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GAUTREAUX v. LANDRIEU

June 16, 1981

DOROTHY GAUTREAUX, ET AL., PLAINTIFFS
v.
MOON LANDRIEU, SECRETARY OF DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Crowley, District Judge.

MEMORANDUM OPINION AND ORDER

This complex litigation began in 1966 when plaintiffs, approximately 43,000 black tenants of and applicants for public housing, brought this action against the Chicago Housing Authority (CHA). Plaintiffs alleged that the CHA violated their rights under the Civil Rights Act of 1866, 42 U.S.C. § 1981 et seq., and the equal protection clause of the fourteenth amendment by choosing project sites in exclusively black neighborhoods and creating racial quotas to limit the number of black families in white projects. This court found that CHA had deliberately engaged in discriminatory tenant-assignment and site-selection procedures. CHA was ordered to use its best efforts to increase the supply of low-rent public housing in predominantly white neighborhoods and, thus, eliminate existing patterns of residential separation of the races. Gautreaux v. CHA, 296 F. Supp. 907 (N.D.Ill. 1969).

Unfortunately, efforts to realize the benefits of the judgment order have been continually impeded by protracted post-judgment litigation. The supplemental order entered in July, 1969 contained a comprehensive plan designed to remedy the effects of and prevent the continuation of CHA's unconstitutional procedures by enjoining further construction of public housing in non-white areas without simultaneous construction in white areas. The supplemental order specifically enjoined: 1) further construction of public housing in non-white areas unless there was simultaneous construction of at least 75 percent of all proposed units in Chicago's white areas; 2) concentration of large numbers of dwelling units in or near a single location; and 3) dwelling units designed for occupancy of more than 240 persons.*fn1 This supplemental order, along with other supplemental orders, were unsuccessfully appealed to the Seventh Circuit and the United States Supreme Court. See Gautreaux v. Chicago Housing Authority, 265 F. Supp. 582 (N.D. Ill. 1967) (tenants have the right to maintain an action alleging that housing is being administered in a racially discriminatory manner); Gautreaux v. Chicago Housing Authority, 265 F. Supp. 582 (N.D.Ill. 1967) (evidence established that CHA intentionally chose sites and adopted tenant assignment procedures for the purpose of maintaining existing patterns of residential separation of the races); Gautreaux v. Chicago Housing Authority, 304 F. Supp. 736 (N.D. Ill. 1969) (supplemental judgment order ordering that no public housing be developed in census tracts with more than 30% minority population); Gautreaux v. Chicago Housing Authority, 436 F.2d 306 (7th Cir. 1970); cert. denied, 402 U.S. 922, 91 S.Ct. 1378, 28 L.Ed.2d 661 (1971) (no abuse of discretion, a year after original order entered, to impose deadlines for submissions to plan commission and city council); Gautreaux v. Romney, 448 F.2d 731 (7th Cir. 1971) (dismissal for lack of jurisdiction of a request for injunction against HUD prohibiting it from continuing to provide relief to CHA reversed); Gautreaux v. Romney, 332 F. Supp. 360 (N.D.Ill. 1971), rev'd 457 F.2d 124 (7th Cir. 1972) (insufficient nexus between CHA housing program and HUD's Model Cities program to permit enjoining of Model Cities funds to Chicago because of lack of compliance with 1969 judgment order); Gautreaux v. Chicago Housing Authority, 342 F. Supp. 827 (N.D.Ill. 1972), aff'd sub nom., Gautreaux v. City of Chicago, 480 F.2d 210 (7th Cir. 1973), cert. denied, 414 U.S. 1144, 94 S.Ct. 895, 39 L.Ed.2d 98 (1974) (district court ordered CHA to by-pass Chicago City Council approval for selection of sites for low rent housing); Gautreaux v. Romney, 363 F. Supp. 690 (N.D.Ill. 1973), rev'd sub nom. Gautreaux v. Chicago Housing Authority, 503 F.2d 930 (7th Cir. 1974) (district court has authority to order suburban or metropolitan area relief for constitutional violations occurring within city limits); Gautreaux v. Chicago Housing Authority, 384 F. Supp. 37 (N.D.Ill. 1974), petition for writ of mandamus denied sub nom., Chicago Housing Authority v. Austin, 511 F.2d 82 (7th Cir. 1975) (district court has the authority to refer the issue of intracity relief to a U.S. Magistrate to serve as a Master); Hills v. Gautreaux, 425 U.S. 284, 96 S.Ct. 1538, 47 L.Ed.2d 792 (1976) (district court has the authority to undertake remedial efforts beyond the boundaries of the municipality in which the constitutional violation occurred and may, in its discretion, order metropolitan relief).

