Baker v. City of San Diego

1

2

3

4

5

6

7

8 UNITED STATES DISTRICT COURT

9 SOUTHERN DISTRICT OF CALIFORNIA

10

11 PATRICE BAKER, et al., Case No.: 19-CV-1013 JO (DEB)

12 Plaintiffs,

ORDER (1) GRANTING CITY OF

13 v. SAN DIEGO AND HOUSING

AUTHORITY OF THE CITY OF SAN

14 CITY OF SAN DIEGO, et al.,

DIEGO’S MOTION TO DISMISS,

15 Defendants. AND (2) GRANTING SAN DIEGO

HOUSING COMMISSION’S

16

MOTION TO DISMISS

17

(ECF Nos. 79, 80)

18

19 Defendants the City of San Diego and the Housing Authority of the City of San

20 Diego (the “City Defendants”) and Defendant the San Diego Housing Commission

21 (“SDHC”) have moved to dismiss Plaintiffs’ Second Amended Complaint. (See ECF

22 Nos. 79 (“City Mot.”), 80 (“SDHC Mot.”), respectively (together, the “Motions”); see

23 also ECF No. 78 (“SAC”).) The Court held a hearing on October 13, 2021. (See ECF

24 No. 87.) For the reasons set forth below, the Court GRANTS the Motions.

25 BACKGROUND

26 I. Factual Background

27 Plaintiffs are San Diego residents who live in the areas of Encanto and

28 Southeastern San Diego (the “Affected Communities”). (SAC ¶ 18–25.) The City

1 Defendants are comprised of the City of San Diego and the Housing Authority that

2 governs Defendant SDHC. (Id. ¶ 26–27.) The SDHC is a corporate and political body

3 established by the laws of the State of California. (Id. ¶ 28.)

4 Plaintiffs allege that the City Defendants and the SDHC used new zoning policies

5 to implement and develop a disproportionate amount of low-income housing projects in

6 the Affected Communities. (Id. ¶ 9.) Plaintiffs contend that the City Defendants

7 implemented a strategy to “streamline the low-income and extremely low-income

8 housing in the Affected Communities as quickly as possible.” (Id. ¶ 34.) The alleged

9 strategy served to “expedite and streamline development in the Affected Communities so

10 it [would] be lucrative for developers at the expense of minority residents.” (Id. ¶ 41.)

11 Plaintiffs allege that the City Defendants have utilized a “disproportionate amount of

12 deferral, waiver, and reimbursement agreements to make it more lucrative for developers

13 to place low-income and extremely low-income housing in the Affected Communities.”

14 (Id. ¶ 85.)

15 II. Procedural History

16 On May 30, 2019, Plaintiffs filed this action against Defendants alleging violations

17 of (1) the Federal Fair Housing Act (“FHA”), (2) 42 U.S.C. § 1983, and (3) the California

18 Fair Employment and Housing Act (“FEHA”). On August 1, 2019, the City Defendants

19 and the County of San Diego (“County”), the latter of which is no longer a party to the

20 action, each filed a Motion to Dismiss. (ECF Nos. 26, 27.) On August 9, 2019, the

21 SDHC also filed a Motion to Dismiss. (ECF No. 29.)

22 On June 1, 2020, the Honorable Anthony J. Battaglia granted in part and denied in

23 part the City Defendants’ and the SDHC’s Motions to Dismiss and granted the County’s

24 Motion to Dismiss, providing Plaintiffs leave to amend. (ECF No. 44.) Judge Battaglia

25 dismissed Plaintiffs’ FHA claim against the City Defendants for failure to “establish a

26 robust causal connection between the statistical disparity and the City’s policy.” (See id.

27 at 12.) Judge Battaglia also dismissed Plaintiffs’ FHA claim against the SDHC for

28 failure to allege a robust causal connection between the statistical disparity and the

1 SDHC’s policy. (See id. at 15–16.) Additionally, Judge Battaglia dismissed Plaintiffs’

2 § 1983 claim against the SDHC. (See id. at 8.)

