January 25, 1978
78-4 MEMORANDUM OPINION FOR THE GENERAL COUNSEL, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Fair Housing— Civil Rights Act— Civil Penalties— Application of Seventh Amendment—Jury Trial
This is in response to your request for our opinion concerning the constitu tionality of the civil damages provisions of the Edwards-Drinan bill (H.R. 3504). Specifically, you have inquired whether the bill’s administrative complaint procedure offends the Seventh Amendment guarantee that “ In suits at common law, where the value in controversy shall exceed twenty dollars, the right o f trial by jury shall be preserved . . . . ” For the reasons that follow, it is our opinion that the provisions in question are suspect under the recent Supreme Court decisions interpreting the Seventh Amendment. The issue is a close one and almost certainly will be litigated. W ith these considerations in mind, we have suggested several ways in which the language of the provision could be altered to improve its chances o f withstanding scrutiny.
1.
H .R. 3504, 95th C ong., 1st sess. (1977), would amend Title VIII of the Civil Rights Act of 1968, 42 U .S .C . § 3601 et seq., by creating three alternative mechanisms for enforcem ent of its fair housing provisions. Section 812 preserves private enforcem ent by means of civil suit; § 811 provides for “ pattern or practice” actions by the Attorney General. Most importantly, for purposes of this discussion, § 810 o f the bill authorizes the Secretary of Housing and Urban Development (HUD), either in response to a private complaint or on his or her own initiative, to investigate allegations of discriminatory housing practices. If he finds reasonable cause to believe the charges to be true, he is required either to refer the matter to the Attorney General for the filing o f a civil action against the offender, or to file an administrative complaint. If the administrative procedure is followed, the respondent is entitled to notice and to the opportunity for a hearing on the
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record; the person conducting the hearing may also allow any aggrieved person to intervene. The hearing officer, after making findings of fact and conclusions of law, may award various forms of relief including money damages, equitable and declaratory relief, and punitive damages up to $10,000; temporary or preliminary relief is also available pending final disposition of the complaint. Review is in the courts o f appeal using a “ substantial evidence” standard. The bill also authorizes the Secretary to assess a civil penalty of $1,000 for each day during which a violation continues after the date on which the administrative order becomes unreviewable. Section 8 1 1(b) empowers the Attorney General, at the request of the Secretary, to institute civil proceedings to enforce either final orders or civil penalties o f this sort.
In applying the Seventh Amendment to this statutory scheme, two principles are immediately clear. First, it is firmly established that the Seventh Amend ment “ does apply to actions enforcing statutory rights, and requires a jury trial upon demand, if the statute creates legal rights and remedies, enforceable in an action for damages in the ordinary courts o f law. ” Curtis v. Loether, 415 U.S. 189, 194 (1974). Thus, the Supreme Court has held that a jury may be demanded in suits in the Federal courts for actual and punitive damages under § 812 of the Civil Rights Act of 1968. Id. Similarly, in'P ernell v. Southall Realty, 416 U .S. 363 (1974), the Court held that the Seventh Amendment applied in civil suits in the District of Columbia courts for recovery of possession o f real property.
A second principle also has emerged— the Seventh Amendment does not apply where Congress has properly assigned the functions of factfinding and initial adjudication to an administrative tribunal where the use of a jury would be inappropriate. Thus, in Atlas Roofing Co. v. Occupational Safety and Health Review Com mission, 430 U.S. 442 (1977), the Supreme Court upheld Congress’ choice of a specialized administrative body to ascertain whether employers were maintaining unsafe, working conditions and to impose civil penalties. The Court found no constitutional right to a jury under such circumstances:
. . . when Congress creates new statutory “ public rights,” it may assign their adjudication to an administrative agency with which a jury trial would be incompatible, without violating the Seventh Am endm ent’s injunction that jury trial is to be “ preserved” in “ suits at common law .” Congress is not required by the Seventh Amend ment to choke the already crowded federal courts with new types of litigation or prevented from committing some new types o f litigation to administrative agencies with special competence in the relevant field. This is the case even if the Seventh Amendment would have required a jury where the adjudication of those rights is assigned to a
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federal court o f law instead o f an administrative agency, 430 U .S ., at 4 5 5 .1 W hile it is, therefore, clear that juries need not be imported into administra tive proceedings designed by Congress to give effect to agency expertise, it is also apparent that Congress may not be altogether free to elect such administra tive forums under all circum stances. Thus, in Atlas Roofing, the Court was careful to go no further than to approve a jury-free administrative proceeding where “ public rights” were involved. 430 U.S. at 458. Unfortunately, this talismanic phrase was not well defined. Instead, the Court spoke somewhat circularly i.n terms o f examples— “ e .g ., cases in which the Government sues in its sovereign capacity to enforce public rights created by statutes within the power o f Congress to enact” {id ., at 450); “ e .g ., where the Government is involved in its sovereign capacity under an otherwise valid statute creating enforceable public rights” (id., at 458).