In 1966 a companion action was begun by plaintiffs against the Department of Housing and Urban Development (HUD), charging that HUD had sanctioned and assisted CHA's racially discriminatory public housing and seeking to prevent HUD from providing further assistance to CHA until these practices were eliminated. After the action was dismissed for lack of jurisdiction, the ruling was appealed. The Seventh Circuit reversed, finding that HUD was liable along with CHA for Chicago's discriminatory housing patterns because HUD knowingly acquiesced to CHA's unconstitutional procedures. The case was remanded to the district court for appropriate relief. Gautreaux v. Romney, 448 F.2d 731 (7th Cir. 1971). Numerous appeals followed this remand, CHA challenging this court's directives and plaintiffs opposing what they characterized as the "limited scope of relief." Thus, despite continuous litigation, numerous hearings and remedial court orders and referral to a Special Master, see Gautreaux v. Landrieu, 498 F. Supp. 1072 (N.D.Ill. 1980), during the past twelve years, plaintiffs have yet to realize more than token relief. A proposed consent decree, negotiated between plaintiffs and HUD, which purports to be a workable plan for finally delivering to the plaintiff class the relief to which it is entitled and to which it has long been deprived, is now before the court for approval.

Some understanding of the 1969 judgment order entered against CHA is essential to an evaluation of the proposed decree because the decree alters some of the fundamental premises of the 1969 judgment order. The 1969 judgment order divided the County of Cook on the basis of census tracts into two areas: the Limited Public Housing Area and the General Public Housing Area. The Limited Area was defined as that part of Cook County composed of 30% or more non-white population; the Limited Housing Area was defined as those areas which were predominantly white. Attempting to remedy the effects of past discriminatory site-selection and tenant assignment procedures, the judgment order prohibited any development of public housing in the Limited Area without simultaneous development in the General Area. Gautreaux v. Chicago Housing Authority, 304 F. Supp. 736 (N.D.Ill. 1969). However, Article X of the order specifically provided for modification of this prohibition to allow proposed developments designed by CHA alone or in combination with other private or public agencies. 304 F. Supp. at 741.

From 1969 to 1979 progress in providing remedial housing was negligible. In order to facilitate speedier relief, on joint motions of the parties, this court modified its previous orders and removed some of the locational restrictions for the units to be developed by CHA.

The scope of relief was also modified. In 1973, plaintiffs, discouraged by CHA's slow progress in complying with the 1969 judgment order, requested the court to order metropolitan area relief. The request was denied on the ground that relief against political entities not parties to the lawsuit would be improper. Gautreaux v. Romney, 363 F. Supp. 690 (N.D.Ill. 1973). On appeal, the Seventh Circuit rejected the district court's reasoning that because the wrongs were committed within Chicago limits and solely against Chicago residents, plaintiffs were not entitled to metropolitan relief and held that, as a matter of law, metropolitan relief was not precluded. Gautreaux v. Chicago Housing Authority, 503 F.2d 930 (7th Cir. 1974). The United States Supreme Court, while affirming the Seventh Circuit's holding that federal courts have the jurisdiction to undertake remedial efforts beyond the boundaries in which the constitutional violation occurred, did not order metropolitan area relief. Hills v. Gautreaux, 425 U.S. 284, 96 S.Ct. 1538, 47 L.Ed.2d 792 (1976). Instead, having made it clear that both CHA and HUD had the authority to act outside Chicago city limits, the Supreme Court remanded the case for further consideration of the feasibility of metropolitan relief.

After the Supreme Court's determination that remedial efforts outside Chicago city limits were constitutional, HUD and plaintiffs voluntarily entered into a one year Letter of Understanding in which the parties agreed to investigate the possibilities of metropolitan-wide relief. In connection with its commitments under this Understanding, HUD developed a Section 8 demonstration program for about 400 class members in existing housing throughout the Chicago metropolitan area. The Leadership Council for Metropolitan Open Communities and the Fair Housing Center of the Home Investments Fund also participated in the development of this demonstration program which was extended and expanded under two later Letters of Understanding.

