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Gautreaux v. Pierce

decided: September 30, 1982.


Appeals from the District Court for the Northern District of Illinois, Eastern Division. No. 66-C-1459 & 1460 -- Marvin E. Aspen, Judge.

Cummings, Chief Judge, Davis, Associate Judge,*fn* and Pell, Circuit Judge.

Author: Pell

PELL, Circuit Judge.

This appeal arises from two consolidated actions in the district court, Nos. 66-C-1459 and 66-C-1460, brought by the plaintiffs against the Chicago Housing Authority (CHA) and the Department of Housing and Urban Development (HUD) respectively. The plaintiffs, approximately 43,000 black tenants of and applicants for public housing, brought these suits alleging that CHA in conjunction with HUD had violated various statutory rights and their constitutional rights under the Fifth and Fourteenth Amendments by selecting housing project sites in predominantly black neighborhoods and by using racial quotas to limit the number of blacks in housing projects in predominantly white neighborhoods. Both CHA and HUD were found to have been guilty of the alleged discriminatory practices at a relatively early stage in the course of this litigation. Over ten years of litigation followed the entry of the decree of liability against CHA in 1969. The task presently before this court is to review the validity of a consent decree, negotiated between the plaintiffs and HUD and approved by the district court, which purports to provide a workable remedy for HUD's discriminatory practices. Two parties are appealing from the district court's approval of the consent decree. The Illinois Housing and Development Authority (IHDA), one of the defendants, is claiming in essence that the provisions of the decree are beyond the parameters of HUD's authority and were approved without the procedural prerequisites to the entry of a consent decree. Ginger Mack (Mack), a member of the plaintiff class, alleges that the decree fails to remedy the discrimination and challenges the designation of "Revitalizing" areas, specifically that of the Hyde Park-Kenwood area, in which assisted housing may be placed under the decree. In addition, the proposed intervenor-appellant Rogers Park Community Council (RPCC) is appealing the district court's denial of its motion to intervene, and is seeking to have revised the decree's designation of a portion of the Rogers Park neighborhood as a "Revitalizing" area.

I. Relevant Background of the Proceedings

A. The Determination of Relief

In 1966, the plaintiffs against CHA in Gautreaux v. Chicago Housing Authority, No. 66-C-1459 (N.D. Ill. 1966), brought a companion suit against HUD, Gautreaux v. Romney, No. 66-C-1460 (N.D. Ill. 1966), claiming that HUD had sanctioned and assisted CHA's racially discriminatory housing practices. The complaint sought a declaratory judgment against HUD, an injunction to prohibit HUD from making any federal funds available to CHA which would support or further the racially discriminatory practices, and "such other and further relief as the Court may deem just and equitable." The district court dismissed the complaint against HUD primarily for failure to state a claim. On appeal in 1971, this court reversed and granted summary judgment against HUD on two counts of the complaint, finding that HUD had knowingly acquiesced in CHA's discriminatory practices. The case was remanded to the district court for appropriate relief. Gautreaux v. Romney, 448 F.2d 731 (7th Cir. 1971). The district court granted the plaintiffs the declaratory and injunctive relief sought against HUD, and grappled with the amorphous concept of "just and equitable" relief. The district court ordered HUD to use its "best efforts" to increase the supply of dwelling units in conformity with the relevant federal statutes, rules, and regulations and with the provisions of a 1969 Judgment Order entered against CHA in the companion case. See Gautreaux v. CHA, 304 F. Supp. 736 (N.D. Ill. 1969). The district court refused to order relief beyond the legal boundaries of the city of Chicago because it found the discriminatory practices to have been committed within those boundaries. Gautreaux v. Romney, 363 F. Supp. 690 (N.D. Ill. 1973). Shortly afterwards, the case against HUD was consolidated with that against CHA.

The 1969 Judgment Order against CHA contained a comprehensive plan designed to remedy the effects of and prevent continuation of the discriminatory practices by enjoining further construction of public housing in predominantly non-white areas without simultaneous construction in predominantly white areas. The 1969 Judgment Order mandated that CHA: (1) use its "best efforts" to increase the supply of family public housing units as rapidly as possible; (2) not commence construction of any family public housing units without first beginning construction of 700 units in the "General Public Housing Area" of Chicago (defined as census tracts which are both (a) 70% or more white as determined by the United States Bureau of the Census, and (b) not within one mile of a census tract 30% or more non-white (the criterion for the "Limited Public Housing Area") as determined by the United States Bureau of the Census; (3) locate 75% of all future family public housing units beyond the 700 units in the General Public Housing Area; (4) cease and desist discrimination on the basis of race; and (5) limit the size of new public housing projects and their concentration with other CHA projects. Gautreaux v. Chicago Housing Authority, 304 F. Supp. 736 (N.D. Ill. 1969).