The sovereign’s prerogative to sue and to be sued as it deems appropriate was recognized and discussed at length in M urray's Lessee v. Hoboken Land Co., 18 How. 272, 284 (1855): “ [TJhere are m atters, involving public rights, which may be presented in such form that the judicial power is capable of acting on them , and which are susceptible of judicial determination, but which Congress may or may not bring within the cognizance of the courts of the United States as it may deem proper.” See also, Ex Parte Bakelite, 279 U.S. 438, 451 (1929): “ Legislative courts also may be created as special tribunals to examine and determine various m atters, arising between the government and others, which from their nature do not require judicial determination and yet are susceptible to it. The mode of determining matters of this class is completely within congressional control. Congress may reserve to itself the power to decide, may delegate that power to executive officers, or may commit it to judicial tribunals.” Accordingly, C ongress’ choice o f administrative forums as means for collecting civil penalties to be deposited into the public treasury has repeatedly been upheld. See, e .g ., Helvering v. M itchell, 303 U.S. 391 (1938).
So, too, has the use of administrative bodies which, in the course of enforcing public policy, incidentally provide relief to private citizens. Thus, in NLRB v. Jones & Laughlin Steel C orp., 301 U.S. 1 (1937), the Court upheld agency action under the National Labor Relations Act in requiring a private em ployer to reinstate an employee with back pay following an unfair labor practice. Likewise, in Block v. H irsh, 256 U .S. 135 (1921), the Court rejected a Seventh Amendment challenge to a statute temporarily suspending the legal remedy o f ejectm ent and establishing an administrative tribunal to determine
'In reaching this broad conclusion, the Court recharacterized the holding of an earlier case, Kachen v. L andy. 382 U .S. 323 (1966), which had upheld the pow er o f a bankruptcy court, exercising sum m ary jurisdiction without a ju ry , to adjudicate the otherwise legal issue o f voidable preferences. Rather than treating this holding as com pelled by the traditional distinction between courts o f law and courts o f equity, the Court observed that this specialized court of equity “ constituted a forum before which a jury would be out of place and would go far to dism antle the statutory s c h e m e .'’ 430 U .S . at 454, n . l l .
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fair rents at which tenants would be allowed to hold over despite the expiration of their leases.
Nevertheless, it cannot be concluded, based on these rather limited prece dents, that administrative proceedings initiated by a public agency but provid ing the full panoply of judicial relief to private parties are necessarily permitted under the Seventh Amendment. The proceedings before the NLRB at issue in Jones & Laughlin were spurred by private complaint, yet the relief available— reinstatement with back pay or an award o f back pay alone— was basically equitable in nature. C f., Slack v. H avens, 522 F. (2d) 1091, 1094 (9th Cir. 1975) (Title VII). M oreover, the Governm ent agency authorized to hear and decide private com plaints, not private individuals who might receive relief in the administrative forum, was alone empowered to trigger proceedings with respect to unfair employment practices and to seek enforcement of its orders in subsequent court proceedings. See, Am algam ated Utility Workers v. Consoli dated Edison C o., 309 U.S. 261 (1940). The holding o f Block v. Hirsh, supra, also appears to be narrow. Although the result in that case subsequently has been characterized broadly,2 the C ourt’s reasoning may be misunderstood unless seen in its context. Mr. Justice Holmes, writing for the Court, spoke specifically in terms of Government regulation of the wartime housing industry. Thus, he emphasized that “ (i]f the power of the Commission established by the statute to regulate the relation is established, as we think it is . . . this objection |concerning the unavailability of trial by jury] amounts to little. To regulate the relation and to decide the facts affecting it are hardly separable.” 256 U .S ., at 158. [Emphasis added.] In Block, therefore, the rent commission played a role com parable to that o f the Interstate Commerce Commission or other Federal agencies which control the prices charged by private entrepreneurs and thereby incidentally benefit members o f the public by requiring those regulated to comply with certain Government standards. The Commission did not afford all-purpose relief to complaining private parties.
