Jetter v. City of Cincinnati

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION

DEBORAH JETTER, et al., : Case No. 1:20-cv-581

:

Plaintiffs, : Judge Timothy S. Black

:

vs. :

:

CITY OF CINCINNATI, :

:

Defendant. :

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S

MOTION TO DISMISS (DOC. 9); DENYING PLAINTIFFS’ MOTION TO

CERTIFY A CLASS (DOC. 7); AND GRANTING THE PARTIES’ JOINT

MOTION TO STAY DISCOVERY (DOC. 21)

This civil case is before the Court on Defendant City of Cincinnati’s motion to

dismiss (Doc. 9) and the parties’ responsive memoranda (Docs. 13, 14, 17). Also before

the Court is Plaintiffs’ motion to certify a class (Doc. 7), and the parties’ responsive

memoranda (Docs. 10, 12). Finally, a joint motion to stay discovery (Doc. 21) is also

before the Court.

I. BACKGROUND

Plaintiffs Dennis and Cecil Howell; Allen and Alberta Harris; Jerilyn Isabel, and

Vickie Jackson are African-Americans who own homes in the Cincinnati neighborhood

of Bond Hill. (Doc. 1 at ¶¶ 4-7). Plaintiff Barbara Applebury owns a home in the Over-

the-Rhine neighborhood of Cincinnati. (Id. at ¶ 8).1 They all allege that the City of

Cincinnati (“the City”) has violated the Fair Housing Act (“FHA”) because of its

1 Another Plaintiff, Deobrah Jetter, voluntarily dismissed her claim. (Doc. 18).

operation of its Property Tax Abatement Program (“RTA”).

The RTA is state program, but it is administered by the City in key respects. The

City designates community-reinvestment areas (“CRAs”) in neighborhoods in need of

“revitalization.” (Doc. 9 at PageID# 90). Since 2001, the City has designated all of

Cincinnati as a CRA. (Id. at PageID# 92). Within the city-wide CRA, homeowners may

build a new home or perform renovations on existing ones and continue to pay taxes

based on their pre-improvement home value for 10-15 years. (Doc. 1 at ¶ 17). Plaintiffs’

example is apt. A homeowner who builds a house for $400,000 on a $100,000 lot will

continue to pay taxes as if her home is worth $100,00.00 for 15 years, saving around

$8,000.00 in that time. (Id. at ¶ 18). The minimum amount a homeowner can spend to

qualify for the abatement is either $2,500 or $5,000.2 The Hamilton County Auditor

approves applications for the abatement. (Doc. 9, PageID# 93).

Plaintiffs allege that a disproportionate number of these tax abatements have gone

to predominately “Caucasian” neighborhoods. (Id. at ¶¶ 23-24).3 The City’s distribution

of tax abatements in this way has caused, according to Plaintiffs:

• increased home values in predominately Caucasian neighborhoods (Id.

at ¶ 27);

2 Plaintiffs allege the minimum is $5,000.00. That appears to be the minimum for owners with 3

or more units. The City points out the minimum for a single-family household is $2,500.00. The

Court does not find that this disagreement is meaningful for purposes of this motion.

3 “Causasian” is Plaintiffs’ preferred term. For present purposes, the Court will simply follow

suit.

• under-development and relative decline, i.e., stagnation of home values

in Bond Hill and other predominately African-American neighborhoods

(Id. at ¶ 31);

• increased segregation throughout Cincinnati and in Bond Hill as

particularly alleged by several Plaintiffs (Id. at ¶¶4-7, 29);

• decreased mobility insofar as homeowners from predominately African-

American neighborhoods like Bond Hill cannot easily enter

predominately Caucasian, wealthier neighborhoods (Id. at ¶30);

• in the case of Plaintiff Applebury, a rise in property taxes in her

redeveloping neighborhood, Over-the-Rhine, that threatens

displacement of her (Id. at ¶8).

Plaintiffs summarize that “[t]he result for neighborhoods in Cincinnati is that

Caucasian neighborhoods have become more affluent, more exclusive, and more White.

African-American neighborhoods remain Black, and less affluent. Tax abatements have

contributed substantially to this phenomenon.” (Id. at ¶32).

For these reasons, Plaintiffs allege that the City has violated the FHA in

implementing the RTA, and Plaintiffs seek various relief, discussed below. Plaintiffs

wish to litigate this case as a class action. To that end, they have moved to certify a class

and a sub-class of similarly situated individuals. (Doc. 7).

II. LAW & ANALYSIS

The Court first addresses the motion to dismiss. For the purposes of this motion to

dismiss, the Court must: (1) view the complaint in light most favorable to Plaintiff; and

(2) take all well-pleaded factual allegations as true. Tackett v. M&G Polymers, 561 F.3d

478, 488 (6th Cir. 2009).

The City first argues that the Tax Injunction Act precludes Plaintiffs’ complaint.

The City then moves to dismiss Plaintiffs’ complaint for lack of standings and for failure

to state a claim.

A. The Tax Injunction Act

As initial matter, this Court addresses the City’s argument that Plaintiffs’ suit is

barred by the Tax Injunction Act (“TIA”). 28 U.S.C. § 1341. This section states: “The

district courts shall not enjoin, suspend or restrain the assessment, levy or collection of

any tax under State law where a plain, speedy and efficient remedy may be had in the

courts of such State.” Id. The City argues this bars Plaintiffs’ suit because the “heart of

this case is the amount of state property taxes, whether abated or not, that is assessed and

collected in the city of Cincinnati.” (Doc. 14 at 10).

