Southwest Fair Housing Council v. WG Scottsdale LLC

• Court: District Court, D. Arizona
• Decided: August 8, 2022
• Docket: 4:19-cv-00180
• Status: Unknown

Opinion

1 WO 2

8 IN THE UNITED STATES DISTRICT COURT 9 FOR THE DISTRICT OF ARIZONA 10

11 Southwest Fair Housing Council, No. CV-19-00180-TUC-RM 12 Plaintiff, ORDER 13 v. 14 WG Scottsdale LLC, 15 Defendant. 16

17 On May 16, 2022, a jury returned a verdict in favor of Plaintiff Southwest Fair 18 Housing Council on its claims under the Americans with Disabilities Act (“ADA”), Fair 19 Housing Act (“FHA”) and Arizona Fair Housing Act (“AZFHA”). (Doc. 120.) The Clerk 20 of Court entered judgment on May 17, 2022. (Doc. 123.) The jury awarded Plaintiff 21 $100,000 in punitive damages and $1.00 in nominal damages. (Id.; Doc. 120.) Presently 22 pending before the Court is Defendant WG Scottsdale LLC’s Motion for Judgment as a 23 Matter of Law or, Alternatively, for a New Trial. (Doc. 134.)1 Plaintiff responded in 24 opposition (Doc. 147) and Defendant replied (Doc. 149). For the following reasons, the 25 Motion will be denied. 26 . . . . 27 28 1 Other pending motions will be resolved separately. 1 I. Renewed Motion for Judgment as a Matter of Law2 2 During trial, Defendant orally moved for judgment as a matter of law pursuant to 3 Federal Rule of Civil Procedure 50(a) on Plaintiff’s claims. (Doc. 110; Doc. 132 at 128- 4 129.) Defendant argued that the evidence presented at trial was insufficient to show that 5 the accommodations it offered, i.e., a whiteboard or lip-reading, did not meet the standard 6 for providing effective communication necessary to enable the prospective resident to 7 fully and equally enjoy Defendant’s facility. (Doc. 132 at 128.) Plaintiff argued in 8 response that because Defendant denied its requests for an ASL interpreter, despite 9 knowing that the prospective tenant was deaf and used ASL to communicate, a 10 reasonable juror could find that Defendant had denied a request for a reasonable 11 accommodation. (Id. at 128-129.) The Court denied the Rule 50(a) oral motion. (Id. at 12 129.) 13 In its Rule 50(b) Renewed Motion for Judgment as a Matter of Law, Defendant 14 argues that the evidence presented at trial was insufficient to show that it refused to make 15 a reasonable accommodation that was necessary for the prospective resident to obtain an 16 “equal opportunity to use and enjoy a dwelling,” as required for a violation of the FHA or 17 AZFHA. (Doc. 134 at 11.) Defendant contends that the evidence does not support a 18 conclusion that the requested ASL interpreter was “necessary” within the meaning of the 19 FHA and AZFHA. (Id. at 11-12.) In support of its argument, Defendant cites to the Third 20 Circuit Court of Appeals’ decision in Vorchheimer v. Philadelphian Owners Ass'n, 903 21 F.3d 100, 105-07 (3d Cir. 2018), in which that Court stated that “[f]or a housing 22 accommodation to be ‘necessary’ under the Act, it must be required for that person to 23 achieve equal housing opportunity, taking into account the alternatives on offer.” 24 Vorchheimer, 903 F.3d at 103 (emphasis added). Defendant contends that, because 25 Plaintiff never indicated that Defendant’s proposed accommodations, i.e. a whiteboard or 26 lipreading, would not be effective means of communicating with the prospective resident, 27 Plaintiff failed to show that an ASL interpreter was necessary to provide the prospective

28 2 As the parties are familiar with the facts of this case, the Court discusses only those facts pertinent to the pending Motion. 1 resident with full and equal access to Defendant’s facility. (Id. at 13-15.) Likewise, 2 Defendant argues that the evidence does not support the jury’s verdict on Plaintiff’s ADA 3 claim because there is no evidence that Defendant knew an ASL interpreter was 4 necessary or that it refused to provide a reasonable accommodation for effective 5 communication. (Id. at 15-16.) In other words, Defendant argues that its proposed 6 accommodations of a whiteboard and/or lipreading fulfilled the FHA’s and ADA’s 7 requirement for it to provide effective communication necessary to enable the prospective 8 resident to fully utilize its facility. 