Southwest Fair Housing Council v. Wg Scottsdale LLC

• Court: Court of Appeals for the Ninth Circuit
• Decided: October 17, 2023
• Docket: 22-16345
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS OCT 17 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

SOUTHWEST FAIR HOUSING COUNCIL, No. 22-16345 an Arizona non-profit corporation, D.C. No. 4:19-cv-00180-RM Plaintiff-Appellee,

v. MEMORANDUM*

WG SCOTTSDALE LLC, AKA Atria Sierra Pointe,

Defendant-Appellant.

Appeal from the United States District Court for the District of Arizona Rosemary Márquez, District Judge, Presiding

Argued and Submitted September 15, 2023 Arizona State University, Phoenix

Before: HURWITZ, BUMATAY, and DESAI, Circuit Judges. Concurrence by Judge BUMATAY.

Southwest Fair Housing Council (“Southwest”) sent testers to Atria Sierra

Pointe, an assisted-living community, to determine whether it would provide an

American Sign Language (“ASL”) interpreter for a fictional deaf applicant for

residency. After the facility declined to provide one, Southwest filed this action

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. alleging violations of the federal Fair Housing Act (“FHA”), the Arizona FHA, and

the Americans with Disabilities Act (“ADA”). A jury returned a verdict in favor of

Southwest, awarding both nominal and punitive damages. The district court then

granted a permanent injunction prohibiting further discriminatory activities and

requiring Sierra Pointe to contract with ASL interpreters when necessary.

On appeal, Sierra Pointe challenges Southwest’s standing to sue, the

sufficiency of the evidence to support the verdict, the punitive damages award, and

Southwest’s standing to seek injunctive relief. We have jurisdiction under 28 U.S.C.

§ 1291 and affirm.

1. An “organization may establish injury in fact if it can demonstrate:

(1) frustration of its organizational mission; and (2) diversion of its resources to

combat the particular conduct in question.” Am. Diabetes Ass’n v. U.S. Dep’t of the

Army, 938 F.3d 1147, 1154 (9th Cir. 2019) (cleaned up). Sierra Pointe does not

contest that Southwest established frustration of its organizational mission. An

organization can establish the requisite diversion of resources if it has designed and

disseminated literature to redress discrimination uncovered by housing testers, Fair

Hous. of Marin v. Combs, 285 F.3d 899, 905 (9th Cir. 2002), or diverts staff and

resources to educational programs concerning a challenged practice, Valle del Sol

Inc. v. Whiting, 732 F.3d 1006, 1018 (9th Cir. 2013). Southwest established

organizational standing here. In direct response to Sierra Pointe’s conduct,

2 Southwest committed resources to training, outreach, and developing printed

materials for distribution.

2. Under the relevant federal and state acts, Southwest had the burden to

prove that an accommodation denied to a disabled person was “necessary.” 42

U.S.C. §§ 3604(f)(3)(B), 12182(b)(2)(A)(ii); Ariz. Rev. Stat. § 41-1491.19(E)(2).

“To prove that an accommodation is necessary, plaintiffs must show that, but for the

accommodation, they likely will be denied an equal opportunity to enjoy the housing

of their choice.” Giebeler v. M & B Assocs., 343 F.3d 1143, 1155 (9th Cir. 2003)

(cleaned up). Southwest presented testimony that deaf individuals whose primary

or preferred language is ASL often struggle to communicate in other ways. Sierra

Pointe’s expert conceded that complex conversations are most likely to require an

ASL interpreter. The testers made Sierra Pointe aware of the fictional applicant’s

use of ASL and requested an ASL interpreter for specific needs related to prospective

housing at the facility, including the consideration of a proposed lease. Viewing this

evidence in the light most favorable to Southwest, see EEOC v. Go Daddy Software,

Inc., 581 F.3d 951, 961 (9th Cir. 2009), a reasonable jury could find that absent an

interpreter, the applicant likely would have been denied an equal opportunity to

enjoy the facility. See Giebeler, 343 F.3d at 1155–56; Karczewski v. DCH Mission

Valley LLC, 862 F.3d 1006, 1010–11 (9th Cir. 2017).

3. Punitive damages may be assessed in an FHA case “when a defendant’s

3 conduct . . . involves reckless or callous indifference to the federally protected rights

of others.” Fair Hous. of Marin, 285 F.3d at 906. Southwest presented evidence

that Sierra Pointe knew that federal law required the accommodation of deaf

residents with ASL interpreters in various situations when necessary, including

during lease signings. The company that operated Sierra Pointe had previously been

involved in similar litigation, and thus was aware of the requirements of federal law.

Substantial evidence thus supports the jury finding that Sierra Pointe’s conduct “was

malicious, oppressive or in reckless disregard of the plaintiff’s rights.”

4. The punitive damages award was not constitutionally excessive.

Because the court limited the non-punitive damages award to $1, the ratio between

the punitive and compensatory awards is not a reliable measure of excessiveness.

See Arizona v. ASARCO LLC, 773 F.3d 1050, 1054–60 (9th Cir. 2014) (en banc).

And the award was less than the maximum civil penalties for violations of the federal

FHA and ADA. See 28 C.F.R. § 85.5 (2022); State Farm Mut. Auto. Ins. Co. v.

Campbell, 538 U.S. 408, 428 (2003).

5. Southwest demonstrated a sufficient likelihood of future harm to

establish standing to seek injunctive relief. The district court correctly found that

“[m]ultiple lawsuits have been filed against” Sierra Pointe’s operating company “for

similar conduct” and that the company had “previously entered a consent decree

with another fair housing organizational plaintiff in New York regarding its refusal

4 to provide ASL interpreters to deaf residents.” These facts demonstrate a reasonable

likelihood of an “actual and imminent, not conjectural or hypothetical,” harm.

