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Peery v. Chicago Housing Authority

United States District Court, N.D. Illinois, Eastern Division

September 30, 2014

JOSEPH PEERY, on behalf of himself and all persons similarly situated, Plaintiffs,
v.
CHICAGO HOUSING AUTHORITY and HOLSTEN MANAGEMENT CORPORATION, Defendants. DEANN STUBENFIELD, JESSICA STUBENFIELD, DEBORAH THIGPEN, and SHARON THOMPSON, Plaintiffs,
v.
CHICAGO HOUSING AUTHORITY and THE COMMUNITY BUILDERS, INC., Defendants.

MEMORANDUM OPINION AND ORDER

MILTON I. SHADUR, District Judge.

On June 16 and 17, 2014, this Court heard evidence and arguments on plaintiffs' Amended Motions for Preliminary Injunction [Dkt. 66. case no. 13 cv 5819; Dkt. 55. case no. 13 cv 6541].[1] Plaintiffs seek entry of a preliminary injunction enjoining the defendants from drug screening as a condition of residency in Chicago Housing Authority ("CHA") subsidized units in mixed-income developments. The defendants argue that the drug testing policy is solely the work of the private developers (The Company of Builders "TCB" and Holsten Management Company "HMC"), who are not state actors for purposes of the Fourth Amendment prohibition of suspicionless drug searches, and even if they were, plaintiffs have consented to the searches. For the reasons set forth herein, the Court denies the motions.

I. Background

The Court heard live testimony from Joanne Pastores Boy, the CHA's Rule 30(b)(6) witness, Peter Holsten, and Lee Pratter of TCB. Voluminous documentary and deposition evidence was provided to the Court, including the depositions of all named plaintiffs as well as Annie Stubenfield, Robert Koener, Jackie Holsten, Susan McCann of TCB, and others. The following facts are not in dispute for purposes of ruling on this motion.

Plaintiff Joseph Peery:

Peery lived at the CHA's Cabrini-Green housing complex from 1991 to 2005. The CHA razed the Cabrini-Green complex as part of the "Plan for Transformation." Residents obtained Section 8 housing vouchers to relocate to private housing. During this time, Peery moved to California. He returned to Chicago in 2009, wanting to live in the Cabrini-Green Area. He selected three housing location preferences: Parkside Phase 1B Rental, Old Town Village East II, and Old Town Village West. In June 2010, HMC personnel from Parkside contacted Peery to apply for a one-bedroom unit in Parkside Phase 1A (a condo building in which scattered units are rented to CHA tenants). Peery successfully completed the application process, including drug testing, and signed his lease on July 23, 2010. Peery has complied with the drug testing policy each year for renewal of his lease.

HMC is a private real estate developer that owns/manages Parkside among other buildings. HMC began using drug screening in the mid-1990s at several of its properties. HMC asserts that the drug screening policy at issue here is identical to the one it employs for all its buildings whether housing CHA tenants or not. According to HMC, it administers all aspects of the drug screening at Parkside, including paying all costs. HMC also attests that results of the tests are not reported to CHA and there is no policy to advise CHA of any objections to the drug testing.

The Parkside development began in 2006 as part of CHA's "Plan for Transformation" for public housing in Chicago. The Cabrini Consent Decree created a Near North Working Group to select developers, provide overall direction, and monitor redevelopment of the former site of Cabrini Green. The Near North Working Group consisted of the Cabrini-Green Local Advisory Council ("LAC"), the CHA, the City of Chicago, counsel for the Gautreaux plaintiffs, and the Habitat Company, CHA's court appointed receiver. The Working Group sought proposals from private developers to redevelop part of the Cabrini site into mixed-income housing. The Working Group selected Parkside Associates, a partnership between Holsten Real Estate Development Corporation[2], Kimball Hill Homes, and the Cabrini-Green Local Advisory Council Community Development Corporation.[3] After going bankrupt, Kimball Hill Homes' share was divided between Holsten and the Cabrini-Green Local Advisory Council Community Development Corporation. The LAC Community Development Corporation is a 40% partner in Parkside. The same Working Group is responsible for the entire Cabrini-Green Area redevelopment and approved tenant selection plans and leases for eleven mixed-income developments. Of the eleven mixed-income developments, nine did not include drug screening as conditions of occupancy. The only two developments to include the drug testing provision are HMC managed.

Joanne Boy of the CHA testified that each site's private developer is responsible for drafting proposed lease agreements and a tenant selection plan. The CHA has minimum requirements for the tenant selection plans. The CHA's minimum tenant selection plan does not contain a drug screening policy. The developer presents the proposed lease and tenant selection plan to the Working Group for review and compliance with HUD regulations and City of Chicago ordinances. Once the Working Group approves a proposed lease and tenant selection plan, it publishes the lease and tenant selection plan for public comment. The Working Group then recommends the lease and tenant selection plan to the CHA Board for approval. On June 20, 2006, the CHA Board approved the lease package and tenant selection plan for Parkside.

Plaintiffs Deann Stubenfield, Jessica Stubenfield, Deborah Thigpen, and Sharon Thompson

Plaintiff Deborah Thigpen lived in the Ida B. Wells and the Wells Extension during the 1990s until 2003. Between 2003 and 2005, Thigpen rented an apartment from a private landlord with a Section 8 voucher that she obtained in connection with her Relocation Rights contract with the CHA. Thigpen listed Ida B. Wells and the Robert Taylor Homes as her first and second choices for locations. Thigpen was offered an apartment in Oakwood Shores Phase 1A in 2005 when it was completed and signed a lease with TCB as lessor. The lease carries an addendum that requires drug testing. Thigpen has taken the drug test every year that she has lived at Oakwood Shores.

Plaintiff Sharon Thompson lived at the Ida B. Wells homes from 1977 through 2006, when she was offered and accepted a unit at Oakwood Shores Phase 2B. Thompson identified Lakefront as her preferred location for relocation. Thompson testified that she did not have an issue with taking a drug test when she initially entered the lease, but objects to having annual tests after living there for 7 years.

Plaintiffs DeAnn and Jessica Stubenfield are not parties to a lease, but live with their mother Annie Stubenfield, a lessee at Oakwood Shores Phase 1A. Annie Stubenfield is not a plaintiff in this case, despite claiming to object to annual drug testing despite submitting to the test for her initial lease. Once her daughters turned 18 and were also required to be screened annually, they objected as well.

Defendant The Community Builders ("TCB") is the management agent for the private owners of the Oakwood Shores property, pursuant to written agreement. It is also the partial owner of the developer for the rental portion of each Oakwood Shores phase. TCB represents that none of the documents for the development and management of Oakwood Shores define TCB or any other owner entity as an agent of CHA. Oakwood Shores leases the land from the CHA that was formerly the site of four public housing projects known as Ida B. Wells, the Wells Extension, Madden Park, and Darrow Homes. TCB contends that the private owners are financially responsible for the success of the development and responsible to the private investors/lenders. TCB drafted the leas and tenant selection plan proposed to the Madden/Wells Area Working Group, and TCB staff decided whether to accept ...


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