An even more important warning is found in Crowell v. Benson, 285 U.S. 22 (1932), which, while sustaining the role o f an administrative tribunal in finding facts and awarding relief under the Longshorem en’s and Harbor W orkers’ Compensation Act, characterized the case at bar as “ one of private right, that is, of the liability o f one individual to another under the law as defined,” id., at 5 1. Thus, although the role o f the administrative tribunal in Crowell was solely adjudicatory rather than prosecutorial, the Court did not dwell on this distinction but focused instead on the nature of the liability created. While the proceedings in Crowell were deemed to be adjunct to the admiralty jurisdiction of the Federal courts and therefore to present no Seventh Amendment problem, two conclusions relevant to our consideration here are suggested by this statement: (1) more than a simple “ public interest” sufficient to sustain congressional legislation is necessary to come within the phrase “ public right”
2“ W e may assum e that the Seventh Am endm ent would not be a bar to a congressional effort to entrust landlord-tenant disputes, including those over the right to possession, to an adm inistrative a g en cy ." P ernell v. Southall R ealty, supra, 416 U .S ., at 383.
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as used in Atlas R oofing; and (2) the nature o f relief afforded by an administrative tribunal may not necessarily be irrelevant for Seventh Amend ment purposes merely because a government agency plays a formal role in instituting those administrative proceedings.
The constitutionality of the adm inistrative proceedings envisioned by the Edwards-Drinan bill must be tested against these rather inconclusive standards. Because the proposal and the context in which it arises differ sufficiently from administrative procedures approved under existing case law, at the very least, it leaves some room for doubt. Although HUD, rather than a private plaintiff, would actually be responsible for filing the administrative complaint, and would do so only if it found a charge to be supported by reasonable cause, it would not be the sole enforcer of the statutorily created guarantee of fair housing practices as was true in NLRB v. Jones & Laughlin. Nor would it act in a regulatory capacity akin to that of the rent commission in Block v. Hirsh. Moreover, the Department would enter the fray, not at the outset, but nearly 10 years after the creation o f a private cause of action in the district court which provides for identical rem edies, and nearly 4 years after the Supreme Court expressly ruled that under such circum stances trial by jury must be available on demand. It is therefore unlikely that removing the obvious cross-reference from § 810 to § 812— civil cause of action or the adoption of cosmetic changes in nomenclature— would suffice to obviate the potential constitutional questions inherent in the proposal.
It may well be that the courts, when asked to apply the Seventh Amendment in this context, would adopt a broad rule based on the specialized forum approach taken in Atlas Roofing3 and the sovereign prerogative analysis of M urray’s Lessee. If so, as long as an adm inistrative agency, and not simply private parties, played a prosecutorial as well as adjudicatory role in administra tive proceedings, the Seventh Amendment would not apply. The existence of a related private right o f action need not undercut the legitimacy of Congress’ choice in this regard; rather, the continued availability of such a judicial forum merely provides alternative means by which private citizens can vindicate the public interest also enforced by the sovereign.
Different reasoning could, however, dictate a different result. It could be argued that Congress should not be able, under the vague rubric “ public righ t,” to circumvent the Seventh Amendment completely by creating a chain of administrative courts capable of giving traditional common law remedies to private litigants seeking relief from wrongs (such as dignitary torts) traditionally regarded as private in character. Plainly, the Seventh Amendment question here is a close and difficult one. Were we to opine one way or the other, our conclusion would probably favor a finding that § 810 is unconstitutional.
Rather than conclude on this equivocal note, we have considered whether it might be possible to modify § 810 to improve its chances of withstanding
3Such a ruling could also rest on the expansive dictum in M r. Justice W hite's opinion in that case, em phasizing the breadth o f C ongress’ prerogative to select the m anner in which it will go about resolving im portant “ p u b lic " issues. 430 U .S . at 455.
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constitutional attack. It should be understood, at the outset, that we do not profess to share your D epartm ent's expertise on and sensitivity to the policy and administrative considerations that would inevitably come into play here. Our advice should be seen as merely suggestive of ways in which the constitutional hurdles could be reduced.
