Landlord Violated the Fair Housing Act by Using a Racial Quota Plan to Maintain Integrated Housing Stephanie Ferst

Loyola Consumer Law Review

Volume 1 | Issue 1 Article 6

1988 Landlord Violated the Fair Housing Act by Using a Racial Quota Plan to Maintain Integrated Housing Stephanie Ferst

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Recommended Citation Stephanie Ferst Landlord Violated the Fair Housing Act by Using a Racial Quota Plan to Maintain Integrated Housing, 1 Loy. Consumer L. Rev. 22 (1988). Available at: http://lawecommons.luc.edu/lclr/vol1/iss1/6

This Recent Case is brought to you for free and open access by LAW eCommons. It has been accepted for inclusion in Loyola Consumer Law Review by an authorized administrator of LAW eCommons. For more information, please contact [email protected]. LANDLORD VIOLATED THE FAIR a policy which preferred white applicants over HOUSING ACT BY USING A minority applicants, and falsely representing to minorities that no apartments were available RACIAL QUOTA PLAN TO when in fact units were available. Starrett then MAINTAIN INTEGRATED moved to dismiss the suit based on estoppel, HOUSING arguing that because the government had not Landlords may no longer use racial quotas to intervened in the Arthur suit it could not sue maintain integration in housing complexes. On Starrett now. The district court denied the mo- March 1, 1988, the United States Court of Ap- tion. peals for the Second Circuit held in United Both parties moved for summary judgment. States v. Starrett City Assocs., 840 F.2d 1096 (2nd The district court granted the government's Cir. 1988), that landlords who restrict minority motion, concluding that Starrett's practices were access through permanent racial quotas violate clear violations of the Fair Housing Act. The Fair Title VIII of The Civil Rights Act of 1968 ("Fair Housing Act prohibits discrimination on the Housing Act"), 42 U.S.C. § 3601-3631 (1982). The basis of race, color, or national origin in the sale court concluded that such quotas were a viola- or rental of housing by: 1) refusing to rent or tion of the Fair Housing Act regardless of the make available housing; 2) offering discrimina- landlord's motivation to maintain racial integra- tory terms of rental; 3) publishing any notice tion. that indicates discrimination against a protected Background class; and 4) falsely representing the unavailabil- ity of housing to protected classes. The court Appellants, Starrett City Associates, built, accordingly enjoined Starrett from discriminat- owned and operated in Brooklyn, New York, the ing against applicants on the basis of race. The largest housing development in the nation. court required Starrett to adopt nondiscrimina- Since 1973, Starrett sought to maintain a tenant tory selection standards subject to court appro- distribution of 64% White, 22% Black, and 8% val and retained jurisdiction over the parties for Hispanic in order to create a racially integrated three years. Starrett appealed. community. Starrett claimed that these quotas were necessary to prevent "white flight" which Starrett's Use of a Quota System to Promote occurs when white tenants move out of a neigh- Integration Held Discriminatory borhood once minority tenants move in. Starrett The UnitedStates Court of Appeals for the developed a rental procedure which required Second Circuit affirmed the lower court by hold- applicants for apartments to indicate their race ing that the Fair Housing Act does not allow or national origin on an application card. Star- permanent racial quotas which restrict minority rett placed these applications in an "active" file access. The court noted that discriminatory and notified applicants of a vacancy when a housing practices are unlawful under the Fair tenant of the same race moved out. Only then Housing Act whether they are motivated by a were prospective applicants offered apartments. racially discriminatory purpose or have a dis- In December, 1979, a group of black appli- proportionate effect on minorities. The court cants brought an action against Starrett in fed- summarized the purpose of the Fair Housing eral court. Arthur v. Starrett City Assocs., 98 Act:to provide, within constitutional limitations, F.R.D. 500 (E.D.N.Y. 1983). The complaint alleged for fair housing throughout the United States. that Starrett's quota system violated federal and Because the legislative history provided no gui- state law by discriminating against the applicants dance on the use of quotas, the court looked to on the basis of race. The parties ultimately analogous federal anti-discrimination law to agreed to a settlement, and a consent decree determine what constituted permissible race- was subsequently entered by the district court. conscious affirmative action under the Fair Hous- The consent decree provided for increased ing Act. Title VII of the Civil Rights Act of 1964,42 apartment availability for minorities. U.S.C. §2000e-2000e(17) (1982), an act with paral- The government filed suit against Starrett in lel objectives to the Fair Housing Act, provided a June, 1984, to address the legality of Starrett's framework for the court's discussion of racial policy and practice of limiting the number of quotas. apartments available to minorities in order to Applying Title VII precedent, the court empha- maintain a racial balance. United States v. Star- sized that a race-conscious affirmative action rett City Assocs., 605 F.Supp. 