REVISED June 2, 2000
UNITED STATES COURT OF APPEALS For the Fifth Circuit
No. 98-31351
LOUISIANA ACORN FAIR HOUSING; GENE LEWIS,
Plaintiffs-Appellees-Cross-Appellants,
VERSUS
DANNY LEBLANC,
Defendant-Appellant-Cross-Appellee.
Appeals from the United States District Court For the Western District of Louisiana
May 15, 2000
Before KING, Chief Judge, and DUHÉ and DeMOSS, Circuit Judges.
DUHÉ, Circuit Judge:
Danny LeBlanc appeals a jury's award of punitive damages to
Gene Lewis, compensatory damages to Louisiana ACORN Fair Housing,
Inc. (the “Appellees”), and the district court's award of
attorney's fees to Appellees. The Appellees also appeal the
district court's attorney's fees award. We reverse and vacate the
jury's punitive damage award to Lewis, its compensatory damage
award to ACORN, and the district court's attorney's fees award. We
affirm all other issues.
I. BACKGROUND Gene Lewis (“Lewis”), who is black, called Danny LeBlanc
(“LeBlanc”) on January 2, 1996, in response to a newspaper
advertisement regarding the rental of a one-bedroom apartment in
Lake Charles, La. LeBlanc owns and rents eleven furnished
apartment units. Lewis then went to view the apartment and make
the $100 deposit LeBlanc had requested. A tenant, Betty
Richardson, showed Lewis the apartment. Richardson told Lewis that
she did not think LeBlanc would rent to him because LeBlanc was
prejudiced.
Lewis then asked to speak to LeBlanc. When LeBlanc arrived,
he allegedly told Lewis that “I just don't rent to you people.”
When Lewis asked what LeBlanc meant by “you people,” LeBlanc stated
“black, color[ed], Negro, whatever you call yourself, I don't rent
to y'all.” LeBlanc contends that he did not rent to Lewis because
Lewis was arguing with Richardson and, therefore, he did not like
Lewis' attitude. Lewis later consulted Louisiana ACORN Fair
Housing, Inc. (“ACORN”), a private nonprofit fair housing
organization, which conducted testing that confirmed Lewis'
allegation that LeBlanc discriminated against prospective tenants
based on race.
Lewis and ACORN sued LeBlanc under the Federal Fair Housing
Act, 42 U.S.C. § 3601 et. seq. (“FHA”), and under the Louisiana
Open Housing Act, La. Rev. Stat. Ann. § 51:2601 et. seq (West
1999). This suit was later consolidated with a suit brought by the
United States against LeBlanc also under the Federal Fair Housing
2 Act. The two cases were later severed for trial purposes because
the United States was seeking injunctive relief, which it
subsequently won, and Lewis and ACORN were seeking monetary relief.
A jury trial was held and the jury verdict is the centerpiece
of this appeal. The jury first concluded that LeBlanc made
statements to Lewis indicating an intent not to rent apartments to
black people. The jury then found that LeBlanc refused to rent an
apartment to Gene Lewis and that race or color was an effective
reason for that refusal.
The Jury awarded Lewis no compensatory or nominal damages but
awarded him $10,000 in punitive damages. The jury based its
punitive damages award on its finding that LeBlanc's refusal to
rent an apartment to Lewis was motivated by ill will, malice, or a
desire to injure Lewis, or a reckless or callous disregard for
Lewis' legal rights. The jury awarded ACORN $1,076 in compensatory
damages but did not award it nominal or punitive damages. The
district court later awarded the Appellees $10,000 in attorney's
fees pursuant to 42 U.S.C. § 3613(c)(2).1
Although the district court provided detailed instructions
regarding damages to the jury, it did not specify whether a
punitive damages award must be predicated upon a nominal or
1 The FHA allows a prevailing party to recover reasonable attorney's fees and costs. The district court held that both Lewis and ACORN were prevailing parties under the Act because the jury found that LeBlanc had violated the FHA even though it did not award Lewis any actual damages.
