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United States of America v. Space Hunters, Inc.: Government Wins Fair Housing Lawsuit against Apartment-Finding Service

In a case previously summarized in the The Letter of the Law, a New York federal court has considered whether a jury properly awarded damages to a handicapped individual who was alleging discrimination against an apartment-locating service- click here to read the earlier decision in this case.

Space Hunters, Inc. ("Company") is a referral service for people who were looking for apartments in New York City, receiving a referral fee for its services. John McDermott ("McDermott") is the president and only employee of the Company. When calls are made to the Company's phone number, a short conversation about where and what type of rental the individual seeks occurs and then the possible renters are directed to come to the Company's offices for further discussions about rental possibilities.

Keith Toto ("Prospective Tenant") was a deaf person who was searching for an apartment. After seeing a newspaper advertisement from the Company, he called the Company to see if it could help him locate an apartment, using a relay service operator (which is a service deaf individuals use to make phone calls). McDermott allegedly informed the Prospective Tenant that he did not accept calls from relay operator services and also directed profanities at the Prospective Tenant.

The Prospective Tenant filed a claim with the United States Department of Housing and Urban Development ("HUD") alleging housing discrimination. As part of its investigation, HUD directed tester William Donegan to call the Company posing as a deaf individual, and he was allegedly told that the Company didn't assist disabled individuals and was treated rudely by the person answering the phone. Next, a HUD investigator telephoned the Company to inquire about the Company's policy regarding handicapped individuals. The "manager" of the Company allegedly reiterated that the Company does not assist handicapped individuals.

Based on the test results, HUD determined there was reasonable cause to issue a Charge of Discrimination and so the Government filed a seven-count lawsuit that made a variety of discrimination allegations based primarily on the Company's treatment of the handicapped in violation of the federal Fair Housing Act ("Act"). The Act is intended to remove discrimination from the housing marketplace, including discrimination against the handicapped. The Company filed a motion to dismiss the lawsuit, and six of the counts were dismissed. A trial was conducted on the remaining claim over the Company's alleged intentional discrimination in violation of the Act against the Prospective Tenant for refusing to communicate through a relay service. The jury awarded the Prospective Tenant $1,500. The Company moved for judgment in its favor notwithstanding the verdict, and the Government opposed this motion and sought a permanent injunction against the Company.

The United States District Court for the Southern District of New York upheld the jury verdict and also granted the Government's motion for a permanent injunction against the Company. First, the court considered the Company's motion for judgment in its favor. Looking at the applicable standards, a court can only grant such a motion when there is no evidence to support the jury verdict. The Company argued that there was no evidence to support the jury verdict of intentional discrimination, as the Company treats all callers in the same way by telling them they need to come into the Company's offices to discuss rental possibilities.

The court rejected this argument, finding that McDermott testified that he does not speak with relay operators, suggesting that he intentionally discriminated against deaf individuals. The court also found that McDermott did engage in some conversation with other perspective tenants, such as asking them where they wanted to live, again showing an animus towards deaf individuals. Finally, McDermott had testified that he only wants "able-bodied" individuals to come to his office. Based on this evidence, the court found that it was reasonable for the jury to conclude that the Company had intentionally discriminated against the Prospective Tenant. Thus, the court affirmed the jury verdict award to the Prospective Tenant.

Next, the court considered the Government's motion for a permanent injunction against the Company. One of the remedies for Act violations is injunctive relief in order to avoid future discrimination by the individuals who have violated the Act. The relief sought by the Government included an injunction barring the Company from: 1) violating the Act in the future; 2) denying access to services relating to the rental of properties; and 3) refusing to accept calls from relay service operators. The Government also sought the imposition of record keeping requirements on the Company for a number of years, in order to insure compliance with the injunction the Government sought. The court agreed that the injunctive relief sought by the Government was appropriate and that the record-keeping requirements were necessary because McDermott had previously violated fair housing laws, causing the forfeiture of his broker's license in 1997. Therefore, the court entered the injunction sought by the Government against the Company and also imposed the record-keeping requirements sought by the Government as well.

United States of America v. Space Hunters, Inc., No. 00 Civ. 1781 (RCC), 2004 WL 2674608 (S.D.N.Y. Nov. 23, 2004). [Note: When an official reporter citation becomes available for this case, the citation will be updated to reflect this information].