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1/23/2012
Civil Rights Liability for a Product Manufacturer or Supplier? An Open Question Under the Federal Fair Housing Act
Originally published in DRI Building Blocks Issue 2, Volume 2.
Two defense attorneys that do not often rub shoulders at a DRI convention (other than the annual convention) are counsel who defend civil rights claims and counsel who defend construction product claims. As a result of the Federal Fair Housing Act and its Amendments, 42 U.S.C. §§3601 et seq. and similar state law analogs, these defense counsel may become fast friends, since counsel representing product suppliers and manufacturers have a new potential exposure to address in the coming months and years.
History of the Fair Housing Act and Its Amendments – A Prompt Remedy
The legislative history of the Fair Housing Act and its Amendments demonstrates that the legislation served to provide prompt remediation of housing that does not comply with the ADA (among other standards) for protected class-members. See 134 Cong. Rec. S10454-57 (1988).
In discussing the 1968 version of the Fair Housing Act, Senator Kennedy described the protections afforded as a "right without a remedy": "But the Fair Housing Act we passed in 1968 has proved to be an empty promise because the legislation lacked an effective enforcement mechanism. For two decades, fair housing in America has been a right without a remedy. … The Fair Housing Amendments Act of 1988 will put real teeth into the fair housing laws by giving HUD real enforcement authority." 134 Cong. Rec. S10454-54.
A Memorandum entitled "Memorandum of Senators Kennedy and Specter Regarding Their Substitute Amendment" stated that "…prompt judicial action is necessary to carry out the purposes of the [FHA]…" 134 Cong. Rec. S10454-56 (emphasis added).
The Fair Housing Act – Broad Application to First Party Claims
In furtherance of the goal of a prompt remedy, the "real teeth" ushered in under the 1988 amendments includes a very broad definition of "discrimination."
42 U.S.C. §3604(f)(3)(C) defines "discrimination" to "include[]" . . . in connection with the design and construction of covered multifamily dwellings for first occupancy . . . a failure to design and construct those dwellings in such a manner that - -
- the public use and common portions of such dwellings are readily accessible to and usable by handicap persons;
- all the doors designed to allow passage into and within all premises within such dwellings are sufficiently wide to allow passage by handicapped persons in wheelchairs; and
- all the doors designed to allow passage into and within all premises within such dwelling contain the follow features of adaptive design:
- an accessible route into and through the dwelling;
- light switches, electrical outlets, thermostats, and other environmental controls in accessible locations;
- reinforcements in bathroom walls to allow later installation of grab bars; and
- usable kitchens and bathrooms such that an individual in a wheelchair can maneuver about the space.
Given the broad language discussed above, one could envision a scenario where a handicapped plaintiff sues a supplier of doors under a "connection" theory that given the size of the order and location of delivery that "you knew or should have known that the doors were being supplied to an apartment complex and you failed to ensure that those doors complied with the ADA and in turn the FHA." One could also envision a scenario where a concrete supplier is "connected" to the construction process by its delivery of concrete for the installation of sidewalks that did not comply with the ADA's cross slope or running slope requirements.
Does the supply of doors for a multifamily dwelling or the delivery of concrete for said dwelling's sidewalks constitute "a failure to . . . construct" as defined under 42 U.S.C. §604(3)(C)? Or is the language of subsection 3604(3)(C), "in connection with the design and construction . . . ", sufficiently broad to capture a construction product supplier? Or a product manufacturer? The phrase "in connection" could be very elastic in the hands of creative plaintiff's counsel or in the mind of a Federal Judge with an eye toward encouraging settlement.
Intent to discriminate against a disabled or handicap personis not an element of a FHA claim under 42 U.S.C. §3604(f)(3)(C). A FHA claim under the foregoing subsection is, in essence, a strict liability claim. A party that is arguably "connected" to the design or construction of a covered multifamily dwelling has only one safe harbor under the FHA: compliance with ANSI 117.1 (see, 42 U.S.C. §3604(f)(4)), which only applies to subsection 3604 (f)(3)(C)(iii) -- failures of adaptive design.
Given Congress' desire for a prompt remedy in the form of remediation and the breadth of the legislation discussed above, there are very few defenses, beyond the statute of limitations, to a defendant "connected"' to the design or construction of a covered multifamily dwelling. To date, the FHA authorities in the construction context involve claims against owners, developers, contractors and design professionals. The breadth of the FHA is now being tested with direct claims against construction product suppliers.
The Fair Housing Act – Attorneys' Fees
What drives a Fair Housing Act Claim? Among other motivators, plaintiff's counsel may recover attorneys' fees pursuant to 42 U.S.C. § 613(c)(2) as a prevailing party.
Recent Activity Under the Fair Housing Act – Third Party Claims
The Fair Housing Act was enacted on April 11, 1968 and amended in 1988. Despite its enactment date and 1988 amendments, the first FHA litigation of note involving a construction-related defendant was 2003 in a North Carolina District Court in the matter of United States v. Quality Built Construction, Inc., 309 F.Supp.2d 767 (E.D.N.C. 2003). TheQuality Built decision was not appealed.