9 Defendant further argues that the evidence is insufficient to support the punitive 10 damages award. (Id. at 16-18.) Defendant compares its conduct in this case to that of 11 defendants in other housing rights cases in which plaintiffs received punitive damages 12 and contends that, in comparison, its conduct did not rise to a level justifying punitive 13 damages. (Id. at 16-17.) Defendant maintains that because Plaintiff’s testers did not 14 convey that an ASL interpreter was necessary but merely requested one, and because 15 Defendant showed willingness to accommodate the prospective deaf resident, there was 16 insufficient evidence to support a finding that Defendant acted in the face of a perceived 17 risk that it was violating federal law. (Id. at 16-18); see Kolstad v. Am. Dental Assn, 527 18 U.S. 526, 536-37 (1999). Defendant therefore asks the Court to vacate the punitive 19 damages award as a matter of law.3 20 In response, Plaintiff argues that Defendant has not met the standard for granting a 21 Rule 50(b) Motion. (Doc. 147.) Plaintiff argues that the evidence presented at trial 22 reasonably supported the jury’s conclusion that an ASL interpreter was a necessary 23 accommodation and that therefore, Defendant’s refusal to provide it violated the FHA, 24 AZFHA, and ADA. (Id. at 3-4.) Plaintiff points to the following evidence that was 25 presented at trial: (1) Plaintiff’s expert witness testified that an ASL interpreter would be 26 necessary for a prospective deaf resident who used sign language in order for him to 27 3 Alternatively, as discussed below, Defendant asks the Court to grant it a new trial on 28 punitive damages and/or reduce the punitive damages award to comport with due process. (Id. at 18.) 1 communicate with Defendant’s employees regarding contractual, financial, and health 2 matters, and lipreading or a whiteboard would not adequately meet those communication 3 needs; (2) Plaintiff’s tester stated that the prospective resident used sign language, that 4 she had difficulty communicating with him due to her lack of knowledge of sign 5 language, and that she was concerned about Defendant’s employees’ ability to 6 communicate with him without an ASL interpreter present for at least some of their 7 communications; (3) Defendant’s employee explicitly stated that the facility would not 8 provide an ASL interpreter for the prospective resident but would provide a whiteboard 9 and a phone system for hearing-impaired individuals; (4) Defendant’s employee 10 explicitly stated that an ASL interpreter would not be provided for discussions regarding 11 financial or documentation paperwork; (5) another one of Defendant’s employees 12 affirmed the prior denial of an ASL interpreter and stated that it was consistent with 13 Defendant’s “guidelines and protocol”; (6) another one of Defendant’s employees 14 affirmed that Defendant would not provide an ASL interpreter despite knowing that the 15 prospective resident was deaf and used sign language to communicate. (Id. at 4-8.) Based 16 on this evidence, Plaintiff contends that there was sufficient evidence presented at trial to 17 support the jury’s findings. (Id. at 9-10.) 18 Plaintiff further argues that Defendant misstates the legal standard for showing 19 that an accommodation is “necessary” for a disabled person. (Id. at 3-4.) Plaintiff 20 contends that the applicable standard under Ninth Circuit Court of Appeals precedent is 21 that a plaintiff must show the “accommodation of the handicap ‘may be necessary’ to 22 afford plaintiff an equal opportunity to use and enjoy the dwelling.” Giebeler v. M&B 23 Assocs., 343 F.3d 1143, 1147 (9th Cir. 2003) (citing United States v. California Mobile 24 Home Park Mgmt. Co., 107 F.3d 1374, 1380 (9th Cir. 1997)). The Ninth Circuit further 25 clarified the standard, stating, “[t]o prove that an accommodation is necessary, plaintiffs 26 must show that, but for the accommodation, they likely will be denied an equal 27 opportunity to enjoy the housing of their choice.” Giebeler, 343 F.3d at 1155 (internal 28 citation and quotation omitted). Under this standard, Plaintiff contends, the evidence 1 could reasonably be interpreted to show that an ASL interpreter was a necessary 2 accommodation. 