The opinion of the court was delivered by: ARTHUR D. SPATT
In this class action, a jury determined that the defendants, who are landlords and real estate brokers, discriminated against two of the three individual black and hispanic plaintiffs and two other black individuals who had inquired about renting apartments in Brooklyn. The jury awarded the successful individual plaintiffs nominal damages and the plaintiff Open Housing Center compensatory and punitive damages against each defendant except the defendant-landlord Benjamin Breitman, against whom the jury declined to award even nominal damages.
Before the Court at this time are the following motions: (1) the plaintiff Open Housing Center, Inc. moves for an award of nominal damages against Breitman; (2) all successful plaintiffs seek equitable relief and an award of attorney's fees against all of the defendants, (3) the defendant-landlord Benjamin Breitman moves for "judgment on the verdict", and (4) the defendant-landlord Jeno Jakabovitz moves to set aside the verdict against him in favor of the plaintiff Jeanette Ramsey.
Defendants Jeno Jakabovitz ("Jakabovitz") and Benjamin Breitman ("Breitman") each own apartment buildings in Brooklyn -- Jakabovitz owns fourteen buildings, Breitman owns two. In attempting to rent the few vacancies which arose in their buildings during the times relevant to this action, Jakabovitz and Breitman employed the services of AM Realty Co. ("AM Realty"), a real estate agency owned and operated by the defendant Emanual Fischler ("Fischler"). Defendants James Siegel ("Siegel") and Carl (Carlos) Matos ("Matos") were two of AM Realty's salespersons during this period.
The plaintiffs alleged that Jakabovitz and Breitman, through the acts of the their agent, AM Realty, discriminated against Orlando Cabrera ("Cabrera"), a hispanic male, and Linda McCoggle ("McCoggle"), a black female, both named individual plaintiffs, and Ronald Luckett ("Luckett"), a black male, and Augustin Hinkson ("Hinkson"), a black male, on the basis of race, by refusing to show apartments in their respective buildings to these individuals.
At the trial, the plaintiffs offered proof that Cabrera, McCoggle, Luckett and Hinkson, individually and on separate occasions, went to AM Realty seeking apartments in the Brooklyn communities of Midwood, Sheepshead Bay and Kings Highway. Cabrera, McCoggle and Luckett each met with Matos; Hinkson met with Siegel. They were each told by the salesperson with whom they spoke that, in effect, no apartments matching their request were immediately available. Instead, these individuals were "steered" to available apartments in areas of Brooklyn with a greater minority population and were, in most cases, offered the opportunity to inspect these apartments.
The plaintiffs further offered proof that shortly after the black or hispanic apartment seeker left AM Realty, a white apartment seeker entered the agency and inquired about housing similar to that requested by the black or hispanic apartment seeker who preceded him or her. The proof revealed that these white apartment seekers were each told that apartments of the type and location sought by both the white and minority apartment seekers were available. Specifically, the white apartment seekers who followed Cabrera, McCoggle and Hinkson were informed of apartments available in buildings owned by Jakabovitz, while the white apartment seeker who followed Luckett was informed of the availability of an apartment in one of Breitman's buildings.
Additionally, plaintiff Jeanette Ramsey ("Ramsey"), a black female, alleged that Jakabovitz personally discriminated against her, similarly on the basis of her race. Ramsey and a white apartment seeker did not meet with anyone from AM Realty but rather dealt with Jakabovitz personally.
In sum, the plaintiffs contended at the trial that the defendants' disparate treatment of the black or hispanic apartment seekers, as compared to the treatment accorded the white apartment seekers, constituted discrimination in violation of applicable law.
The above-described activities were the product of "tests" conducted by the plaintiff Open Housing Center. Judge Haight of the Southern District of New York recently described the Open Housing Center as
"a not-for-profit New York corporation whose primary purpose is to promote equal opportunity in housing in the New York metropolitan area. It seeks to eliminate unlawful racially discriminatory housing practices in respect of the rental or purchase of apartment units in the metropolitan area, and to assure all persons seeking to rent or buy apartment units the housing of their choice, free of discrimination. In aid of these goals, the OHC assists individuals in obtaining equal access to housing; prepares and distributes information on housing in all five boroughs of New York City; investigates allegations of discrimination and refers complaints to appropriate public agencies or private attorneys; provides counseling and referral services to members of the public who seek housing opportunities; and educates members of the public about housing issues and their legal rights." ( Open Housing Ctr., Inc. v. Samson Management Corp., No. 91-5111, 1992 U.S. Dist. LEXIS 15729 [S.D.N.Y. October 14, 1992]. See also Amended Complaint, P 8.)