3 compensatory damages award. The court made clear that if the jury
determined that LeBlanc violated the FHA it may award compensatory
and/or nominal damages. During its deliberations, the jury asked
the court for definitions of compensatory and nominal damages. The
judge then read definitions to the jury from Black's Law
Dictionary. The judge said “[c]ompensatory damages are such as
will compensate the injured party for the injury sustained and
nothing more, such as will simply make good or replace the loss
caused by the wrong or injury, damages awarded to a person as
compensation, indemnity or restitution for harm sustained by him.”
Regarding nominal damages, the judge said, “[n]ominal damages are
a trifling sum awarded to a plaintiff in an action where there is
no substantial loss or injury to be compensated, but still the law
recognizes a technical invasion of his rights or a breach of the
defendant's duty, or in cases where, although, there has been a
real injury, the plaintiff's evidence entirely fails to show its
amount.”
II. DISCUSSION
A. Punitive Damages
LeBlanc contends that we should vacate Lewis' punitive damages
award because the jury awarded Lewis neither compensatory nor
nominal damages. Whether a plaintiff suing under the Federal Fair
Housing Act may receive punitive damages absent compensatory or
nominal damages is an issue of first impression in this Circuit.
4 We review this legal question de novo.
The text of the Federal Fair Housing Act does not provide us
with an easy answer. Section 3613(c) of the FHA provides that “(1)
In a civil action under subsection (a) of this section, if the
court finds that a discriminatory housing practice has occurred or
is about to occur, the court may award the plaintiff actual and
punitive damages.” The FHA is silent as to whether punitive
damages may be awarded absent actual damages. The text neither
conditions a punitive damage award upon an award of actual damages
nor does it endorse the jury finding in this case.
The FHA's legislative history provides little guidance. The
United States Department of Justice, as Amicus Curiae for
Appellees, relies heavily on Congress's 1988 amendments to the FHA.
In an effort to strengthen enforcement of the FHA, Congress removed
the $1,000 limitation on punitive damage awards that had been part
of the Act since it was passed in 1968. A House Committee stated
that the limitation on damages “served as a major impediment to
imposing an effective deterrent on violators and a disincentive for
private persons to bring suits under existing law.” H.R. Rep. No.
711, 100th Cong., 2d Sess. 15 (1988). The United States argues
that imposing a requirement that compensatory damages are a
necessary predicate to an award of punitive damages would frustrate
Congress' purpose made clear in the 1988 amendments lifting the
punitive damage limit. While the United States is correct to note
that punitive damages are a very important component behind
5 enforcement of the FHA, the legislative history neither supports
nor discredits a punitive damages award absent actual damages.
Under these circumstances, we must apply the federal common
law to fill this gap in the FHA which Congress has left unanswered.
Courts create federal common law when it is necessary to effectuate
the intent behind a federal statute. Erwin Chemerinsky, Federal
Jurisdiction, § 6.3 at 353 (1994). When applying civil rights
statutes, federal common law must be applied to effect uniformity,
“otherwise the Civil Rights Acts would fail to effect the purposes
and ends which Congress intended.” Basista v. Weir, 340 F.2d 74,
86 (3d. Cir 1965). Thus, where a cause of action arises out of a
federal statute, federal, not state, law governs the scope of the
remedy available to plaintiffs. Carpenters Dist. Council of New
Orleans & Vicinity v. Dillard Dept. Stores, Inc., 15 F.3d 1275,
1288 (5th Cir. 1994).
Based on these federal common law principles, we must assess
both the FHA and other federal civil rights laws to determine
whether a punitive damage award may stand absent a nominal or
compensatory award. As the Fourth Circuit noted, “[t]here is no
established federal common law rule that precludes the award of
punitive damages in the absence of an award of compensatory
damages.” People Helpers Found. Inc. v. Richmond, 12 F.3d 1321,
1326 (4th Cir. 1993). We must determine whether there is a common
law rule allowing such a result. The Fifth Circuit has not
addressed this question as it applies to the FHA and decisions by
6 other circuits provide a variety of different answers.
The two most recent cases come from the Third and Fourth
Circuits. In Alexander v. Riga, Nos. 98-3597, 98-3622, 2000 WL
295288 (3d. Cir. Mar. 22, 2000), a jury found that the defendant
violated the FHA when he denied rental housing to the plaintiffs
based on race. However, the jury did not award actual damages.
