appellecityst.paul8thcir09-1209petitionenbanc

UNITED STATES COURT OF APPEALSFOR THE EIGHTH CIRCUIT

No. 09-1209

Thomas J. Gallagher; Joseph J. Collins, Sr.; Dadder’s Properties, LLC; Dadder’sEstates, LLC; Dadder’s Enterprises, LLC; Dadder’s Holdings, LLC; Troy Allison;

Jeff Kubitschek; Sara Kubitschek,

Plaintiffs - Appellants,

v.

Steve Magner, individually and as a supervisor of City of St. Paul’s Department ofNeighborhood Housing and Property Improvement; Mike Cassidy, individually

and as a code enforcement officer of the City of St. Paul; Joel Essling, individuallyand as a code enforcement officer of the City of St. Paul; Steve Schiller,

individually and as a code enforcement officer of the City of St. Paul; JoeYannarelly, individually and as a code enforcement officer of the City of St. Paul;

Dennis Senty, individually and as a code enforcement officer of the City of St.Paul; Michael Urmann, individually and as a fire inspector of the City of St. Paul;Andy Dawkins, individually and as Director of City of St. Paul’s Department of

Neighborhood Housing and Property Improvement; Randy Kelly, individually andas Mayor of City of St. Paul; John Doe; Jane Doe, individually and in their official

capacities as code enforcement officers of City of St. Paul’s Department ofNeighborhood Housing and Property Improvement, law enforcement officers orother officials or employees of the City of St. Paul; City of St. Paul, a municipal

corporation,

Defendants - Appellees.

Appellate Case: 09-1209 Page: 1 Date Filed: 09/15/2010 Entry ID: 3703709

No. 09-1528

Frank J. Steinhauser, III; Mark E. Meysembourg; Kelly G. Brisson,

Plaintiffs - Appellants,

v.

City of St. Paul, a municipal corporation; Randy Kelly, individually and as Mayorof City of St. Paul; Andy Dawkins, individually and as Director of City of St.

Paul’s Department of Neighborhood Housing and Property Improvement; LisaMartin, individually and as a code enforcement officer of City of St. Paul’s

Department of Neighborhood Housing and Property Improvement; Steve Magner,individually and as a supervisor of City of St. Paul’s Department of Neighborhood

Housing and Property Improvement; Dean Koehnen, individually and as a lawenforcement officer of City of St. Paul; John Doe; Jane Roe, individually and in

their official capacities as code enforcement officers of City of St. Paul’sDepartment of Neighborhood Housing and Property Improvement, law

enforcement officers or other officials or employees of the City of St. Paul,


No. 09-1579

Sandra Harrilal,

Plaintiff - Appellant,

Bee Vue; Lamena Vue,

Plaintiffs,


Steven R. Johnson, d/b/a Market Group and Properties,

Plaintiff - Appellant,

v.

Steve Magner, individually and as a supervisor of City of St. Paul’s Department ofNeighborhood Housing and Property Improvement; Michael Kalis, individuallyand as a code enforcement officer of City of St. Paul; Dick Lippert, individually

and as a code enforcement officer of the City of St. Paul; Kelly Booker,individually and as a code enforcement officer of the City of St. Paul; Jack

Reardon, individually and as a code enforcement officer of the City of St. Paul;Paula Seeley, individually and as a code enforcement officer of the City of St.

Paul; Lisa Martin, individually and as a code enforcement officer of the City of St.Paul; Dean Koehnen, individually and as a law enforcement officer of the City of

St. Paul; Andy Dawkins, individually and as Director of the City of St. Paul’sDepartment of Neighborhood Housing and Property Improvement; Randy Kelly,

individually and as Mayor of the City of St. Paul; individually, jointly andseverally; John and Jane Doe, individually and in their official capacities as code

enforcement officers of the City of St. Paul’s Department of NeighborhoodHousing and Property Improvement, law enforcement officers or other officials or

employees of the City of St. Paul; City of St. Paul, a municipal corporation,


APPELLEES’ PETITION FOR EN BANC HEARING


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TABLE OF CONTENTS

TABLE OF AUTHORITIES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii

INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

FACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARGUMENT.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

I. By Finding a Prima Facie Case of Disparate Impact Without AnyStatistical Analysis or Any Other Analytical Method to Show aComparison Between African-Americans That Are Affected by theNeutral Policy and Similarly Situated Persons Unaffected by thePolicy, the Panel Departed from Clear Precedent and Created aCircuit Split. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