Summers v. Earth Island Inst., 555 U.S. 488, 493 (2009).

AFFIRMED.

5 FILED OCT 17 2023 Southwest Fair Housing Council v. WG Scottsdale LLC, No. 22-16345 BUMATAY, J., concurring: MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

While I concur with the majority here, I write to note the entirely convoluted

state of organizational standing doctrine in the Ninth Circuit. That doctrine as it

stands today has strayed from not only Supreme Court precedent but our own.

Southwest Fair Housing Council, the plaintiff-appellee here, isn’t an

organization that went about its business and unexpectedly encountered

discrimination at the Atria Sierra Pointe apartment building and then mobilized

against that discrimination. Instead, Southwest is an organization already dedicated

to rooting out discrimination in housing. As early as 2015, well before encountering

Sierra Pointe, Southwest made the conscious decision to pivot toward confronting

disability discrimination. It then devoted resources training its “testers” on hearing

discrimination. After it did so, it found what it was looking for. In 2016, it found a

building that did less than it was expected to under the Americans with Disabilities

Act. It then went about its mission educating its members about disability

discrimination in housing. Southwest now claims standing for an organizational

injury.

So, in this case, Southwest voluntarily expended resources in line with its

mission to combat disability discrimination and then continued to expend resources

after it found an instance of that discrimination. Under traditional standing doctrine,

Southwest would not have Article III standing. That’s because a self-inflicted injury 1 cannot establish standing. See Clapper v. Amnesty Int’l USA, 568 U.S. 398, 416

(2013) (“[R]espondents cannot manufacture standing merely by inflicting harm on

themselves[.]”); Nat’l Family Plan. and Reprod. Health Ass’n v. Gonzales, 468 F.3d

826, 831 (D.C. Cir. 2006) (“We have consistently held that self-inflicted harm

doesn’t satisfy the basic requirements for standing.”); Pennsylvania v. New Jersey,

426 U.S. 660, 664 (1976) (per curiam) (“The injuries to the plaintiffs’ fiscs were

self-inflicted . . . . No state can be heard to complain about damage inflicted by its

own hand.”). It is no different for organizational standing.

But our precedent has deviated far from traditional standing doctrine when it

comes to organizations. To begin, our organizational standing doctrine required that

an organization show (1) a “frustration of its organizational mission;” and (2) a

“diversion of its resources to combat the [challenged actions].” Smith v. Pac. Props.

& Dev. Corp., 358 F.3d 1097, 1105 (9th Cir. 2004) (simplified). When it comes to

diversion, we’ve also held that the organization must “show that it would have

suffered some other injury if it had not diverted resources to counteracting the

problem.” La Asociacion de Trabajadores de Lake Forest v. City of Lake Forest,

624 F.3d 1083, 1088 (9th Cir. 2010). Thus, an “organization may sue only if it was

forced to choose between suffering injury and diverting resources to counteract the

injury.” Id. at 1088 n.4 (simplified).

2 So far so good. But somewhere, as our precedent developed, critical parts of

this test got lost. While we once required diversion to avoid “some other injury,”

that requirement has seemingly disappeared from our books. See id. at 1088. While

we once required frustration, we now say spending for education consistent with an

organization’s mission constitutes frustration of purpose. See, e.g., Fair Hous.

Council of San Fernando Valley v. Roommate.com, LLC, 666 F.3d 1216, 1219, 1224

(9th Cir. 2012) (granting organizational standing for spending on “education and

outreach campaigns targeted at discriminatory roommate advertising” as frustrating

the organizations’ “central mission” even though their mission was “eliminating

housing discrimination”). Of course, we’ve also said that some types of spending

for education aren’t enough. See Rodriguez v. City of San Jose, 930 F.3d 1123, 1136

(9th Cir. 2019) (denying organizational standing to a group which “advis[ed] and

assist[ed] members and non-members in navigating California’s gun laws and

attempting to recover confiscated firearms”). With any guardrails gone, it’s hard to

see any discernible limits to organizational standing. We now leave it to the whims

of the panel draw.

Our organizational standing mess has not gone unnoticed. Several members

of our court have criticized it. See Sabra v. Maricopa County Cmty. College District,

44 F.4th 867, 895–96 (9th Cir. 2022) (VanDyke, J., concurring); E. Bay Sanctuary

Covenant v. Biden, 993 F.3d 640, 689–94 (9th Cir. 2021) (Bumatay, J., dissenting

3 from the denial of rehearing en banc); Roommate.com, 666 F.3d at 1224–26 (Ikuta,

J., concurring).

One fix might be to reinvigorate the requirement that diversion of resources

be to avoid “some other injury.” Lake Forest, 624 F.3d at 1088. To say that any

voluntary reaction by an organization to an outside actor or force confers

organizational standing is far too broad. Self-inflicted injury isn’t enough. If any

diversion of resources is sufficient, then any organization could manufacture

standing at will. Take this case. We say that Southwest has standing because it

“committed resources to training, outreach, and developing printed materials.” But

if Southwest doesn’t have to establish that these resources were made to avoid an

injury, it’s hard to see how it was traceable to anything that happened at Sierra Pointe.

See Havens Realty Corp. v. Coleman, 455 U.S. 363, 376 (1982) (holding that an

organization’s injury must be “fairly traceable” to the defendants’ actions).

Combatting disability discrimination is, of course, a noble cause, but the injury

Southwest complains of appears to be the kind of self-inflicted harm that Article III

standing does not support.

While I’m highly skeptical that Southwest meets organizational standing

requirements, I cannot say that our lax precedent precludes it here. I thus reluctantly

join the majority in full.