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Federal Court Refuses to Dismiss HIV-Related Housing Discrimination Claim Against LeFrak Realty Organization

Posted on: December 17th, 2013 by Art Leonard No Comments

U.S. District Judge Denise Cote has refused to dismiss a discrimination case brought by a person living with HIV, identified in court papers as L.C., and the Fair Housing Justice Center against a major New York City realtor, Lefrak Organization and its subsidiary, Estates NY Real Estate Services, Inc.  Judge Cote’s December 13 ruling found that that plaintiffs had successfully alleged facts supporting a claim that LeFrak’s rental practices at its LeFrak City apartments in Queens discriminate against people living with HIV who are clients of New York City’s HIV/AIDS Services Administration (HASA), a division of the City’s Human Resources Agency.  L.C. v. LeFrak Organizations, Inc., 2013 U.S. Dist. LEXIS 175756.

According to the complaint, L.C. was notified by HASA that she would be entitled to economic support to rent an apartment up to a monthly rent of $1,100.  Under HASA’s policies, L.C. was supposed to locate and apply to rent a suitable apartment and, upon approval by HASA, the agency would issue a check to the landlord for the first month’s rent and a voucher to cover an equal amount as a security deposit, and HASA would subsequently issue monthly checks to the landlord to cover the rent.  HASA also covers any necessary broker fees.

Thus notified by HASA, L.C. went to the LeFrak City website, determined that apartments were available there within the specified price range, and called the rental office.  When she identified herself as a HASA client, she was referred to “an office on Queens Boulevard that deals with applicants who will be using government benefits programs to pay their rent,” according to Judge Cote’s opinion.  There, L.C. encountered the Catch-22 in this situation.  LeFrak’s agents would not show L.C. an apartment until she provided a letter from HASA confirming that they would pay a specific amount for the rent, but HASA does not issue such letters before a client has actually been approved to rent a particular apartment.  L.C. explained to the LeFrak agent that she needed to apply for the particular apartment and have it approved by HASA before HASA would issue a letter, but the LeFrak people said they would not process L.C.’s application until they had a letter from HASA.

L.C. then met with her HASA case manager, who confirmed with her supervisor that HASA does not issue such letters.  L.C. then visited Housing Works, and a Housing Works manager called LeFrak.  The LeFrak representative confirmed at that time that they had apartments available for around $1,100 a month, but that a letter from HASA had to be submitted before they would process L.C.’s application.

The other plaintiff in the case, Fair Housing Justice Center, sent “testers” to LeFrak to confirm what their policies are.  LeFrak was then listing three apartments at LeFrak City within the $1,100 price range.  One tester told the LeFrak staff that she was employed, earning $46,000 a year, and looking for a studio or one-bedroom in LeFrak City in that price range.  She was promptly shown a floor plan and given an application to complete, and no request for documentation of her income was made at that time.  Two other testers told the LeFrak people that they were inquiring for a brother who was living with AIDS and would be receiving a housing subsidy from HASA, and in both cases they were referred to the special office for renters using government program subsidies.  They confronted the same response as L.C..  They could not submit an application or see an apartment until they submitted the requested “papers” including a HASA commitment letter.  They were also required to wait for LeFrak to do a criminal and credit background check.   (This had not been requested of the tester who said she was employed.)  The testers also noted that the office to which they were referred had a glass window separating the applicants from the LeFrak staff, unlike the regular rental office.

L.C. and FHJC filed their federal discrimination lawsuit on April 25, 2013, asserting claims under the federal Fair Housing Act (FHA), which forbids housing discrimination against people with disabilities, and the New York City Human Rights Law, which forbids discrimination not only against people with disabilities but also discrimination based on a potential renter’s source of income.  The complaint claimed both intentional discrimination (disparate treatment) and maintenance of procedures that had a disproportionate adverse effect on people with disabilities (disparate impact).

