Nozzi v. Housing Authority

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

MICHAEL NOZZI, an individual; No. 13-56223

NIDIA PELAEZ, an individual; LOS

ANGELES COALITION TO END D.C. No.

HUNGER AND HOMELESSNESS, a 2:07-cv-00380-

non-profit organization, on behalf of GW-FFM

themselves and similarly situated

persons,

Plaintiffs-Appellants, OPINION

v.

HOUSING AUTHORITY OF THE CITY

OF LOS ANGELES; RUDOLPH

MONTIEL, in his official capacity,

Defendants-Appellees.

Appeal from the United States District Court

for the Central District of California

George H. Wu, District Judge, Presiding

Argued and Submitted

July 10, 2015—Pasadena, California

Filed November 30, 2015

2 NOZZI V. HACLA

Before: Stephen Reinhardt and Richard R. Clifton, Circuit

Judges and Miranda M. Du,* District Judge.

Opinion by Judge Reinhardt

SUMMARY**

Civil Rights

The panel reversed the district court’s summary judgment

in favor of defendants, directed that summary judgment be

entered in favor of plaintiffs, and remanded for further

proceedings in a putative class action in which plaintiffs

alleged that defendants, the local administrators of the

Section 8 Housing Choice Voucher Program, reduced the

amount of Section 8 beneficiaries’ subsidies without

providing adequate notice, in violation of federal and state

law.

The panel first noted that this Court had previously held

that plaintiffs have a property interest in Section 8 benefits to

which the procedural protections of the Due Process Clause

apply. Nozzi v. Housing Authority of the City of Los Angeles,

425 F. App’x 539 (9th Cir. 2011). The panel held that the

Housing Authority failed to provide meaningful information

to Section 8 beneficiaries about a change to the program’s

*

The Honorable Miranda M. Du, District Judge for the U.S. District

Court for the District of Nevada, sitting by designation.

**

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

NOZZI V. HACLA 3

subsidy payment standard and the effect of that change upon

the beneficiaries and their property interests. The panel held

that this failure violated both the requirements of the Voucher

Program regulations and the requirements of procedural due

process. It also resulted in a violation of two state statutes,

California Government Code §§ 815.6 & 815.2, which

require public entities to take reasonable efforts to comply

with the mandatory duties established by federal regulations.

The panel reversed and remanded with instructions for the

district court to enter summary judgment in favor of the

plaintiffs on the merits of the federal and state law claims.

The panel ordered that on remand, the case be reassigned

to a different district judge—a judge other than the two

identified by the current district judge who himself had

declined to hear the case further. The panel stated that further

factual development may be needed to determine the size and

validity of plaintiffs’ class and to determine the appropriate

remedy.

COUNSEL

Barrett S. Litt (argued), Kaye, McLane, Bednarski & Litt,

LLP, Pasadena, California; Patrick Dunlevy, Lisa R. Jaskol,

Stephanie Carroll, Public Counsel, Los Angeles, California,

for Plaintiffs-Appellees.

Roy G. Weatherup (argued) and Brant H. Dveirin, Lewis

Brisbois Bisgaard & Smith LLP, Los Angeles, California, for

Defendants-Appellees.

4 NOZZI V. HACLA

OPINION

REINHARDT, Circuit Judge:

The Section 8 Housing Choice Voucher Program provides

rental assistance to the most vulnerable members of our

society. For many, especially those in areas with a high cost

of living, the continuous receipt of these benefits is the only

means through which Section 8 beneficiaries and their

families can obtain safe, affordable housing. For those on a

fixed income or those living paycheck to paycheck, any

unexpected decrease in the subsidy can result in

homelessness. For this reason, the program contains

procedural protections designed to ensure that beneficiaries

have at least a full year to plan for certain changes that may

decrease the beneficiary’s subsidy and increase the rent that

they will have to pay.

Plaintiffs are the putative class representatives of a group

of tenants who receive rent subsidies through the Section 8

Housing Choice Voucher Program. They assert that the

Defendants, the local administrators of the Voucher Program,

reduced the amount of Section 8 beneficiaries’ subsidies

without providing adequate notice, in violation of federal and

state law. We agree. Accordingly, we reverse the grant of

summary judgment in favor of the defendants, direct that

summary judgment be entered in favor of the plaintiffs, and

remand for further proceedings consistent with this opinion.