In conducting its "tests" in this case, the Open Housing Center sent a black or hispanic person to either AM Realty or Jakabovitz to inquire about available apartments in the Midwood, Sheepshead Bay and Kings Highway communities. After the black or hispanic person's visit, a white person visited the same party and asked about the availability of similar housing.
These pairs of people are commonly called "testers". They have no actual intention of renting an apartment, but pose as renters for the purpose of collecting evidence of unlawful discriminatory practices. Other than race, the tester pairs sent by the Open Housing Center purported to possess substantially similar distinguishing characteristics and personal backgrounds. The plaintiffs argued that the differences in the way the white testers and the black and hispanic testers were treated indicated discrimination.
This two-week trial resulted in a jury verdict on May 13, 1992. The jury found that salesperson Matos discriminated against Cabrera and Luckett in violation of the Fair Housing Act, 42 U.S.C. § 3601 et seq., but determined that Matos did not discriminate against plaintiff McCoggle. Additionally, the jury found that salesperson Siegel discriminated against Hinkson, in violation of the Fair Housing Act, and that Jakabovitz discriminated against Ramsey in violation of the Fair Housing Act, the Civil Rights Act of 1870, 42 U.S.C. § 1981, involving the right to enter into a contract, and the Civil Rights Act of 1866, 42 U.S.C. § 1982, involving the right to lease real property.
Preliminarily, the jury determined that both Siegel and Matos acted within the scope of their authority and in furtherance of the business of Fischler, doing business as AM Realty. The jury further found that Fischler, doing business as AM Realty, acted as the agent of the landlord-defendants Jakabovitz and Breitman with regard to the events at issue in this case. By these findings, the jury held the landlord-defendants liable for the discriminatory acts of their agent, AM Realty.
Having so determined, the jury declined to award compensatory damages to either Cabrera or Ramsey, the testers. Instead, the jury awarded them each nominal damages in the sum of one dollar. The jury awarded the Open Housing Center compensatory damages against Siegel in the sum of $ 1,000, against Matos in the sum of $ 3,000, and against Jakabovitz in the sum of $ 8,000. In addition, the jury declined to award punitive damages in favor of Cabrera or Ramsey against any of the defendants, but awarded such damages to the Open Housing Center in the sums of $ 1,000 against Fischler, $ 350 against Siegel, $ 1,000 against Matos, and $ 1,000 against Jakabovitz. The jury declined to award any compensatory, nominal or punitive damages against Breitman.
When the jury determined that AM Realty acted as Breitman's agent and that Matos discriminated against Luckett, yet declined to award even nominal damages against Breitman, the Court directed the jury to further deliberate on the issue of damages against Breitman. The jury quickly returned and confirmed its original decision, declining to award any damages against Breitman.
Numerous other parties were originally named as party defendants. However, the plaintiffs and these other defendants entered into consent decrees, approved by Judge Korman of this Court, leaving only Fischler d/b/a AM Realty, Matos, Siegel, Breitman, Jakabovitz, and Marianne Hascup ("Hascup"), another of AM Realty's brokers, as the remaining defendants. At the trial, this action was dismissed as against Hascup. Additionally, Ronald Luckett was originally named as a plaintiff in this action but withdrew before the trial.
Although real estate agencies have been held liable for the discriminatory acts of the brokers they employ (see, e.g., City of Chicago v. Matchmaker Real Estate Sales Center, Inc., 982 F.2d 1086 [7th Cir. 1992] [available on Lexis at 1992 U.S. App. LEXIS 32343]), and landlords have been held liable for the discriminatory acts of their managing agents, who are employees of the landlords, (see, e.g., Walker v. Crigler, 976 F.2d 900 [4th Cir. 1992]), this case may be the first in which a jury has held a landlord liable for the discriminatory acts of independent real estate agents acting on behalf of the landlord. Mindful of the significance and apparent novelty of this case, the Court now turns to the parties' respective motions.
The plaintiff Open Housing Center moves for an award of nominal damages against Breitman. All of the successful plaintiffs seek equitable relief and an award of attorney's fees against all defendants.