LeFrak moved to dismiss the case, claiming that it did not intentionally discriminate against people with HIV.  LeFrak argued that the FHA claims had to be dismissed because they failed to allege that LeFrak had discriminated because of HIV status.  They asserted that the story told in the complaint was one of treating people differently depending upon their source of income to pay rent, and that this did not violate the FHA.  Rejecting this argument, Judge Cote wrote that the complaint “alleges that LeFrak understood that HASA clients, alone of all persons requiring government housing subsidies, would be unable to produce a source-of-income letter at the application stage of the rental process.  This is sufficient to give the defendants fair notice of the plaintiffs’ theory that LeFrak intentionally discriminated against L.C.”

Judge Cote also found that plaintiffs could maintain an action under another provision of the FHA which refers not only to the actual rental of housing but also to the “terms, conditions or privileges” attached to housing.  For example, refusing to let L.C. see an available apartment or floor plan can itself be the basis of a discrimination claim, so the case is not solely based on a denial of a rental application.

Judge Cote found that the complaint could also qualify under the disparate impact theory, by showing that LeFrak maintained procedures that made it particularly difficult for HASA clients to rent apartments, thus having a “disparate impact” against persons with HIV.   LeFrak objected that the plaintiffs failed to provide statistics showing the disparate impact, but Judge Cote found that they had alleged that out of 8 million New Yorkers, 67,000 are living with HIV and almost half of them are HASA clients, the “vast majority” of whom are using the HASA housing subsidy program.  “This adequately puts the defendants on notice that plaintiffs’ alleged basis for disparate impact is that the percentage of the HIV population in New York City on housing subsidies exceeds the percentage of non-HIV New York City population on housing subsidies.”

LeFrak argued that L.C. should be challenging HASA’s refusal to provide the necessary commitment letters, rather than LeFrak’s refusal to process rental applications without receiving such letters.  Judge Cote rejected this argument as well, pointing out that LeFrak had not argued that HASA was a “necessary party” to this case, so this argument did not entitled LeFrak to get the claims against itself dismissed.

The judge’s analysis of the New York City Human Rights Law claims was straightforward.  Since the city law outlaws the same kind of housing discrimination based on disability that is outlawed by the FHA, the same factual allegations supported the city law discrimination claim.  That the city law also forbids housing discrimination based on source-of-income, a relatively recent addition to the law, makes the city law claim even stronger in this case, especially since LeFrak argued in opposition to the federal claim that its policies discriminated based on source-of-income, not disability.  In fact, LeFrak’s argument sounds like a concession that its policy violates the city law.

LeFrak argued that its policy of requiring rental applicants to provide income documentation before renting an apartment was “legitimate and applied to all applicants.”  Cote pointed out that the plaintiffs were not denying that, but rather were challenging LeFrak’s refusal to show apartments or accept rental applications before documentation of income was presented, because this policy “served as an impediment that prevented L.C. from ‘securing’ an apartment.”  Judge Cote observed that the complaint makes the claim that LeFrak’s differential approach on documentation between applicants of means and applicants who are relying on government programs establishes “a prima facie case of disparate treatment based on source of income,” a direct violation of the city law.  Judge Cote also found that the plaintiffs had alleged necessary facts to put their city law case in play, by showing that if LeFrak had processed L.C.’s application and conditionally approved her as a tenant, HASA would have provided the documentation necessary to complete the rental process.

Finally, Cote rejected LeFrak’s argument that because the city law applies to discrimination in rentals but doesn’t mention any right for a member of the public to “inspect” an apartment before applying for it, LeFrak could not be held liable for a violation merely because it refused to allow inspections of vacant apartments by public housing subsidy applicants who had not yet presented written confirmation of their housing benefits.  Cote pointed out that the city law has a provision mandating “liberal construction,” and found that any obstruction put in the way of a potential client could come within the ambit of the anti-discrimination law.

Attorneys Armen Merjian from Housing Works and Diane Lee Houk from the law firm Emery Celli Brinckerhoff and Abady represent the plaintiffs L.C. and FHJC.   LeFrak is represented by Randy Mastro and other attorneys from Gibson, Dunn & Crutcher.