Presented by: Harry J. Kelly, Nixon Peabody LLP

1. IREM Building Operations Symposium
By
Harry J. Kelly
Nixon Peabody LLP
Washington, D.C. Office
How to Avoid Discrimination Claims
(without it hurting too much)

2. Avoiding Discrimination Claims
• Avoiding Claims: The Property Manager’s Role
› Property managers stand at a critical point in most
claims arising under anti-discrimination laws.
› Interaction with tenants and other persons can mean
the difference between a happy resolution and a
lawsuit.
› Like it or not, property managers are on the line in these
moments, and they need to take steps in advance to
maximize the chances of handing these situations
properly
› Good news: there are several strategies to pursue to
successfully avoid discrimination claims
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3. Avoiding Discrimination Claims
Rule 1: Know The Law
› The first step in avoiding liability is to understand the laws
that apply
› In property management context, these are the chief federal
laws:
– Fair Housing Act
– Americans with Disabilities Act
– Section 504 of the Rehabilitation Act of 1973 (only for
multifamily housing that receives Federal financial
assistance
› May be other state/local laws, but these Federal laws lay out
the principal concepts
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4. Avoiding Discrimination Claims
Fair Housing Act Section 504 Americans With
Disabilities
Act
Applies to Sales and Rentals Multifamily Housing Places of Public
(including Multifamily that receives Accommodation
Housing) Federal financial
assistance
Provides • Bans discrimination in • Bans discrimination • Imposes accessible
rental, sales of housing on basis of design stds.
re protected classes disability • Requires removal
• Imposes accessible • Imposes accessible of barriers
design requirements design stds. • Reasonable
• Reasonable • Reasonable accommodations
accommodations/ accommodations
reasonable modifications
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5. Avoiding Discrimination Claims
Know the Law: Recent Legal Developments
› Multifamily Housing: HUD adopts final rules
on “disparate impact” discrimination
› Commercial Properties: Justice
Department adopts/implements new 2010
ADA accessible design standards
› Reasonable Accommodations
› Let’s take a detailed look at each of these
rules
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6. Avoiding Discrimination Claims
• HUD’s Final Disparate Impact Rules
› What is disparate impact liability?
– Two types of liability in discrimination cases:
• Disparate Treatment: where someone in a protected
class is singled out for adverse treatment
• Disparate Impact: A policy that appears neutral on its
face but that, as applied, has a harsher impact on
someone in a protected class than on general public
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7. Avoiding Discrimination Claims
• HUD’s Final Disparate Impact Rules
› Why is it important?
– Allows liability without finding of actual intent to discriminate
• Liability is based on effects of a policy or practice, not on
whether there was an intent to discriminate
• In other words, “clean heart” is not necessarily a defense
– Importantto understand HUD’s rule, because disparate
impact is used in many areas of anti-discrimination law.
• So even if you are not in the housing area, you need to
understand this principal because it may affect you
• Courts will look at HUD view because it is “expert”
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8. Avoiding Discrimination Claims
• HUD’s Final Disparate Impact Rule
› Uses a balance-shifting test to determine whether a violation
has occurred
– Plaintiff
bears initial burden of showing if the policy or
practice has a disparate impact on someone in a protected
class
– If
so, burden shifts to defendant to show if there is a legally
sufficient justification for the challenged practice
• Must show substantial, legitimate, nondiscriminatory
interest and
• No less discriminatory alternative
– Burden shifts to Plaintiff to show no less discriminatory
alternative
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9. Avoiding Discrimination Claims
• What is the Impact of Disparate Impact?
› Inclusive Communities case (Texas) shows problems posed
by disparate impact analysis
– Plaintiff
wanted to develop LIHTC properties in non-
minority areas
– Texas agency allocates LIHTCs using Federal standards,
resulting in more LIHTC housing in minority areas.
– Court ruled:
• Plaintiff showed disparate impact on minorities
• Defendant showed legitimate justification, but did not
show that no less discriminatory alternative available
• Plaintiff won
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10. Avoiding Discrimination Claims
• Disparate Impact can apply in many contexts
› Lenders, insurers objected to proposed HUD rule
– Theyfeared liability if general policies inadvertently had
harsher impact on protected classes
• Lenders: stricter post-recession underwriting practices
may result in less credit offered to protected classes,
which could result in disparate impact claims
› Disparate impact does not require “macro” impacts
– Absolutelypossible to be liable for adopting a policy at a
single property that has a disparate impact on protected
classes
– E.g., firm 2 persons per bedroom rule (impacts families)
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11. Avoiding Discrimination Claims
• Future of Disparate Impact
› If this rule is so important, why did HUD just adopt it?
– While courts have applied disparate impact in housing
cases for many years, it remains controversial
• Typically, we do not impose liability without intent or at
least violation of some well-established duty
• Supreme Court has been critical of fault without intent in
discrimination cases
• Last term and this term, cases on docket raised question
whether FHAct actually does allow disparate impact
– Will be interesting to see what Supreme Court does
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12. Avoiding Discrimination Claims
• Lessons to Learn:
› Before adopting any policy or practice, you need to
ask:
• Isit likely that policy or practice will have a
harsher impact on persons in a protected
class?
• Is
there a legally sufficient justification for the
policy or practice?
• Is
there a less discriminatory alternative that
would meet the same practical goals?