The City is incorrect. The “[Supreme] Court has interpreted and applied the TIA

only in cases Congress wrote the Act to address, i.e., cases in which state taxpayers seek

federal-court orders enabling them to avoid paying state taxes.” Hibbs v. Winn, 542 U.S.

88, 107 (2004). Ҥ 1341 has been read to restrain state taxpayers from instituting federal

actions to contest their liability for state taxes, but not to stop third parties from pursuing

constitutional challenges to tax benefits in a federal forum.” Id. at 108.

Here, Plaintiffs do not seek to avoid paying state taxes. Rather, Plaintiffs

challenge the racial impact of tax abatements administered in the City. The suit is not

barred by the TIA.

B. Subject-Matter Jurisdiction

The City first moves to dismiss Plaintiffs’ complaint for lack of subject matter

jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1). The City argues that

Plaintiffs lack Article III standing. The City also contends this Court should review the

motion to dismiss for lack of subject matter jurisdiction as a factual attack, and the Court

should weigh the facts called into question by the City when determining if subject-

matter jurisdiction exists. (Doc. 9 at PageID# 88).

1. Standard of Review

“Rule 12(b)(1) motions to dismiss for lack of subject-matter jurisdiction generally

come in two varieties: a facial attack or a factual attack.” Gentek Bldg. Prods. v.

Sherwin–Williams Co., 491 F.3d 320, 330 (6th Cir. 2007) (citing Ohio Nat’l Life Ins. Co.

v. United States, 922 F.2d 320, 325 (6th Cir. 1990)). In either case, “where subject

matter jurisdiction is challenged under Rule 12(b)(1), as it was here, the plaintiff has the

burden of proving jurisdiction in order to survive the motion.” Rogers v. Stratton Indus.,

Inc., 798 F.2d 913, 915 (6th Cir. 1986).

“A facial attack on the subject-matter jurisdiction alleged in the complaint

questions merely the sufficiency of the pleading.” Id. “When reviewing a facial attack, a

district court takes the allegations in the complaint as true,” and construes them in the

light most favorable to the nonmoving party, a safeguard similar to that employed under

Federal Rule of Civil Procedure 12(b)(6). Id.; see also United States v. Ritchie, 15 F.3d

592, 598 (6th Cir. 1994). “If those allegations establish federal claims, jurisdiction

exists.” Gentek Bldg. Prods., 491 F.3d at 330.

“A factual attack is a challenge to the factual existence of subject matter

jurisdiction.” Golf Vill. N., LLC v. City of Powell, Ohio, 338 F. Supp. 3d 700, 704 (S.D.

Ohio 2018) (citing Ritchie, 15 F.3d at 598). “When a Rule 12(b)(1) motion attacks the

factual basis for jurisdiction, the district court must weigh the evidence and the plaintiff

has the burden of proving that the court has jurisdiction over the subject matter.” Golden

v. Gorno Bros., Inc., 410 F.3d 879, 881 (6th Cir. 2005).

“But a district court engages in a factual inquiry regarding the complaint’s

allegations only when the facts necessary to sustain jurisdiction do not implicate the

merits of the plaintiff's claim.” Gentek, 491 F.3d 320, 330 (citing Garcia v. Copenhaver,

Bell & Assocs., 104 F.3d 1256, 1261 (11th Cir.1997)). In other words, “the district court

is prohibited from making factual findings with respect to a jurisdictional issue when

such a finding would adversely affect the merits of the plaintiff's case.” Carrier Corp. v.

Outokumpu Oyj, 673 F.3d 430, 443–44 (6th Cir. 2012) “When ‘an attack on subject-

matter jurisdiction also implicates an element of the cause of action, then the district

court should find that jurisdiction exists and deal with the objection as a direct attack on

the merits of the plaintiff’s claim.’” Id. (quoting Gentek, 491 F.3d at 330).

The City suggests this is a “factual attack” because it is challenging Plaintiffs’

allegations related to the City’s implementation of residential tax abatements. The City

directs the Court’s attention to Ohio state law as its factual attack. Any findings related

to the City’s implementation of Ohio’s residential tax abatement law would go directly to

the merits of Plaintiffs’ case – whether the City’s tax abatement procedure violates the

FHA.

Accordingly, the Court makes no jurisdictional findings of fact, and will review

the City’s subject-matter jurisdiction challenge as a facial attack.

2. Article III Standing

Federal courts are vested with jurisdiction to address “actual cases and

controversies.” Coalition for Gov’t Procurement v. Fed. Prison Indus., Inc., 365 F.3d

435, 458 (6th Cir. 2004) (citing U.S. CONST. art III, § 2). The doctrine is an evolving

body of law with its “core component” being “the case-or-controversy requirement of

Article III,” but “some of its elements express merely prudential considerations that are

part of judicial self-government.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 559

(1992). “The doctrine of standing, which is derived from Article III, requires a plaintiff

to have a ‘personal stake in the outcome of the controversy.’” Foster v. Health Recovery

Servs., Inc., No. 2:19-CV-4453, 2020 WL 5943021, at *3 (S.D. Ohio Oct. 7, 2020)

(citing Susan B. Anthony List v. Driehaus, 573 U.S. 149, 158 (2014)). “Whether the

interest sought to be protected by the complainant is arguably within the zone of interests

to be protected or regulated by the statute. Ass'n of Data Processing Serv. Organizations,

Inc. v. Camp, 397 U.S. 150, 153, (1970). “The [standing] requirement at issue is in reality

tied to a particular statute.” Bank of Am. Corp. v. City of Miami, 137 S. Ct. 1296, 1302,

197 L. Ed. 2d 678 (2017) (discussing standing in the context of an FHA claim).

The FHA casts a wide “zone of interests.” Id. Any “aggrieved person” may bring

a lawsuit under the FHA. 42 U.S.C. § 3613(a)(1)(A). An aggrieved person is one who

either “claims to have been injured by a discriminatory housing practice” or anyone who

“believes” they “will be injured by a discriminatory housing practice about to occur.” 42

U.S.C. § 3602(i). In interpreting the statute, courts have stated the FHA codifies “a

congressional intention to define standing as broadly as is permitted by Article III of the

Constitution.” Bank of Am. Corp. v. City of Miami., 137 S. Ct. 1296, 1298 (2017)

(quoting Trafficante v. Metropolitan Life Ins. Co., 409 U.S. 205 (1972)).

