On May 5, 2008, an association of residents of a New Jersey neighborhood filled a lawsuit under the Fair Housing Act and 42 U.S.C. § 1983 in the U.S. District Court for the District of New Jersey. The residents, represented by lawyers from South Jersey Legal Services, asked the court for declaratory, injunctive, and monetary relief, claiming that the defendants' redevelopment plan for the Gardens neighborhood represented a violation of the Fair Housing Act, and of the Equal Protection clauses of the United States and New Jersey Constitutions. Specifically, the plaintiffs claimed that the defendants' redevelopment plan, which called for the razing of the existing homes located in the Gardens neighborhood, the only one with predominantly African American and Hispanic residents, made housing unavailable because of race. Moreover, the plaintiffs claimed that the redevelopment plan had a disparate impact on African-American and Hispanic households in violation of the Fair Housing Act because it destroyed their homes without providing adequate relocation assistance. The township had displaced hundreds of predominantly African American and Hispanic residents and, the plaintiffs claimed, "devastated a once stable minority community in need of only modest improvement." Only about 70 homes out of 300 remain scattered throughout the neighborhood and no new homes were constructed in 10 years. On July 18, 2008, the plaintiffs filed a motion for preliminary injunction.

On October 28, 2008, the Court (Judge Noel Hillman) issued an order with respect to the defendants' motion to dismiss. Three of the allegations under state law related to local redevelopment and housing laws and open meetings laws were dismissed as moot. Two counts related to denial of just compensation under state law were dismissed as moot. In other respects, the motion was denied.

On November 25, 2008, the Court granted in part and denied in part the plaintiff's motion to file an amended complaint. The plaintiffs could not file allegations pertaining to denial of just compensation in light of the Court's opinion of October 28, 2008. On December 3, 2008, the plaintiffs filed a second amended complaint, which added more facts and allegations of violation of the Due Process clauses under the U.S. and New Jersey constitutions.

On February 13, 2009, the Court denied the plaintiffs' motion for preliminary injunction. The injunction was sought with respect to disparate impact claim under the FHA, and the Court stated the plaintiffs did not show they were likely to succeed on the merits, and suffer and irreparable injury. Even if they lost housing, there was insufficient showing that monetary compensation would not be enough.

On October 23, 2009, the Court granted in part, denied in part, and continue in part the defendants' motion to dismiss. The motions with respect to claims under the FHA, EEOC, Equal Protection claim under 42 U.S.C. § 1983, were treated as motions for summary judgment, and continued until later. The Court dismissed claims of Due Process violations under the U.S. and New Jersey constitutions, claims of discrimination under state laws, and claims of violations of local redevelopment and housing laws.

On January 19, 2010, the defendants filed a motion for summary judgment. On January 3, 2011, the district court (Judge Noel Hillman) granted summary judgment in favor of the defendants. Specifically, the district court found that the redevelopment plan of the Gardens neighborhood did not have a disparate impact on African Americans and Hispanics. The court found that the residents were unable to make a prima facie showing that the plan had a disparate impact on protected groups because they were unable to show that the plan had a greater adverse impact on protected groups than on others, and were unable to show that the township's legitimate interest in redevelopment could be accomplished with less discriminatory impact. Finally, the court held that the defendants had not acted with the discriminatory intent necessary to violate the United States Constitution.

The plaintiffs appealed the district court's ruling to the U.S. Court of Appeals for the Third Circuit. In an opinion filed September 13, 2011 the court (Judges Sloviter, Fuentes, and Fisher) vacated the District Court's judgment and remanded the case for further proceedings. The court made clear that at the summary judgment stage, the district court is to take the evidence in the light most favorable to the non-moving party. Under that standard, the evidence submitted was sufficient to establish a prima facie case of disparate impact under the Fair Housing Act. Specifically, the court held that the evidence presented by the residents that African American and Hispanic citizens were 8 times more likely to be affected by the redevelopment plan was sufficient to show a disparate impact. Furthermore, the appellate court made it clear that the district court had erred by asking whether the defendants had treated minorities the same as other residents, rather than asking whether minority residents were affected differently than the other residents. On May 22, 2012, the Third Circuit's mandate was entered.

On June 11, 2012, the defendants filed a petition for a writ of certiorari with the United State Supreme Court, asking for review of the legal question whether disparate impact claims exist under the Fair Housing Act. This was an issue on which the Court had granted review in Magner v. Gallagher (Sup. Ct. Docket 10-1032), but then that case was withdrawn by its defendant, the City of St. Paul, after full briefing but before argument. The Court granted cert., and argument was scheduled for December 4, 2013. Observers expected the Court to strike down the disparate impact theory. Instead, on November 13, 2013, the case settled.

The settlement--which news reports state was funded, in part, by an organization called The Reinvestment Fund--includes provision for construction of 44 new homes, with the first to be ready for occupancy before the end of 2014. Twenty homes will go to current residents in exchange for allowing redevelopment of their existing homes. All of the phased new construction will be completed by 2018. Seven households that have elected to relocate will be compensated based in part on the appraised value of their homes. The aggregate amount that the township paid to them was $691,000.00

On November 15, 2013, the Court entered the settlement agreement and dismissed the case and the proceedings with prejudice.

Justin Benson - 10/07/2011
Zhandos Kuderin - 08/01/2014


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