NOZZI V. HACLA 5

I. STATUTORY AND REGULATORY BACKGROUND

A. Overview of the Section 8 Housing Choice Voucher

Program

In 1974, Congress created the Section 8 housing program

in order to “aid[] low-income families in obtaining a decent

place to live” and “promot[e] economically mixed housing.”

Housing and Community Development Act of 1974, Pub. L.

93-383 § 201(a), 88 Stat. 633, 622–66 (1974) (codified as

amended at 42 U.S.C. § 1437f). For over four decades, the

program has provided rental assistance to low-income,

elderly, and disabled families. See generally Park Village

Apartment Tenants Ass’n v. Mortimer Howard Trust,

636 F.3d 1150, 1152 (9th Cir. 2011).

The majority of federal housing assistance takes place

through the Housing Choice Voucher Program, which

subsidizes the cost of renting privately-owned housing units.

42 U.S.C. § 1437f(o). The Voucher Program is funded and

regulated by the federal Department of Housing and Urban

Development, and it is administered at the local level through

“public housing agencies.” 24 C.F.R. § 982.1(a).

The public housing agencies determine whether

individuals are eligible to participate in the program.

24 C.F.R. § 982.201. When an individual is approved, the

public housing agency gives that person a voucher which

entitles him to search for qualifying privately-owned housing.

24 C.F.R. § 982.302. When a voucher-possessing individual

finds a qualifying unit, the unit owner and public housing

agency will negotiate and enter into a housing assistance

payment contract, which inter alia specifies the maximum

monthly rent that the unit owner may charge. 42 U.S.C.

6 NOZZI V. HACLA

§ 1437f(c). After that contract has been formed, the public

housing agency will make subsidy payments to the unit

owner on behalf of the tenant.1

An extensive set of statutory provisions and regulations

governs the calculation of the subsidy that must be paid on

behalf of each tenant. See 42 U.S.C. § 1437f(o); 24 C.F.R.

§ 982.501 et seq. To begin with, the Department of Housing

and Urban Development must set the fair market rent for

established geographic areas across the United States.

24 C.F.R. § 982.503(a)(1). The public housing agency must

use this fair market rent to create a local voucher “payment

standard” for each of the areas in its jurisdiction. 24 C.F.R.

§ 982.503(b)(1)(I). A payment standard is the maximum

subsidy payment that the housing agency will provide for

each type of apartment in the area. Id. It must generally be

set between 90 percent and 110 percent of the fair market rent

for the area. 24 C.F.R. § 982.503(b)(1)(i).2

All tenants are responsible for contributing 30% of their

monthly adjusted income or 10% of their gross monthly

1

As the “beneficiaries” at issue in this opinion are those Section 8

recipients who have already secured and are currently leasing apartments

that are paid for, in part, by Section 8 subsidies, the terms “beneficiary”

and “tenant” are used interchangeably throughout the opinion.

2

The public housing agency must request approval to establish a

payment standard outside of this range. 24 C.F.R. § 982.503(b)(2). The

Department of Housing and Urban Development may approve such a

variance if the public housing agency meets one of the prescribed

exceptions. See 24 C.F.R. § 982.503(c)–(d).

NOZZI V. HACLA 7

income, whichever is greater. 42 U.S.C. § 1437f(c)(2)(A).3

Tenants whose rental units cost more than the payment

standard have a higher expected contribution. Such tenants

must also pay any amount by which their rent exceeds the

established payment standard. 42 U.S.C. § 1437f(o)(2)(B).4

In either case, the subsidy covers the balance of the rent.

B. Procedures for Decreasing the Payment Standard

Practically, the formula for calculating a tenant’s

expected rent contribution means that a decision by the public

housing agency to increase the payment standard will

generally yield larger subsidies. By contrast, a decrease in

the payment standard will generally decrease subsidies and

may increase the rental contribution of a substantial number

of tenants.5

3

This calculation must account for any welfare assistance tenants

receive that is specifically designated for housing costs. 42 U.S.C.

§ 1437f(o)(2)(A)(iii).

4

An example helps to illustrate this formula. Abel and Beth both must

contribute 30% of their monthly adjusted income, for a total of $100 each.

The payment standard for one-bedroom apartments in their area is $400.

Abel rents a $400 apartment. He must pay $100 towards his rent and will

receive the remaining $300 as a rent subsidy. Beth rents a $500

apartment. She must pay the $100 from her monthly adjusted income, but

must also pay the amount by which her $500 apartment exceeds the $400

payment standard–another $100, for a total of $200.