CERTIFICATE OF COMPLIANCE WITH RULE 32.. . . . . . . . . . . . . . . . . . . . . 14


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TABLE OF AUTHORITIES

Artisan/Am. Corp. v. City of Alvin, Tex., 588 F.3d 291 (6th Cir. 2009) . . . 7, 9, 11

Charleston Hous. Auth. v. U. S. Dept. of Agric., 419 F.3d 729 (8th Cir. 2005). . . 7

Darst-Webbe Tenant Ass’n Bd. v. St. Louis Hous. Auth., 417 F.3d 898 (8th Cir.2005). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Huntington Branch, N.A.A.C.P. v. Town of Huntington, 844 F.2d 926 (2nd Cir.1988). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Laub v. U.S. Dept. of Interior, 342 F.3d 1080 (9th Cir. 2003).. . . . . . . . . . . . . . . . 1

Oti Kaga, Inc. v. S. Dakota Hous. Dev. Auth., 342 F.3d 871 (8th Cir. 2003). . . . . 4

Owens v. Charleston Hous. Auth., 336 F. Supp. 2d 934 (E.D. Mo. 2004). . . . . . . 7

Reinhart v. Lincoln County, 482 F.3d 1225 (10th Cir. 2007). . . . . . . . . . . . . . 4, 11

Smith v. Town of Clarkton, N.C., 682 F.2d 1055 (4th Cir. 1982). . . . . . . . . . . . . . 6

Tsombanidis v. W. Haven Fire Dept., 352 F.3d 565 (2nd Cir. 2003). . . . . . 5, 8, 11


The City has not abandoned its prudential standing argument as the Panel1

indicated in its opinion. Standing cannot be waived, and particularly under theanalysis by the Panel, prudential standing is even more suspect. Appellants are inno different situation than any other landlord and have no grievance other thanthat which is general to the population of all landowners, landlords and owner-occupied properties as a whole. Because the issue of standing implicatesjurisdiction, it is one which the court is required to consider. Laub v. U.S. Dept. ofInterior, 342 F.3d 1080 (9th Cir. 2003).

1

INTRODUCTION

The City, its employees, and officials seek en banc review of the Panel’s

ruling that found that application of the City’s housing code had a

disproportionate adverse effect on African-American tenants. The Panel also

found that there was a dispute of fact regarding whether a defunct program called

Problem Properties 2000 (PP2000) was a viable alternative to the City’s housing

code enforcement practices. Rehearing en banc is necessary to maintain

uniformity of decisions regarding prima facie findings of adverse impact and the

proceeding involves a question of exceptional importance because it creates

confusion for all municipalities seeking to enforce housing codes.1

FACTS

These cases have been ongoing since May, 2004. After four years of

discovery, Appellants failed to support their disparate impact claim with any

statistical evidence or other analytical method. On December 18, 2008, the


2

Honorable Joan Ericksen dismissed Appellants’ disparate impact claim as a matter

of law and correctly found that Appellants failed to make the essential comparison

of who could afford housing before the City applied its code enforcement and who

could afford it afterwards. Without this comparative analysis, Appellants’ claim

failed.

The Panel reversed the lower court’s findings based on the following

evidence the Panel identified in the record:

(a) The City experienced a shortage of affordable housing.

(b) Racial minorities, especially African-Americans, made up a

disproportionate percentage of lower-income households in the City that

rely on low-income housing.

(c) The City’s aggressive housing code enforcement practices increased

costs for property owners that rent to low-income tenants.

(d) The increased burden on rental-property owners from aggressive code

enforcement resulted in less affordable housing in the City.

The Panel found that “though there is not a single document that connects

the dots of Appellants’ disparate impact claim, it is enough that each analytic step

is reasonable and supported by the evidence.”


On appeal, Appellants Steinhauser, et al. and Harrilal, et al. did not in any2

way identify PP2000 as a viable alternative, and also did not challenge the City’sargument on appeal that Appellants Steinhauser and Harrilal abandoned thisposition. The Panel erred when it identified, on behalf of Appellants Steinhauserand Harrilal, PP2000 as a viable alternative. In any event, there can be no factualdispute that PP2000 is not a viable alternative to the City’s housing codeenforcement. PP2000 was a limited program with three inspectors and very fewproperties. The City’s housing code enforcement applies to the City’s entirehousing stock.