The proposed consent decree is an extension of the agreements under the Letters of Understanding. In sharp contrast to the 1969 judgment order entered against CHA, in which Cook County was divided into Limited and General areas, the proposed decree provides for metropolitan relief by dividing the Chicago Standard Metropolitan Statistical Area (SMSA), composed of six counties including Cook, into three areas: General, Limited and Revitalizing. Thus, under the proposed decree, the Limited Area, with more than 30% minority population, and the General Area, with less than 30% minority concentration, encompasses a much larger geographic area than the Limited and General Areas defined in the 1969 judgment order. In addition, recognizing that total relief to Gautreaux families outside the Limited Area could not be provided in the foreseeable future, the proposed decree introduces the concept of Revitalizing Areas, areas which have substantial minority population and are undergoing sufficient redevelopment to justify the assumption that these areas will become more integrated in a relatively short time. Because these areas are buffer zones between the Limited and General areas with ongoing or planned financial reinvestment by private parties, they are considered the most promising neighborhoods for racial and economic residential integration.

Other significant provisions of the proposed decree provide for: 1) placement of up to 7,100 persons in assisted units in the General and Revitalizing areas; 2) set-asides of Section 8 Contract Authority for a total of 350 new and/or substantially rehabilitated units and 150 Section 8 existing housing certificates for Gautreaux plaintiffs; 3) reservation of not less than 6% nor more than 12% of the units in each project for Gautreaux plaintiffs; 4) availability of at least $3 million in reallocated Community Development Block Grant Funds for use in the Chicago SMSA; and 5) placement through an outside contractor chosen by HUD and approved by plaintiffs.

The consent decree binds only HUD and the plaintiffs. However, during the course of this litigation additional parties defendant were named*fn2 and many of these defendants along with individual members of the class and other interested persons not parties to this lawsuit who claim to be affected by the decree wished to comment on whether it should be approved. A fairness hearing of several days was held after this court determined that the proposal was "within the range of possible approval." See Manual for Complex Litigation § 1.46 at 53-54. In evaluating the decree careful consideration was given to all the testimony at the fairness hearing, as well as the exhibits and memoranda filed by interested parties as well as plaintiffs and defendants.

A proposed decree can be approved if it is fair, reasonable and adequate. Fed. R.Civ.P. 23(e). The factors to be considered in making this determination include: (1) the merits of the case balanced against the settlement offer; (2) the defendant's ability to provide relief; (3) the amount of opposition to the settlement; (4) any evidence of collusion in reaching the settlement; (5) the opinion of competent counsel; and (6) the reaction of class members to the settlement. Armstrong v. Board of School Directors, 616 F.2d 305 (7th Cir. 1980). In approving or rejecting the settlement the district court must specifically state the reasons for its decision. 616 F.2d at 315.

The objectors include the Illinois Housing Development Authority (IHDA), neighborhood organizations objecting to the concept and application of the designation of Revitalizing Areas, and individual class members. The merits of these objections will be considered in turn.

Initially IHDA challenges the propriety of the negotiations leading up to the proposed decree and suggests that its proponents intentionally excluded affected parties from the negotiations until the decree was completed. Relying on In re General Motors Corp. Engine Interchange Litigation, 594 F.2d 1106 (7th Cir. 1979), IHDA argues that because the proponents improperly negotiated the settlement they bear the heavier burden of establishing fairness by clear and convincing evidence. IHDA objects to the haste with which the decree was negotiated. It claims that this haste coupled with the fact that the proposed decree binds only two parties to this litigation and will not dispose of the case gives an appearance of impropriety and, thus, demands stricter scrutiny to insure that there was no collusion. IHDA's contentions do not withstand analysis.