3 In reply, Defendant argues that it did not violate the applicable anti-discrimination 4 laws because Plaintiff’s tester never conveyed to Defendant’s employees either that a 5 whiteboard would not meet the prospective resident’s needs for lease signing or any other 6 situation, or that the prospective resident needed an ASL interpreter for lease signing or 7 in any other situation. (Doc. 149 at 3.) 8 A. Legal Standard 9 A party may move for judgment as a matter of law under Federal Rule of Civil 10 Procedure 50(a) before a case is submitted to the jury. A Rule 50(a) motion for judgment 11 as a matter of law must “specify the judgment sought and the law and facts that entitle the 12 movant to the judgment.” Fed. R. Civ. P. 50(a)(2). 13 A party may renew a motion for judgment as a matter of law under Rule 50(b) no 14 later than 28 days after the entry of judgment in a jury trial. Fed. R. Civ. P. 50(b). “[A] 15 party cannot raise arguments in its post-trial motion for judgment as a matter of law 16 under Rule 50(b) that it did not raise in its pre-verdict Rule 50(a) motion.” OTR Wheel 17 Eng’g, Inc. v. West Worldwide Servs., Inc., 897 F.3d 1008, 1016 (9th Cir. 2018) (internal 18 quotation marks omitted). 19 “The test [on a Rule 50(b) motion] is whether the evidence, construed in the light 20 most favorable to the nonmoving party, permits only one reasonable conclusion, and that 21 conclusion is contrary to that of the jury.” Estate of Diaz v. City of Anaheim, 840 F.3d 22 592, 604 (9th Cir. 2016) (internal quotation marks omitted)). In considering a Rule 50(b) 23 motion, the court “must view the evidence in the light most favorable to the nonmoving 24 party and draw all reasonable inferences in that party’s favor.” Colony Cove Props., LLC 25 v. City of Carson, 888 F.3d 445, 450 (9th Cir. 2018) (internal quotation and alteration 26 marks omitted)). In ruling on a Rule 50(b) motion, the court may “(1) allow judgment on 27 the verdict . . . ; (2) order a new trial; or (3) direct the entry of judgment as a matter of 28 law.” Fed. R. Civ. P. 50(b). 1 B. Discussion 2 Defendant has not established that it is entitled to judgment as a matter of law 3 pursuant to Rule 50(b). Though the jury could have reached a verdict in Defendant’s 4 favor based on the evidence presented at trial, the jury was not required to do so. There 5 was sufficient evidence presented at trial from which a reasonable jury could conclude 6 that an ASL interpreter was necessary for the prospective resident’s full and equal 7 enjoyment of the facility—or even for him to be able to meaningfully participate in 8 signing a lease agreement or discussing his needs with Defendant’s employees prior to 9 moving in. Although the jury could have concluded, based on Plaintiff’s responses to 10 Defendant’s inquiries regarding the prospective resident’s hearing and communication 11 abilities, that a whiteboard or lipreading would have been a reasonable accommodation 12 that would have provided effective communication, it was not required to reach that 13 conclusion. The evidence at trial showed that Plaintiff repeatedly referred to the 14 prospective resident’s use of sign language and requested an ASL interpreter for specific 15 needs related to the prospective resident’s housing at Defendant’s facility, and that, 16 despite knowing that the prospective resident was deaf and used sign language to 17 communicate, Defendant explicitly and repeatedly stated it would not provide an ASL 18 interpreter. The jury’s interpretation of these events and communications as a denial of a 19 reasonable accommodation in violation of the ADA and FHA was reasonable. 