To satisfy standing, the Supreme Court requires a plaintiff to have: “(1) suffered

an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant,

and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v.

Robins, 136 S. Ct. 1540, 1547 (2016). “Where, as here, a case is at the pleading stage,

the plaintiff must clearly allege facts demonstrating each element.” Id. (internal

quotation omitted).

a. Injury in Fact

The City claims the Plaintiffs fail to meet the injury-in-fact element of standing

because Plaintiffs’ alleged injuries are not “concrete and particularized.” (Doc. 9,

PageID# 95). Plaintiffs alleged harms are “speculative”; that the complaint “lacks any

facts demonstrating alleged discrimination”; and that none of the existing Plaintiffs

applied for the RTA. (Id. at PageID# 96). The City thus concludes that the Plaintiffs

alleged harms are “conjectural and hypothetical” rather than “actual and imminent.” (Id.)

On the contrary, the Court finds the Plaintiffs have pleaded injuries cognizable

under the FHA. Among other things, Plaintiffs allege the City’s implementation of the

RTA has caused their neighborhoods to become more segregated. For example, three

Plaintiffs live in Bond Hill and allege the neighborhood has become increasingly

segregated because of the City’s implementation of the RTA. (Doc. 1 at ¶¶2-7, 29).4 The

loss of interracial associations is a long-recognized injury sufficient to confer standing

under the FHA. See e.g., Havens Realty Corp. v. Coleman, 455 U.S. 363, 376 (1982)

(finding the loss of “social and professional benefits of living in an integrated society” a

sufficient injury).

In fact, the alleged injury here is nearly indistinguishable from that alleged in

Gladstone Realtors v. Bellwood, a case the City cites but does not otherwise discuss. 441

U.S. 91, 99 (1979). In Gladstone Realtors, a municipality alleged that realtors’ sales

practices caused racial imbalance and economic diminution in home values within a

defined geographic area. 441 U.S. 91, 92 (1979). Here, if anything, the relationship is

more direct because the homeowners of the segregated neighborhoods, suffering from

economic diminution in home values, assert the claims for themselves.

The City states “the Complaint is devoid of any allegation that any of the eight

named Plaintiffs participated or sought to participate in the City’s RTA.” (Doc. 9 at

PageID# 95). That is true. But two Plaintiffs state they cannot afford the minimum

expenditure. (Doc. 1 at ¶¶ 6-7). More importantly, the commonly alleged injury is not

that individual applications are approved or denied on a discriminatory basis. It is that the

implementation of the RTA, writ-large, that has caused housing segregation and other

harms.

4 The only other lead Plaintiff, Barbara Applebury, lives in Over-the-Rhine and alleges the influx

of CRT abatements into that neighborhood has caused her property taxes to increase such that

she may be forced out. This flips the script but results in the same injury: the loss of an integrated

neighborhood.

The alleged injuries may or may not be provably connected to the RTA policy but,

as pleaded, they are not speculative.

b. Traceable to Challenged Conduct of the Defendant

The City claims the alleged injury is not traceable to City officials. (Doc. 9 at

PageID# 97). In uncontradicted assertions, the City says County Auditors assess property

values and award tax abatements. (Id.). The City states it simply follows its legal

obligations under state law and forwards the abatements. (Id. at PageID#99). Thus, the

City concludes the alleged injury is not traceable to City actions.

The Court disagrees that the City has no discretion in administering the RTA. As it

admits, the City designates the tracts that are eligible for the CRA. (Doc. 9 at 15, n.5)

(“…Cincinnati Ordinance 276-2017 establishes the City’s residential CRA policy.”)

Using that discretion, the City has determined that all of Cincinnati meets the CRA

criteria, from 2001 to the present, so all of Cincinnati is eligible for the RTA. (Doc. 9 at

15). According to Plaintiffs, it is that choice, made at the City level, that has led to a

huge influx of resources to Caucasian neighborhoods, the underdevelopment of African-

American ones, and the resultant harms alleged. Plaintiffs also allege the City has not

done anything to counter the trends hastened by the RTA. (Doc. 1 at ¶6). Giving

Plaintiffs the benefit of reasonable inferences, the Court finds that the conduct

complained of is plausibly traceable to the City’s choices in implementing the RTA.

c. Redressable by a Favorable Judicial Ruling

The City claims Plaintiffs must, but fail to, “show that a favorable judicial ruling

will remove the harm they suffer.” (Doc. 9 at PageID# 100) (quoting Warth v. Seldin, 422

U.S. 490, 505 (1975)). The City’s argument here, specifically, takes issue with Plaintiffs’

demands for relief. As remedies for the alleged wrongs, Plaintiffs ask the Court pause

abatements to Caucasian neighborhoods, provide them to African-American

neighborhoods in parity with Caucasian neigborhoods; or give African-Americans a

100% tax abatement for 10 years. (Doc. 1, PageID# 12-13). Other demands include an

order establishing an outreach program to help African-Americans obtain the residential

tax abatement; and tax relief that would offset increases in property taxes resulting from

the RTA. (Id.).