In their motion for equitable relief, the plaintiffs seek declaratory, prohibitive and affirmative relief. Specifically, with regard to all of the defendants, the plaintiffs request (1) a declaration that the defendants' acts violated the Civil Rights Acts of 1870, 42 U.S.C. § 1981, and of 1866, 42 U.S.C. § 1982, and the Fair Housing Act, and (2) an injunction permanently enjoining the defendants from violating the above-cited statutes.
With regard to the broker-defendants Fischler, Siegel and Matos, the plaintiffs seek an Order requiring them to (1) offer the plaintiffs and their class available apartments that meet their needs; (2) solicit and encourage blacks and hispanics to rent apartments in all Brooklyn neighborhoods, particularly in Midwood, Kings Highway and Sheepshead Bay; (3) advertise in publications such as the Spanish-language El Diario, and the City Sun and The New York Amsterdam News concerning apartments available in all buildings in which any defendant has an interest; and (4) submit written reports to the Open Housing Center so that the Open Housing Center can monitor the broker defendants' compliance with this court's order. Additionally, the plaintiffs seek a declaration that defendants Fischler and Matos continued to practice discrimination in violation of a consent decree approved by Judge Korman of this court on August 27, 1984.
As to the landlord-defendants Jakabovitz and Breitman, the plaintiffs request an order directing said defendants to (1) offer plaintiffs and their class available apartments that meet their needs; (2) submit to the Open Housing Center each month a list of all apartments available for rental in all buildings owned by these defendants, with Jakabovitz reserving one-third of the vacancies in his buildings and Breitman reserving one-half of the vacancies in his buildings for financially qualified black or hispanic apartment seekers referred by the Open Housing Center; (3) submit to the Court their rental criteria, which must be the same as with those used with respect to white tenants; (4) explain, in writing, the basis for rejecting a tenant referred by the Open Housing Center; (5) provide written instructions to all brokers or salespersons employed by these landlord-defendants stating that brokers are to refer all financially qualified applicants to them, regardless of race, color, religion or national origin, and to provide proof of the broker's receipt of such written instructions to the Open Housing Center; (6) post "fair housing" signs in the lobbies of all of their apartment buildings; and (7) advertise available apartments in El Diario and either the City Sun or The New York Amsterdam News whenever the landlord places an advertisement in a newspaper of his choice. The plaintiffs request that the terms of this Order remain in effect for five years from the date of entry.
The Open Housing Center further contends that it will have to hire another person in order to carry out and monitor the enforcement of the equitable relief it seeks. Consequently, it requests that the Court order the defendant-landlords to pay to the Center "monitoring costs" in the total sum of $ 178,250.00, or $ 35,650.00 per annum, for the five-year period covered by the injunction the plaintiffs seek.
With respect to their motion for attorney's fees, the plaintiffs seek an award in the sum of $ 975,638.49, including costs and disbursements.
In opposition to the motion for attorney's fees, Breitman argues that the computer records submitted by the plaintiffs do not allow for proper scrutiny and are thus insufficient. With respect to the motion for equitable relief, Breitman contends that because the evidence did not support the jury's verdict as it pertains to Breitman, an award of equitable relief is not proper.
None of the broker-defendants have filed any opposition to the plaintiffs' motions.
Defendant Jakabovitz's Motion
Jakabovitz moves, apparently pursuant to Rule 50 of the Federal Rules of Civil Procedure, to set aside the jury's verdict with respect to the plaintiff Ramsey, on the ground that the plaintiffs allegedly failed to meet their burden of proof after Jakabovitz offered proof of a nondiscriminatory defense.
The plaintiffs oppose this motion on two grounds. First, the plaintiffs argue that the Court should not consider the merits of this motion because Jakabovitz failed to make a Rule 50 motion for "judgment as a matter of law" against Ramsey at the close of the evidence. Second, the plaintiffs contend that they sufficiently demonstrated that the alleged "nondiscriminatory reasons" were actually a coverup for a racially discriminatory reason.
Defendant Breitman's Motion
Breitman moves for "judgment on the verdict". He contends that because the jury declined to award nominal damages against him and, in fact, confirmed its decision upon further deliberation, the clear intent of the jury's verdict was that judgment be entered in favor of Breitman. In support of this conclusion, Breitman submits two possible reasons for the jury's determination. Specifically, Breitman argues that the jury may have found (1) that Matos did not act within the scope of his agency, or (2) that Matos's discriminatory conduct with respect to Luckett did not relate to Breitman's building.
