| Court: | 9th Circuit |
| Facts: | A couple wants to rent an apartment from a mom-and-pop landlord
who want to use the property as a retirement place. Their
business strategy is to keep the properties in good condition,
and rent at slightly-below-market rates, in the hope of getting
long term tenants. They also limit the number of occupants.
The Nymoens want to live there, but there are too many of them. They allege that having to get other housing caused them all kinds of probems: degradation, flooding, etc. HUD buys this and penalizes the Pfaffs. |
| Posture: | Complaint with HUD re: discrimination. HUD ALJ finds that there has been discrimination via disparate impact, and awards $4,212.61 in damages plus $20K for emotional distress. And a civil penalty of $8K. More than they'd make over the lifetime of the property, it seems. Plus now they are subject to all sorts of oversight. Countersuit. |
| Issue: | Does the cap on number of occupants discriminate against families with children? |
| Holding: | No. The ALJ erred. |
| Rule: | HUD can't have two conflicting interpretations of the statute, because the public needs to be able to rely on them. |
| Reasoning: | Normally we would defer to HUD. They say that a "compelling business necessity" must be found, but they have been very vroad and general in the past. The penalties are very harsh here. And there's no support for this in legislative intent. And anyway, even if the rules have changed, you can't prosecute the Pfaffs for conduct that wasn't a crime when they did it. |
| Dicta: | HUD went crazy here. |