The district court then declined to submit the issue of punitive
damages to the jury. The Third Circuit reversed this decision
stating: “it bears mentioning that beyond a doubt, punitive damages
can be awarded in a civil rights case where a jury finds a
constitutional violation, even when the jury has not awarded
compensatory or nominal damages.” Id. at *8 (citing Curtis v.
Loether, 415 U.S. 189 (1974); Basista, 340 F.2d at 87) (emphasis
added). The Third Circuit additionally noted that a FHA violation
is all that is needed to establish liability. Id.2
The Fourth Circuit dealt with a similar question when a jury
in a FHA case awarded one dollar in punitive damages but no
compensatory damages. The Fourth Circuit concluded that “in the
absence of statutory language to the contrary” punitive damages are
not recoverable unless predicated upon an award of actual damages.
People Helpers Found., Inc., 12 F.3d at 1327. Nevertheless, we
2 Although the Third Circuit suggests that a constitutional violation is a necessary predicate for a punitive damages award absent an actual damages award, the court reversed the district court without finding that a constitutional violation had taken place.
7 respectfully suggest that the Fourth Circuit's basis for this
holding is flawed. First, the court did not rely on any civil
rights cases in reaching its decision. Id. at 1326-27. A survey
of cases interpreting federal civil rights laws is essential, in
our view, because of the need to maintain a uniform federal common
law. Second, the Fourth Circuit noted that a majority of the 50
states prohibit punitive damage awards when there is no
compensatory award. Id. at 1327. Although state law may be useful
in articulating a policy for our interpretation of federal common
law, it is federal law that must be the centerpiece of our decision
not state law.
Appellees contend that two other cases support upholding
Lewis' punitive damages award. In Fountila v. Carter, 571 F.2d 487
(9th Cir. 1978), a jury awarded one dollar in actual damages and
$5,000 in punitive damages. The court noted in dicta that “it has
in fact been noted that a finding of actual damages is not a
condition to the award of punitive damages under the Civil Rights
Act of 1968.” Id. at 492 (citing Rogers v. Loether, 467 F.2d 1110,
1112 n. 4 (7th Cir. 1972), aff'd sub nom. Curtis v. Loether, 415
U.S. 189 (1974)). This decision is not entirely on point because
the jury did award a nominal award in addition to punitive damages.
Moreover, the case relies on Rogers v. Loether. The Appellees
argue that Rogers supports the proposition that the FHA does not
require a finding of actual damages as a condition to the award of
punitive damages. 467 F.2d at 1112 n.4. However, the Seventh
8 Circuit in Rogers never decided this question raising the issue
only in dicta.
In conclusion, the FHA cases do not provide us with a uniform
federal common law. The Third Circuit holds punitive damages may
be appropriate when a constitutional violation exists. The Fourth
Circuit closes the door on punitive damages absent an award of
actual damages but uses questionable authority to reach that
conclusion. The Seventh and Ninth Circuit cases suggest that a
punitive award is permissible absent actual damages but did not
confront the question directly as we must.
We must now examine decisions by this and other federal courts
interpreting similar federal civil rights statutes. In a series of
42 U.S.C. § 1983 cases, the Fifth Circuit has articulated a
standard for permitting punitive damages absent an award of actual
damages. Ryland v. Shapiro, 708 F.2d 967, 976 (5th Cir. 1983);
Wilson v. Taylor, 658 F.2d 1021, 1033 (5th Cir. 1981); McCulloch v.
Glasgow, 620 F.2d 47, 51 (5th Cir. 1980). In Ryland, 708 F.2d at
976, we said:
The rule in our circuit is that in the absence of proof of actual injury, a plaintiff who has been deprived of his constitutional rights may only collect nominal damages. Mere proof of the violation of a right will not support an award of compensatory damages. However, claims of mental and emotional distress, if proven, can support an award of compensatory damages. Moreover, the societal interest in deterring or punishing violators of constitutional rights supports an award of punitive damages even in the absence of actual injury. (Internal citations omitted and emphasis added).
Therefore, our circuit has adhered to the general rule that a
9 punitive award may stand in the absence of actual damages where
there has been a constitutional violation, a rule similar to the
Third Circuit FHA rule in Alexander.
