The opinion of the court was delivered by: Denise Cote, District Judge
The Anti-Discrimination Center of Metro New York, Inc. ("ADC") has brought suit as relator for the United States of America against Westchester County, New York ("Westchester" or the "County"), alleging that Westchester violated the False Claims Act, 31 U.S.C. § 3729, et seq. ("FCA"), through certifications made to the Secretary of Housing and Urban Development ("HUD") between April 2000 and April 2006 to obtain over $52 million in federal funding for housing and community development. On July 13, 2007, this Court denied the County's motion to dismiss, rejecting its contention that it had no legal obligation to consider race when it analyzed impediments to fair housing in connection with its certifications. The Court held that a grantee that certifies to the federal government that it will affirmatively further fair housing as a condition to its receipt of federal funds must analyze "the existence and impact of race discrimination on housing opportunities and choice in its jurisdiction." United States ex rel. Anti-Discrimination Center of Metro New York, Inc. v. Westchester Cty., 495 F. Supp. 2d 375, 376 (2007).*fn1
Discovery having been completed, the ADC has now brought a motion for partial summary judgment, contending that there is no genuine issue of material fact that the County knowingly submitted false certifications that it would affirmatively further fair housing ("AFFH") by, inter alia, failing to analyze impediments to fair housing choice within the County in terms of race. The County has filed a cross-motion for summary judgment, arguing that it did properly analyze race, and that even if its certifications were false in that regard, it did not make them with the requisite knowledge for liability to be imposed under the FCA. Those motions were fully submitted on November 14, 2008. For the following reasons, ADC's motion for partial summary judgment is granted in part and denied in part, and the County's motion for summary judgment is denied in full.
Before describing the evidentiary record created through this motion practice and the legal analysis of the ADC's FCA claims, a brief summary of the parties' contentions is in order. ADC contends that Westchester is a racially segregated county, and that to obtain the HUD funds at issue here the County had to analyze and record its analysis of the impediments to fair housing choice, and then take appropriate actions to overcome those impediments and also record those actions. ADC contends that, despite certifying to the federal government that it had taken each of these steps, the County did none of these things, instead focusing exclusively on obtaining federal funds to increase the stock of affordable housing within the County, and ignoring the fact that its actions were increasing patterns of segregation. ADC identifies several tactics that it contends the County could have (and should have) utilized to reduce the barriers to fair housing choice based on race within its jurisdiction.
The County has taken a variety of tacks in defending these charges. In addition to disputing that it was required to analyze race when analyzing impediments to fair housing choice, it contends principally that in any event it did analyze race, determined that racial segregation and discrimination were not significant barriers to fair housing choice, and concluded that the most pressing impediment to fair housing was the lack of affordable housing stock. It argues that it did an outstanding job in increasing the stock of affordable housing within the County, and that this litigation represents little more than a policy dispute over the most effective means for addressing local government resistance to integration and affordable housing. The County has adopted a policy of cooperation with municipalities, in light of what it terms "political reality" and due to its belief that cooperation is the most productive avenue for increasing the stock of affordable housing in the County.
The undisputed facts of record, or, where disputed, taken in the light most favorable to the County, establish the following.
A. Statutory and Regulatory Framework Westchester County is Comprised of 45 Municipal Entities
All of the municipalities are part of the Westchester Urban County Consortium ("Consortium"), except for the municipalities of Mount Pleasant, Mount Vernon, New Rochelle, White Plains, and Yonkers. The County applied to HUD for federal funding, including Community Development Block Grants ("CDBG"), on behalf of itself and the Consortium each year from April 1, 2000 to April 1, 2006 ("the false claims period").*fn2
The United States grants housing and community development-related funding to state and local entities. In order to receive certain federal funding, including CDBG funds, the County was required to certify that it would meet a variety of fair housing obligations, including that the County would AFFH. Specifically, grant recipients are required to make certifications to HUD that, inter alia, "the grant will be conducted and administered in conformity with the Civil Rights Act of 1964 and the Fair Housing Act, and the grantee will affirmatively further fair housing." 42 U.S.C. § 5304(b)(2). To AFFH, the County was required to undertake three tasks: to "conduct an analysis of impediments to fair housing choice within the area, take appropriate actions to overcome the effects of any impediments identified through that analysis, and maintain records reflecting the analysis and actions in this regard." 24 C.F.R. § 91.425(a)(1)(i), see also id. § 570.601(a)(2). It is undisputed that the County was aware of its AFFH obligations during the false claims period, and that the County made claims for payments of grant funds from the United States during the period.