20 Furthermore, Defendant’s citation to a Third Circuit Court of Appeals decision 21 that could be interpreted to establish a higher burden for proving that an accommodation 22 is “necessary” under the FHA does not provide grounds for changing this Court’s legal 23 analysis set forth in its Order denying summary judgment to Defendant on Plaintiff’s 24 ADA, FHA, and AZFHA claims. (See Doc. 65 at 15-25.)4 In that Order, relying on the 25 Ninth Circuit Court of Appeals precedent cited here by Plaintiff, in addition to other 26 cases, the Court found that a question of fact existed as to whether Defendant’s proposed 27 accommodations “would have provided effective communication and equal access for the

28 4 Notably, Defendant did not move for reconsideration of that Order pursuant to LRCiv 7.2(g). 1 deaf individual, or whether an ASL interpreter was necessary” to fulfill Defendant’s 2 obligations to the prospective resident under the law. (Doc. 65 at 19.) The Court denied 3 summary judgment to both parties on the issue that Defendant now raises in its Motion, 4 finding that the trier of fact would have to determine, based on the evidence presented at 5 trial, whether Defendant had violated the ADA, FHA, and AZFHA by refusing to provide 6 a reasonable accommodation necessary for effective communication. (Doc. 65 at 19-21, 7 24-25.) Defendant’s argument that the Court should now change its analysis based on 8 Defendant’s proffered interpretation of out-of-circuit precedent is unavailing. The 9 evidence, construed in the light most favorable to the non-moving party, supports the 10 jury’s conclusion that Defendant violated the ADA, FHA, and AZFHA, and therefore 11 judgment as a matter of law in favor of Defendant is inappropriate. 12 Furthermore, the Court declines to vacate the punitive damages award as a matter 13 of law. Following trial, the Court instructed the jury that it could award Plaintiff punitive 14 damages if it found that Defendant engaged in a reckless disregard of the Plaintiff’s 15 protected rights by discriminating in the face of a perceived risk that its actions would 16 violate federal law pursuant to the ADA or FHA. See Kolstad v. Am. Dental Ass’n, 527 17 U.S. 526, 535-37 (1999). The instruction was based in part on evidence that Defendant’s 18 parent company, Atria Senior Living, had previously entered a consent decree with 19 another fair housing organizational plaintiff in New York regarding its refusal to provide 20 ASL interpreters to deaf residents. (See Docs. 117 at 19-20, 131 at 124, Doc. 132 at 12, 21 Doc. 147-5.) In light of this history, in addition to other evidence presented at trial, it was 22 reasonable for the jury to conclude that Defendant acted in the face of perceived risk that 23 it could violate federal law when it refused to provide an ASL interpreter to a prospective 24 deaf resident who requested one. 25 II. Motion for New Trial 26 In its Motion for a New Trial, Defendant argues that it is entitled to a new trial 27 because the evidence presented at trial is legally insufficient to support the jury’s 28 conclusion that an ASL interpreter was a reasonable accommodation that was necessary 1 for the prospective resident to use and enjoy Defendant’s facility. (Doc. 134 at 2.) 2 Defendant further argues that it should receive a new trial on punitive damages because, 3 it argues, an analysis of the factors set forth in BMW of N. Am., Inc. v. Gore, 517 U.S. 4 559, 575 (1996) for assessing the reasonableness of a punitive damages award yields the 5 conclusion that the award is unsustainable. (Doc. 134 at 18.) Defendant argues as to each 6 factor that (1) Defendant’s conduct was not sufficiently reprehensible to justify the 7 punitive damages award because no one was harmed, the deaf prospective resident was 8 not financially vulnerable, and this is Atria’s first violation; (2) the jury did not award 9 compensatory damages and the ratio of punitive to nominal damages is 100,000 to 1; and 10 (3) the HUD civil penalty amounts for a first-time violation of the FHA provide for a 11 maximum civil penalty of $19,787. (Doc. 134 at 17.) 