I was recently asked if a plaintiff could be awarded punitive damages in a fair housing case. While I try not to devolve into lawyer-speak here at the Fair Housing Defense blog all that often, I wanted to provide a few thoughts on the question. While the short answer to the question is yes, punitive damages are not typical and will only come up in extreme circumstances.
The Fair Housing Act (FHA) provides for the recovery of punitive damages by victims of discriminatory housing practices. "[T]he assessment of punitive damages under the FHA is governed by federal rather than state law." United States v. Big D Enterprises, Inc., 184 F.3d 924, 932 (8th Cir. 1999), cert. denied, 120 S. Ct. 1419 (2000). Punitive damages are appropriate in a federal civil rights action "when the defendant's conduct is shown to be motivated by evil motive or intent, or when it involves reckless or callous indifference to the federally protected rights of others." Smith v. Wade, 461 U.S. 30, 56 (1983). The Supreme Court addressed the meaning of the terms "malice" and "reckless indifference" as they relate to the standard for punitive damages in the Title VII (employment) context. See Kolstad v. American Dental Assoc., 527 U.S. 526 (1999). The Court stated that "'malice' or 'reckless indifference' pertain to the [defendant's] knowledge that it may be acting in violation of federal law, not its awareness that it is engaging in discrimination." The Kolstad Court further explained that, although conduct justifying a punitive damages award is sometimes characterized as egregious or outrageous, it "is not to say that [defendants] must engage in conduct with some independent, 'egregious' quality before being subject to a punitive award." In an employment context, it is sufficient that a defendant "discriminate in the face of a perceived risk that its actions will violate federal law to be liable in punitive damages."
Although Kolstad concerned punitive damages in a Title VII employment discrimination case, and Wade addressed punitive damages in a § 1983 civil rights action, it is likely the same standard for punitive damages applies in the FHA arena. See Alexander v. Riga, 208 F.3d 419, 430-32 (3rd Cir. 2000) (discussing applicability of Kolstad to Fair Housing Act violations).
Management's knowledge of and compliance with the fair housing laws is, of course, our best defense to a fair housing complaint. Nevertheless, even if there is a case in which one of our leasing office employees may have misunderstood a guideline or simply made a mistake, punitive damages are only available when a strict standard is met.