II.
First, private actions in a district court seeking actual and punitive damages and other relief might be preserved, but the nature of the proposed administra tive proceedings altered. Use of an administrative forum to impose civil penalties without recourse to trial by jury was expressly approved in Atlas Roofing. Provision for equitable relief in the form of temporary or permanent injunctions in no way offends the Seventh A m endm ent’s preservation o f juries in “ Suits at common law .” It could be contended that thus to limit the administrative relief available, by omitting any provision for awards o f actual or punitive damages, would not seriously undercut the efficacy o f the proposal. Actual damages resulting from a dignitary tort are difficult to prove, and the threat of a civil penalty due the government would do as much to encourage compliance with the law as would the possible imposition of punitive dam ages.4 This option would seem almost certainly to avoid any possible problem under the Seventh Amendment.
Second, the private action in a district court might be eliminated, and the remedies now available in that forum instead provided in the course of administrative proceedings. The development of legislative history dem onstrat ing a belief by Congress in the necessity for a strong governmental role in order to vindicate the public interest in nondiscriminatory housing practices would provide added support for the claim that the choice of an administrative forum was more than a ruse to eliminate Seventh Amendment rights incident to the existing civil cause of action. This option would be strengthened if the provision for punitive damages were eliminated and civil penalties imposed to run in favor of the government rather than the private complainant.
Third, the b ill’s treatment of the mechanism by which administrative awards are to be enforced could be modified. Section 811(b) indicates that the Secretary may request the Attorney General to institute civil proceedings for this purpose; it may be inferred that no power to sue for enforcement is meant to lie in the private complainant. Express language disallowing such claims by other than the Attorney General could enhance the claim that a public right, not a private right, is being vindicated. Consideration also might be given to vesting the reviewing circuit court o f appeals with the power to enforce such awards (see, e .g ., 15 U .S.C . § 45(d) (the review provision applicable to orders o f the
4M oreover, the bill as presently drafted seems to invite m oney-m inded plaintiffs to bring charges in the adm inistrative forum , then to return to the district court if their initial efforts prove unsuccessful. The resulting duplicative effort by adm inistrative and judicial officers, costs to defendants, and problem s o f res judicata would seem ingly be at least somewhat reduced if injunctive relief w ere the only remedy available in both forums.
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Federal Trade Com mission under § 5 o f the Federal Trade Commission Act)), instead o f simply incorporating the provision authorizing such courts to enjoin, set aside, suspend, or determ ine the validity o f orders as set forth in 28 U.S.C. § 2342. The awkward asymmetry o f a civil suit in which jury trial is guaranteed pursuant to C urtis, and an enforcem ent action also in the district court, which provides absolutely identical relief, would therefore be avoided.5 Finally, a requirem ent that the Secretary determine that administrative proceedings are in the public interest, as is the case in FTC proceedings under 15 U .S.C . § 45, would enhance the emphasis upon the “ public right” (as opposed to “ private right” ) aspects o f this bill, which are now left to be inferred from the statutory scheme. Although such a change is unlikely to be determinative in a cou rt’s interpretation of the measure, it may weigh the balance in favor o f sustaining the proposed administrative procedure.
As stated above, we are not in a position to judge the practical merits of any of these options. Nor are we able to assure you that the adoption of any alterations would obviate the possibility o f a successful challenge to the administrative procedures contemplated here. We would urge that, whatever course you follow, steps be taken during the legislative process to underline wherever possible the public benefit aspects o f this bill.
Larry A . H am mond
Deputy Assistant Attorney General Office o f Legal Counsel
5W hile such an enforcem ent action is arguably m erely an extension o f the adm inistrative proceedings, and would not, therefore, trigger a right to a jury determ ination o f the underlying facts, a contrary rule has. in the past, been adopted by at least one court w ith regard to suits to enforce the im position o f civil penalties under the Federal T rade Com m ission Act. See, U nited States v. J .B . W illiams, C o.. In c.. 498 F. (2d) 414 (2d Cir. 1974). A court faced with the incongruous availability o f jury trials in suits by private plaintiffs, but not in actions brought by HUD to provide private com plainants with identical relief, m ight well determ ine that jury trials should be afforded in both cases. Such a result could significantly limit the efficacy o f the adm inistrative tribunal as a m eans o f speeding the disposition o f housing discrim ination cases.