5

In the hypothetical above, if the public housing agency lowered the

payment standard for a one-bedroom apartment in the area from $400 to

$300, Abel, who is renting a $400 apartment, would now need to pay an

additional $100 for a total of $200. Beth, who is renting a $500

apartment, would need to pay an additional $200, for a total of $300. A

decrease in the payment standard would not cause an increase in rent

when: (1) the total rent for the unit is less than the lower payment

8 NOZZI V. HACLA

To avoid any hardship caused by this change, the

Department of Housing and Urban Development’s

regulations are designed to ensure that beneficiaries have a

one-year period of stable benefits in which to plan for

changes to the payment standard that may adversely affect

their subsidy amount and rent contribution. Each year, the

public housing agency conducts annual examinations of each

beneficiary, usually on the anniversary of the beneficiary’s

entry into the Section 8 program, to verify his continued

eligibility for benefits and to calculate his expected rent

contribution for the current year. 24 C.F.R. § 982.516.

Alterations to a tenant’s benefits may occur due to

circumstantial changes, such as adjustments to the tenant’s

income, family composition, or cost to rent his apartment, but

the regulations limit the discretion of public housing agencies

to lower subsidies based on adjustments to the payment

standards. If the public housing agency decides to lower the

payment standards, it must provide information about the

change to all beneficiaries at their annual reexaminations

following the decision, and must further advise these

beneficiaries that the change will not go into effect until their

following reexamination one year later. See 24 C.F.R.

§ 982.505(c)(3).

This requirement provides some measure of financial

stability for vulnerable Section 8 beneficiaries as it protects

against sudden decreases in subsidy at the whims of the

public housing agency. Absent any changes to a

beneficiary’s circumstances, he can be assured that his

subsidy will renew with, at a minimum, the same terms as the

standard, (2) the tenant’s adjusted income has also decreased, or (3) the

public housing agency later raised the payment standard before the

decrease went into effect.

NOZZI V. HACLA 9

prior year unless he had previously been warned that the

public housing agency has taken an action that could

adversely affect his subsidy. The regulations cast this

warning in terms of the public housing agency’s duty to

provide information to the beneficiary that the payment

standard has been decreased, to be effective at least a year

afterward. Thus, under that mandatory procedure, the

beneficiary necessarily has an expectation in an unaffected

one-year term of benefits following the warning in which to

plan for the change’s potential adverse impact.

II. FACTUAL AND PROCEDURAL BACKGROUND

A. Implementation of the 2004 Payment Standard

Decrease

The Housing Authority of the City of Los Angeles

(“Housing Authority”) administers the Voucher Program for

that city.6 In 2004, the Department of Housing and Urban

Development required the Housing Authority to limit

spending in order to balance the Department’s 2004 budget.

To meet the budget constraints, the Housing Authority’s

Board of Commissioners reduced the payment standard from

110% of the 50th percentile of rents in Los Angeles County

to 100% of the 40th percentile of rents. At the time, the

Board estimated that “approximately 45% of its

approximately 45,000 Section 8 tenants would be adversely

affected by the April 2004 decrease, and would have to pay

an average of $104 more in rent each month if they chose to

remain in their current units. Of this number, nearly 5,000

6

The plaintiffs in this case also sued the Executive Director of the

Housing Authority for the City of Los Angeles. Throughout the opinion,

both defendants will be referred to as the “Housing Authority.”

10 NOZZI V. HACLA

were elderly families, and nearly 4,500 were non-elderly,

disabled families.”7

That year, the Housing Authority instructed its staff to

attach a copy of a flyer to each Section 8 beneficiaries’

“notice of review determination” or “RE-38,” which is a form

sent annually to all Section 8 beneficiaries at the time of their

annual reexamination that confirms their renewed eligibility

for benefits and sets forth their rent contribution and subsidy

amount for the current year. The flyer, which was printed in

both English and Spanish, stated:

HOUSING AUTHORITY OF THE CITY OF LOS

ANGELES

NOTICE

Effective April 2, 2004 the Housing Authority

lowered the payment standards used to

determine your portion of the rent. We will

not apply these lower payment standards until

your next regular reexamination. If you

move, however, these new lower payment

standards will apply to your next unit.