There is no evidence of collusion compelling the imposition of a higher standard. IHDA's reliance on General Motors is misplaced for the situation there is vastly different in three respects. First, in General Motors the Seventh Circuit found that the district court, in evaluating the settlement, proceeded under the assumption that the negotiations leading up to the settlement proposal were irrelevant to the issue of fairness. However, while reversing the trial court's order of approval, the General Motors Court unequivocally stated that "[w]e do not hold that irregular settlement negotiations may never form the basis for a judicially acceptable class action settlement." In re General Motors Corp. Engine Interchange Litigation, 594 F.2d 1106, 1131 (7th Cir. 1979). Thus, irregular negotiations without more, do not render a decree unfair, unreasonable or inadequate. Secondly, in General Motors, the judge prohibited discovery of the settlement negotiations and severely limited questioning about the negotiations at the fairness hearing. Finally, the General Motors court made a finding that there had, in fact, been "irregular" negotiations.

In contrast, at no time has this court intimated that the manner or methods of negotiations are irrelevant to an evaluation of the decree. Additionally, there is no evidence that the negotiations which led to the proposed decree have been irregular, nor has there been an aura of secrecy surrounding the negotiations. The settlement negotiations were announced and the proponents agreed to consult with interested parties before submitting the decree for court approval. The proponents also explained that the haste with which the decree was negotiated was due to the impending change in HUD's national administration and a desire to complete negotiations and the fairness hearing while the HUD counsel most intimately familiar with the case would still be able to participate. There has been no impropriety.

IHDA's substantive objections are the next considerations. Essentially IHDA challenges the decree on the grounds that it impermissibly extends HUD's authority and attempts to preempt the power of local governmental units. IHDA objects to several of the limitations on new construction. In particular IHDA objects to the reservation requirement and to the imposition of a 100-unit maximum and 10% — 3 bedroom requirement per development. It contends that these restrictions will hurt the production of housing and create numerous unresolved operating conflicts for IHDA and its developers.

The specifics of the decree are, to a large extent, merely extensions of the Letters of Understanding that have proved workable for the past four and a half years. IHDA contends that neither plaintiffs nor HUD are able to rebut any of the "well-considered opinions" of IHDA's expert witnesses. Yet IHDA has failed to establish that its "well-qualified experts in urbanology" have any greater or more accurate understanding of the problems surrounding implementation of this decree than the proponents who have been intimately involved with the case since its inception.

Secondly, since IHDA is not legally bound to participate in the Section 8 program if it does not want to comply with HUD requirements it is difficult to see how HUD is infringing upon local governmental authorities. Nothing in Hills v. Gautreaux, 425 U.S. 284, 96 S.Ct. 1538, 47 L.Ed.2d 792 (1975) or Otero v. New York City Housing Authority, 484 F.2d 1122 (2d Cir. 1973) compels a different conclusion, for those cases merely delineate what conduct HUD cannot adopt. HUD may not, under Hills, "force suburban governments to submit public housing proposals to HUD nor displace the rights and powers accorded local government entities under federal or state housing statutes . . ." 425 U.S. at 306, 96 S.Ct. at 1550. Nor, may it, under Otero, ignore its own implementation regulations. IHDA has failed to show that under the proposed decree HUD would be violating the mandates of Hills or Otero. HUD is not preempting IHDA's authority by exercising its discretion to award funds to authorities which comply with imposed restrictions designed to provide Gautreaux relief or violating its own regulations because the regulations give HUD express discretion with respect to applications for its funds. See 24 C.F.R. Part 883 et seq.

The second group of objectors are neighborhood organizations or Uptown, Hyde Park, and Census Tract 101, which is a portion of Rogers Park. These organizations object to the designation of their neighborhoods as Revitalizing. On the other hand, a fourth neighborhood, Lawndale, objected to the failure to designate only a small portion of it as Revitalizing. The objections of Lawndale, however, have become moot, because at the end of the fairness hearing the proposed consent decree was amended to add five more census tracts in Lawndale to the Revitalizing Area classification.

Objectors from Uptown, Hyde Park, and Rogers Park challenge the designation Revitalizing, contending that because it is vague and arbitrary, it is impossible to determine whether application of the designation to a particular area is appropriate. Several of the organizations contend that their neighborhoods are not properly designated Revitalizing and fear that there will be an over-concentration of public housing in their area if assisted housing is developed in areas which are still in an economically deprived and physically deteriorating state. Finally, other neighborhood organizations, such as the Rochelle Group of plaintiffs, fear that the restrictions on construction in the decree will cause massive displacement of residents when overcrowded units are replaced with units that comply with the HUD occupancy guidelines.