12 In response, Plaintiff argues that the Court should deny the Motion for a New Trial 13 for the same reasons it should deny the Motion for Judgment as a Matter of Law— 14 namely, that the evidence was sufficient to support the jury’s verdict, including the 15 finding that an ASL interpreter was a reasonable accommodation necessary for effective 16 communication, and therefore the Court should not disturb the verdict. (Doc. 147 at 14- 17 15.) 18 Plaintiff further argues that the punitive damages award was reasonable, 19 considering that (1) Defendant’s parent company, Atria Senior Living, had previously 20 entered into a consent decree with another fair housing organizational plaintiff in New 21 York regarding its refusal to provide ASL interpreters to deaf residents, and had agreed in 22 that case to alter its procedures and practices to comply with federal anti-discrimination 23 law; (2) Atria trained its employees on the same obligations for which it was sued here; 24 and (3) testimony at trial indicated that Atria knew it was illegal to implement a policy of 25 refusing to provide ASL interpreters for deaf residents. (Doc. 147 at 16.) Plaintiff further 26 contends that, pursuant to the factors set forth in Gore, the punitive damages award of 27 $100,000 is reasonable because (1) substantial punitive damages may be awarded even if 28 compensatory damages are not; (2) acts of knowing or intentional discrimination qualify 1 as “reprehensible;” (3) the Ninth Circuit Court of Appeals has upheld similar punitive 2 damages awards in housing discrimination cases, including comparable ratios between 3 punitive and nominal damages; (4) the national scope of Atria’s assisted living facilities 4 justifies the award due to the difficulty of enforcement and the extent of potential harm 5 that could occur as a result of its discriminatory practices; and (5) Defendant’s contention 6 that the maximum civil penalty for its violation is $19,787 is misleading, and the true 7 maximum penalty is at least $115,054 because Atria is a repeat violator due to the 8 previous New York case. (Id. at 17-18); see 42 U.S.C. § 3614(d)(1)(C)(i); 28 C.F.R. § 9 85.5, at Table 1 (showing current penalty amounts). 10 A. Legal Standard 11 A court may grant a motion for a new trial under Rule 59 of the Federal Rules of 12 Civil Procedure “for any reason for which a new trial has heretofore been granted in an 13 action at law in federal court.” Fed. R. Civ. P. 59(a)(1)(A). “Such reasons may include a 14 verdict that is contrary to the clear weight of the evidence, a verdict based upon false or 15 perjurious evidence, or to prevent a clear miscarriage of justice.” Crowley v. Epicept 16 Corp., 883 F.3d 739, 751 (9th Cir. 2018) (per curiam) (internal quotation and alteration 17 marks omitted). “The grant of a new trial is ‘confided almost entirely to the exercise of 18 discretion on the part of the trial court.’” Murphy v. City of Long Beach, 914 F.2d 183, 19 186 (9th Cir. 1990) (quoting Allied Chem. Corp. v. Daiflon, Inc., 449 U.S. 33, 36 (1980)). 20 The Court “is not required to view the trial evidence in the light most favorable to the 21 verdict” and may weigh the evidence and assess witness credibility in determining 22 whether a new trial is “necessary to prevent a miscarriage of justice.” Experience Hendrix 23 L.L.C. v. Hendrixlicensing.com Ltd., 762 F.3d 829, 842 (9th Cir. 2014). 24 A grossly excessive punitive damages award “can violate ‘[e]lementary notions of 25 fairness enshrined in our constitutional jurisprudence.’” Arizona v. ASARCO LLC, 733 26 F.3d 882, 885 (9th Cir. 2013), on reh’g en banc, 773 F.3d 1050 (9th Cir. 2014)5 (citing

