawful to discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith, because of race, color, religion, sex, familial status, or national origin.
Plaintiffs contend that Defendant violated this provision by providing different and inferior municipal services to the dwellings in Cadillac Heights because of the race of its residents. Defendant argues that Plaintiffs' § 3604(b) claim should be dismissed under Rule 12(b)(1): "Plaintiffs do not allege a cognizable injury under § 3604(b) in the provision of municipal services, because this, too, must be in connection with the sale or rental of a dwelling." (Def. Mot. at 4). Although couched in jurisdictional terms, Defendant's argument is premised on the contention that Plaintiffs' claim is not cognizable under § 3604(b); therefore, the Court will analyze Defendant's argument as a motion to dismiss under Rule 12(b)(6) rather than Rule 12(b)(1).
There is a split in authority about whether the discriminatory provision of municipal services to residents is actionable under § 3604(b). Compare Jersey Heights Neighborhood Ass'n v. Glendening, 174 F.3d 180, 193 (4th Cir. 1999) ("The Fair Housing Act's services provision simply requires that 'such things as garbage collection and other services of the kind usually provided by municipalities' not be denied on a discriminatory basis."), Mackey v. Nationwide Ins. Cos., 724 F.2d 419, 424 (4th Cir. 1984) ("Section 804(b) [ 42 U.S.C. § 3604(b)] prohibits discrimination against any person in the provision of services or facilities in connection with a dwelling. . . . It encompasses such things as garbage collection and other services of the kind usually provided by municipalities."), Southend Neighborhood Improvement Ass'n, 743 F.2d 1207, 1210 (7th Cir. 1984) ("That subsection [§ 3604(b)] applies to services generally provided by governmental units such as police and fire protection or garbage collection . . ."), and Miller v. City of Dallas, No. 3:98-CV-2955-D, 2002 WL 230834, at *14 (N.D. Tex. Feb. 14, 2002) (Fitzwater, J.) (stating in dicta that a § 3604(b) claim was available to the plaintiffs for discriminatory flood protection, protection from industrial nuisances, and other inferior municipal services, without requiring that those services be connected to the sale or rental of a dwelling), with Clifton Terrace Assocs., Ltd. v. United Techs. Corp., 929 F.2d 714, 720 (D.C. Cir. 1991) (limiting the applicability of § 3604(b) to "services provided in connection with the sale or rental of housing" and expressing doubt about Southend's and Mackey's interpretations of § 3604(b)), Cox v. City of Dallas, No. 3:98-CV-1763-BH, 2004 WL 370242, at *7-8 (N.D. Tex. Feb. 24, 2004) (Ramirez, M.J.) ("[T]he Court holds that § 3604(b) applies only to discrimination in the provision of services that precludes the sale or rental of housing."), and Halprin v. The Prairie Single Family Homes of Dearborn Park Ass'n, 208 F.Supp.2d 896, 901 (N.D. Ill. 2002) (holding that the alleged discriminatory provision of services by a homeowners' association "in no way include[d] either a direct or inferential allegation with respect to a material element of a § 3604(b) claim: the sale or rental of a dwelling"). Some courts have viewed the crux of this split in authority to be the interpretation of the meaning of "therewith" in the phrase "in connection therewith" in § 3604(b). See, e.g., Cox, 2004 WL 370242, at *7 ("To determine whether the scope of § 3604(b) extends beyond the sale or rental of housing, it is necessary to decide whether the language 'in connection with' refers to the 'sale or rental of a dwelling' or merely the 'dwelling' in general.").
The regulation of the Department of Housing and Urban Development ("HUD") which interprets the meaning of 42 U.S.C. § 3604(b) states, in relevant part:
(a) It shall be unlawful, because of race, color, religion, sex, handicap, familial status, or national origin, to impose different terms, conditions or privileges relating to the sale or rental of a dwelling or to deny or limit services or facilities in connection with the sale or rental of a dwelling.
(b) Prohibited actions under this section include, but are not limited to: . . .
(4) Limiting the use of privileges, services, or facilities associated with a dwelling because of race, color, religion, sex, handicap, familial status, or national origin of an owner, tenant, or a person associated with him or her.24 C.F.R. § 100.65 (2004).