That message was followed by (1) a heading stating

“PAYMENT STANDARDS AND TENANT-BASED

SHELTER PLUS CARE PAYMENT STANDARDS

EFFECTIVE APRIL 2, 2004”; (2) a table listing the new

payment standards; and (3) a statement that “Regardless of its

7

The Board also provided, for the first time, that every tenant must pay

a minimum expected contribution of $50. That change is not at issue in

this case.

NOZZI V. HACLA 11

location, the unit’s rent can never be higher than the

comparable rents determined by the housing authority.”8 For

simplicity, this will hereinafter be referred to as the “flyer.”

The attached RE-38 form showed the tenant’s subsidy and

rent contribution for the current year, a number that was

unaffected by the decreased payment standards.

Approximately one year later and only thirty days before

the changes to the payment standard were scheduled to be

implemented and to adversely affect the tenants’ subsidies

and rent contributions, the Housing Authority sent out

another notice of review determination. This particular

notice, which will hereinafter be referred to as the “four-week

notice,” set forth the tenants’ subsidies and rents for the

upcoming year using the new, lowered payment standard.

This was the first time that tenants were actually notified that

the change would affect them personally or that there would

be an increase to their rent contributions.

B. The Impacted Beneficiaries Sue

In 2007, Plaintiffs Michael Nozzi and Nidia Palaez,

together with the Los Angeles Coalition to End Hunger and

Homelessness, filed an amended class action complaint on

behalf of affected Section 8 beneficiaries against the Housing

Authority and its Executive Director.9 They claimed that, as

8

See Appendix A.

9

Plaintiff Los Angeles Coalition to End Hunger and Homelessness is a

non-profit devoted to fighting the causes and effects of homelessness. It

advocates for more affordable housing on behalf of low-income

individuals in Los Angeles. Its membership includes people who receive

Section 8 benefits and who have been negatively affected by the 2004

decrease in the payment standard.

12 NOZZI V. HACLA

relevant here, the Defendants’ failure to provide

comprehensible information to Section 8 beneficiaries about

the payment standard change and its effect one year in

advance of the change’s implementation: (1) violated the due

process clauses of the United States and California

Constitutions, (2) violated California Government Code

§ 815.6, which governs liability for public entities that breach

mandatory duties, and (3) constituted negligence pursuant to

California Government Code § 815.2.

Plaintiff Michael Nozzi, a Section 8 beneficiary since

December 2003, is totally and permanently disabled under

Social Security’s standards. As a result of the 2004 change,

his expected rent contribution increased 48%—from $231 to

$342 per month. Plaintiff Nidia Palaez, a beneficiary since

February 2004, is a single mother with a young daughter.

She experienced a 177% increase in her portion of the rent as

a result of the 2004 change. She alleges that this increase has

adversely affected her family’s quality of life, that she has

had difficulty affording suitable school clothes for her

daughter, and that she has had to divert money from her food

budget to cover her increased rent costs.

Both Nozzi and Palaez allege that they did not understand

that their Section 8 benefits would decrease and that their

own rent obligations would increase until they received

notices approximately one year after the flyer, four weeks

before the change in the payment standard adversely affected

their rent contribution. Neither recalls receiving the original

flyer, and neither could comprehend it when it was later

shown to them.

NOZZI V. HACLA 13

C. The District Court Disposes of Plaintiff’s Claims

On November 26, 2007, the district court for the Central

District of California dismissed the plaintiff’s negligence

claim. The court held that the plaintiffs failed to establish an

essential element for such claims against a public entity: that

a statute imposed a mandatory duty on the entity.10

In early 2009, the parties filed cross-motions for summary

judgment on the remaining issues. With respect to the due

process claims, the Housing Authority argued that the

plaintiffs did not have a property interest protected by the due

process clauses of the United States or California

Constitutions.

Furthermore, the Housing Authority asserted that, even if

the plaintiffs had a protected property interest, they received

sufficient process because the Housing Authority had sent the

flyer and “made significant efforts to increase participants’

awareness of the 2004 VPS reduction through public hearings

and community outreach.” The Housing Authority supported

its position with (1) declarations from Housing Authority

employees summarily stating that all Section 8 beneficiaries

receive instructional training upon entry into the Section 8

program, and (2) minutes of a public meeting and a

PowerPoint presentation used at the meeting discussing

changes to the Housing Authority’s operation, during which

a brief discussion occurred regarding the payment standard

decrease.

10

The district court also dismissed other claims that are not relevant to

this appeal.