The Court agrees with the City, on a preliminary basis, that several of the demands

for relief are constitutionally questionable. In FHA cases in particular “courts should

strive to design [remedies] to eliminate racial disparities through race-neutral means.”

Texas Dep't of Hous. & Cmty. Affs. v. Inclusive Communities Project, Inc., 576 U.S. 519,

544–545 (2015). Doubling down on the point, the Inclusive Communities Court cautioned

that “[r]emedial orders that impose racial targets or quotas might raise more difficult

constitutional questions.” Id. at 45. Indeed, a remedy that directed tax abatements based

solely on race could run afoul of Equal Protection Clause. See, e.g., Parents Involved in

Cmty. Sch. v. Seattle Sch. Dist. No. 1, 551 U.S. 701, 730 (2007).

These are serious issues but not fatal to Plaintiffs’ complaint at this stage.

Plaintiffs demand for an outreach effort directed toward African-American

neighborhoods appears, without any briefing to the contrary, to be both constitutionally

inoffensive and in line with remedies applied by district courts in other FHA cases. See

United States v. City of Parma, Ohio, 661 F.2d 562, 576 (6th Cir. 1981) (upholding a

district court remedy wherein it ordered a city “advertising” campaign to address FHA

violations).

Additionally, the Court finds that the general demand for relief (“further and other

relief”) authorizes this Court to consider, if liability is established, a range of remedies.

Tigrett v. Cooper, 855 F. Supp. 2d 733, 744 (W.D. Tenn. 2012) (“Under the general

prayers for relief in a complaint, it appears to be widely accepted that district courts retain

discretion to extend relief beyond the bounds of the specific prayers for relief requested

in a complaint.”). Flexibility in crafting relief to fit the scope of an FHA violation is also

a well-established principle. The FHA itself grants district courts the authority to “order

such affirmative action as may be appropriate” to remedy a violation. 42 U.S.C.

§3613(c)(1). Moreover, “[a]ppropriate relief for violations of the [FHA] is to be

determined on a case-by-case basis … with relief tailored in each instance to the needs of

the particular situation.” United States v. Jamestown Ctr.-In-The-Grove Apartments, 557

F.2d 1079, 1080 (5th Cir. 1977). For these reasons, the Court does not consider itself

bound by Plaintiffs’ prayer for relief or the Constitutionally questionable remedies

therein.

The Court is satisfied that a favorable judicial ruling could indeed remedy the

harms of which Plaintiffs complains.

3. Failure to State a Claim

a. Standard of Review

A motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) operates to test the

sufficiency of the complaint and provides for dismissal of a complaint for “failure to state

a claim upon which relief can be granted.” To show grounds for relief, Fed. R. Civ. P.

8(a) requires that the complaint contain a “short and plain statement of the claim showing

that the pleader is entitled to relief.”

While Fed. R. Civ. P. 8 “does not require ‘detailed factual allegations,’ . . . it

demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S.

544, 555 (2007)). Pleadings offering mere “‘labels and conclusions’ or ‘a formulaic

recitation of the elements of a cause of action will not do.’” Id. (citing Twombly, 550

U.S. at 555). In fact, in determining a motion to dismiss, “courts ‘are not bound to accept

as true a legal conclusion couched as a factual allegation[.]’” Twombly, 550 U.S. at 555

(citing Papasan v. Allain, 478 U.S. 265 (1986)). Further, “[f]actual allegations must be

enough to raise a right to relief above the speculative level[.]” Id.

Accordingly, “[t]o survive a motion to dismiss, a complaint must contain

sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its

face.’” Iqbal, 556 U.S. at 678. A claim is plausible where “plaintiff pleads factual

content that allows the court to draw the reasonable inference that the defendant is liable

for the misconduct alleged.” Id. Plausibility “is not akin to a ‘probability requirement,’

but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id.

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

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

pleader is entitled to relief,’” and the case shall be dismissed. Id. (citing Fed. Rule Civ.

P. 8(a)(2)).

b. Disparate Treatment Claim

In a typical disparate-treatment case against a municipal policy, a plaintiff

“establishes a prima facie case by showing that animus against the protected group was a

significant factor in the position taken by the municipal decision-makers themselves or by

those to whom the decision-makers were knowingly responsive. Mhany Mgmt., Inc. v.

Cty. of Nassau, 819 F.3d 581, 606 (2d Cir. 2016).

Plaintiffs invoke the word “intentional” to describe the alleged misconduct, raising

the possibility they are moving under a disparate-treatment claim as opposed to a

disparate-impact claim exclusively. (Doc. 1 at ¶¶1,36); see Inclusive Communities

Project, Inc. v. Lincoln Prop. Co., 920 F.3d 890, 909 (5th Cir. 2019) (“Disparate

treatment is deliberate discrimination.”). To the extent Plaintiffs have asserted a cause of

action alleging disparate treatment, it must fail. Plaintiffs do not plead any non-

conclusory facts suggesting race-based animus played any role in the development of the

RTA policy. Beyond using the word “intentional,” Plaintiffs state no factual bases for a

disparate-treatment claim.

Thus, under either Plaintiffs’ or the City’s proposed framework for the Court’s

scrutiny of a pleading, Plaintiffs lack a cause of action for a disparate treatment claim

under the FHA.

c. Disparate Impact Claims

In contrast to a disparate treatment case, a plaintiff bringing a disparate impact

claim challenges practices that have a “disproportionately adverse effect on minorities”

and are otherwise unjustified by a legitimate rationale. Texas Dep't of Hous. & Cmty.

