November 21, 2018

Divided Ninth Circuit affirms punitive damages award in unpublished decision (Fair Housing Center of Washington v. Breier-Scheetz Properties)

This unpublished memorandum disposition from the Ninth Circuit affirms a punitive damages award in a housing discrimination case. 

The defendant landlord limited occupancy in certain studio apartments to one person per studio.  The Fair Housing Center of Washington argued that this policy unfairly discriminated against families, in violation of federal, state, and local housing laws. The district court ruled agreed and imposed punitive damages on the landlord, who appealed.

The Ninth Circuit affirmed in an opinion with very little analysis, as is typical of unpublished memorandum dispositions.  The discussion is so cursory, it does not even reveal the amount of punitive damages at issue.  (Press reports indicate the award was $100,000.)

Although the majority seemed to think the case was a slam-dunk, Judge Bea dissented from the decision to affirm the punitive damages.  He explained that the plaintiff presented no evidence that the defendant acted with an "evil motive" as required for punitive damages under the Fair Housing Act:

[The defendant] was simply unwilling to change a longstanding and reasonable business policy—which [the defendant] maintained was legal—until ordered to do so by a court. It cannot be the case that in order to avoid being subjected to punitive damages, a business must immediately change its policies whenever it is accused of misconduct by an advocacy group or an administrative agency, rather than insist that the group or agency prove liability in a court of law. A defendant similarly cannot be subjected to punitive damages for failing prophetically to cease conduct that is only subsequently enjoined by a court order. . . . . None of the district court’s findings in this case come close to evincing the “reckless or callous indifference” required to award punitive damages under the FHA.
This is an issue that comes up fairly often in California punitive damages litigation.  Plaintiffs' counsel will sometimes argue that a defendant's failure to admit liability is itself a reason for punishment.  California courts have recognized, however, that a defendant cannot be punished merely for defending itself.  In light of Judge Bea's dissent on this point, it's a bit surprising that the judges in the majority did not bother to offer any response to his arguments.