United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
Honorable Edmond E. Chang United States District Judge.
Group, LLC, brought suit against the City of Zion, Illinois,
alleging that Zion's adoption of a rental unit inspection
ordinance and a “Comprehensive Plan” (the
City's official development strategy), violates the Fair
Housing Act, 42 U.S.C. § 3601 et seq. by
allegedly seeking to shrink the amount of available housing
for African-Americans and Latinos. R. 23, Am.
Compl. Zion now brings a motion to dismiss, R.
32, Def.'s Mot. to Dismiss, under Federal Rule of Civil
Procedure 12(b)(6) for failure to state a claim. For the
reasons discussed below, the motion to dismiss is granted.
purposes of this motion, the Court accepts as true the
allegations in the Amended Complaint. Erickson v.
Pardus, 551 U.S. 89, 94 (2007). TBS Group owns dozens of
rental units in Zion, Illinois. Am. Compl. ¶¶ 1,
15. According to TBS, all of its properties are in
neighborhoods populated mostly with minorities and TBS rents
almost exclusively to African-American or Latino tenants.
Id. ¶ 1.
2015, Zion adopted Ordinance 15-O-33, which added rental
housing inspection and certification regulations to
Zion's Municipal Code. Zion Code §
10-180; see also Am. Compl. ¶ 20;
Def.'s Mot. to Dismiss at 1. The ordinance requires all
Zion property owners who rent out units to maintain a
“current and valid city-issued certificate of
compliance.” Id. § 10-180(2)(a). To get a
certificate, a unit needs to pass an inspection,
id. § 10-180(5)(a), for which landlords are
charged “$75.00 per dwelling unit, ” id.
§ 10-9(c) (fee schedule for inspections).
order to obtain a compliance certificate for a dwelling unit,
the unit must be free of any condition “that would
constitute a hazard to the health and safety of the
occupants” and must be “otherwise fit for
occupancy.” Zion Code § 10-180(5)(c). Landlords
must keep the unit in a “safe, habitable, and
code-compliant condition” or else lose the certificate
upon re-inspection. Id. § 10-180(5)(d). If a
unit fails an inspection, then the code official reports the
violations to the owner and issues a notice to comply.
Id. §§ 10-180(5)(c), 10-180(5)(h). A new
inspection is scheduled and the process repeats until the
owner gets it right. Id. § 10-180(5)(i). Units
that passed inspection without a problem get a compliance
certificate that is good for two years; those that needed to
correct a violation get a certificate that lasts only one
year. Id. § 10-180(3)(a)(ii). Any rental unit
that is out of compliance is fined between $100 and $750 a
day as a penalty. § 10-180(9)(a).
received notices from the Zion Building Department, notifying
TBS of the requirement to obtain certificates of compliance.
See Am. Compl., Exh. A. The group exhibit attached
to the Amended Complaint includes 15 initial letters, which
cover various TBS rental properties and notify TBS of the
rental inspection regulations and requirements, and another
15 follow-up letters, labelled “FINAL NOTICE, ”
covering those same properties. Id.; Am. Compl.
Group contends that Zion's rental inspection ordinance
violates Section 804(a) of the Fair Housing Act, 42 U.S.C.
§ 3604(a), in that it allegedly makes “housing
unavailable because of race, national origin, or color
…” Am. Compl. ¶ 25. TBS says, “[o]n
information and belief, ” that the ordinance is being
“enforced selectively against landlords who have
African-American and Latino tenants.” Id.
¶ 24. This selective enforcement is made possible, TBS
argues, because “[t]he criteria for the inspections is
not defined” and therefore Zion has “latitude in
deciding which properties ‘pass' and which do
not.” Id. ¶ 23. This
“vague[ness]” allows rental unit inspection
compliance decisions to be made in a discriminatory way,
“deem[ing] properties occupied by African-American and
Latino tenants unrentable.” Id. TBS also
appears to contend that, even if its properties were all
deemed code-compliant, the inspection fees themselves are
unaffordable. Id. As a result, TBS asserts, the
ordinance makes fewer housing units available to blacks and
Latinos because it prices out landlords like TBS who rent
primarily to those racial minorities.
support its argument, TBS relies on demographic statistics
set forth in the Amended Complaint. TBS contends that blacks
are overrepresented as renters in the area, making up 31% of
Zion's population but accounting for 39.3% of the renting
community. Id. ¶ 7. Whites, on the other hand,
are 48.9% of Zion's population, but only 39% of renters.