Affs. v. Inclusive Communities Project, Inc., 576 U.S. 519, 524 (2015). However,

according to precedent set in Texas Dep't of Hous. & Cmty. Affs. v. Inclusive

Communities Project courts must consider at least two important “safeguards” when

analyzing a disparate impact claim. Id.

First, defendants in disparate impact claims are allowed “leeway to state and

explain the valid interest served by their policies.” Id. at. 541. Courts should not read the

FHA “to impose onerous costs on actors who encourage revitalizing dilapidated housing

in our Nation's cities merely because some other priority might seem preferable.” Id.

Accordingly, “[g]overnmental or private policies are not contrary to the disparate-impact

requirement unless they are “artificial, arbitrary, and unnecessary barriers.” Id. at 543

quoting Griggs v. Duke Power Co., 401 U.S. 424 (1971).

Second, according to the court in Inclusive Communities, disparate-impact

plaintiffs must show a “robust causal connection” between the policy and the harm.

Importantly, “a disparate-impact claim that relies on a statistical disparity must fail if the

plaintiff cannot point to a defendant's policy or policies causing that disparity. A robust

causality requirement ensures that “[r]acial imbalance ... does not, without more,

establish a prima facie case of disparate impact.” Inclusive Communities, 576 U.S. at 542

(2015). “A plaintiff who fails to allege facts at the pleading stage or produce statistical

evidence demonstrating a causal connection cannot make out a prima facie case of

disparate impact.” Id. at 543.

Before getting to the substantive portions of the doctrine, the City complains that

Plaintiffs have not cited a specific section of the FHA and therefore have not properly put

the City on notice. (Doc. 9 at PageID# 107). The Court disagrees. There is no command

in the Federal Rules demanding a certain mode of citation in a complaint. Rather, as

stated, a pleading must state the basis for jurisdiction and contain a short and plain

statement of the claim showing that the pleader is entitled to relief. Fed. R. Civ. P.

8(a)(2). Plaintiffs have done as much, alleging jurisdiction under the FHA and stating

that the City’s implementation of a tax credit program causes various harms affecting

African-Americans disproportionately. The City is fairly on notice of allegations it must

defend against.

The City argues that Plaintiffs have not alleged facts showing the RTA is an

“artificial, arbitrary or unnecessary barrier” to fair housing. (Id. at PageID# 111). But

Plaintiffs alleged facts that, if true, would establish harm to African-Americans caused by

tax abatements that those Caucasian neighborhoods arguably do not need. This is a main

concern of the complaint—whiter and more affluent neighborhoods are getting a lion’s

share of tax incentives intended for areas in need of revitalization. The Court is satisfied

that Plaintiffs properly allege that the policy does create an unnecessary barrier to fair

housing.

In support of the RTA as good policy, the City cites its laudable goals like “the

retention of residents across all City neighborhoods.” (Id. at PageID# 112). However,

only after Plaintiff makes its prima facie case does the burden move to the government to

show its legitimate objectives. This case is not there yet. See Graoch Assocs. # 33, L.P.

v. Louisville/Jefferson Cty. Metro Hum. Rels. Comm'n, 508 F.3d 366, 373 (6th Cir. 2007)

(discussing the framework to a disparate impact claim under the FHA and points at which

the evidentiary burden shifts); see also Nat'l Fair Hous. All. v. Travelers Indem. Co., 261

F. Supp. 3d 20, 29 (D.D.C. 2017) (“Other limitations on disparate-impact liability take

effect at different stages—for example, defendants must have leeway to state and explain

the valid interest served by the challenged policies at the rebuttal stage.”) (emphasis

added, internal citations omitted). Thus, the City’s arguments justifying the RTA based

on its policy objectives are premature.

The City also alleges that “Plaintiffs offer no robust causal evidence of their

extraordinarily broad claim that the City’s RTA is the cause of their alleged harm.” (Id. at

PageID# 106). For the Court, the City’s argument here raises the important question of

whether Inclusive Communities’ “robust causality” requirement demands “evidence” or

“statistics” at the pleadings stage.

To revisit some of the relevant language from Inclusive Communities, the court

there stated “[a] plaintiff who fails to allege facts at the pleading stage or produce

statistical evidence demonstrating a causal connection cannot make out a prima facie case

of disparate impact.” 576 U.S. at 543 (2015). Federal courts have split on how to interpret

the language.5

Here, the Court adopts the persuasive reasoning of its sister court in the Southern

District of Ohio case Seattle House, LLC v. City of Delaware, Ohio. No. 2:20-CV-3284,

2021 WL 3284742, at *5 (S.D. Ohio Aug. 2, 2021). That court determined, and this

5 The Fifth Circuit identified four views of the robust causality requirement and discusses how

that requirement interacts with evidentiary burdens et al. Inclusive Communities Project, Inc. v.

Lincoln Prop. Co., 920 F.3d 890, 903 (5th Cir. 2019), cert. denied, 140 S. Ct. 2506, 206 L. Ed.

2d 462 (2020).