Westchester entered into Cooperation Agreements with municipalities participating in the Consortium. The agreements pertained to, inter alia, CDBG grants, and provided that the County is prohibited from expending community development block grant funds for activities in or in support of any local government that does not affirmatively further fair housing within its jurisdiction or that impedes the County's action to comply with its fair housing certifications.
These Cooperation Agreements were submitted to HUD every three years.
B. The Requirement to Consider Race
As set forth more fully in Anti-Discrimination Center, 495 F. Supp. 2d at 387-89, the statutory and regulatory framework set forth above -- in requiring the grantee of funds to certify that the grant will be "conducted and administered" in conformity with the Civil Rights Act of 1964 and the Fair Housing Act ("FHA"), and to certify that the grantee will AFFH -- requires the grantee to analyze the impact of race on housing opportunities and choice in its jurisdiction. In identifying impediments to fair housing choice, it must analyze impediments erected by race discrimination or segregation, and if such impediments exist, it must take appropriate action to overcome the effects of those impediments. Id. at 387.*fn3
C. The County's AFFH Certifications
By the year 2000, Norma Drummond, a member of the County's Planning Department, was the person responsible for the County's administration of the grants associated with the County's affordable housing program and CDBG program. As discussed above, one of the County's duties as part of the requirement to AFFH was to conduct an analysis of impediments or AI, as it is customarily called. Two AIs were reduced to writing during the false claims period and included within the County's "Consolidated Plans" presented to HUD in 2000 and in 2004.
1. Consolidated Plans and Related Submissions
The County's Consolidated Plans addressed housing and community development goals for four federal grant programs.*fn4
Consolidated Plans serve four main functions: they are "[a] planning document for the jurisdiction," "[a] submission for federal funds under HUD's formula grant programs," "[a] strategy to be followed in carrying out HUD programs," and "[a] management tool for assessing performance and tracking results."
24 C.F.R. § 91.1(b). Consolidated Plans are required to describe, inter alia, the jurisdiction's "general priorities for allocating investment geographically within the jurisdiction . . . and among different activities and needs" for the following categories: affordable housing, public housing, homelessness, other special needs (including the elderly, disabled, persons with alcohol or drug addiction, persons with HIV/AIDS and their families, and public housing residents), and nonhousing development pursuant to the CDBG program. Id. § 91.215.
As part of the Consolidated Plan process, the County was required to make Action Plan submissions to HUD. The Action Plans were annual submissions that addressed the goals and objectives for the County as they related to the categories discussed above. See id. § 91.220; id. § 91.420. The Action Plans included the County's annual applications for funding, as well as the County's annual express certification that it would AFFH. See id. § 91.225; id. § 91.425. The County also made annual submissions, called Consolidated Annual Performance and Evaluation Reports ("CAPERs"), reviewing the "progress it has made in carrying out its strategic plan and its action plan" over the previous year. Id. § 91.520(a).
During the false claims period, the County submitted two Consolidated Plans (one covering the years 2000-2004 and one covering the years 2004-2008). It also submitted annual Action Plans (with express AFFH certifications) and CAPERs for each of the years 2000-2006. In its annual certifications during the false claims period, the County certified that it would: "affirmatively further fair housing, which means it will conduct an analysis of impediments to fair housing choice within the jurisdiction, take appropriate actions to overcome the effects of any impediments identified through that analysis, and maintain records reflecting that analysis and actions in this regard." The County included its 2000 and 2004 AIs in the Consolidated Plans it submitted to HUD, although the regulations did not require that the AIs themselves be submitted to HUD.
