In a split decision, the United States Court of Appeals for the Second Circuit recently reversed Judge Spatt of the Eastern District of New York and held that a landlord may be liable under the Fair Housing Act of 1968 (the “FHA”) for failing to address a situation in which one tenant repeatedly used racially-charged language to harass another. See Francis v. Kings Park Manor, Inc., 917 F.3d 109 (2d Cir. 2019). This decision is significant in that it opens the door to landlords being subject to a duty to intervene when made aware of discriminatory conduct between tenants.

A few months after plaintiff Francis, an African-American, moved into an apartment complex owned by defendant KPM, his next-door neighbor Endres began what the Court found “can only be described as a brazen and relentless campaign of racial harassment, abuse, and threats.” During an eight-month period in 2012, the neighbor’s harassment led plaintiff to call the police four times, with the neighbor eventually being arrested for aggravated harassment. After each incident, either the police or plaintiff notified defendant, but defendant never responded to plaintiff or did anything to address the harassment. The neighbor remained in the complex until the expiration of his lease in January 2013.

In 2014, plaintiff brought this action claiming violations of sections 3604(b) and 3617 of the FHA, among other allegations. Under section 3604, it is unlawful to “discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith, because of race, color, religion, sex, familial status, or national origin.” See 42 U.S.C. 3604(b). Section 3617 states, “[i]t shall be unlawful to coerce, intimidate, threaten, or interfere with any person in the exercise or enjoyment of, or on account of his having exercised or enjoyed, or on account of his having aided or encouraged any other person in the exercise or enjoyment of, any right granted or protected by section 3603, 3604, 3605, or 3606 of this title.” See 42 U.S.C. 3617. Defendant moved to dismiss the claims and the District Court granted the motion, finding that there was no basis to impute the neighbor’s behavior to defendant and that plaintiff had not adequately pleaded that defendant failed to intervene based on its own racial animus toward plaintiff.

On appeal, the Court reversed the District Court’s holding with regard to the FHA. First, it found that the FHA applied “post-acquisition”—i.e., that it prohibits discriminatory actions that occur after a plaintiff buys or rents housing. In this analysis, the Court reviewed the broad language of the FHA, decisions in other circuit courts, the similar language found in Title VII of the Civil Rights Act, and HUD regulations that “for thirty years clearly contemplated claims based on post-acquisition conduct, consistent with our interpretation of §§ 3604 and 3617.” Second, the Court found that a landlord may be liable under the FHA for “intentionally failing to address tenant-on-tenant racial discrimination.” In support of this finding, the Court cited the FHA’s broad language, a recent Seventh Circuit decision (Wetzel v. Glen St. Andrew Living Cmty., LLC, 901 F.3d 856 (7th Cir. 2018)) and the 2016 HUD final rule on discriminatory conduct. The Court determined that landlord liability under the FHA for tenant-on-tenant discrimination is subject to a three-part test in which plaintiff must prove: “‘(1) [t]he third-party created a hostile environment for the plaintiff . . . ; (2) the housing provider knew or should have known about the conduct creating the hostile environment;’ and (3) notwithstanding its obligation under the FHA to do so, ‘the housing provider failed to take prompt action to correct and end the harassment while having the power to do so.’” Under this analysis, “the landlord can be held liable only in circumstances where the landlord had the power to take corrective action,” such as evicting the harassing tenant or barring that tenant from common areas, “yet failed to do so.”

Third, the Court found that intentional discrimination is not a necessary element of an FHA violation, and that “[t]o establish a violation of the FHA, a plaintiff need not show discriminatory intent but need only prove that the challenged practice has a discriminatory effect.” Further, even if intentional discrimination were required, the Court found that plaintiff’s complaint has properly alleged this element because plaintiff “has alleged that the KPM Defendants had actual knowledge of Endres’s criminal racial harassment of Francis but, because it involved race, intentionally allowed it to continue even though they had the power to end it.” Based on these holdings, the Court found that a landlord may be liable under the FHA for failing to intervene and reversed the District Court’s dismissal of the FHA claims. The Court also reversed and remanded the District Court’s dismissal of claims under the Civil Rights Act of 1866 and the New York State Human Rights Law for the same reasons, but affirmed the dismissal of the negligent infliction of emotional distress claim.

In dissent, Judge Livingston argued that that majority “steers the FHA into ‘unchartered territory,’ where courts improbably discover new causes of action in half-century-old provisions, and heedless of the deleterious consequences for parties, courts, and the housing market.” Among other things, Judge Livingston noted that although the majority correctly states that there is no circuit split as to whether the FHA applies to post-acquisition conduct, “the majority obfuscates the deep division that does exist as to ‘the scope or degree of the provision’s [post-acquisition] reach.’” Specifically, circuit courts disagree as to whether prohibited post-acquisition conduct can include situations outside of a landlord’s constructive eviction of a tenant.

Likewise, Judge Livingston disagreed with the majority’s holding that intent is not a necessary element of an FHA claim, arguing that the majority “can do so only by ignoring th[e] clear statutory text and all or part of past decisions of this Court and others.” Finally, Judge Livingston criticized the majority’s reliance on the 2016 HUD final rule—“promulgated after this litigation began”—and its use of Title VII to support its holding: “Employers simply exert far more control over not only their employees, but also the entire workplace environment, than do landlords over their tenants and the residences those tenants quite literally call their own. Taken collectively, an employer’s ability to monitor, respond and enforce—all crucial aspects of our Title VII jurisprudence—differs substantially from the ability of a landlord to do the same.”