Court agrees, that Inclusive Communities did not create a “heightened burden on the

pleadings for a disparate impact claim….” Id. The court in Seattle House, in turn, quotes

a Southern District of New York case persuasively stating:

[Inclusive Communities] emphasized that statistics demonstrating a racial disparity

in a particular location, without an adequate showing of a causal connection to the

challenged policy, would not be sufficient to establish a prima facie case of

disparate impact. But a prima facie case is an evidentiary standard, and not a

pleading requirement. ICP did not alter the plausibility standard for pleading,

which requires only the plaintiff plead allegations that plausibly give rise to an

inference that the challenged policy causes a disparate impact. Nor does ICP

require Plaintiffs to proffer statistical evidence of disparate impact, if other facts

are pleaded that support the inference. Id. (quoting Winfield v. City of N.Y., 2016

U.S. Dist. LEXIS 146919, at *20 (S.D.N.Y. Oct. 24, 2016)).

The persuasive force of such orders is bolstered by common intuition and a recent

regulation, promulgated by Department of Housing and Urban Development (“HUD”),

regarding disparate impact claims specifically. The Inclusive Communities court did not

say it was altering a pleading standard. Moreover, the requirement of evidence at the

pleading stage would not just heighten a pleading standard but, essentially, collapse

several stages of civil procedure into a single step. Meanwhile, a recent HUD

regulation—one that is clearly attempting to codify Inclusive Communities—states that a

Plaintiff must “sufficiently plead facts to support” among other elements, “that there is a

robust causal link….” See 24 C.F.R. § 100.500.

For these reasons, the regular plausibility standard ought to apply. Accordingly,

Plaintiffs’ disparate impact claim will survive a motion to dismiss if Plaintiffs allege facts

establishing that a “robust causation” between the policy and the harm is plausible.

With that standard in mind, the Court turns to Plaintiffs alleged facts. The

allegation generally is that the implementation of the CRT has caused racial segregation.

“The tax abatement program…. has resulted in the significant new construction of single-

family homes, and condominiums in Caucasian neighborhoods in Cincinnati, thereby

increasing property values and the personal wealth of Caucasian homeowners.” (Doc. 1 at

¶27). In turn, Plaintiffs allege, population growth has accelerated in those

neighborhoods. (Id. at ¶28). The influx of money and people into predominately

Caucasian neighborhoods has allegedly increased the cost of moving into those

neighborhoods from the predominately African-American black neighborhoods, like

Bond Hill. At the same time, “there has been minimal tax abatement activity in African

American neighborhoods where property values have remained relatively flat ....” (Id. at

¶31).

Plaintiffs also provide numbers. The city has abated more than $180 million in

taxes.6 About half of those abatement dollars have gone to Caucasian neighborhoods and

29% to a single one—Hyde Park. (Id. at ¶ 24). African-American neighborhoods have

received considerably less in way of tax abatements, and perhaps as little as 20%. (Id. at

¶¶24-25).

The City does not refute the segregated-nature of recent housing patterns. Instead,

the City claims the RTA is not the cause. (Doc. 9 at PageID# 112). The City states that

6 The complaint does not say how long of a period it is examining with regards to RTAs

awarded. However, Plaintiffs direct the Court to the City’s tracker of RTAs at

https://insights.cincinnati-oh.gov/stories/s/residential-tax-abatemetns/kceu-xqtz/. (Doc. 1 at ¶23).

Analyzing that tracker, the Court’s best inference is that the Plaintiff-cited figures account for

RTA activity from roughly 2015 up until the complaint was filed.

such issues have “myriad causes including but not limited to, the 2008 housing market

collapse, a national failure to increase salaries consistent with cost-of-living, or the

decades-long history of “white flight….” (Id.). The City concludes that “this conclusory

allegation that seeks to identify the City’s RTA as the exclusive cause of economic racial

inequities should be rejected outright.” (Id.).

The City is probably correct about the “myriad causes” of segregation and

stagnant home prices in African-American neighborhoods. After all, “[t]he housing

market is interconnected with economic and social life.” City of Miami, 137 S. Ct. at

1306 (2017).” The Court is not convinced, though, that Plaintiffs must prove that the

operation of the RTA is the exclusive driver of the harms they allege. If that were the

case, no FHA litigation attacking municipal policies would ever get beyond the pleadings

stage. Instead, the inquiry ought to focus on whether the facts alleged create a plausible

inference of “robust” causal relationship between the policy and the harm alleged.

In this case, giving the benefit of reasonable inferences to the Plaintiffs, the Court

finds Plaintiffs have pleaded facts suggesting “robust causation” is at least plausible. The

City’s policy is that it has decided to make a powerful tax abatement available to every

homeowner in the City. While available to every homeowner, the tax credits, have gone

disproportionately, and in very large numbers, to predominately Caucasian

neighborhoods. Given the scale of the program, the idea that such disproportionate

distribution would cause the harms alleged is plausible—even if it is no more than that at

this stage. Plaintiffs have therefore adequately pleaded a disparate-impact claim.

In summary, the Court finds Plaintiffs have not pleaded a cause of action based on

intentional discrimination. To the extent any intentional discrimination claim is before the

Court, it is hereby dismissed. On the other hand, the Court has found Plaintiffs may go

forth with their disparate impact claim under the FHA.

C. The Motion for Class Certification

Plaintiffs’ motion for class certification is also before this Court. (Doc. 7).

Plaintiffs seek to represent a primary class and a sub-class. The proposed primary class is

defined as:

[A]ll African -American homeowners in the predominately African-American

neighborhoods of Cincinnati—including Avondale, Bond Hill, College Hill,

English Woods, Evanston, Kennedy Heights, Madisonville, Millvale, Mount Airy,

Mount Auburn, North Avondale, North Fairmont, Paddock Hills, Pendelton,

Roselawn, South Cumminsville, Walnut Hills, Winton Hills, and the West End.

(Doc. 7 at 2).