27 5 On rehearing en banc, the Ninth Circuit affirmed a $300,000 punitive damages verdict in a Title VII sexual harassment case in which only nominal damages were otherwise 28 awarded, holding in part that (1) the $300,000 punitive damages award did not violate due process; (2) it is improper to examine the ratio of nominal damages to punitive 1 BMW of North America, Inc. v. Gore, 517 U.S. 559, 574 (1996)). In assessing the 2 reasonableness or excessiveness of a punitive damages award, the Supreme Court has set 3 forth three factors that a Court may consider: (1) the degree of reprehensibility of the 4 defendant’s conduct, (2) the ratio between punitive damages and actual harm, as 5 measured by compensatory damages, and (3) the civil or criminal penalties that could be 6 imposed for comparable misconduct. Gore, 517 U.S. at 575-84. A jury may award 7 punitive damages even if it does not award compensatory or nominal damages. See 8 ASARCO LLC, 733 F.3d at 888. However, “in practice, few awards exceeding a single- 9 digit ratio between punitive and compensatory damages, to a significant degree, will 10 satisfy due process.” ASARCO LLC, 773 F.3d at 1055. “[A] higher ratio may be 11 appropriate where the conduct is especially egregious, but results in minimal economic 12 damages.” ASARCO LLC, 773 F.3d at 1055 (internal citation omitted). 13 B. Discussion 14 As discussed above, the Court finds that the jury’s verdict was reasonably based 15 on the evidence presented during the three-day trial and will therefore deny Defendant’s 16 Motion for a New Trial. In support of its Motion for a New Trial, Defendant presents 17 essentially identical arguments regarding the necessity of the accommodation sought and 18 the conclusions it posits the jury should have drawn from the parties’ communications 19 regarding reasonable accommodations. Those arguments fail for the same reasons 20 discussed above. 21 With respect to Defendant’s argument that it should receive a new trial on punitive 22 damages, the Court finds that the jury’s punitive damages award was not grossly 23 excessive such that it violates “elementary notions of fairness enshrined in our 24 constitutional jurisprudence.” ASARCO LLC, 733 F.3d at 885. For the reasons discussed 25 above in Section I(B), supra, it was reasonable for the jury to conclude that Defendant’s 26 refusal to provide an ASL interpreter to a prospective deaf resident was reprehensible. 27 damages in determining whether a punitive damages award complies with due process; 28 and (3) the employer’s conduct was sufficiently reprehensible to support the punitive damages award. Arizona v. ASARCO LLC, 773 F.3d 1050 (9th Cir. 2014). See ASARCO LLC, 733 F.3d at 886. 2 Regarding the second factor, the lack of a compensatory damages award does not || necessarily undermine a punitive damages award. See ASARCO LLC, 733 F.3d at 888. 4|| The circumstances present in this case—in particular, that Plaintiff is a fair housing 5 || organization whose mission, in part, is to ensure equal housing access and opportunities 6|| for deaf individuals—are such that a punitive damages award without a compensatory || damages award was reasonable and justified. 8 The third factor also fails to support Defendant’s request for a new trial on 9|| punitive damages. Based upon 28 C.F.R. § 85.5, Table 1, the maximum civil penalty for □□ the FHA and ADA violations found against Defendant in this case could be as high as |) $437,290. Table 1 reflects the following civil penalties for violations of the FHA and ADA after May 9, 2022: (1) $115,054 for a first FHA violation; (2) $230,107 for 13 |) subsequent FHA violations; (3) $103,591 for a first ADA violation; and (4) $207,183 for subsequent ADA violations. 28 C.F.R. § 85.5, at Table 1. Thus, were Atria considered a 15 || repeat violator due to the prior New York case, the maximum civil penalties for the ADA 16|| and FHA violations found in this case would be $437,290. The punitive damages award 17|| of $100,000 is significantly less. 18 Accordingly, 19 IT IS ORDERED that Defendant’s Motion for Judgment as a Matter of Law or, Affirmatively, fora New Trial (Doc. 134) is denied. 21 Dated this 8th day of August, 2022. 22 23 24 □□ □ = Honorable Rosthary Mgfquez 26 United States District □□□□□ 27 28

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