Therefore, HUD interprets the "in connection therewith" language in § 3604(b) as referring to the "sale or rental of a dwelling," rather than the "dwelling" in general. See 24 C.F.R. § 100.65(a) ("to deny or limit services or facilities in connection with the sale or rental of a dwelling"). However, HUD broadly interprets the requirement that the services be "in connection with the sale or rental of a dwelling" to include the discriminatory limiting of the use of services "associated with a dwelling." 24 C.F.R. § 100.65(b)(4). Under HUD's interpretation of § 3604(b), Defendant's alleged provision of different and inferior municipal services to the dwellings in Cadillac Heights because of the race of its residents falls within the conduct prohibited by 24 C.F.R. § 100.65(b)(4), and thus violates § 3604(b). Therefore, the Court must determine how much weight to afford HUD's interpretation of § 3604(b).
As explained by the Supreme Court, when a court reviews an agency's construction of the statute which it administers, the court should engage in the following analysis:
First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute.Chevron v. Natural Res. Defense Council, 467 U.S. 837, 842-43 (1984).
HUD administers the Fair Housing Act and is authorized by statute to make rules to implement Subchapter I of the Act, which includes § 3604. See 42 U.S.C. § 3608(a) ("The authority and responsibility for administering this Act shall be in the Secretary of Housing and Urban Development."); see also 42 U.S.C. § 3614a ("The Secretary may make rules (including rules for the collection, maintenance, and analysis of appropriate data) to carry out this subchapter."). Therefore, the Court must engage in the Chevron analysis to determine whether to follow HUD's interpretation of § 3604(b). See Nationwide Mut. Ins. Co. v. Cisneros, 52 F.3d 1351, 1356 (6th Cir. 1995) (applying the Chevron analysis to determine whether to follow HUD's interpretation of § 3604 as prohibiting the discriminatory refusal to provide property or hazard insurance for dwellings); see also Park Place Home Brokers v. P-K Mobile Home Park, 773 F.Supp. 46, 53-54 (N.D. Ohio 1991) (applying the Chevron analysis to determine whether to follow HUD's interpretation of § 3607 [another provision of the Fair Housing Act]).
First, the Court finds that Congress has not directly spoken to whether the discriminatory provision of municipal services to a dwelling is actionable under § 3604(b). The ambiguity of the statute is evidenced by the split in authority interpreting its meaning. Second, the Court finds that HUD's interpretation is based on a permissible construction of the statute. The statute can reasonably be interpreted to require the discriminatory provision of services to be in connection with the sale or rental of a dwelling. Further, the "in connection with the sale or rental of a dwelling" requirement can permissibly be broadly interpreted to encompass "[l]imiting the use of . . . services . . . associated with a dwelling because of race . . . of an owner, tenant, or a person associated with him or her." 24 C.F.R. § 100.65(b)(4). Therefore, pursuant to the deference mandated by Chevron, the Court will follow HUD's interpretation of § 3604(b). Because Plaintiffs' allegation that Defendant violated this provision by providing different and inferior municipal services to the dwellings in Cadillac Heights because of the race of its residents falls within the scope of conduct prohibited by 24 C.F.R. § 100.65(b)(4), Plaintiffs' allegation is actionable under § 3604(b). Therefore, the Court denies Defendant's motion to dismiss Plaintiffs' § 3604(b) claim.
C. 42 U.S.C. § 2000d
42 U.S.C. § 2000d provides:
No person in the United States shall, on the ground of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving federal assistance.
Plaintiffs contend that Defendant violated this statute by providing the following municipal services on a discriminatory basis: zoning and land use policies and practices, flood protection, environmental protection, and the provision of adequate streets and stormwater drainage facilities. Defendant argues that Plaintiffs' § 2000d claim should be dismissed under Rule 12(b)(1) because Plaintiffs have failed to allege an injury arising from a "program or activity receiving federal assistance." Although couched in jurisdictional terms, Defendant's argument is premised on the contention that Plaintiffs' claim is not cognizable under § 2000d because Plaintiffs have failed to identify a program or activity receiving federal funding; therefore, the Court will analyze Defendant's argument as a motion to dismiss under Rule 12(b)(6) rather than Rule 12(b)(1).
Defendant additionally argues that Plaintiffs' § 2000d claim should be dismissed under Rule 12(b)(1), because Plaintiffs have not alleged that they are intended beneficiaries, applicants for, or participants in a program or activity receiving federal assistance, and under Rule 12(b)(6) because Plaintiffs have failed to "identify a specific policy of the City of Dallas and that injuries resulted from the execution of the official policy." In light of the Court's ruling, infra, that Plaintiffs' § 2000d claim should be dismissed because Plaintiffs have failed to allege an injury arising from a "program or activity receiving federal assistance," the Court does not reach these arguments. If Plaintiffs choose to re-plead their § 2000d claim, Plaintiffs should consider whether Defendants' arguments highlight additional defects in the pleading of their § 2000d claim.