Plaintiffs propose a subclass consisting of:

“[a]ny African American homeowner in Madisonville, Over-the- Rhine, and

Walnut Hills7 who has not received a Residential Tax Abatement but who never-

the-less has experienced a raising of their property taxes by more than 5% higher

than the average raise for all homeowners in Cincinnati.” (Id.).

1. Standard of Review

Class actions constitute “an exception to usual rule that litigation is conducted by

and on behalf of the individual named parties only.” Califano v. Yamasaki, 442 U.S. 682,

700-01 (1978). “In order to justify a departure from that rule, ‘a class representative must

be part of the class and possess the same interest and suffer the same injury as the class

7 Whether intended by Plaintiffs or not, Walnut Hills appears as a relevant neighborhood in both

the primary class and the subclass.

members.’” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 348-49 (2011) (quoting E.

Tex. Motor Freight Sys., Inc. v. Rodriguez, 431 U.S. 395, 403 (1977)). To obtain class

certification, a plaintiff must meet each of the four prerequisites contained in Federal

Rule of Civil Procedure 23(a)—numerosity, commonality, typicality, and adequate

representation. Zehentbauer Family Land, LP v. Chesapeake Expl. LLC, 935 F.3d 496,

503 (6th Cir. 2019).

“[C]ertification is proper only if the trial court is satisfied, after a rigorous

analysis, that the prerequisites of Rule 23(a) have been satisfied.” Comcast Corp. v.

Behrend, 569 U.S. 27, 33 (2013). This rigorous analysis may require “the court to probe

behind the pleadings before coming to rest on the certification question.” Id. However,

courts do not have “license to engage in free-ranging merits inquiries at the certification

stage.” Amgen Inc. v. Conn. Ret. Plans & Tr. Funds, 568 U.S. 455, 466 (2013).

In addition to meeting the four criteria in Rule 23(a), a plaintiff must demonstrate

that the putative class complies with at least one of the requirements of Rule 23(b). Id.

Here, Plaintiffs seeks certification of the class pursuant to Rule 23(b)(2). (Doc.7 at 2-3).

A court may certify a class under Rule 23(b)(2) if (2) the party opposing the class has

acted or refused to act on grounds that apply generally to the class, so that final injunctive

relief or corresponding declaratory relief is appropriate respecting the class as a whole.

a. Numerosity

While there is no strict numerical threshold, “[o]ften, a class of 40 or more

members is sufficient to meet the numerosity requirement.’” Dillow v. Home Care

Network, Inc., No. 1:16-cv-612, 2017 WL 2418738, at *2 (S.D. Ohio June 5, 2017)

(cleaning up). Plaintiff credibly alleges the proposed putative class would number in the

“tens of thousands.” (Doc. 1 at ¶¶ 3-4). The Court agrees with Plaintiffs that the proposed

class is so numerous as to make joinder unpracticable.

For its part, the City does not contend that the number of putative class members

would be small. Instead, it revives what is essentially its standing argument. Accepting

the class descriptions at face value, the putative class clearly meets the numerosity

requirement. Fed. R. Civ. P. 23(a)(1).

b. Commonality and Typicality

Rule 23(a)(2) requires that “there are questions of law or fact common to the

class.” Although the Rule “speaks of ‘questions’ in the plural,” the Sixth Circuit has held

that “one question common to the class” satisfies this requirement. Sprague v. Gen.

Motors Corp., 133 F.3d 388, 397 (6th Cir. 1998). As the Supreme Court explained in

Tyson Foods, Inc. v. Bouaphakeo, “[a]n individual question is one where ‘members of a

proposed class will need to present evidence that varies from member to member,’ while

a common question is one where ‘the same evidence will suffice for each member to

make a prima facie showing [or] the issue is susceptible to generalized, class-wide

proof.’” 136 S. Ct. 1036, 1045 (2016) (quoting 2 W. Rubenstein, Newberg, Newberg on

Class Actions § 4:50, pp. 196-197 (5th ed. 2012)).

Commonality does not require “the raising of common ‘questions’—even in

droves—but, rather the capacity of a classwide proceeding to generate common answers

apt to drive the resolution of the litigation.” Zehentbauer, 935 F.3d at 503 (quoting Wal-

Mart, 564 U.S. at 350). Said another way, commonality is met when determining the

“truth or falsity” of a common contention “will resolve an issue that is central to the

validity of each one of the claims in one stroke,” advancing the litigation. Wal-Mart, 564

U.S. at 350; Sprague, 133 F.3d at 397.

To recap, there are five named Plaintiff households—four from Bond Hill and one

from Over-the-Rhine. The Bond Hill Plaintiffs, essentially representatives of the primary

class, complain of neighborhood decay, segregation, stagnant property values and their

inability to afford the minimum tax-abatement expenditure. The Over-the-Rhine Plaintiff

additionally complains of rising tax burden caused by RTA-spurred development. These

five households from two neighborhoods assert that their claims are typical of the tens of

thousands of African-American homeowners across all predominately African-American

communities in Cincinnati.

With this specific dynamic in mind, the Court finds Plaintiffs have not made the

requisite showing of commonality. As proposed, Plaintiffs’ class would encompass the

homeowners in the described neighborhoods who have received the RTA, those who

cannot afford it; and those who have applied for it and been rejected. It would embrace

homeowners whose property values had sky-rocketed, stagnated, or decreased. The class

description would potentially include homeowners who both have and have not lost the

benefit of interracial associations. It strikes the Court as intuitive that several members of

the proposed class may have no claims at all.