Breitman also maintains that he is entitled to judgment because he offered a nondiscriminatory defense which the plaintiffs failed to overcome, and because the verdict sheet is ambiguous.
As with Jakabovitz's motion to set aside the verdict as to Ramsey, it is unclear under what procedural rule Breitman moves. Apparently, he also moves pursuant to Rule 50 of the Federal Rules of Civil Procedure.
In opposition to Breitman's motion, the plaintiffs initially contend that Breitman has not met the heavy burden one must satisfy to succeed on a Rule 50 motion. Moreover, the plaintiffs argue that, under the circumstances presented, the Court must enter an award of nominal damages against Breitman. The plaintiffs further contend that a determination of the merit of Breitman's "nondiscriminatory reasons" was properly within the purview of the jury, which rejected these "nondiscriminatory reasons" in reaching its verdict. Finally, the plaintiffs maintain that the verdict sheet is not ambiguous and note that, even assuming that the verdict sheet is ambiguous, Breitman never objected to its form although he had ample opportunity to review it.
In enacting Title VIII of the Civil Rights Act of 1968, commonly known as the "Fair Housing Act" ("the Act") and codified at 42 U.S.C. § 3601 et seq., Congress exercised its power under the Thirteenth Amendment to bar all racial discrimination in the rental or sale of real property. (See United States v. Youritan Constr. Co., 370 F. Supp. 643, 648 [N.D. Cal. 1973], aff'd in part, remanded on other grounds, 509 F.2d 623 [9th Cir. 1975].) The purpose of the Act "is to protect against conduct which, either intentionally or in effect, impedes integration and/or perpetuates segregation and discrimination in housing." ( Ragin v. Harry Macklowe Real Estate Co., Inc., 801 F. Supp. 1213, 1230 [S.D.N.Y. 1992]. See also Armstrong, "Desegregation Through Private Litigation: Using Equitable Remedies to Achieve the Purposes of the Fair Housing Act", 64 Temple L. Rev. 909, 910 .)
In September 1988, during the pendency of the instant litigation, the Fair Housing Act was amended, with these amendments taking effect March 12, 1989. Whether the pre-amendment Act or the post-amendment Act is applied does not affect the Court's decision here, except with regard to the issue of attorney's fees, which is discussed below.
Prior to amendment, 42 U.S.C. § 3604 states that it is unlawful
"(a) To refuse to sell or rent after the making of a bona fide offer, or to refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, or national origin.
"(b) To discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith, because of race, color, religion, sex, or national origin.
"(d) To represent to any person because of race, color, religion, sex, or national origin that any dwelling is not available for inspection, sale, or rental when such dwelling is in fact so available."
The amendments to this section added "familial status" to the list of protected classifications.
Under the pre-amendment Act, 42 U.S.C. § 3612 provides for the enforcement of the provisions of the Act by private persons, while under the post-amendment Act, private enforcement is covered by § 3613. Both sections contain similar language.
The Supreme Court has held that a tester, who "may have approached the real estate agent fully expecting that he would receive false information, and without any intention of buying or renting a home," is such a "private person", with standing "by virtue of her allegation that her statutorily created right to truthful housing information was violated." ( Ragin v. Harry Macklowe Real Estate Co., supra, 801 F.2d at p. 1229 [quoting from Havens Realty Corp. v. Coleman, 455 U.S. 363, 374, 102 S. Ct. 1114, 1121, 71 L. Ed. 2d 214 (1982)].) Similarly, an entity such as the Open Housing Center has standing upon a showing
"that it sustained actual or threatened injury in fact that is fairly traceable to the alleged illegal action and likely to be redressed by a favorable court decision. See Havens, 455 U.S. at 378-79; Valley Forge Christian College v. Americans United for Separation of Church & State, Inc., 454 U.S. 464, 472, 70 L. Ed. 2d 700, 102 S. Ct. 752 (1982). Injury in fact can be established by proof that the defendant's 'purportedly illegal action increases the resources the group must devote to programs independent of its suit challenging the action' [citations omitted] such as . . . 'devoting more time, effort and money to endeavors designed to educate'". (Ragin v. Harry Macklowe Real Estate Co., supra.)