In Grove City v. Bell, the Supreme Court found that, in order for a program or activity's discrimination to be actionable, the federal funding received by the defendant had to be directly tied to the program or activity alleged to be discriminatory. Grove City v. Bell, 465 U.S. 555 (1984). In response, Congress enacted in 1987 an expansive definition of "program or activity" with the express purpose of overruling the Supreme Court's Grove City decision and making "clear that discrimination is prohibited throughout entire agencies or institutions if any part receives Federal financial assistance." S. Rep. 100-64, at *6. Congress enacted, in relevant part, the following definition of "program or activity:"
For the purposes of this subsection, the term "program or activity" and the term "program" mean all of the operations of —
(1)(A) a department, agency, special purpose district, or other instrumentality of a State or of a local government; or
(B) the entity of such State or local government that distributes such assistance and each such department or agency (and each other State or local government entity) to which such assistance is extended, in the case of assistance to a State or local government. 42 U.S.C. § 2000d-4a(1)(a).
The City of Dallas is neither a "department, agency, special purpose district, or instrumentality of a State or of a local government" nor an "entity of such State or local government;" rather, the City is a local government. Therefore, the City is not a "program or activity" under § 2000d. See Miller, 2002 WL 230834, at *10 n. 10 ("The court disagrees that the City of Dallas as a whole may be regarded as a program or activity receiving federal assistance."); Schroeder v. City of Chicago, 715 F. Supp. 222, 225 (N.D. Ill. 1989) ("The City of Chicago does not fit this statutory definition of 'program or activity.' The City is not a department or instrumentality of a local government. Rather, the City embodies the entire government."). Therefore, federal funding may not be imputed from one department or agency of the City to another. Rather, Plaintiffs must specifically identify the departments, agencies, special purpose districts, instrumentalities, and entities of the City of Dallas that receive direct federal funding. Once Plaintiffs satisfy this burden, in light of the broad definition of "program or activity," all actions of those identified departments, agencies, special purpose districts, instrumentalities, and entities are actionable under § 2000d, even if the discriminatory acts are unrelated to the federal funds.
Plaintiffs make the following allegations about the federal funding of Dallas programs and activities:
The City receives federal funds and distributes the federal funds to City departments including City departments directly responsible for providing municipal services to the dwelling units and persons in Cadillac Heights. These departments include the City Attorney, Code Compliance Services, Development Services providing zoning and land use functions, Environmental and Health Services, Housing, Office of Financial Services, Park and Recreation, Public Works and Transportation. (Compl. ¶ 4). By alleging that federal funds are distributed to the City, which in turn distributes those funds to the listed programs and activities, Plaintiffs have failed to allege that the programs and activities are direct recipients of the federal funding. Further, Plaintiffs have not alleged that the funds distributed to the City were earmarked for the listed programs and activities. Cf. Miller, 2002 WL 230834, at *10-11 (analyzing a § 2000d claim based on discriminatory programs funded by the Community Development Block Grant program). Therefore, under Rule 12(b)(6), the Court dismisses without prejudice Plaintiffs' § 2000d claim. See Cuffley v. Mickes, 208 F.3d 702, 710 (8th Cir. 2000) ("Title VI clearly does not apply to prohibit the Klan's membership criteria. The Klan is not a direct recipient of federal funds nor are federal funds earmarked for the Klan. There is not even an allegation here that the State pays for the Adopt-A-Highway program with earmarked federal funds."); Nat'l Collegiate Athletic Ass'n v. Smith, 525 U.S. 459, 468 ("Entities that receive federal assistance, whether directly or through an intermediary, are recipients within the meaning of Title IX; entities that only benefit economically from federal assistance are not. The Third Circuit's conclusion that the NCAA would be subject to the requirements of Title IX if it received dues from its federally funded members is inconsistent with this precedent. Unlike the earmarked student aid in Grove City, there is no allegation that the NCAA members paid their dues with federal funds earmarked for that purpose. At most, the Association's receipt of dues demonstrates that it indirectly benefits from the federal assistance afforded its members."). The Court will afford Plaintiffs an opportunity to amend their pleadings with respect to this claim if they can correct the pleading deficiency noted.D. 42 U.S.C. §§ 1981, 1982, 1983, 2000d, and the Fourteenth Amendment
Defendant argues that Plaintiffs' claims asserted under 42 U.S.C. §§ 1981, 1982, 1983 2000d, and the Fourteenth Amendment should be dismissed under Rule 12(b)(6) because Plaintiffs fail to identify a specific policy of the City of Dallas and failed to allege that injuries resulted from that official policy. Further, Defendant argues that Plaintiffs' § 1981 claim should be dismissed because Plaintiffs have not asserted a specific injury as a result of intentional race discrimination, Plaintiffs have failed to allege that Plaintiffs' injuries resulted from the execution of the official policy, and Plaintiffs have only made conclusory allegations that white neighborhoods are treated better than Cadillac Heights. Defendant argues that Plaintiffs' § 1982 claim should be dismissed because Plaintiffs have not asserted an injury as a result of interference with their rights under 42 U.S.C. § 1982, Plaintiffs have failed to allege that Plaintiffs' injuries resulted from the execution of an official policy of the City of Dallas, and Plaintiffs have failed to specify the elemental requirements of a § 1982 claim. Finally, Defendant argues that Plaintiffs' claims under 42 U.S.C. § 1983 and the Fourteenth Amendment should be dismissed because Plaintiffs have not alleged that the City's action or inaction impaired the Plaintiffs' privileges or immunities, deprived them of life, liberty, or property without due process of law, or denied them equal protection of the laws.