Several factors support the validity of the Revitalizing Area concept. First, the judgment order originally entered contemplated continued construction of public housing in minority areas. The ratio of housing which could continue to be developed in minority areas compared to public housing developed in the General Areas has been continually revised over the past years. The concept of the Revitalizing Area incorporates the idea of ratios, but seeks to direct the development of public housing in those areas which have the greatest potential for integration and redevelopment. At the same time the decree seeks to insure that the residents who now live in these Revitalizing Areas will not be displaced. Next, as the proponents of the decree emphasize, the Revitalizing Areas are neighborhoods with a substantial minority population where there is visibly physical redevelopment, the kind of development which attracts a white population and can foster ultimate racial integration. Finally, the construction limits prevent an over-concentration of public housing.

The concept of the Revitalizing Area has been criticized for being too indefinite and lacking objective standards. Those criticisms ignore the fact that ten criteria were developed and applied in identifying Revitalizing Areas. An area may be designated as a Revitalizing Area if it is: 1) undergoing visible redevelopment or evidences impending construction; 2) located along the lakefront, 3) scheduled to receive Community Development Block Grant Funds; 4) accessible to good transportation; 5) an area with a significant number of buildings already up to code standards; 6) accessible to good shopping; 7) located near attractive features, such as the lake or downtown; 8) free of an excessive concentration of assisted housing; 9) located in an area which is not entirely or predominantly in a minority area and 10) not densely populated. Thus, general site and neighborhood standards have been set. Yet, at the same time flexibility has been built in, because HUD is required to evaluate the block and census tract before it approves any particular proposal.

With respect to the designations of Uptown, Hyde Park and a small part of Rogers Park as Revitalizing Areas, the record indicates that the ten criteria were appropriately applied and that these areas have been properly designated as Revitalizing. While reasonable persons may differ as to how these criteria should be applied in a specific factual situation, the record supports the finding that the designation of these three areas as Revitalizing Areas is sound.

This court recognizes that residents of areas designated as Revitalizing are understandably concerned that continued construction and subsidizing of assisted housing in their neighborhoods will threaten what economic and social stability now exists there. However, the dangers which seem to be created by the designation of Uptown, Hyde Park and a small part of Rogers Park as Revitalizing Areas are, upon closer analysis, not the real threats they appear to be at first glance. First, designation as Revitalizing is merely the first step towards the development of public housing in the specific area. Once the area is designated, HUD must specifically, after carefully balancing the ten factors, approve the project. Additionally, the decree provides for a response to unforeseen circumstances by permitting reclassification of a project location by petitioning the court. Further, after five years the entire program is scheduled for review. The court is convinced that this decree is the best plan that has yet been designed to provide plaintiffs with the relief they so clearly deserve. Thus, while not perfect, the proposed decree is fair, reasonable and adequate.

It is important to keep in mind that all parties concerned have the same goal — a fervent desire to see the development of safe, clean public housing which not only provides relief to the plaintiff class, but furthers integrated living and urban redevelopment — in short, a plan which makes Chicago a better place for all of us to live. No consent decree can please all those who are involved; this decree, however, provides for a workable program, one which can be enacted within the foreseeable future, and will be of benefit to the entire community.

Accordingly, the court approves the proposed decree as amended.

CONSENT DECREE

Plaintiffs filed their complaint in this action on August 9, 1966. Since that time, defendants Landrieu and the United States Department of Housing and Urban Development ("HUD"), have been substituted for their predecessors as defendants. Proceedings in this action have led to the entry of opinions and orders, including those reported at 265 F. Supp. 582 (1967), 448 F.2d 731 (1971) and 425 U.S. 284, 96 S.Ct. 1538, 47 L.Ed.2d 792 (1976). On June 29, 1979, plaintiffs filed a motion requesting further relief. Inasmuch as the plaintiffs and HUD have consented to the entry of this Decree, that request is withdrawn as of the "effective date," as defined herein.

Now, therefore, upon the consent of the plaintiffs and HUD, it is hereby ordered as follows:

1. Jurisdiction

This Court has jurisdiction over HUD, Landrieu and the plaintiffs and over the subject ...


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