II. Nominal Damages in the Breitman Case and Breitman's Motion for "Judgment on the Verdict"
The Open Housing Center contends that, based upon the jury's verdict as recorded on the special verdict sheet, the entry of an award of nominal damages against the landlord-defendant Breitman is required. The Supreme Court has held that a plaintiff who suffers a deprivation of an absolute right, but is unable to prove actual damages, is "entitled to recover nominal damages not to exceed one dollar." ( Carey v. Piphus, 435 U.S. 247, 267, 98 S. Ct. 1042, 1054, 55 L. Ed. 2d 252 .) The Second Circuit has interpreted this holding "as requiring an award of nominal damages where the plaintiff proves a deprivation of an absolute right" ( Fassett v. Haeckel, 936 F.2d 118, 121 [2d Cir. 1991] [emphasis in original]), and has directed district courts to award nominal damages in instances "when substantive constitutional rights had been violated but no compensatory damages had been proved." ( Ruggiero v. Krzeminski, 928 F.2d 558, 563 [2d Cir. 1991] [citation omitted].)
An examination of the special verdict sheet clearly indicates that the jury found Luckett's substantive constitutional rights to have been violated by Breitman's agent. The verdict sheet reads, in pertinent part, as follows:
"3. Did the plaintiffs establish that the defendant EMANUEL [sic] FISCHLER, doing business as AM REALTY CO. acted as an "agent" for the defendant BENJAMIN BREITMAN, as the Court has explained that concept to you, with regard to the incident of March 6, 1987 involving testers RONALD LUCKETT and SUSAN HAMOVICH?
"5. Do you find that the plaintiff OPEN HOUSING CENTER, INC. established, that on March 6, 1987, RONALD LUCKETT was discriminated against by the defendant CARLOS MATOS because of his race, in violation of Title VIII, the Fair Housing Act?
Based upon the juror's answers to the clear and unambiguous questions in the special verdict sheet, the evidence presented at the trial, and the Court's extensive jury instructions, it is beyond dispute that the jury found that (1) Matos discriminated against Luckett, in violation of Luckett's constitutional rights, with regard to the renting of a Breitman apartment; and (2) that Matos, as one of AM Realty's salespersons, acted as Breitman's agent. Accordingly, the jury's verdict holds Breitman liable for the discriminatory acts by Matos.
Nevertheless, the jury declined to award either compensatory damages or nominal damages against Breitman, despite being directed to return to the jury room to reconsider its seemingly inconsistent verdict. In light of the jury's verdict and the law set forth above, Luckett would have been entitled to an award of nominal damages had he been a plaintiff in this action.
A review of the recent cases involving the Fair Housing Act indicates that Congress has granted to organizations like the Open Housing Center standing to assert the rights of third parties, such as Luckett, under the circumstances presented in this case. (See Huertas v. East River Housing Corp., 81 F.R.D. 641 [S.D.N.Y. 1979]; see also Seniors Civil Liberties Ass'n v. Kemp, supra, 965 F.2d at p. 1033; LeBlanc-Sternberg v. Fletcher, 781 F. Supp. 261, 270 [S.D.N.Y. 1991] ["under the [Fair Housing Act], the distinction between 'third party' and 'first party' standing is of little significance"]; Saunders v. General Servs. Corp., 659 F. Supp. 1042, 1052-53 [E.D. Va. 1987] [criteria for representative standing].) Consequently, the Court should have instructed the jury to award nominal damages not to exceed one dollar in favor of the Open Housing Center and against Breitman. The Second Circuit has held that a district court's failure to make such an instruction constitutes error. ( Fassett v. Haeckel, supra, 936 F.2d at p. 121.) Accordingly, the Court now corrects this error, grants the Open Housing Center's motion, and directs an award of nominal damages in the sum of $ 1.00 against Breitman. ( Fassett v. Haeckel, supra; Ruggiero v. Krzeminski, supra, 928 F.2d at p. 564.)
The Court considered Breitman's arguments in support of his motion to set aside the jury's verdict and in opposition to the Open Housing Center's motion for nominal damages and finds them to be without merit. Initially, the Court notes that Breitman does not cite any rule as authority for his motion. Assuming that his motion is for judgment as a matter of law under Rule 50(b), Breitman has failed to satisfy the heavy burden necessary to set aside a jury verdict.
A motion to set aside a jury verdict, formerly known as "judgment notwithstanding the verdict", or motion "j.n.o.v.", is covered by Rule 50 of the Federal Rules of Civil Procedure and is now ...