3 On July 17, 2020, Plaintiffs filed a First Amended Complaint against the City

4 Defendants and the SDHC. (ECF No. 48.) On October 6, 2020, the case was transferred

5 to the undersigned. (ECF No. 55.) On March 2, 2021, the Court granted Defendants’

6 Motions to Dismiss and dismissed without prejudice Plaintiffs’ First Amended

7 Complaint. (ECF No. 75.)

8 On April 22, 2021, Plaintiffs filed the operative Second Amended Complaint

9 alleging violations of (1) the FHA – Disparate Impact; (2) the FHA – Perpetuation of

10 Segregation; (3) 42 U.S.C. § 1983; and (4) the FEHA. (ECF No. 78.) On June 21, 2021,

11 the City Defendants and the SDHC filed the instant Motions to Dismiss. (ECF Nos. 79,

12 80.)

13 LEGAL STANDARD

14 “A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to

15 state a claim upon which relief can be granted ‘tests the legal sufficiency of a claim.’”

16 Conservation Force v. Salazar, 646 F.3d 1240, 1241–42 (9th Cir. 2011) (quoting

17 Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001)). “A district court’s dismissal for

18 failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) is proper if there is

19 a ‘lack of a cognizable legal theory or the absence of sufficient facts alleged under a

20 cognizable legal theory.’” Id. at 1242 (quoting Balistreri v. Pacifica Police Dep’t, 901

21 F.2d 696, 699 (9th Cir. 1988)).

22 “Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a ‘short

23 and plain statement of the claim showing that the pleader is entitled to relief.’” Ashcroft

24 v. Iqbal, 556 U.S. 662, 677–78 (2009) (quoting Fed. R. Civ. P. 8(a)(2)). “[T]he pleading

25 standard Rule 8 announces does not require ‘detailed factual allegations,’ but it demands

26 more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Id. at 678

27 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In other words, “[a]

28 / / /

1 pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of

2 a cause of action will not do.’” Id. (quoting Twombly, 550 U.S. at 555).

3 “To survive a motion to dismiss, a complaint must contain sufficient factual

4 matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Id.

5 (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff

6 pleads factual content that allows the court to draw the reasonable inference that the

7 defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556).

8 “[W]here the well-pleaded facts do not permit the court to infer more than the mere

9 possibility of misconduct, the complaint has alleged—but it has not ‘show[n]’—'that the

10 pleader is entitled to relief.’” Id. at 679 (second alteration in original) (quoting Fed. R.

11 Civ. P. 8(a)(2)).

12 “If a complaint is dismissed for failure to state a claim, leave to amend should be

13 granted ‘unless the court determines that the allegation of other facts consistent with the

14 challenged pleading could not possibly cure the deficiency.’” DeSoto v. Yellow Freight

15 Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992) (quoting Schreiber Distrib. Co. v. Serv-Well

16 Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986)). “A district court does not err in

17 denying leave to amend where the amendment would be futile.” Id. (citing Reddy v.

18 Litton Indus., 912 F.2d 291, 296 (9th Cir. 1990), cert. denied, 502 U.S. 921 (1991)).

19 ANALYSIS

20 I. Federal Housing Authority

21 Plaintiffs allege a violation of the FHA, 42 U.S.C. § 3601, because “Defendants

22 are required to administer programs . . . in a manner that furthers the policies of the Fair

23 Housing Act.” (SAC ¶ 179.) To bring a claim under the FHA, Plaintiffs must allege a

24 theory of disparate treatment or disparate impact. See Gamble v. City of Escondido, 104

25 F.3d 300, 304–05 (9th Cir. 1997). To make out a claim for disparate impact, the plaintiff

26 has the burden to “establish a prima facie case of disparate-impact discrimination under

27 the FHA.” Sw. Fair Hous. Council, Inc. v. Maricopa Domestic Water Improvement Dist.,

28 / / /

1 17 F.4th 950, 960 (9th Cir. 2021). To allege an FHA claim based on disparate impact, a

2 plaintiff must demonstrate:

3 (1) the existence of a policy, not a one-time decision, that is

outwardly neutral; (2) a significant, adverse, and

4

disproportionate effect on a protected class, of which the

5 plaintiff is a member; and (3) robust causality that shows,

beyond mere evidence of a statistical disparity, that the

6

challenged policy, and not some other factor or policy, caused

7 the disproportionate effect.