3

The Panel stated that “it is reasonable to infer” a disparate impact on

African-Americans. The Panel went on to find that the City’s enforcement of the

housing code had a manifest relationship to legitimate, non-discriminatory

objectives. The Panel found that on appeal, Appellants identified PP2000 as a

viable alternative to the City’s housing code enforcement. 2

ARGUMENT

I. By Finding a Prima Facie Case of Disparate Impact Without AnyStatistical Analysis or Any Other Analytical Method to Show aComparison Between African-Americans That Are Affected by theNeutral Policy and Similarly Situated Persons Unaffected by the Policy,the Panel Departed from Clear Precedent and Created a Circuit Split.

The Panel found that based on evidence in the record the City’s aggressive

enforcement of the housing code resulted in a disproportionate adverse impact on

African-Americans. The Panel found that viewed in the light most favorable to

Appellants, the evidence shows that the City’s housing code enforcement

burdened Appellants’ rental businesses which indirectly burdened their tenants.


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In making these inferences, the Panel disregarded the longstanding case law that

requires statistical analysis or some other analytical method to show disparate

impact. There must be a comparison between two groups; those who could afford

the housing before the code enforcement and those who could afford it afterward.

To succeed on their disparate impact claim, the landowners must show the

facially-neutral policy results in, or can be predicted to result in, a disparate impact

on protected classes compared to a relevant population. See Darst-Webbe Tenant

Ass’n Bd. v. St. Louis Hous. Auth., 417 F.3d 898, 902 (8th Cir. 2005). Appellants

“must show a facially neutral policy ha[d] a significant adverse impact on

members of a protected minority group. Oti Kaga, Inc. v. S. Dakota Hous. Dev.

Auth., 342 F.3d 871, 883 (8th Cir. 2003).

In Reinhart v. Lincoln County, 482 F.3d 1225, 1230 (10th Cir. 2007) the

court found that “It is essential to be able to compare who could afford the housing

before the new regulations and who could afford it afterwards.” The Panel agreed

that a before and after cost comparison is one way to show African-Americans

experience adverse impact, but found that it is not the only way. However, the

Panel found disparate impact without any statistical comparison, or the use of any

analytical method to show any comparison at all.


5

The Panel decision is in direct conflict with law in other circuits. The

comparison must reveal that although neutral, the policy imposes a significant

adverse impact on a group of individuals. See e.g., Tsombanidis v. W. Haven Fire

Dept., 352 F.3d 565, 575, 576 (2nd Cir. 2003) (The basis for a successful disparate

impact claim involves a comparison between two groups - - those affected and

those unaffected by the facially-neutral policy.). The Panel found that Appellants

were not required to provide a particular statistical comparison. The Panel inferred

an adverse impact without any statistics or some other analytical mechanism to

show the necessary comparison resulted in a disproportionate impact.

In Huntington Branch, N.A.A.C.P. v. Town of Huntington, 844 F.2d 926

(2nd Cir. 1988), the facially-neutral policy challenged prevented subsidized

housing from being built in a predominately white neighborhood. The Panel cited

Huntington Branch, N.A.A.C.P. for the proposition that disparate impact was

found when evidence established that African-Americans in need of subsidized

housing, currently occupied subsidized housing, holding Section 8 certificates,

and are on the waiting list for those certificates is disproportionate to the

percentage of African-Americans in the general population. In Huntington

Branch, N.A.A.C.P. the parties stipulated to statistics that unequivocally showed

that a disproportionate number of black families needed subsidized housing and


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statistics that showed that a disproportionate number of African-Americans used

Section 8 vouchers to supplement their rent or were on waiting lists for such

vouchers. The Court compared African-Americans in need of subsidized housing

or vouchers to African-Americans in the general population to find disparate

impact. In the cases before the Panel, the Panel found disparate impact without

any comparison groups at all.

The Panel used Smith v. Town of Clarkton, N.C., 682 F.2d 1055 (4th Cir.

1982) as an example of showing disparate impact because the “undisputed

statistical picture leaves no doubt that the black population of Blanden County was

adversely affected by the termination of the housing project, as it is that

population most in need of new construction to replace substandard housing, and

it is the one with the highest percentage of presumptively eligible applicants.”