Id. TBS suggests (at least as far as data from
1980 to 2000 can show) that the number of black renters has
been increasing sharply while the number of white renters has
fallen over time. Id. ¶¶ 8-9.
these population numbers as a background, TBS goes on to list
incidents-over the past few decades-that allegedly show
Zion's attempts to discriminate and limit rental units
available to blacks and Latinos. See Am. Compl. at
3-7. First, in 1982, a real estate developer brought a fair
housing case against Zion, alleging that the city was trying
to curtail construction of “Section 8” housing.
Id. ¶ 12. “Section 8” refers to
Section 8 of the Housing and Community Development Act of
1974, 42 U.S.C. 5301 et seq., which authorizes the
Secretary of Housing and Urban Development to enter into
contracts with landowners in order to help low-income
families finding suitable housing. The developer's suit
alleged that Zion did not want any more
“undesirable” people. Id. ¶
forward to the mid-1990s, TBS asserts that “[i]n a[n]
… attempt to eliminate rental housing for
African-Americans, ” Zion passed ordinances declaring
2100-2700 Hebron Avenue, the heavily black area where
TBS's properties are located, as “blighted.”
Am. Compl. ¶ 15(b). TBS does not cite the ordinances,
but gives a link to a 1994 Chicago Tribune article
on Zion's “blight” declarations and a related
federal housing investigation assessing possible
discrimination. Id. ¶ 15(b) (citing Steve
Mills, Hud Probes Bias in Zion's Blight,
Chicago-Tribune, Dec. 22, 1994,
(accessed Sept. 14, 2017)). According to TBS, the blight
ordinances ramped up segregation in the area, leading to a
higher concentration of minorities in the 2100-2700 Hebron
Avenue neighborhood. Am. Compl. ¶ 15(c). By its
reckoning, whites went from occupying about half of the
available housing in the area in the early 1990s to 38
percent in 2010. Id.
also alleges that Zion's “Comprehensive Plan,
” approved in December 2015, is another example of the
city's discriminatory approach to housing. Am. Compl.
¶ 16. According to TBS, that Plan “will
make housing unavailable” for racial minorities in
violation of the Fair Housing Act, because it “includes
multiple-family housing (rental) relegated almost exclusively
to a south-eastern area next to industrial uses and remote
from green space.” Id. ¶¶ 16, 26. As
another example of discrimination, TBS mentions another Zion
ordinance that allegedly classifies properties as
“nuisance” properties merely because the
residents of the property call the police for help.
Id. ¶ 17.
addition to the ordinances and the Comprehensive Plan, the
Amended Complaint also offers certain remarks made by Zion
mayors in support of the allegations of discrimination.
Around 2005, then-Mayor Lane Harrison allegedly said to TBS
that he did “not want more African-Americans to move
into” TBS's property. Am. Compl. ¶ 11. Around
ten years later, in 2015, Zion Mayor Al Hill allegedly said
that he wanted to shrink the rental percentage of housing in
Zion from its current level of 60% to a “healthy”
20% to 30%. Id. ¶ 10. Then, in deliberating
over the rental inspection ordinance in February 2017, Mayor
Hill said that “Zion has 3.5 percent [of] the
population of Lake County” but “38 percent of the
Section 8 vouchers” awarded by the county. He called
this “an issue that we have to address, ” and
cited “issues that are associated with too many rental
units and too much Section 8 rental units.”
Id. ¶ 18. TBS also cites an incident at a
public forum on the rental inspection ordinance, where a
resident “referred disparagingly to ‘Section
8' and ‘these people, '” and officials
responded by pointing to the “disproportionate number
of ‘Section 8' vouchers in Zion.”
Id. ¶ 19.
January 2017, the previously assigned judge dismissed
TBS's original complaint for failure to state a claim,
but gave TBS the chance to amend it. R. 22, Opinion and Order
(Jan. 23, 2017). TBS did so, and now Zion moves to dismiss
the Amended Complaint for failure to state a claim.
See Def's. Mot. to Dismiss; R. 37, Def's.
Standard of Review
Federal Rule of Civil Procedure 8(a)(2), a complaint
generally need only include “a short and plain
statement of the claim showing that the pleader is entitled
to relief.” Fed.R.Civ.P. 8(a)(2). This short and plain
statement must “give the defendant fair notice of what
the ... claim is and the grounds upon which it rests.”