8 Id. at 962. Disparate impact discrimination includes “actions by private or governmental

9 bodies that create a discriminatory effect upon a protected class or perpetuate housing

10 segregation without any concomitant legitimate reason.” See Ave. 6E Invs., LLC v. City

11 of Yuma, 818 F.3d 493, 503 (9th Cir. 2009). “A disparate-impact claim relying on a

12 statistical disparity must fail if the plaintiff cannot point to a defendant’s policy or

13 policies causing that disparity. A robust causality requirement is important in ensuring

14 that defendants do not resort to the use of racial quotas.” Tex. Dep’t of Hous. & Cmty.

15 Affairs v. Inclusive Cmties. Project, Inc. (“ICP VI”), 576 U.S. 519, 521 (2015). “A

16 robust causality requirement ensures that ‘[r]acial imbalance . . . does not, without more,

17 establish a prima facie case of disparate impact’ and thus protects defendants from being

18 held liable for racial disparities they did not create.” Id. at 542 (citing Wards Cove

19 Packing Co. v. Atonio, 490 U.S. 642 (1989), superseded by statute on other grounds, 42

20 U.S.C. § 2000e-2(k)). “If a statistical discrepancy is caused by factors other than the

21 defendant’s policy, a plaintiff cannot establish a prima facie case, and there is no liability.

22 ICP VI, 576 U.S. at 527; Comm. Concerning Cmty. Improvement v. City of Modesto, 583

23 F.3d 690, 702–03 (9th Cir. 2009) (stating that “gross statistical disparities” alone will

24 rarely be “sufficient to invalidate a challenged government action”). Robust causality

25 “requires that plaintiffs prove with a preponderance of the evidence that the policy itself,

26 and not some other factor . . . created or exacerbated a disproportionate effect.” See Sw.

27 Fair Hous. Council, 17 F.4th at 962.

28 / / /

1 A. The City of San Diego and Housing Authority of the City of San Diego

2 Previously, the Court found that Plaintiffs had failed to “adequately allege how the

3 challenged policies of the City and SDHC have caused the claimed statistical disparity.”

4 (See ECF No. 75 at 4.) In their Second Amended Complaint, Plaintiffs add allegations

5 regarding the impact of the Community Plans, (SAC ¶¶ 37–40); a streamlined review

6 process pursuant to the California Environmental Quality Act, (id. ¶ 70); the Expedite

7 Program, (id. ¶ 90); City Ordinances No. 20916 and No. 20917, (id. ¶ 110–11); and

8 Resolution No. 313066. (Id. ¶ 113.) First, Plaintiffs allege that amendments to the

9 Community Plans led to increases in low-income and extremely low-income housing

10 with “severe limits on commercial, industrial and office development.” (Id. ¶ 38.)

11 Second, Plaintiffs allege the City Defendants adopted a plan to “streamline the review

12 process for proposed new development projects” which were previously subject to

13 discretionary review and now would provide automatic approval. (Id. ¶¶ 70–71.) Third,

14 Plaintiffs allege the Expedite Program streamlined the building permitting process and

15 removed it altogether for some building developments in the San Diego Promise Zone,

16 which includes the Affected Communities. (Id. ¶ 90.) Fourth, Plaintiffs allege Ordinance

17 No. 20916 provided incentives for developers to construct density above the maximum

18 typically allowed if they do not request any waiver/incentive. (Id. ¶ 110.) Fifth,

19 Plaintiffs allege Ordinance No. 20917 provided a streamlined environmental review

20 process for projects with densities established by existing zoning, community plan, or

21 general plan policies for which an Environmental Impact Report was already certified.

22 (Id. ¶ 111.) Sixth, Plaintiffs allege that Resolution No. 313066 approved the

23 “recommendation to continue to preserve and expand low-income and very low-income

24 housing in the Affected Communities.” (Id. ¶ 113.)

25 Once again, Plaintiffs’ allegations fall short under the Ninth Circuit’s test. To be

26 sure, Plaintiffs’ new allegations satisfy the first prong of the Ninth Circuit’s test by

27 alleging outwardly neutral policies that they do not allege are discriminatory on their

28 face. (See generally SAC; see also Sw. Fair Hous. Council, Inc., 17 F.4th at 962–63

1 (finding an outwardly neutral policy where the policy does not explicitly treat customers

2 differently based on their membership in any “recognized protected class”).) Plaintiffs’

3 allegations also satisfy the second prong because they include evidence demonstrating a

4 statistical disparity between the Affected Communities and Non-Affected Communities.