A review of other court decisions interpreting Section 1983
reveals a similar link between a finding of a constitutional
violation and upholding a punitive award absent a showing of actual
harm. The Seventh Circuit has long held that a jury may award
punitive damages even absent a compensatory award if the plaintiff
suffered a constitutional violation. Erwin v. Manitowoc, 872 F.2d
1292, 1299 (7th Cir. 1989); McKinley v. Trattles, 732 F.2d 1320,
1326 (7th Cir. 1984); Lenard v. Argento, 699 F.2d 874, 889 (7th
Cir. 1983); Endicott v. Huddleston, 644 F.2d 1208, 1217 (7th Cir.
1980).
Beyond Section 1983, decisions interpreting other civil rights
acts reach more varied results on the question whether a punitive
award may be upheld absent actual damages. Speaking generally, the
Third Circuit has said that federal law permits the recovery of
punitive damages and as a matter of federal common law it is not
necessary to prove nominal damages. Basista, 340 F.2d at 87.
However, since the Third Circuit's insightful decision in
Basista, federal courts have become more divided on this punitive
damages question. The Seventh Circuit determined that under 42
U.S.C. § 1981(a) a punitive damages award should not be conditioned
on the existence of a compensatory award. Although the Seventh
Circuit relied heavily on its Section 1983 case law, it did not
10 indicate that a constitutional violation was necessary for the
punitive award to stand under 42 U.S.C. § 1981(a) or Title VII.
Timm v. Progressive Steel Treating, Inc., 137 F.3d 1008, 1010 (7th
Cir. 1998). See also Buckner v. Franco, Inc., No. 97-6028, 1999
U.S. App. LEXIS 7369 *17 (6th Cir. Apr. 12, 1999) (noting in dicta
support for Seventh Circuit's finding in Timm). However, in
another 42 U.S.C. § 1981 case, the First Circuit held that a
punitive damages award must be vacated absent either a compensatory
damages award or a timely request for nominal damages. Kerr-Selgas
v. American Airlines, Inc., 69 F.3d 1205, 1215 (1st Cir. 1995).
See also Frey v. Alldata Corp., 895 F.Supp. 221, 225 n.1 (E.D. Wis.
1995) (noting in dicta that only in cases involving a
constitutional violation would federal courts allow a punitive
damages award without compensatory damages); Paciorek v. Mich.
Consolidated Gas Co., 179 F.R.D. 216, 221 (E.D. Mich. 1998) (noting
that under 42 U.S.C. § 1981(a)(b)(1) and American's with
Disabilities Act nothing conditions the imposition of punitive
damages upon an award of compensatory or nominal damages).
Although the goal of a federal common law of damages is to
produce uniform results, so far the federal judiciary has not
succeeded in this endeavor. There are many cases under the FHA and
other civil rights statutes that support either upholding or
vacating Lewis' punitive damages award. However, we find most
instructive our own circuit's case law limiting punitive damages
awards, absent an actual damages award, to cases were a violation
11 of a constitutional right has occurred. LeBlanc did violate Lewis'
rights under the FHA but he did not violate Lewis' constitutional
rights. For that reason, we vacate Lewis' punitive damage award.3
In the alternative, the Appellees argue that we should remand
the case to the district court for a further determination of the
damages award. First Appellees contend that because the jury found
LeBlanc violated the FHA the district court should have award Lewis
nominal damages for this invasion of his civil rights. Appellees
contend that when rights are violated in a civil rights case a
presumption of injury exists, thereby requiring at least nominal
damages. Memphis Community Sch. Dist. v. Stachura, 477 U.S. 299,
308 (1986); Gore v. Turner, 563 F.2d 159, 164 (5th Cir. 1977).
The cases Appellees cite are not applicable to the situation
before us. In Memphis Community Sch. Dist., the Supreme Court
noted that nominal damages may be an appropriate means of
vindicating rights whose deprivation has not cause actual injury.
477 U.S. at 308 n.11. However, the Court made this statement in
reference to a violation of a constitutional right under Section
1983. Likewise, in Gore, we recognized that nominal damages could
be presumed from the denial of a constitutional right. 563 F.2d at
164. Neither case Appellees cite deal with a factual situation
3 Because we conclude that the punitive damages award cannot stand absent an award of actual damages, we do not decide whether a punitive damage award under the FHA must be based on egregious conduct or merely predicated on a violation of the statute. See generally Kolstad v. Am. Dental Ass'n., - U.S. -, 119 S.Ct. 2118 (1999).