14 NOZZI V. HACLA

In response, the plaintiffs argued that they had a

legitimate expectation in continued and stable Section 8

benefits. They challenged the relevance of the Defendants’

purported training sessions and public meetings to the

question whether the Housing Authority provided sufficient

notice to the affected beneficiaries. Furthermore, the

plaintiffs asserted, the only relevant question was whether the

flyer was reasonably comprehensible to the average recipient,

a question unaffected by the Housing Authority’s other

actions.

The district court granted summary judgment in favor of

the Housing Authority on the due process claims and the

remaining state statutory claim, an alleged violation of

§ 815.6. According to the district court, the plaintiffs could

not have a protectable property interest in their Section 8

benefits because the Housing Authority had complete

discretion to reduce the payment standard. The only

restriction, the district court wrote, was 24 C.F.R.

§ 982.505(c)(3), which required the agency to provide notice,

but did not create a property interest protectable by the due

process clauses.

With regard to the California Government Code § 815.6

claim, the district court held that such a claim required the

plaintiffs to show that the Housing Authority had breached a

“mandatory duty” imposed by statute. The court reasoned

that even if 24 C.F.R. § 982.505(c)(3) or the due process

clauses created such a duty, there was no basis on which to

conclude that the Housing Authority had breached its

obligations under that regulation.

NOZZI V. HACLA 15

D. Nozzi I

On appeal, a different panel of this Court reversed. Nozzi

v. Housing Authority of the City of Los Angeles (“Nozzi I”)

(mem.), 425 F. App’x 539 (9th Cir. 2011). With regard to the

plaintiffs’ due process claims, we held that the district court

“improperly concluded that plaintiffs’ property interest in

Section 8 benefits did not require adequate notice that their

benefits were subject to the planned reduction.” 425 F.

App’x at 541. To begin with, the plaintiffs had a “well-

settled property interest” in Section 8 benefits because “the

statute, in tandem with regulatory requirements ‘restrict[ing]

the discretion’” of the Housing Authority, “protected against

an abrupt and unexpected change in benefits.” Id.11 We

remanded for the district court to apply the Mathews v.

Eldridge balancing test to determine if the Housing

Authority’s notice was sufficient.12 Id.

11

In so holding, the prior panel held that the grant of summary judgment

in favor of the defendants was inappropriate because there was a material

issue of fact as to whether the steps taken by the Housing Authority

protected against a sudden change in benefits. The majority did not find

it necessary, for purposes of reversing the district court’s grant of

summary judgment, to address the merits of the plaintiffs’ contentions that

they had a right to a stable one-year term of benefits and that any steps by

the Housing Authority taken less than one year before the change would

be insufficient to protect this interest.

12

As described in greater detail below, Mathews v. Eldridge, 424 U.S.

319 (1976) requires courts, when determining what process is due to

protect an interest covered by the due process clause, to examine (1) the

private interest that will be affected by an official action; (2) the risk of

erroneous deprivation of such interest through the procedures used, and

the probable value of additional or substitute safeguards; and (3) the

government’s interest, which includes the administrative burdens of

additional or substitute procedures. Id. at 335.

16 NOZZI V. HACLA

As for the California Government Code § 815.6 claim, we

noted that the statute permits private individuals to sue public

entities when three elements have been met: (1) there is an

enactment imposing a mandatory duty, (2) that enactment is

intended to protect the individual from the type of injury

suffered, and (3) the breach of the mandatory duty was the

proximate cause of the injury suffered. Id. We held that the

“district court incorrectly concluded that the notice provided

by defendants satisfied the mandatory duty in § 982.505 to

provide one-year notice before implementing the reduced

[payment standard].” Id. The notice required by the

regulation must be, “[a]t a minimum,” “sufficiently effective

to protect housing benefits recipients from an abrupt and

unexpected reduction in benefits.” Id. Accordingly, this

Court remanded the § 815.6 claim for further consideration.13

Finally, we held that the district court’s dismissal of the

plaintiffs’ state law negligence claim was “erroneous”

because public entities “may be held vicariously liable for the

negligent acts of their individual employees” under California

Government Code § 815.2. Id. This claim was also

remanded for further consideration.

E. Remand and the Current Appeal

On remand from Nozzi I, pursuant to a jointly agreed

upon phased discovery plan, the plaintiffs sought discovery

of the identities of Section 8 tenants who had been sent the

flyer and whose benefits were ultimately affected by the

decreased payment standard. They also sought discovery

13

Again, for the purposes of reversing summary judgment in favor of the

defendants, the prior panel did not find it necessary to address whether

plaintiffs’ had a right to a stable one-year term of benefits.