5 (See SAC ¶¶ 114–30; see also Sw. Fair Hous. Council, Inc., 17 F.4th at 963 (relying on a

6 comparison between “those affected and those unaffected by the facially neutral policy”

7 to evaluate statistical disparity).) But Plaintiffs’ claims again fail the third prong because

8 they do not prove a robust causal connection between the specific policies of the City

9 Defendants and the alleged statistical disparity. (See generally SAC; see also ICP VI,

10 576 U.S. at 543 (noting it is difficult to “establish causation because of the multiple

11 factors that go into investment decisions about where to construct or renovate housing

12 units”).)

13 Here, Plaintiffs allege that the combined effect of these policies caused Encanto

14 and Southeastern San Diego to receive more affordable housing units than eight Non-

15 Affected Communities received combined. (See SAC ¶ 118.) Since 2015, 81% of the

16 affordable housing units to be built were to be added in Southeastern San Diego. (See id.

17 ¶ 121.) Nonetheless, the City Defendants contend that Plaintiffs have failed to meet the

18 robust causality requirement between the alleged policy and the disparate impact. (City

19 MTD at 8.) Although Plaintiffs specify the policies they believe have led to the alleged

20 disparate impact, the essential nexus that it was the identified policies, and not some other

21 factor, such as an “uncontrollable societal determinant[]” or “unchallenged policies of the

22 defendant” that created the disparate effect is noticeably absent from the SAC. See Sw.

23 Fair Hous. Council, Inc., 17 F.4th at 962.

24 In Southwest Fair Housing Council, Inc., for example, the plaintiffs challenged the

25 defendant’s policy of increasing the security deposit for renters in its public housing units

26 as compared to renters in its private housing units. Id. at 965. Key to the Ninth Circuit’s

27 finding in Southwest Fair Housing Council, Inc., was the bifurcation of the defendant’s

28 customer base—making it clear that application of the increased security deposit for one

1 subset of the base was causing the adverse effects. Id. at 966. In contrast, the policies

2 challenged in this case are applied citywide and not specifically to a certain subset of the

3 population. Because Plaintiffs fail to allege bifurcation or targeted application, they fail

4 to clearly establish the requisite nexus. Cf. id. (finding that a robust causality existed

5 because the adverse effects of the policy were specifically applied to a subset of the

6 defendant’s customer base). Therefore, Plaintiffs’ additional allegations are insufficient

7 to meet the robust causality requirement under the Ninth Circuit’s pleading standard, and

8 the Court GRANTS the City Defendants’ Motion to Dismiss Plaintiffs’ FHA claim for

9 failure to state a claim.

10 B. San Diego Housing Commission

11 Plaintiffs also fail to allege facts sufficient to establish a robust causal connection

12 between any specific policy of the SDHC and the alleged statistical disparity. (See

13 generally SAC.) Plaintiffs challenge the SDHC’s method of distributing federal funds,

14 alleging that the SDHC has “leveraged federal funding to continue to concentrate poverty

15 in the Affected Communities.” (See id. ¶ 152–53.) In response, the SDHC argues that its

16 policy of awarding funding based on points incentivizes developers to “propose low-

17 income housing development in the Non-Affected Communities.” (SDHC Mot. at 12.)

18 Additionally, the SDHC notes that Plaintiffs fail to specify a policy that causes the

19 alleged disparity in placement of low-income rental units in the Affected Communities as

20 compared to the Non-Affected Communities. (Id. at 13.)

21 The SDHC is correct: Plaintiffs make allegations based on statistical outcomes but

22 fail to establish a nexus between any specific policy and the distribution of funds. (See

23 generally SAC.) Absent a specific policy, Plaintiffs’ allegations fail to meet the pleading

24 standard. See ICP VI, 576 U.S. at 542 (“A disparate-impact claim that relies on a

25 statistical disparity must fail if the plaintiff cannot point to a defendant’s policy or

26 policies causing that disparity.”). Thus, the Court GRANTS the SDHC’s Motion to