12 similar to this case where the jury decided not to award the
plaintiff compensatory or nominal damages. Moreover, we reiterate
this case does not involve the violation of a constitutional right.
Next Appellees contend that the jury may have lumped the
compensatory and nominal damages awards into the punitive sum
because of its misunderstanding of the law. They also argue that
the jury may have been confused about the damage definitions. We
do not find this argument persuasive. The jury used a two-page
verdict form that asked them only four questions addressing each
type of damage award separately. The jury also asked the judge
during deliberations for definitions of nominal and compensatory
damages. Moreover, the fact that the jury awarded ACORN
compensatory damages but not punitive damages refutes any argument
that the jury may have been confused by the types of damage awards
or lumped the various awards together.
B. ACORN's Standing
LeBlanc also appeals the jury's compensatory damages award to
ACORN and the court's attorney's fees award to ACORN. ACORN also
appeals its attorney's fees award. Before we reach the merits of
these awards, we must determine sua sponte whether ACORN has
standing to bring this suit against LeBlanc.
The Supreme Court, in Lujan v. Defenders of Wildlife, 504 U.S.
555 (1992), stated the minimum requirements that an organization
must establish to have constitutional standing:
First, the plaintiff must have suffered an injury in fact - an
13 invasion of a legally-protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical. Second, there must be a causal connection between the injury and the conduct complained of - the injury has to be fairly traceable to the challenged action of the defendant, and not the result of the independent action of some third party not before the court. Third, it must be likely, as opposed to merely speculative, that the injury will be redressed in a favorable decision. Lujan, 555 U.S. at 560- 61 (internal quotes, parentheses and citations omitted).
We must focus on the injury in fact requirement. Under the
Federal Fair Housing Act, the Supreme Court has held that an
organization has suffered injury in fact if the defendant's actions
impaired the organization's ability to provide counseling and
referral services. The Court said, “[s]uch concrete and
demonstrable injury to the organization's activities - with the
consequent drain on the organization's resources - constitutes far
more than simply a setback to the organization's abstract social
interests.” Havens Realty Corp., v. Coleman, 455 U.S. 363, 379
(1982). Although the Court in Havens dealt with standing at the
pleadings stage, the Court noted that the organization will “have
to demonstrate at trial that it has indeed suffered impairment in
its role of facilitating open housing before it will be entitled to
judicial relief.” Id. at 379 n.21.
Based on these two cases, the Fifth Circuit has described what
types of organizational activities do not meet the Supreme Court's
injury in fact requirement. For example, “[t]he mere fact that an
organization redirects some of its resources to litigation and
legal counseling in response to actions or inactions of another
14 party is insufficient to impart standing upon the organization.”
Association for Retarded Citizens of Dallas v. Dallas County Mental
Health & Mental Retardation Ctr. Bd. of Trustees, 19 F.3d 241, 244
(5th Cir. 1994) (Federal Fair Housing Act case); see also
Association of Community Orgs. for Reform Now v. Fowler, 178 F.3d
350, 358-59 (5th Cir. 1999).
In contrast, we noted that an organization could have standing
if it had proven a drain on its resources resulting from
counteracting the effects of the defendant's actions. Id. at 360.
Likewise, the Third Circuit concluded that a housing organization
had standing where its staff “stopped everything else” and devoted
all attention to the litigation in question and diverted resources
to counter the defendant's conduct. Alexander, 2000 WL 295288 at
*14 n.4. We reiterate that the Supreme Court in Havens noted that
an organization must demonstrate at trial that it suffered some
sort of impairment in facilitating open housing before receiving
judicial relief.
We conclude that ACORN did not demonstrate at trial any
impairment in facilitating open housing. At best ACORN proved the
resources it expended defending Lewis (although ACORN never kept
time sheets to record its work for Lewis); but it did not prove a
drain on its resources. ACORN's executive director, Jeffrey
Karlson, testified at length at the trial. However, Karlson
neither mentioned any specific projects ACORN had to put on hold
15 while working on Lewis' case nor did he describe in any detail how
ACORN had to re-double efforts in the community to combat
discrimination.