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)
(alteration in original) (internal quotation marks and
citation omitted). The Seventh Circuit explained that this
rule “reflects a liberal notice pleading regime, which
is intended to ‘focus litigation on the merits of a
claim' rather than on technicalities that might keep
plaintiffs out of court.” Brooks v. Ross, 578
F.3d 574, 580 (7th Cir. 2009) (quoting Swierkiewicz v.
Sorema N.A., 534 U.S. 506, 514 (2002)).
motion under Rule 12(b)(6) challenges the sufficiency of the
complaint to state a claim upon which relief may be
granted.” Hallinan v. Fraternal Order of Police of
Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009).
“[A] complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is
plausible on its face.' ” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting
Twombly, 550 U.S. at 570). These allegations
“must be enough to raise a right to relief above the
speculative level.” Twombly, 550 U.S. at 555.
Allegations that are entitled to the assumption of truth are
those that are factual, instead of mere legal conclusions.
Iqbal, 556 U.S. at 678-79.
other things, the Fair Housing Act prohibits race and color
discrimination in the selling and renting of housing. 42
U.S.C. § 3601 et seq. It is illegal to
“refuse to sell or rent ... or otherwise make
unavailable or deny, a dwelling” to someone because of
race or color (among other protected characteristics), 42
U.S.C. § 3604(a), or to “discriminate against any
person [based on race, color, or other protected
characteristics] in the terms, conditions, or privileges of
sale or rental of a dwelling.” Id. §
3604(b). At its core, then, individuals who are denied
housing based on their race may bring suit under the Fair
Housing Act. Havens Realty Corp. v.
Coleman, 455 U.S. 363, 375 (1982). Covering more than
those individuals, however, the Fair Housing Act authorizes
any “aggrieved person” to bring a fair-housing
suit, 42 U.S.C. § 3613(a), that is, any person who
“claims to have been injured by a discriminatory
housing practice, ” or is about to be injured.
Id. § 3602(i). Supreme Court precedent
instructs that any person or entity whose alleged injury
falls within the Fair Housing Act's “zone of
interests” qualifies as an aggrieved person. Bank
of America Corp. v. City of Miami, Fla., 137 S.Ct. 1296,
1302-03 (2017); see also Trafficante v. Metro. Life Ins.
Co., 409 U.S. 205, 209 (1972) (“The language of
the [Fair Housing Act] is broad and inclusive.”). This
gives “aggrieved person” a “broad”
construction. Bank of America Corp. v. City of
Miami, Fla., 137 S.Ct. at 1303. And, specifically,
financial injuries caused by discriminatory housing practices
qualify as the type of injury that an aggrieved person may
file suit against. See Id. at 1304 (city was an
aggrieved person because the alleged discriminatory practice
caused a concentration of foreclosures and vacancies, reduced
property values, and diminished property-tax revenue).
Although Zion makes a cursory argument that TBS has not
sufficiently alleged injury under the Fair Housing Act, the
Amended Complaint readily sets forth a financial injury-the
certificate-compliance fees for rental units-that allegedly
is the product of race discrimination. That sort of alleged
injury is well within the zone of interests of the Fair
said, even if TBS has alleged a covered injury, the question
remains whether the Amended Complaint sufficiently alleges
that Zion adopted the compliance-certificate Ordinance in
order to deny housing to racial minorities. There are two
pertinent forms of discrimination barred by the Fair Housing
Act (1) disparate treatment; and (2) disparate impact.
Cty. of Cook v. HSBC N. Am. Holdings Inc., 136
F.Supp.3d 952, 966 (N.D. Ill. 2015). In the Amended
Complaint, TBS did not spell out specifically what type of
discrimination claim it was bringing, but it later clarified
that it was pursuing both the disparate treatment and
disparate impact avenues. See Pl's. Resp. Br. at
5. The Court turns to those next.
state a disparate treatment claim under the Fair Housing Act
(“disparate treatment” is just another way of
saying intentional discrimination), TBS must plausibly allege
that Zion had a discriminatory intent or motive. Ricci v.
DeStefano, 557 U.S. 557, 577 (2009). Intentional
discrimination can be alleged through “either direct or
circumstantial evidence.” Daveri Dev. Grp., LLC v.
Vill. of Wheeling, 934 F.Supp.2d 987, 997 (N.D. Ill.
2013). “Proof of discriminatory motive … can in
some situations be inferred from the mere fact of differences
in treatment.” Int'l Bhd. of Teamsters v.
United States, 431 U.S. 324, 335 n. 15 (1977). In this
case, TBS does not plead enough facts to plausibly suggest
that Zion has intentionally discriminated against racial
minorities in its housing practices.