In Swierkiewicz v. Sorema, the Supreme Court clarified that, under Federal Rule of Civil Procedure 8(a), a plaintiff's complaint need include only "a short and plain statement of the claim showing that the pleader is entitled to relief" so as to "give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Swierkiewicz v. Sorema, 534 U.S. 506, 512 (2002). Plaintiffs' Second Amended Complaint contains extensive factual allegations, followed by a listing of the various statutes and constitutional provisions under which Plaintiffs seek relief. Plaintiffs' claims may well be cognizable under §§ 1981, 1982, 2000d, and the Fourteenth Amendment, but Plaintiffs do not explain, even in a general sense, which allegations constitute the basis for each claim. Neither the Court nor Defendant should be required to discern from such general allegations which factual statements arguably support each of Plaintiffs' claims. The Court finds that Plaintiffs' Second Amended Complaint fails to afford Defendant fair notice of the bases of Plaintiffs' claims under 42 U.S.C. § 1981, 1982, 1983, 2000d, and the Fourteenth Amendment. Therefore, the Court dismisses without prejudice Plaintiffs' claims under 42 U.S.C. §§ 1981, 1982, 1983, 2000d, and the Fourteenth Amendment. Plaintiffs may amend their pleadings to afford Defendant fair notice of the bases for these claims.
E. Rule 23(b)(2) Class Action
Defendant additionally argues that Plaintiffs' Second Amended Complaint should be dismissed because Plaintiffs seek relief that is predominantly monetary and that cannot be granted in a Rule 23(b)(2) class action. The Court finds that this issue is best resolved when the Court rules on Plaintiffs' Motion for Class Certification. In light of the partial dismissal of Plaintiffs' Second Amended Complaint and the anticipated filing of Plaintiffs' Third Amended Complaint, the Court denies as moot Plaintiffs' Motion for Class Certification, filed on January 12, 2004. Within 30 days of filing Plaintiffs' Third Amended Complaint, Plaintiffs shall file a renewed Motion for Class Certification.
F. Leave to Amend
In sum, to the extent Plaintiffs' § 3604(a) claim is premised on the contention that their own property has been rendered unavailable because of the lower property values resulting from industrial zoning, industrial pollution, and lack of flood protection, Plaintiffs' § 3604(a) claim is dismissed with prejudice. To the extent the § 3604(a) claim is premised on the implementation of land acquisition programs and on the unavailability of dwellings to third parties, Plaintiffs' § 3604(a) claim is dismissed without prejudice. The Court denies Defendant's motion to dismiss Plaintiffs' § 3604(b) claim. Plaintiffs' claims under 42 U.S.C. §§ 1981, 1982, 1983, 2000d, and the Fourteenth Amendment are dismissed without prejudice.
Plaintiffs have twenty days from the date of this Memorandum Opinion and Order to file a Third Amended Complaint. Therein, Plaintiffs may assert their § 3604(b) claim, which has survived Defendant's Motion to Dismiss, and any of the claims dismissed without prejudice that Plaintiffs wish to re-assert. Any claims that the Court has dismissed without prejudice and that Plaintiffs choose not to include in their Third Amended Complaint will be dismissed with prejudice.