The Fortune Society, a non-profit organization that provides temporary and permanent housing to hundreds of formerly incarcerated individuals each year, tried to rent apartments at The Sand Castle, an apartment complex managed and owned by the Sandcastle Towers Housing Development Fund Corp. (the “Fund”). When the Fund learned that the Fortune Society served formerly imprisoned individuals, they refused to rent apartments.
On October 30, 2014, the Fortune Society filed this lawsuit in the U.S. District Court for the Eastern District of New York. The plaintiff sued the Fund (and related entities) under the Fair Housing Act of 1968 and New York State and City law. Represented by Relman, Dane & Colfax, the plaintiff sought injunctive, monetary and declarative relief. The plaintiff claimed that the defendant maintained a discriminatory policy that prohibited anyone with a criminal record from renting an apartment or living at The Sand Castle. Specifically, they claimed that the policy had the purpose and effect of discriminating against African Americans and Latinos.
The court set up a discovery schedule, which proceeded for about a year. On May 1, 2015, the plaintiff filed an amended complaint.
On June 25, 2015, the court ordered the parties to meet and discuss settlement in light of the recent Supreme Court decision
Inclusive Communities Project v. Texas Department of Housing and Community Affairs. (See
here in the Clearinghouse). That opinion held that the Fair Housing Act encompassed disparate impact liability, but emphasized that liability followed only if the challenged policy or practice actually caused, rather than merely accompanied, a racial disparity.
The plaintiff filed a motion for partial summary judgment on its race discrimination claims based on disparate impact on September 30, 2016. On the same day, the defendant moved for summary judgment. The defendant claimed that summary judgment was appropriate because discovery confirmed that it did not maintain a blanket ban on residents with criminal records.
On November 16, 2015, the parties met at a status conference to discuss settlement, as recommended by the court. But they failed to agree.
On October 18, 2016, the United States entered a Statement of Interest. It suggested a three-step legal test that the court should use to evaluate the plaintiff's claims (Department of Justice press release available
here):
- The plaintiff must show the challenged practice has a discriminatory effect on a protected class;
- The defendant must establish a legitimate justification for the challenged practice; and
- The plaintiff must exhibit another policy to serve the same interests with less discriminatory effect.
The court (Magistrate Judge Vera M. Scanlon) issued an order denying the plaintiff’s motion for partial summary judgment and grating in part and denying in part the defendant’s motion for summary judgment on July 3, 2019. The court denied the defendant’s motion for summary judgment with respect to the plaintiff’s disparate impact claim but granted it with respect to the plaintiff’s disparate treatment claim. In addition, the court scheduled a status conference on August 20, 2019, to discuss settlement possibilities.
The parties jointly filed a stipulation of dismissal with prejudice on October 11, 2019. On October 16, 2019, the defendant and the plaintiff filed a status report, stating that the matter has been resolved. According to the New York Daily News, the parties agreed to a $1,187,500 settlement. The
article did not mention any injunctive relief but did note that the Fund no longer controlled The Sand Castle or any other residential property.
This case is closed.
MJ Koo - 01/22/2017
Raul Noguera-McElroy - 04/19/2019
Bogyung Lim - 01/31/2020
compress summary