One excerpt in particular demonstrates the conjectural and
hypothetical nature of Karlson's testimony. When asked to describe
how LeBlanc's discrimination frustrated ACORN's mission, Karlson
said:
Again, all I can do is base this on the mission of the organization being frustrated over two and a half years in trying to resolve this particular complaint to the extent that this one complaint started to take over an inordinate amount of our work time and staff time of our normal activities, really takes away from our activities in other areas, being able to do outreach and education, research and monitoring, intakes and investigations of complaints. It takes away from our normal activities - and this particular case has. My estimate is 96 and a half hours of our staff time, over two and a half years, and that's conservative. If I kept time sheets, probably much larger than that, but we did not.
But in terms of frustration of mission, our mission after we resolved the complaint, we have to make up for all that lost ground and all that lost time. And I can't sit here and give you and exact amount for what that is, but we have to go back out and repair the damage that's been done, because the discrimination in this case is continuing and ongoing. That's why we're in court, trying to seek relief to get that to stop and to stop it from happening in the future. So, to the extent that we can do that through frustration of mission, we have to go back and redouble our efforts in the community to make up for that lost ground that was taken away from us during the course of this particular complaint and to help heal some of the damage in the community. I don't know if I can really explain it much more than that. (Tr. at 88-89).
None of ACORN's testimony at trial demonstrates a concrete and
particularized injury as required by Lujan; instead, as the Supreme
Court cautioned in Lujan, ACORN's injury based on the testimony at
trial is only conjectural, hypothetical and speculative.
16 Therefore, we find that ACORN lacks standing to bring suit and
reverse and vacate the jury's compensatory award to ACORN. In
addition, because ACORN lacks standing, we conclude that ACORN is
not longer a “prevailing party” pursuant to 42 U.S.C. § 3613(c) of
the Federal Fair Housing Act. We also reverse and vacate the
district court's award of $10,000 in attorney's fees to ACORN.
CONCLUSION
We reverse and vacate the district court's punitive damages
award to Lewis, and the compensatory damages award and attorney's
fees award to ACORN. In all other respects we affirm.
AFFIRMED IN PART, REVERSED AND VACATED IN PART.
17 KING, Chief Judge, concurring in part and dissenting in part:
Judge Duhé has written a careful and thorough opinion, and I
concur in Part IIB of the opinion and its holding regarding ACORN’s
standing. While I agree fully with the description in Part IIA of
the opinion of the legal landscape on the award of punitive
damages, I cannot agree with its conclusion, and I would affirm
Lewis’ punitive damage award. As Judge Easterbrook said in
declining to read a compensatory-punitive link into § 1981a or
Title VII when no such link had been read into § 1983, “[e]xtra-
statutory requirements for recovery should not be invented.” Timm
v. Progressive Steel Treating, Inc., 137 F.3d 1008, 1010 (7th Cir.
1998). I can see no justification for inventing such a requirement
for the FHA.
As the majority acknowledges, punitive damages are a very
important part of the FHA’s goal of eradicating discriminatory
practices. “Punitive damages are awarded in the jury’s discretion
‘to punish [the defendant] for his outrageous conduct and to deter
him and others like him from similar conduct in the future.’” Smith
v. Wade, 461 U.S. 30, 54 (1983) (quoting RESTATEMENT (SECOND) OF TORTS
§ 908(1) (1977)). The jury in this case clearly believed that the
defendant had engaged in behavior that warranted a punitive award.
Indeed, the behavior exhibited by this defendant has been unlawful
for thirty years and is reminiscent of the blatant violations
18 challenged shortly after the Act became effective. And yet, he
emerges from this case with no financial disincentive to continue
his practices. Nor are other landlords in the community hereby
discouraged from engaging in similar practices.
I see no language in the Act dictating the majority’s
conclusion and I find it unfaithful to the FHA’s purposes. I also
see it as providing a basis for similar conclusions in other
contexts, thereby threatening the fulfillment of other civil rights
acts’ goals. For these reasons, I respectfully dissent.