NOZZI V. HACLA 17

pertaining to any training sessions and public outreach efforts

by the Housing Authority that concerned the payment

standard. Before the completion of discovery, the Housing

Authority filed a renewed motion for summary judgment.

The plaintiffs objected that ruling on summary judgment

should be deferred under Federal Rule of Civil Procedure

56(d), which allows the court to defer considering a motion

for summary judgment when the nonmovant shows that it

cannot yet present facts essential to its opposition. The

Housing Authority disagreed, arguing that no further

discovery was necessary.

The district court ignored the plaintiffs’ request for more

discovery and issued a tentative ruling granting summary

judgment to the Housing Authority which it later reduced to

a final judgment. In that order, the district court determined

that, applying the Mathews test, plaintiffs received

constitutionally adequate process. Specifically, the district

court reasoned, the flyer, training sessions, public outreach

meetings, and four-week notice provided more than enough

notice to Section 8 beneficiaries.

With regard to the California Government Code § 815.6

claim, the district court rejected the plaintiffs’ claim that the

notice provided was not adequate, and held that the totality of

the Housing Authority’s efforts protected plaintiffs from an

“abrupt” and “unexpected” reduction in their Section 8

benefits. Finally, the court held that the Housing Authority

could not be vicariously liable for the conduct of its

employees, because its employees did not breach any

mandatory duty owed to the plaintiffs. This appeal followed.

18 NOZZI V. HACLA

III. STANDING AND STANDARD OF REVIEW

As an initial matter, the Housing Authority claims that the

plaintiffs lack standing to bring this action. It is incorrect. To

establish standing, plaintiffs must establish that they have:

(1) an injury in fact, (2) that is “fairly traceable to the

challenged action of the defendant” and (3) that is “likely to

be redressed by a favorable decision.” Lujan v. Defenders of

Wildlife, 504 U.S. 555, 560–61 (1992) (quotation marks

omitted). Here, the plaintiffs alleged that the Housing

Authority decreased the amount of their Section 8 benefits

and therefore increased the amount they had to pay in rent

without adhering to the protections required by due process

and by Voucher Program regulations. As the Supreme Court

has held, “[w]hen the suit is one challenging the legality of

government action or inaction” and “the plaintiff is himself

an object of the action . . . there is ordinarily little question

that the action or inaction has caused him injury[.]” Id. at

561–62. Plaintiffs request compensatory damages, as well as

declaratory and injunctive relief, for uncompensated injuries

that were ongoing when they filed their complaint. As a

result, they met all three standing requirements.

We review the district court’s grant of summary judgment

to the Housing Authority for each claim de novo and must

determine whether, “viewing the evidence in the light most

favorable to the non-moving party, there are any genuine

issues of material fact and whether the district court correctly

applied the substantive law.” Leisik v. Brightwood Corp.,

278 F.3d 895, 898 (9th Cir. 2002).14 If we determine that

14

Plaintiffs also contend that the district court abused its discretion in

denying their motion to postpone consideration of the Defendants’ motion

for summary judgment until the completion of discovery. Because we

NOZZI V. HACLA 19

there are no genuine issues of material fact remaining, that

the Housing Authority does not prevail, and that it has had a

“full and fair opportunity” to present its case, we may

consider whether plaintiffs are entitled to summary judgment.

Albino v. Baca, 747 F.3d 1162, 1176 (9th Cir. 2014) (en

banc). Here, we also consider, at the plaintiffs’ request,

whether to reassign this case to a different district judge,

which we may do only when a party can show “personal

biases or unusual circumstances,” such as when the district

judge can be reasonably expected to have substantial

difficulty setting aside his previous impressions of the case or

when reassignment is desirable in order to preserve the

appearance of justice. Krechman v. Cnty. of Riverside,

723 F.3d 1104, 1111 (9th Cir. 2013).

IV. PROCEDURAL DUE PROCESS

A. The Contours of the Plaintiffs’ Property Right

The Due Process Clause of the Fourteenth Amendment

imposes procedural constraints on governmental decisions

that deprive individuals of liberty or property interests.

Mathews, 424 U.S. at 332 (1976).15 Thus, the first question

hold that granting summary judgment in favor of the defendants was

improper for other reasons, and because there is no cause for further

discovery on the summary judgment issues following remand, we need not

address this contention.