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13. Avoiding Discrimination Claims
• DOJ’s 2010 ADA Standards
› ADA imposes accessible design duties on owners of “places
of public accommodations,” such as offices, retail stores,
theaters, restaurants, sports venues, etc.
› For many years, DOJ has imposed accessible design rules
(US ADA Guidelines)
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14. Avoiding Discrimination Claims
• DOJ’s 2010 ADA Standards
› After many years of review, study and testing, DOJ published
new design rules – 2010 ADA Standards – to replace earlier
rules
– New scoping requirements
• Changes in slopes, number of accessible entrances,
clarification of accessible routes
– Expands rules intended to assure access to public
accommodations, including hotel reservation systems,
sports venues (including swimming pools)
– New definitions for wheelchairs (may not include golf carts)
– “Service animals” limited to trained dogs (and horses!)
• Cannot ask if disabled, but can ask if animal is trained
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15. Avoiding Discrimination Claims
• DOJ’s 2010 ADA Standards
› Lessons to Learn
– Most of the ADA design issues are literally cast in concrete
– Butproperty managers should be award of these rules and
understand how accessible design issues can impact
tenants, employees and members of the public
– Again,
property managers are often at the critical juncture
between owners and the public
– Theirresponses often can make difference between
successful management of a stressful situation and active
legal dispute
• And typically, manager is in the middle
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16. Avoiding Discrimination Claims
• Reasonable Accommodations
› Generally, biggest impact of anti-discrimination rules is duty
to make reasonable accommodations
› The ADA, the FHAct and Section 504 all impose a duty to
provide reasonable accommodations to persons with
disabilities.
› Property managers may be subject to requests for
reasonable accommodation in two contexts:
– Under the FHAct and Section 504, they may be required to
make reasonable accommodations/reasonable
modifications to tenants and applicants
– UnderADA, they may be required to make reasonable
accommodations to employees and tenants
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17. Avoiding Discrimination Claims
• Reasonable Accommodations under the ADA
› Title I: “Discrimination” includes –
Not making reasonable accommodations to the known
physical or mental limitations of an otherwise qualified
individual . . . unless such covered entity can
demonstrate that the accommodation would impose
an undue hardship on the operation of such covered
entity . . . .
Source: 42 USC sec. 12112(b)(5)(A)
› Title II and Title III both contain reasonable
accommodation rules
› Similar concepts apply under FHAct and Section 504
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18. Avoiding Discrimination Claims
• Reasonable Accommodations
› To be entitled to a reasonable accommodation, requestor
must demonstrate:
1. He/she is a person with a disability
2. There is a reasonable “nexus” between the disability
claimed and the accommodation requested
› Concept is to provide “meaningful access” under ADA
– Compare to concept of “equal opportunity” under
FHAct
– US Supreme Court: “equal opportunity” may mean
extending greater benefits to disabled persons than to
non-disabled persons.
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19. Avoiding Discrimination Claims
• Reasonable Accommodation: Examples
› Waiver of lease terms that allow eviction upon occurrence of
crime/act of violence where tenant is mentally disabled
Boston Hous. Auth. v. Bridgewaters, 898 N.E.2d 848, 859
(Mass. 2009)
- Tenant had history of mental illness and violence to others
– PHA attempted to evict; tenant asked PHA to halt eviction
as a reasonable accommodation to his disability
– Mass Court: PHA had to demonstrate an individualized
assessment of tenant’s likelihood of committing future
injuries (i.e., consulting with advocacy organizations,
contacting family members or case workers, etc.); could
not rely on stereotypes about potential threats
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20. Avoiding Discrimination Claims
• Reasonable Accommodations
› Lesson To Learn
– Have a published reasonable accommodation policy that
staff and tenants understand
– If a request is made
• DO NOT ASK IF REQUESTOR IS DISABLED
• If requestor is obviously disabled and there is a “nexus”
between request and disability, request normally should
be granted
• If requestor is not obviously impaired, you have right to
obtain sufficient information to determine if there is a
nexus between claimed disability and request.
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21. Avoiding Discrimination Claims
• Rule 2: Educate and Communicate
› Make sure that you communicate with owner and that you are
on the same page about what law requires and how you will
handle
› Make sure your staff is familiar with these rules and
understands how to respond if a question arises
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22. Avoiding Discrimination Claims
• Rule 3: Formalize processes
› Develop and update manuals that set out policies for the staff
› Keep records of reasonable accommodation requests and
responses
› Appoint someone in your organization to be the point person
on anti-discrimination issues, to develop expertise and
effective management
– This is especially true if you receive Federal financial aid
› Inform tenants, employees, public about the policies
– Tends to be less controversy and fewer charges of
mistreatment if everyone knows upfront what their rights
are and how claims will be handled
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23. Avoiding Discrimination Claims
• Rule 4: Handle claims smartly
› Make sure that staff understands potential situations that may
raise discrimination concerns, especially reasonable
accommodation requests
› If a complaint is filed, have policies that assure anti-
discrimination officer promptly receives the complaint and
provides notice to other relevant persons, including owner
› Preserve all documents and email messages that may relate
to discrimination claim
› Contact legal advisor before responding to any court or
enforcement agency with respect to the claim
› Confirm extent of insurance coverage, if any
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24. Avoiding Discrimination Claims
• Contact Information:
Harry J. Kelly, Esq.
Nixon Peabody LLP
401 Ninth Street, N.W., #900
Washington, D.C. 2004
Phone: 202-585-8712
Email: hkelly@nixonpeabody.com
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