It was not until 2009 through 2011 that additional decisions addressing the FHA in the construction context were decided. United States v. Murphy Development, LLC, 2009 WL 3614829 (M.C. Tenn. 2009), United States v. Shanrie Co., 610 F.Supp.2d 958 (S.D. Ill. 2009), Mathis v. United Homes, LLC, 607 F.Supp.2d 411 (E.D.N.Y. 2009), Equal Rights Ctr. v. Archstone Smith Trust, 603 F.Supp.2d 814 (D.Md. 2009), and Sentell v. RPM Mgt. Co. 2009 WL 2601367 (E.D.Ark. 2009). As discussed below these cases involved claims against owners, contractors and design professionals and focused on alleged rights of indemnity and contribution among these parties for alleged infringements of the FHA.
Third-Party Practice in Federal Courts
Despite the potentially dismal picture painted above, if counsel for a manufacturer or supplier of construction products is impleaded by way of a third party complaint, there is a very compelling argument that the FHA contains no express right to contribution or indemnity as set forth in the authorities cited above. According to the courts cited above, no claim for indemnity or contribution exists as a matter of law.
The Quality Built Court held that direct defendants who implead new parties by way of third party complaints (or assert cross claims against one another) are not among the class of those that the FHA was meant to protect, rather they are the ones whose conduct the FHA sought to regulate. Quality Built Construction, Inc., 309 F.Supp.2d at 778. TheQuality Built Court found nothing in the FHA suggesting that Congress intended to create a right of contribution or indemnification. Id.
Where a supplier or manufacturer of construction products is impleaded in a FHA case by way of Federal Civil Rule 14, the Court should focus on the derivative nature of the third party complaint as such claims are only appropriate where the third party defendant's liability to the third party plaintiff is dependent on the outcome of the main claim. American Zurich Ins. Co. v. Cooper Tire & Rubber Co., 512 F.3d 800 (6th Cir. 2008).
The derivative nature of the claims is of paramount importance when considering that some of the third party claims may be based in contract or tort. The Quality BuiltCourt found that the breach of contract and negligence claims were "de facto" claims for indemnity and contribution and failed as a matter of law. Quality Built Construction, Inc.,309 F.Supp.2d at 809.
Third-Party Practice in State Courts
It must be noted that the Murphy Development and Equal Rights Center Courts left open the possibility of third party practice in state courts sounding in breach of contract or breach of a state law negligence claim. Murphy Development at *2; Quality Built Construction, Inc, 603 F.Supp.2d at 824. These decisions can be relied upon to undermine the "de facto" analysis set forth by the Quality BuiltCourt. Recovery under a third party complaint against a construction product supplier in a state court, under a state law breach of contract theory, would turn on the language of the Purchase Order language.
Concluding Thoughts
In the context of a "shot gun" approach where plaintiffs assert direct claims against a product supplier or manufacturer under 42 U.S.C. §3604(f)(3)(C), the battle ground will be whether a supplier or manufacturer of a construction product is (1) an entity responsible for failures of design and construction and (2) whether the "in connection with the design and construction" language is broad enough to capture a product supplier or manufacturer. Further, from a policy perspective, if the goal of the FHA is to promote remediation of ADA violations and failures of "adaptive design," a product supplier or manufacturer is not in a position to remediate the violation as it does not control the dwelling and does not likely have access to the dwelling. At best, a supplier or manufacturer could provide ADA-compliant products to a third party for purposes of remediation.
In the context of third party practice, a body of law is slowly developing that should insulate a product supplier or manufacturer from FHA liability under federal law. FHA liability under state law contract and negligence principles remains an open question.
Finally, plaintiffs must secure a judgment to be a prevailing party. See 42 U.S.C. § 613(c)(2). However, the United States Supreme Court in Buckhannon Board and Care Home v. West Virginia Department of Health and Human Resources, 532 U.S. 598, 604, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001) held that in order to qualify as a prevailing party, a party must obtain an enforceable judgment or a settlement that is enforced through a consent decree. The Supreme Court determined that the term "prevailing party" does not include a party that fails to secure a judgment or court ordered consent decree, but has nonetheless achieved the desired result because the lawsuit brought about a voluntary change in the defendant's conduct. In so ruling, the Supreme Court rejected a "catalyst theory" of defining a prevailing party.
Assuming application of the FHA to construction product suppliers, if an actual violation is corrected in the context of first party claims, prior to motion practice deadlines, plaintiffs and their counsel would not be in a position to recover any fees. In the context of third party claims (assuming such claims are permitted), a request for access and an offer to correct an actual violation would present a potential mitigation defense to any attempt to pass through a recovery of the underlying plaintiffs' attorneys fees.
This Legal Alert is intended to bring attention to new developments in the law. It is not intended to be, nor should it be construed to be official legal advice for any particular client nor any particular situation. Rendigs, Fry, Kiely & Dennis, LLP makes no warranties, express or implied, as to the accuracy or reliability of the information contained in this legal alert, nor for any interpretation by the reader of the information contained herein. If legal advice or other professional assistance is needed, the services of a competent legal professional of your choice should be obtained.
Christopher R. Carville, Partner
CRC@Rendigs.com | (513) 381-9200
