Jose Reyes v. Waples Mobile Home Park Limited Partnership
Published, 4th Cir. (Jan. 23, 2024) (2024)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A landlord's policy requiring all adult tenants to prove legal status, which disproportionately impacts a protected class, does not establish a 'business necessity' defense under the Fair Housing Act's disparate impact theory if the asserted risk of criminal liability under the federal anti-harboring statute for merely leasing to undocumented immigrants is not plausible.
Facts:
- Between 2010 and 2015, four noncitizen Latino families from El Salvador and Bolivia, consisting of fathers with legal status, undocumented mothers, and U.S. citizen children, moved into Waples Mobile Home Park.
- The fathers, as leaseholders, had provided valid Social Security numbers and passed credit and criminal background checks, successfully renewing their leases without issue until 2015.
- In 2015, Waples Mobile Home Park (Waples) began enforcing a policy requiring all adult occupants of mobile homes to present proof of legal status in the U.S., specifically an original Social Security card or an original foreign passport, U.S. Visa, and Arrival/Departure Form.
- The mothers in the families could not provide proof of legal status, and Waples declined to accept Individual Taxpayer Identification Numbers (ITINs) as an alternative.
- When families did not comply with the policy, Waples converted their leases from year-long terms to month-to-month and imposed a $100 monthly rent surcharge, threatening further increases.
- Eventually, each of the families chose to vacate their homes at the Park due to the rent increases and fear of eviction.
- Waples's decision to begin enforcing the policy against all occupants stemmed from a discovery that two tenants at different Waples properties committed sex offenses that should have been reported, prompting a general crackdown on background checks.
- Despite enforcing the policy and converting leases, Waples did not evict any non-compliant tenants but rather knowingly continued to house them while charging a premium.
Procedural Posture:
- The Families initiated a lawsuit against Waples in 2016, alleging, among other things, a violation of the Fair Housing Act (FHA) under a disparate-impact theory.
- The district court denied Waples's motion to dismiss the FHA claim but ruled that the Families could only proceed under a disparate-treatment theory, not disparate-impact.
- After discovery, the district court granted Waples's motion for summary judgment on the FHA claim (which it considered only under the disparate-treatment theory of liability).
- The Families appealed this decision to the Fourth Circuit (Appellants: Families; Appellees: Waples), arguing that the district court’s prior dismissal of their FHA claim under a disparate-impact theory of liability was in error.
- The Fourth Circuit vacated the district court's judgment, held that the claim should have been allowed to proceed under a disparate-impact theory, and remanded the case for the district court to consider Steps Two and Three of the Inclusive Communities framework.
- On remand, the district court initially denied Waples's renewed motion for summary judgment, finding that there were triable issues of fact as to whether Waples could satisfy Step Two.
- The case was then reassigned to a new district court judge, who reversed course and granted summary judgment in favor of Waples, finding the policy a valid business necessity under the anti-harboring statute.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a mobile home park's policy requiring all adult residents to provide proof of legal status in the United States constitute a legitimate 'business necessity' under the Fair Housing Act's disparate impact framework, based on the asserted need to avoid criminal liability under the federal anti-harboring statute for leasing to undocumented immigrants, when such a policy disproportionately impacts Latino families?
Opinions:
Majority - Wilkinson, Circuit Judge
No, a mobile home park's policy requiring all adult residents to provide proof of legal status does not constitute a legitimate business necessity under the Fair Housing Act's disparate impact framework, because the asserted risk of criminal liability under the federal anti-harboring statute for merely leasing to undocumented immigrants is not plausible. The court applied the three-step burden-shifting framework from Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. for disparate-impact claims. Step One, establishing a prima facie case of disparate impact on Latino residents, was already satisfied from the prior appeal. For Step Two, Waples argued its policy was a 'business necessity' to avoid criminal liability under the federal anti-harboring statute (8 U.S.C. § 1324(a)(1)(A)(iii)). However, the court found Waples's understanding of the statute to be a 'misapprehension.' The anti-harboring statute requires active intent to 'conceal, harbor, or shield from detection' an undocumented individual, which involves an element of deceit not present in ordinary lease agreements. The court distinguished United States v. Aguilar, noting that case involved a landlord actively running a 'flophouse' with knowledge and repeated warnings, indicating an intent to harbor, unlike merely renting to an undocumented immigrant. Referencing a consensus among other circuit courts (Second, Third, Fifth, Seventh Circuits), the court emphasized that renting an apartment in the normal course of business, without more, does not violate the anti-harboring statute. Furthermore, the court highlighted the absence of federal verification requirements for landlords, in contrast to employers. The Department of Justice, as amicus, confirmed that residential landlords do not ordinarily risk prosecution for merely failing to proactively verify tenants' immigration statuses. Therefore, the court concluded that Waples's risk of prosecution under the anti-harboring statute was 'too attenuated to cross the threshold of a plausible concern,' failing to establish a legitimate business necessity. The court also identified a 'further infirmity' in Waples's position: the record was 'too thin' to support the business necessity defense. The policy was long-dormant, only enforced after unrelated issues at other properties, and Waples chose to impose rent surcharges instead of evicting non-compliant tenants, knowingly housing undocumented individuals for a 'premium.' These actions contradicted a genuine concern about harboring liability. Since Waples did not meet its burden at Step Two, the court did not need to reach Step Three. The district court's grant of summary judgment for Waples was reversed.
Analysis:
This decision significantly clarifies the scope of the 'business necessity' defense for landlords facing disparate impact claims under the Fair Housing Act. It establishes a high bar for asserting a risk of criminal liability as a legitimate interest, requiring the risk to be plausible and supported by a proper interpretation of the underlying statute, not mere speculation. The ruling also underscores that the defendant's actual conduct must be consistent with the asserted business necessity, preventing landlords from using pretextual justifications for policies that disproportionately harm protected groups. This case will likely limit the ability of housing providers to implement broad immigration status verification policies that disproportionately impact immigrant communities, thereby reinforcing protections against housing discrimination under the FHA.