The County's 2000 AI was one of eight components of the County's 2000-2004 Consolidated Plan, and each component was discussed in separate chapters of the Consolidated Plan. In the chapter of the 2000-2004 Consolidated Plan addressed to the projected housing needs of the County for the next five years, the plan included figures showing the Consortium's 1990 population by race, and also by race and income level. The 2000-2004 Consolidated Plan also identified communities in the County that had "areas of minority concentration," and identified which municipalities in the Consortium had the largest black population, as well as which ones had the largest gain in black population during the 1980s. It also noted that blacks made up between .1% and 16% of all homeowners in the Consortium's municipalities, and between 1 and 30% of the renters in the Consortium's municipalities. The 2000-2004 Consolidated Plan also reviewed the waiting list for Section 8 rental assistance, and broke down the waiting list by race. The 2000-2004 Consolidated Plan noted that "[l]ow-income families and individuals and those with special housing needs (e.g., mentally ill, disabled and persons with AIDS) are frequently excluded from housing opportunities due to illegal discrimination," and that the non-profit housing counseling agency Westchester Residential Opportunities ("WRO") reported that they received approximately 120 housing discrimination complaints in 1999.
Similarly, in the County's 2004-2008 Consolidated Plan, the County noted that a key finding of the housing needs component of the Consolidated Plan (one of the nine components of the Consolidated Plan) was that while 72% of households in the Consortium own their own homes, only 46% of black households and 35% of Hispanic households own their own homes. In the Housing and Homeless Needs Assessment Component, the County identified "impacted areas" of the County, which were defined as areas that had populations that were over 40% minority or 40% "poverty." The plan identified the municipalities in the Consortium that had the highest minority populations. The 2004-2008 plan noted that "[m]inorities are priced out of the expensive homeownership market," citing the finding regarding the percentage of homeownership among all Consortium households and among minorities. The Appendix to the Consolidated Plan for 2004-2008 includes, inter alia, data tables from the 2000 census, including tables showing 1) population by race and Hispanic Origin, 2) the population by age, 3) cost-burdened owners and renters, 4) overcrowded housing units, and 5) housing deficiencies. The appendix also includes tables showing housing problems for Hispanic households and black, non-Hispanic households. These tables showed the percentage of these populations that experienced housing problems at different income levels, where having "any housing problem" was defined as a "cost burden [of] greater than 30% of income and/or without complete kitchen or plumbing facilities."
2. Materials and Communications Relating to the Preparation of AIs
The County had received a copy of the HUD Fair Housing Planning Guide ("HUD Guide") by April 1, 2000. The purpose of the HUD Guide is to help grantees fulfill the "fair housing requirements" of grants such as the CDBG. As for the requirement to AFFH, HUD stated in the Guide that it interpreted the objectives of conducting the AI, taking appropriate actions, and maintaining records reflecting the analysis and actions taken, to mean, inter alia, to "[a]nalyze and eliminate housing discrimination in the jurisdiction" and to "[p]rovide opportunities for inclusive patterns of housing occupancy regardless of race, color, religion, sex, familial status, disability and national origin." An AI involves an "assessment of conditions, both public and private, affecting fair housing choice for all protected classes." Such impediments are "actions, omissions or decisions" which "restrict housing choices or the availability of housing choices," or which have the effect of doing so, based on "race, color, religion, sex, disability, familial status, or national origin," including "[p]olicies, practices, or procedures that appear neutral on their face." HUD's suggested AI format includes a housing profile describing "the degree of segregation and restricted housing by race, ethnicity, disability status, and families with children; [and] how segregation and restricted housing supply occurred."
