On November 12, 2008, the Greater New Orleans Fair Housing Action Center and the National Fair Housing Alliance, along with African-American homeowners from Louisiana, filed a lawsuit in the U.S. District Court for the District of Columbia on behalf of more than 20,000 families, against the U.S. Department of Housing & Urban Development ("HUD") and the Executive Director of the Louisiana Recovery Authority ("LRA") under 42 U.S.C. §§ 3604(a), 3605(a), 3608(d), (e)(5) and 42 U.S.C. § 5304(b)(2).
The plaintiffs, represented by both private counsel and the NAACP Legal Defense Fund, alleged that HUD's "Road Home" program has a discriminatory and disparate impact on African Americans. They asked the court for declaratory and injunctive relief. Specifically, the plaintiffs sought an injunction requiring the LRA to recalculate Road Home awards to homeowners in New Orleans using a formula that does not have a disparate impact on African Americans.
In response to the devastation of Hurricane Katrina, HUD established the Road Home program, an $11 billion housing redevelopment program. Road Home was designed to compensate individuals whose homes were damaged by Hurricane Katrina. The Road Home Program was administered by the LRA. The LRA awarded grants to homeowners based on the lesser
of the pre-Katrina value of a home or the cost to rebuild the home. It capped grant amounts at $150,000. A number of covenants, including a covenant to rebuild within a certain amount of time, accompanied the grants. Because home values in predominantly African-American neighborhoods are lower than the values of similar homes in white neighborhoods, Plaintiffs alleged that African-Americans homeowners were likely to receive grant amounts based on the pre-storm value of their homes rather than the cost of rebuilding. On the other hand, Plaintiffs alleged that white homeowners with higher-valued yet similar homes were likely to receive grants based on the cost to rebuild. Plaintiffs alleged this would result in disparate impact, because white homeowners would receive higher grants than African-American homeowners; in turn, the result would be an uneven recovery that harmed African-American residents of Louisiana. For example, one African-American homeowner had a home that the LRA estimated had a pre-storm value of $1,400 but would have cost over $150,000 to rebuild. According to the formula, she would have received an essentially useless grant of $1,400.
On May 5, 2009, LRA filed a motion to dismiss plaintiffs' complaint and also moved to transfer the matter to a district court in Louisiana. Co-defendant HUD opposed the motion. The District Court originally set a hearing on the motion for June 2010, but the hearing was continued. The District Court Judge (Judge Henry Kennedy) did not rule on the motion to dismiss until September 7, 2010, most likely because shortly after the defendants filed motions to dismiss, the plaintiffs filed two motions for temporary restraining orders and preliminary injunctions, the results of which were appealed to the D.C. Circuit.
On October 12, 2009, Louisiana provided low- and moderate-income homeowners who had received a Road Home grant based on the pre-storm value of their home with the opportunity to receive Additional Compensation Grants in an effort to provide grantees with grants based on the estimate cost of damage.
On June 6, 2010, plaintiffs filed a motion for a temporary restraining order and preliminary injunction preventing the Louisiana from spending any remaining funds from the Road Home Program until the merits of the plaintiffs' case are resolved. Plaintiffs filed this motion because the LRA was set to sunset on June 30, 2010 and all remaining Road Home funds were scheduled to transfer to Louisiana's Office of Community Development, which would repurpose the funds for another program. On June 29, 2010, the District Court (Judge Henry Kennedy) found the plaintiffs were likely able to establish a prima facie case of racial discrimination, but even so denied the plaintiffs' motion. He held that the Eleventh Amendment barred him from providing retroactive relief to African-American homeowners who had already received grants under the formula.
On July 21, 2010, the plaintiffs filed a narrower motion for a temporary restraining order and preliminary injunction requesting only prospective relief. Judge Kennedy granted this motion, and prohibited Louisiana from disbursing funding based on the value of a person's home.
The plaintiffs filed an interlocutory appeal to the District Court's denial of its first motion for a temporary restraining order and a preliminary injunction on July 21, 2010. The LRA appealed the District Court's decision to grant the plaintiff's second preliminary injunction.
On September 7, 2010, Judge Kennedy granted in part and denied in part the LRA's motion to dismiss and denied the LRA's motion to transfer. Judge Kennedy allowed plaintiffs claims against the LRA's executive director under 42 U.S.C. § 3604(a), but limited the claim to prospective relief. He dismissed all other claims against Louisiana. Louisiana appealed, but on December 30, 2010, the D.C. Circuit Court (per curiam) ordered that to the appeal held in abeyance until it resolved the pending appeals on the motions for temporary restraining orders and preliminary injunctions.
On April 8, 2011, a D.C. Circuit Court panel (Judge Judith Rogers, Judge Brett Kavanaugh, and Judge Stephen Williams) determined that plaintiffs had not demonstrated a likelihood of success on the merits of the case, and affirmed the District Court's denial of the plaintiffs' first motion and reversed the District Court's granting of the plaintiffs' second motion. In an opinion joined by Judge Kavanaugh, Judge Williams wrote that the plaintiffs failed to put forward convincing evidence of disparate impact.
In July 2011, the parties reached a settlement in the matter. According to the settlement, the October 2009 program providing for additional compensation grants aided the majority of injured African-American homeowners. In addition, Louisiana agreed to reward approximately 1,300 homeowners in four parishes approximately $62 million in additional compensation. The parties reserved the additional funds for homeowners who received Road Home compensation based on the pre-storm value of their home. In order to qualify for additional funding, the homeowners who received grants based on the pre-storm value of their home must: (1) live in one of the four Louisiana parishes most impacted by Hurricanes Katrina and Rita; (2) have an original grant that was significantly constrained by their homes pre-storm value; (3) have a home in which the pre-storm value was at or below the fifty-fifth percentile of the parish. Further, eligible recipients must have been unable to complete repairs and return to their homes as of May 1, 2011, or must have returned without repairing the property, which must be uninhabitable according to local laws and ordinances. The agreement also provided recipients of this additional grant money additional time to comply with the rebuilding covenants that accompanied their original grants.
The plaintiffs voluntarily dismissed the suit, in light of the settlement, which does not provide for court enforcement.Benjamin Clark - 11/16/2012