Numerous appeals followed from the district court's determination of the relief to be accorded against CHA and HUD.*fn1 Of these appeals, only those concerning the appropriateness of remedial efforts outside the city of Chicago have a significant bearing on the present appeals. This court reversed the previously discussed district court decision in Gautreaux v. Romney, 363 F. Supp. 690 (N.D. Ill. 1973), in which the district court had refused to order metropolitan area relief, that is, relief beyond the legal boundaries of the city of Chicago. This court concluded that metropolitan area relief was not precluded simply because the wrongs had been committed within Chicago and against Chicago residents, and remanded the case to the district court for "the adoption of a comprehensive metropolitan area plan that will not only disestablish the segregated public housing system in the City of Chicago . . . . but will increase the supply of dwelling units as rapidly as possible." Gautreaux v. Chicago Housing Authority, 503 F.2d 930, 939 (7th Cir. 1974).

This court's decision was appealed to the Supreme Court on the permissibility of "inter-district relief for discrimination in public housing in the absence of a finding of an inter-district violation." Hills v. Gautreaux, 425 U.S. 284, 292, 47 L. Ed. 2d 792, 96 S. Ct. 1538 (1976). The Supreme Court concluded metropolitan area*fn2 relief was not precluded by virtue of the constitutional and statutory violations having been committed in Chicago. Id. at 300. The more substantial question, according to the Court, was whether an order against HUD affecting its conduct beyond Chicago's boundaries would impermissibly interfere with local governments and suburban housing authorities that had not been implicated in HUD's unconstitutional conduct. It reasoned that an order directed solely to HUD would not force unwilling localities to apply for assistance but would merely reinforce the regulations guiding HUD's determination of which of the locally authorized projects to assist with federal funds. Id. at 303. The Court concluded:

In sum, there is no basis for the petitioner's claim that court-ordered metropolitan area relief in this case would be impermissible as a matter of law under the Milliken [v. Bradley, 418 U.S. 717, 41 L. Ed. 2d 1069, 94 S. Ct. 3112 (1971)] decision. In contrast to the desegregation order in that case, a metropolitan area relief order directed to HUD would not consolidate or in any way restructure local governmental units. The remedial decree would neither 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 or existing land-use laws. The order would have the same effect on the suburban governments as a discretionary decision by HUD to use the statutory powers to provide the respondents with alternatives to the racially segregated Chicago public housing system created by CHA and HUD.

Id. at 305-06. The Supreme Court affirmed the decision of this court. It remanded the case to the district court for further evidence and consideration on the issue of metropolitan area relief so that the district court could determine the nature and scope of relief "in the exercise of its equitable discretion." Id. at 306.

B. The Consent Decree

1. The Proceedings

On February 25, 1975, prior to the Supreme Court's decision, fourteen additional defendants, including IHDA, were added by the plaintiffs by way of a second supplemental complaint. After the Supreme Court's remand, HUD and the plaintiffs voluntarily entered into a Letter of Understanding dated June 7, 1976, later modified and extended in a second Letter of Agreement dated July 29, 1977, in which the parties agreed to implement metropolitan area relief in a demonstration program. The demonstration program continued in operation for several years after agreement to an additional extension. On November 24, 1980, the plaintiffs and HUD told the district court that they would soon have a draft settlement agreement between them, and the court set a December 18, 1980 date for a preliminary hearing on the soon-to-be-proposed consent decree.*fn3 A copy of the draft consent decree was received by IHDA on December 2, without exhibits. On the following day, an explanation of the decree by counsel for the plaintiffs and HUD was given to IHDA and others.

At the December 18 hearing, the district court determined that the proposed decree with exhibits was "within the range of possible approval." The court set a fairness hearing date of January 14, 1981 and approved the form of notice to be sent to the class members. This notice was mailed and published on December 25, 1980, informing class members of the nature of the proposal, its availability for examination at the office of the clerk of the district court, and that public meetings would be held on January 6, 8 and 9, 1981.

On January 2, 1981, IHDA filed a cross-claim seeking injunctive relief against implementation of the proposed decree alleging that the decree's requirements upon HUD went beyond the parameters of HUD's authority and restrictions imposed on HUD by its governing regulations. On January 5, IHDA filed a discovery motion for documentation of the decree's negotiations and a motion to be permitted to appear sometime after January 14 to present its objections to the decree. The court continued IHDA's discovery motion and gave IHDA until January 19 to present its objections. On January 13, IHDA presented further discovery requests. The court granted four of IHDA's six deposition requests, and continued a documentary request.