The HUD Guide also explains the relationship of the AI to the Consolidated Plan, noting that the consolidated document includes, among other things, the community development plan and the submissions for various housing and development programs, including the CDBG. The HUD Guide notes that many of the fair housing problems that relate to housing choice for low and moderate income housing programs are addressed already elsewhere in the consolidated plan. The Guide cautions, however, that grantees should prepare AI's using a "Fair Housing Perspective," and that this means that while the explanation of barriers to affordable housing to be included in the Consolidated Plan may contain a good deal of relevant AI information[, it] may not go far or deep enough into factors that have made poor housing conditions more severe for certain groups in the lower-income population than for others. Jurisdictions should be aware of the extent to which discrimination or other causes that may have a discriminatory effect play a role in producing the more severe conditions for certain groups. (Emphasis supplied).
The distinction between AFFH actions and affordable housing activities is further explained in the HUD Guide:
The two concepts are not equivalent but they are also not entirely separate. When a jurisdiction undertakes to build or rehabilitate housing for low- and moderate-income families, for example, this action is not in and of itself sufficient to affirmatively further fair housing. It may be providing an extremely useful service by increasing the supply of decent, safe, and sanitary affordable housing. Providing adequate housing and improving existing neighborhoods are vital functions and should always be encouraged.
Additionally, the provision of affordable housing is often important to minority families and to persons with disabilities because they are disproportionately represented among those that would benefit from low-cost housing. When steps are taken to assure that the housing is fully available to all residents of the community, regardless of race, color, national origin, gender, handicap, or familial status, those are the actions that affirmatively further fair housing. (Emphasis supplied).
The HUD Guide informed grantees that "AIs are not to be submitted to, or be approved by, HUD. However, HUD could request submission of the AI in the event of a complaint or as part of routine monitoring." Rather, the HUD Guide explained that jurisdictions should provide a summary of the AI, along with the jurisdiction's accomplishments for the past year, as part of the CAPER submission. Prior to the false claims period, the County received a letter from HUD, dated July 17, 1996, in relation to its 1996 Consolidated Plan submissions. The letter set forth "matters of advice" for "areas for future improvement." One such matter of advice informed the County that its AI should contain a description of the degree of segregation and restricted housing by race, ethnicity, disability status and families with children; explain how segregation and restricted housing supply occurred; and relate this information by neighborhood and cost of housing. Minorities should be categorized as follows: Black, Hispanic, Asian, Pacific-Islander, and American Indian/Alaskan Native. In addition, the County should submit data on the housing needs of homeless individuals and families by race/ethnicity in subsequent Consolidated Plan submissions.
Additionally, the County had its own internal documents from before the false claims period relating to its AFFH obligations and the preparation of AIs. One such document, which is an outline of the County's Fair Housing Plan ("FHP"), sets forth the requirements that the County conduct an AI, set out actions to be taken, and maintain records. The end of the outline contains the following reminder: "Remember: This [the FHP] is not a report on affordable housing, but FAIR HOUSING!!!" Similarly, in a July 1996 letter to WRO, an employee of the County's planning department thanked the WRO for meeting to discuss the FHP. The letter went on to say that [w]hile this document [the FHP] is required by HUD to analyze Fair Housing throughout the Westchester Urban County Consortium, it will also be a useful tool for future planning and development of affordable housing. As you know, the Planning department has prepared several reports that address affordable housing, which should not be confused with the Fair Housing Plan.
The goals of the Fair Housing Plan are: 1) to analyze barriers to housing that are based on race, religion, sex, disabilities, familial status, or national origin; 2) to develop strategies to remove those barriers; and 3) to maintain records of Fair Housing efforts, thus indicating the County's commitment to fair housing choice. (Emphasis supplied).
In 2002, Drummond attended HUD-sponsored training regarding AFFH. The training materials were titled "Affirmatively Furthering Fair Housing[:] Conducting the Analysis of Impediments and Beyond." Those materials noted that "[d]uring the past thirty-seven years, Congress has spent more than one trillion dollars in a failed attempt to remedy the effects of a dual housing market in America," and they traced the evolution of the dual market to, inter alia, African-Americans migrating to cities and encountering obstacles "designed to segregate them from the majority, and to ...