27 Dismiss Plaintiffs’ FHA cause of action for failure to state a claim.

28 / / /

1 II. § 1983

2 Plaintiffs allege a violation of 42 U.S.C. § 1983 because the “actions and

3 omissions of Defendants have deprived Plaintiffs particular rights under the federal and

4 state fair housing laws and the 14th Amendment’s Equal Protection Clause.” (SAC

5 ¶ 194.) To establish a claim under § 1983, a plaintiff must allege “(1) that a right secured

6 by the Constitution or laws of the United States was violated, and (2) that the alleged

7 violation was committed by a person acting under the color of State law.” Long v. Cty. of

8 Los Angeles, 442 F.3d 1178, 1185 (9th Cir. 2006). Municipalities are “persons” under

9 § 1983 and therefore can be held liable for violations. Id. (citing Monell v. Dep’t of

10 Social Servs., 436 U.S. 658, 690 (1970)). A municipality may only be liable, however,

11 when “execution of a government’s policy or custom inflicts the injury.” Id.

12 Here, Plaintiffs’ § 1983 claim fails for two reasons. First, and as described above,

13 Plaintiffs have not alleged facts sufficient to show that it was the execution of the City

14 Defendants’ or the SDHC’s policies that caused the alleged violation of the FHA.

15 Accordingly, Plaintiffs’ § 1983 claims cannot be based on the alleged FHA violations.

16 Further, a § 1983 claim may not be based on violations of a state law or regulation. See

17 Galen v. Cty. of Los Angeles, 477 F.3d 652, 662 (9th Cir. 2007); see also Save Our Valley

18 v. Sound Transit, 335 F.3d 932, 939 (9th Cir. 2003).

19 Second, to the extent the § 1983 claim is based on the Fourteenth Amendment’s

20 Equal Protection Clause, that claim also fails. “To state a claim under 42 U.S.C. § 1983

21 for a violation of the Equal Protection Clause of the Fourteenth Amendment, a plaintiff

22 must show that the defendants acted with an intent or purpose to discriminate against the

23 plaintiff based upon membership in a protected class.” See Lee v. City of Los Angeles,

24 250 F.3d 668, 686 (9th Cir. 2001). “Where the challenged governmental policy is

25 ‘facially neutral,’ proof of its disproportionate impact on an identifiable group can satisfy

26 the intent requirement only if it tends to show that some invidious or discriminatory

27 purpose underlies the policy.” See id. Here, although Plaintiffs have alleged that

28 Defendants acted with intent or purpose to discriminate against Plaintiffs, they fail to

1 |}allege an invidious or discriminatory purpose underlying the City Defendants’ or the

2 ||SDHC’s policies. At best, Plaintiffs’ claims amount to a mere recitation of the elements

3 ||of a cause of action, which is insufficient to sustain a claim. See Ashcroft, 556 U.S. at

4 || 663-64.

5 For both these reasons, the Court GRANTS Defendants’ Motions and

6 || DISMISSES Plaintiff's § 1983 claims.

7 California Fair Employment and Housing Act

8 “Because FEHA is based on the Fair Housing Act, liability under the Fair Housing

9 || Act also supports liability under FEHA.” Jniestra v. Cliff Warren Invs., Inc., 886 F.

10 || Supp. 2d 1161, 1169 (C.D. Cal. 2012) (citing Brown v. Smith, 55 Cal. App. 4th 767, 780

11 |}(1997)). Accordingly, the Court GRANTS the Motions and DISMISSES Plaintiffs’

12 || FEHA claim.

13 CONCLUSION

14 In light of the foregoing, the Court GRANTS both the City Defendants’ Motion to

15 ||}Dismiss (ECF No. 79) and the SDHC’s Motion to Dismiss (ECF No. 80) and

16 || DISMISSES WITHOUT PREJUDICE Plaintiffs’ Second Amended Complaint (ECF

17 || No. 78).

18 Plaintiffs MAY FILE an amended complaint curing the above enumerated

19 || deficiencies within twenty-one (21) days of the electronic docketing of this Order.

20 || Should Plaintiffs fail timely to file an amended complaint, the Clerk of Court will enter

21 || judgment of dismissal without prejudice without further Order of the Court.

22 IT IS SO ORDERED.

23 |!Dated: February 16, 2022

24 ° “Tan (2 re

25 Honorable Todd W. Robinson

United States District Judge

27

28