On January 14, the first day of the fairness hearing, the court heard from the proponents of the decree. The hearing resumed on January 19, at which time the court granted a joint motion to amend the decree by its proponents, and denied IHDA's motion for a preliminary injunction, its continued documentary request, and its renewed motion for a previously denied deposition. Objections to the proposed consent decree were presented, including requests for a continuance. At the beginning of its presentation, IHDA moved for judgment arguing that the proponents of the decree had failed to meet their burdens of persuasion and of going forward with evidence. The court took no action on the motion. Upon conclusion of the objectors' evidence, the proponents presented additional evidence in support of the decree. Closing arguments were set for February 6, 1981, and later rescheduled for February 27, 1981. On June 16, 1981, the district court issued its Memorandum Opinion and Order approving the consent decree. The decree was amended sua sponte on June 25 and entered as a final order on June 30, 1981. An order changing a provision of the decree was entered on July 23, 1981.

2. The Terms of the Consent Decree

The decree and its exhibits A and B are appended to the district court's decision approving the consent decree. 523 F. Supp. at 672-83. Exhibits C and D are, respectively, an amendment to the contract between HUD and the Leadership Council for Metropolitan Open Communities (LCMOC) and a Model Program proposal for funds for substantial rehabilitation of housing. Their extensive provisions need not be appended to this opinion for purposes of our review.

Only the more fundamental provisions of the decree and exhibits, given their length and complexity, will be examined in detail. The consent decree applies to the plaintiffs and HUD, "including their agents, employees, successors and assigns, and to all other persons in active concert or participation with any of them who receive actual notice of this Decree by personal service or otherwise." The introductory paragraph of the decree provides that the motion of 1979 pursuant to which metropolitan relief was sought is to be withdrawn as of the effective date of the decree, the date upon which the decree is entered by the district court.

Most provisions of the decree apply to "assisted housing," which is defined as non-elderly housing subsidized by HUD directly or through a public housing agency, under the following housing programs or under any housing program in the future for the benefit of poor persons as an addition to or alternative or substitute for the following programs:

(1) Pursuant to section 8 of the United States Housing Act of 1937, as amended, the following "Section 8" programs:

(a) New Construction (24 C.F.R. Part 880);

(b) Substantial Rehabilitation (24 C.F.R. Part 881);

(c) Existing Housing (24 C.F.R. Part 882, subparts A and B);

(d) Moderate Rehabilitation (24 C.F.R. Part 882, subparts D and E);

(e) State Housing Agencies (24 C.F.R. Part 883);

(f) Special Allocations (known as Loan Management and Property Disposition) (24 C.F.R. Part 886);

(2) Public Housing New Construction and Acquisition (24 C.F.R. Part 841); and (3) Rent Supplement (24 C.F.R. Part 215) and Rental Assistance Payments Program (24 C.F.R. Part 236, subpart D) only to the extent that the projects in question had not received any payments pursuant to these two programs before the effective date of the consent decree.

Unlike the 1969 Judgment Order in which Cook County was divided into a Limited Area and a General Area, the decree provides for metropolitan relief by dividing the six counties comprising the Chicago Standard Metropolitan Statistical Area into a General Area, a Limited Area, and a Revitalizing Area. The General Area consists of those parts of the city of Chicago which lie within the census tracts listed in Exhibit A to the decree and all of the tracts within the Chicago SMSA outside of the city except those listed in Exhibit A as excluded from the General Area. The district court characterized the General Area, defined as including "predominantly non-minority" areas, as having less than 30% minority population. The Limited Area, defined as including "predominantly minority" areas and characterized by the district court as having more than 30% minority population, is that part of the city of Chicago within the census tracts not listed in Exhibits A or B and those parts of the Chicago SMSA outside of the city listed in Exhibit A as excluded from the General Area. The Revitalizing Area, defined as generally being areas of the city of Chicago having substantial minority occupancy and undergoing substantial physical development, encompasses that part of the city of Chicago which lies within the census tracts listed in Exhibit B.*fn4

Essentially, HUD's obligations under the decree do not expire until 7,100 eligible persons*fn5 have commenced occupancy of assisted housing units in the General Area and Revitalizing Area. The LCMOC is to continue to be employed as HUD's agent to assist eligible persons in obtaining assisted housing, as it was pursuant to the Letters of Understanding. Each year in addition to the "fair share" of Section 8 units annually allocated to the Chicago SMSA pursuant to 24 C.F.R. ยง 891, subpart D (1981), HUD must set aside additional funding authority for:

(1) 150 units of Section 8 Existing Housing Units;

(2) 250 Section 8 New Construction and/or Substantial Rehabilitation units to be located in the General Area or in the Revitalizing Area with mortgages insured under the National Housing Act, with the units to be in projects that contain no more than approximately ...

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