(emphasis added). To make this determination the Court had the following

information: the facially-neutral policy at issue prevented the construction of fifty

units of public housing, 69.2% of all black families in Blanden County are eligible

for low income housing and only 26% of the white population is eligible, that the

removal of low income housing in the County fell 2.65 times more harshly on the

black population than on the white population. The Court compared those that

would benefit from the public housing and those who would not to find a disparate


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impact on the black population. Again, in the cases before the Panel, the Panel

found disparate impact without any comparisons.

In Owens v. Charleston Hous. Auth., 336 F. Supp. 2d 934, 943 (E.D. Mo.

2004), aff’d in part, Charleston Hous. Auth. v. U. S. Dept. of Agric., 419 F.3d 729,

740, 741 (8th Cir. 2005), the facially-neutral policy challenged would result in the

destruction of low income housing. Tenants put forth an expert witness showing a

disparate impact and had “statistical proof” that the destruction of the low income

housing would have a disproportionate impact on African-Americans in general,

and low-income African-Americans in particular. The comparison was between

those who would use the low income housing (the relevant waiting list population,

the income eligible population, or the actual apartment population) versus those

who would not. In the case at bar, the Panel simply inferred a disparate impact

without any expert providing the basis for such, or any statistical proof or any

other method of proof.

In Artisan/Am. Corp. v. City of Alvin, Tex., 588 F.3d 291, 298 (6th Cir.

2009) the facially-neutral policy challenged was the city’s refusal to permit a low-

income housing project. Artisan produced statistics that racial minorities are more

likely to rent apartments and more likely to qualify for low-income housing.

However, the Court did not find evidence of a disparate impact because Artisan


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did not provide analysis of the racial make-up of the relevant income pool. The

Panel here found that the relevant comparative analysis need not be made to find

disparate impact.

A plaintiff does not meet its burden to show disparate impact if it merely

raises an inference of discriminatory impact. Tsombanidis, 352 F.3d at 574.

Furthermore, a plaintiff must show a causal connection between the facially-

neutral policy and the alleged discriminatory effect. Id. Appellants here, as

correctly found by the district court, failed to meet this burden. The Panel

inferred, based on evidence in the record, that a facially-neutral housing code that

applies undisputedly to all properties in the City of St. Paul, those rented and those

owner-occupied, those owned by the Public Housing Agency and those owned by

private parties, had a disparate impact on African-Americans. The “evidence” the

Panel relied upon did not have any analytical showing of a comparison between

the two groups who could afford the property before the housing code was applied

and who could afford it afterward.

The Panel relied upon evidence that showed the City experienced a shortage

of affordable housing. But there is absolutely no evidence in the record that any

shortage was because of anything done by the City. The Panel relied upon

evidence that African-Americans make up a disproportionate percentage of low-


9

income tenants. However, there was no analytical method to determine how the

City’s housing code would affect those tenants. Like Artisan/Am. Corp., 588 F.3d

291, this evidence, without the relevant comparison, is not enough to find a

disparate impact. In fact, the evidence showed that some of Appellants’ properties

that Appellants claim were targeted by code enforcement oftentimes did not have

African-American tenants, did not have tenants at all, or Appellants did not recall

the race of their tenants. Not only was there no analytical method used to show a

comparison between those affected by the policy and those not affected by the

policy, Appellants could not even show a comparison within their own properties.

Many of the properties they claimed were affected did not have African-American

tenants or any tenants at all.

The Panel found that the City’s aggressive housing code enforcement

increased the costs for property owners who rent to low-income tenants. The

evidence that the Panel relied upon was (1) affidavits of the Appellants that say that

they have reported substantial increases in costs because of code enforcement, and

(2) a 1995 report that the HQS standards were more strict 82% of the time in

examined categories. There is no analytical method from this evidence that

compared those unaffected and those affected by the City’s code enforcement. At

most, Appellants have affidavits saying that they had increased costs at some


10

properties. Those properties were not even identified as properties with African-

Americans. Furthermore, this is a far cry from an analytical method that shows a

significant adverse impact on African-Americans. The HQS standards that the

Panel relied upon as evidence of disparate impact that were more strict in 82% of

the examined categories did not show the necessary comparison. The City’s

housing code applies to all properties; and it is the application of that facially-

neutral policy that must be analyzed. The fact that there is a HQS that may be less

strict does nothing to further any analysis of the more strict City housing code.