Plaintiffs’ specific points of contention bring the commonality problem into

sharper relief. For example, Plaintiffs claim all class members “want to live in a non-

racially segregated city.” (Doc. 7 at 7). For such a blanket assertion to hold true across

such a huge population beggars belief. Even if it were true, the Court notes there is a

difference between wanting to live in a non-segregated city and experiencing the loss of

interracial relations. The Court is not clear that merely wanting an integrated

neighborhood is a cognizable claim under the FHA.

Plaintiffs also assert a common question that allegedly unifies all members of the

proposed class: “Whether the RTA program has produced racially segregative effects.”

(Doc. 12 at 3). As with the class description, the Court discerns a problem of breadth

here. “Segregative effects” could include a lot of potential harms. Not all segregative

effects are cognizable injuries. It is plausible some segregative effects are caused by the

RTA while others are not. Connecting the RTA to different segregative effects would

likely entail different inquiries and evidence. And the Court anticipates different

“segregative effects” would require different remedies. In other words, the issue—

defined so broadly—is not “susceptible to generalized, class-wide proof.” Tyson, 136 S.

Ct. at 1045 (2016). The practical upshot of this is that litigation held together only by a

question of “segregative effects” allegedly cause by the RTA would very likely become

unwieldy, undercutting the core function of class resolution in the first place.

For largely the same reasons, Plaintiffs have not met their burden in demonstrating

typicality. Federal Rule of Civil Procedure 23(a)(3) requires plaintiffs to demonstrate that

“the claims or defenses of the representative parties are typical of the claims or defenses

of the class.” “Typicality is met if the class members’ claims are ‘fairly encompassed by

the named plaintiffs’ claims.’” Hendricks v. Total Quality Logistics, LLC, No. 1:10-cv-

649, 2019 WL 2387206, at *7 (S.D. Ohio Mar. 22, 2019) (quoting Sprague, 133 F.3d at

399). The purpose of the requirement is to ensure that the representatives’ interests and

the interests of the class members are aligned. Id. “Many courts have found typicality if

the claims or defenses of the representatives and the members of the class stem from a

single event or a unitary course of conduct, or if they are based on the same legal or

remedial theory.” Rikos, 799 F.3d at 509 (quoting Charles Alan Wright, Arthur R. Miller

& Mary Kay Kane, 7A Federal Practice and Procedure § 1764 (3d ed. 2005)).

As the City notes, those African American homeowners who have received the tax

abatement or may want to apply for it may have divergent interests from those who

cannot afford it. Moreover, members of the sub-class—African-American homeowners in

Over-the-Rhine, Madisonville, and Walnut Hills whose property taxes have increased by

more than 5% compared to the average Cincinnati homeowner—are not all at risk of

displacement in the way Plaintiff Appelbury alleges she is. It seems intuitive that many in

the sub-class would naturally want the RTA-initiated development to continue so that

their property values continue to rise. Thus, the Court is not persuaded the named

Plaintiffs claims are typical of the class or sub-class.

c. Adequacy

The adequacy of representation requirement of Rule 23(a)(4) ensures that “the

representative parties will fairly and adequately protect the interests of the class.” This

requirement has two components: (1) the representatives must have common interests

with the unnamed class members, and (2) it must appear that the representatives will

vigorously prosecute the class action through qualified counsel. See Rikos, No. 1:11-cv-

225, 2018 WL 2009681, at *5 (S.D. Ohio Apr. 30, 2018) (citing Senter v. Gen. Motors

Corp., 532 F.2d 511, 524-25 (6th Cir. 1976)).

Because the proposed class lacks typicality and commonality, the Court is likewise

concerned about the adequacy of representation. The proposed class and the range of

possible remedies are each very broad. It is therefore not hard to imagine situations

where members of the class are at cross-purposes, with various members prioritizing

integration, property values, tax burdens, and any other number of concerns. The Court

finds Plaintiffs have not demonstrated that the class representatives will adequately

represent the interests of absent class members because, among other reasons, the

interests of absent class members is incredibly broad territory.

Having found Plaintiffs have not shown the necessary class prerequisites, the

Court will not reach the question of qualifications of Plaintiffs’ counsel (although it is

self-evident) nor the further demands of Rule 23(b)(2). The Court will deny the motion to

certify the proposed class and subclass for the reasons stated.

As should be clear from the Court’s analyses of the Rule 23(a) factors, the class

description proposed by Plaintiffs is simply too broad given the allegations of the

complaint. That said, “[a] district court's order denying or granting class status is

inherently tentative. District courts have the discretion and even the obligation to reassess

their class rulings as the case develops.” In re Whirlpool Corp. Front-Loading Washer

Prod. Liab. Litig., 302 F.R.D. 448, 459 (N.D. Ohio 2014) (cleaned up). With this in

mind, the Court denies Plaintiffs’ motion to certify a class without prejudice to a renewed

motion for class certification.

IV. CONCLUSION

Based upon the foregoing,

1. Defendant’s motion to dismiss (Doc.9) is GRANTED in PART and

DENIED in PART as follows:

a. Defendant’s motion is GRANTED as it relates to any of

Plaintiffs’ claims for intentional discrimination or disparate

treatment under the FHA.

b. Defendant’s motion is DENIED with regards to Plaintiffs’

disparate impact claims under the FHA; Plaintiffs may proceed

with disparate impact claims.

2. Plaintiffs’ motion to certify a class is DENIED (Doc. 7) without

prejudice.

3. The parties’ joint motion to stay discovery is GRANTED. (Doc.

21). The Court anticipates setting a discovery schedule after

Defendant has interposed an answer and the Court has held a

Preliminary Pretrial Conference.

IT IS SO ORDERED.

Date: 9/30/2021 Fine hy Shok

Timot lack

United States District Judge

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