262, 263 (E.D.N.Y. plan may be valid under the Fair Housing Act if 1985). The complaint alleged that Starrett vio- the plan is temporary, has a defined goal, is lated the Fair Housing Act by discriminating based on a history of racial discrimination, and is against minorities. The alleged discrimination designed to increase minority access. Starrett's included forcing black applicants to wait longer plan was unlawful because the quotas were than white applicants for apartments, enforcing imposed indefinitely, and were not based upon any history of prior, racial discrimination. an integrated housing complex through the use Further, the system acted as a ceiling for minority of quotas. First, the dissent disagreed with the access to housing opportunities. majority's interpretation of the purpose of the The court concluded that Starrett's allocation Fair Housing Act. The Fair Housing Act was of public housing on the basis of racial quotas intended to prohibit segregation, not integra- clearly had a discriminatory effect on minorities. tion. As authority for this interpretation, the dis- Starrett conceded the discriminatory effect of its sent noted that neither the Fair Housing Act nor plan but had two major defenses. First, Starrett its legislative history explicitly indicates whether argued that it was clothed with governmental Congress intended to prohibit racially main- authority by its receipt of federal funding and tained integration. Therefore, the dissent thus was obligated to affirmatively promote claimed that the Fair Housing Act was never integration. The court declined to decide intended to apply to actions such as Starrett's whether Starrett was a state actor but concluded which maintained an integrated rather than that even if Starrett were a state actor, the racial segregated complex. Second, the dissent relied quotas Starrett used were invalid affirmative upon the holding in Otero, which the dissent action plans under the Fair Housing Act. characterized as generally not prohibiting racial rental quotas adopted to promote integration Starrett next argued that a "white flight" phe- under the Fair Housing nomenon justified its use of racial quotas to Act. The dissent in fact found the instant case easier to maintain integration. In support of this argu- decide than ment, Starrett relied upon Otero v. New York Otero because Starrett promoted integration through quotas City Housing Authority, 484 F.2d 1122 (2d Cir. from the inception of the complex. In Otero, on the other hand, 1973), where the court held that public housing the New York Housing Authority attempted to achieve inte- authorities had a duty to integrate housing gration by extricating complexes and to prevent racial segregation itself from commitments it had made with minority even if their actions in so doing prevented some tenants. Finally, the dissent stated that public minorities from residing in particular housing. policy decisions of this nature should be determined In Otero, the landlords rented half of a group of by the legislature and not by the courts. newly renovated apartments to non-former occupants, instead of renting to former occupants Stephanie Ferst who were predominately minorities. The court distinguished Otero because there the renting Editor's Note: On November 7,1988, the United procedures did not involve a plan for long-term States Supreme Court denied the petition for maintenance of specified levels of integration. writ of certiorari. justice White would have The court held the Otero plan to be a single granted the writ. 57 U.S.L.W. 3333 (U.S. Nov. 7, event which did not operate as a strict racial 1988) (No. 88-82). The United States Department quota. Starrett's plan, in contrast, operated to of Justice, the NAACP, and the City of Chicago determine exact racial distribution on an indefi- have challenged a "managed integration" quota nite basis. system used by the directors of Atrium Village, a 309-apartment complex in Chicago. Their view Dissent: Use of Quotas Discriminatory Only if is that the directors violated the Fair Housing Act They Result in Segregation by manipulating the list of rental applicants to The dissent concluded that Starrett was within maintain a 50-50 balance of black and white the spirit of the Fair Housing Act by maintaining tenants.

UNITED STATES COURT OF its 1980 model X-cars caused premature rear- APPEALS DETERMINES THAT wheel lock-up. The complaint further alleged that excessive corrosion over time aggravated GENERAL MOTORS' BRAKING that condition, and that GM violated the Act by SYSTEM WAS NOT PROVEN failing to notify the Secretary of Treasury and DEFECTIVE failing to remedy the defect. The Court of In U.S. v. General Motors Corp., 841 F.2d 400 Appeals held that there was not a class-wide defect and affirmed the trial court's (D.C. Cir. 1988), the United States Court of judgment in Appeals for the District of Columbia Circuit con- favor of GM. sidered a claim that General Motors Corpora- Background tion ("GM") manufactured automobiles with a Development of the X-car by GM began in defective braking system. The claim, brought 1975. In 1978, GM engineers first obtained infor- under the National Traffic and Motor Vehicle mation indicating a potential brake problem. In Safety Act ("the Act"), alleged that GM knew, or a test of GM's model X-cars, drivers registered should have known, that the braking system in complaints of "premature" rear-wheel lock- (continued on page 24)