Finally, in support of its finding that there was an increased financial burden

on rental property owners because of aggressive code enforcement and that resulted

in less affordable housing in the City, the Panel relied upon (1) the City’s vacant

building report and (2) Appellants’ affidavits and tenants’ affidavits. There was no

evidence or analysis that tied the City’s vacant building report to the City’s code

enforcement. This conflicts with requirements in other circuits, that by making the

relevant comparisons, there be some analytical mechanism or statistical analysis to

show a significant adverse impact. The affidavits by a portion of Appellants that

stated that those Appellants had increased costs, and three tenants (the City can

only locate affidavits of two tenants in the record) averring that Appellants had to

fix up rental properties in which they lived, is not an analysis showing a significant


The tenants’ affidavits do not state the race of the tenants. However,3

Appellants identified in their sworn Answers to Interrogatories the race of SusanTourville and Lachaka Cousette.

11

adverse impact on a protected group. At best, it would show an impact on the three

African-Americans with supporting affidavits, three of possibly thousands of

tenants, but does not provide the statistical analysis or other analytical method

necessary to show a significant adverse impact on a protected group of individuals.

Furthermore, the City could only locate two affidavits of tenants – Suzanne M.

Tourville and Lachaka Cousette. Suzanne M. Tourville is Caucasian and Lachake

Cousette is African-American. An affidavit of one member of a protected group3

does not show a significant adverse impact on the protected group. The affidavit of

a Caucasian tenant actually supports the argument that there was not a disparate

impact on African-Americans.

The Panel departed from well-settled law that a significant adverse impact

must be shown in order to succeed in a disparate impact claim. The Panel found

that data, not analyzed or used in any way to show a significant impact, is enough

evidence to make it “reasonable to infer” that African-Americans were

disproportionately affected by the City’s code enforcement. Under law in other

circuits, this inference is not enough to survive a motion for summary judgment.

See e.g., Reinhart, 482 F.3d 1225; Artisan/Am. Corp., 588 F.3d 291; Tsombanidis,


12

352 F.3d 565. The Panel’s finding significantly and devastatingly lowers the bar

for a disparate impact claim to one that a finding of disparate impact can be

inferred by innocuous and unanalyzed data such as the increase in foreclosed or

vacant homes during a time where the same is happening in similar municipalities,

and self-serving affidavits stating that the cost of renting homes has increased

because of the City’s requirement that the homes be safe. Not only is there “not a

single document that connects the dots of Appellants’ disparate impact claim” there

is no comparison made at all between the two groups necessary -- those affected

and those unaffected by the City’s code enforcement. A review of this decision en

banc is absolutely necessary to clarify the way by which a disparate impact can be

shown. If a disparate impact showing can be met by data and self-serving

affidavits with no necessary comparison made between groups, municipalities

within the 8th Circuit must be made aware of this significant departure from other

Circuits.

The issue before this Court also involves a question of exceptional

importance: Can a City with a protected class population be prevented from

enforcing its housing code because protected class members may rent properties

subject to the housing code? Under the Panel’s analysis the fact that there is a

shortage of affordable housing, that minorities rely on affordable housing, that


13

housing code enforcement increased costs to landlords who rent to low-income

tenants, and because of that increase in cost there will be less affordable housing in

the City is enough to find a disparate impact of a housing code on minorities. All

housing codes in racially diverse municipalities with a shortage of affordable

housing meet this criteria. If municipalities are prevented from enforcing housing

codes when there is a shortage of affordable housing, they must be made aware of

this significant restriction on their powers. This ruling may have the unintended

result of promoting segregation. Why live in a city that cannot enforce its code

because of the shortage of affordable housing and the existence of a minority

population?

CONCLUSION

For all the above reasons, Appellees’ respectfully request that this Court

grant the Appellees’ petition for rehearing en banc.

Dated: September 15, 2010 GERALD T. HENDRICKSONSaint Paul City Attorney

s/ Louise Toscano Seeba LOUISE TOSCANO SEEBA, #292047Assistant City Attorney750 City Hall and Court House15 West Kellogg BoulevardSt. Paul, Minnesota 55102(651) 266-8772Attorneys for the Appellees


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CERTIFICATE OF COMPLIANCE WITH RULE 32

This petition was prepared using WordPerfect Office 12, Times New Roman14 and complies with the typeface requirements of FRAP 32(a) and the type stylerequirements of FRAP 32(a). This brief has been scanned for viruses and isbelieved to be virus free.


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