15

The language of Article I § 7 of the California Constitution is

“virtually identical” to the Due Process Clause of the United States

Constitution, with the caveat that California courts place a higher

significance on the dignitary interest inherent in providing proper

procedure. Today’s Fresh Start, Inc. v. Los Angeles Cnty. Office of

Education, 303 P.3d 1140, 1150 (Cal. 2013). Recognizing this difference,

20 NOZZI V. HACLA

in any case in which a violation of procedural due process is

alleged is whether the plaintiffs have a protected property or

liberty interest and, if so, the extent or scope of that interest.

Board of Regents of State Colleges v. Roth, 408 U.S. 564,

569–70 (1972). The property interests that due process

protects extend beyond tangible property and include

anything to which a plaintiff has a “legitimate claim of

entitlement.” Id. at 576–77. A legitimate claim of

entitlement is created “and [its] dimensions are defined by

existing rules or understandings that stem from an

independent source such as state law—rules or

understandings that secure certain benefits and that support

claims of entitlement to those benefits.” Id. at 577. Further,

as we have previously held, plaintiffs have a protected

property right in public benefits when, as here, a statute

authorizes those benefits and the “implementing regulations”

“greatly restrict the discretion” of the people who administer

those benefits. See Griffeth v. Detrich, 603 F.2d 118, 121

(9th Cir. 1979).

Thus, as we held in Nozzi I, the plaintiffs here have a

property interest in Section 8 benefits to which the procedural

protections of the due process clause apply. 425 F. App’x at

541 (“Section 8 participants have a property interest in

housing benefits[.]”); Ressler v. Pierce, 692 F.2d 1212,

1215–16 (9th Cir. 1982) (“In addition, [the plaintiff] has a

constitutionally protected ‘property’ interest in Section 8

benefits by virtue of her membership in a class of individuals

whom the Section 8 program was intended to benefit.”); see

also Roth, 408 U.S. at 576 (“[A] person receiving . . . benefits

we nevertheless address the plaintiffs’ federal and state due process claims

together, as it is unnecessary to take the additional factor into account in

this case.

NOZZI V. HACLA 21

under statutory and administrative standards defining

eligibility for them has an interest in continued receipt of

those benefits that is safeguarded by procedural due

process.”); Holbrook v. Pitt, 643 F.2d 1261, 1278 (7th Cir.

1981) (“Courts have held in a variety of circumstances that

certified tenants in Section 8 programs have protectable

property interests under the due process clause.”).

The “dimensions” of the property interest here “are

defined by existing rules . . . or understandings that secure

certain benefits”—in this case, the Voucher Program statute

and regulations. See Roth, 408 U.S. at 577. These

regulations limit the Housing Authority’s discretion to alter

tenants’ subsidies through changes to the payment standard

unless tenants have been advised of the change and notified

that the reduced standard will not be implemented for at least

a full year afterwards. See 24 C.F.R. § 982.505(c)(3); see

also Nozzi I, 425 F. App’x at 541–42 (“[T]he Section 8

regulations ‘closely circumscribe’ [the Housing Authority’s]

discretion—by prohibiting [it] from immediately

implementing a reduced [payment standard] and requiring [it]

to inform participants that a reduced [standard] will be

implemented[.]”). This mandatory one-year postponement is

designed to serve as an “equitable . . . safeguard[] against

reductions in subsidy.” Section 8 Housing Choice Voucher

Program; Expansion of Payment Standard Protection, 65 Fed.

Reg. 42508-01, 42508 (July 10, 2000).

Thus, plaintiffs’ property right extends beyond Section 8

benefits generally. The protected property right is in housing

benefits that continue in existence for a period of at least one

year after the beneficiary is advised that his benefits may be

decreased by a change to the payment standard. The tenant

can budget for annual leases, plan for any drastic changes,

22 NOZZI V. HACLA

and take steps to avoid his family’s eviction, secure in the

knowledge that his benefits will not be adversely affected

during the extended period his property rights remain in

effect.

The district court and the Housing Authority heavily rely

on Rosas v. McMahon, 945 F.2d 1469 (9th Cir. 1991) to

support the argument that the plaintiffs do not have a

protected property interest, but that case is inapplicable. In

Rosas, the local agency provided notice of a change to

welfare benefits 10 days before its implementation, as

required by a regulation. Id. at 1472. The plaintiffs insisted

that they were entitled to an earlier notice about which the

statutes and regulations said nothing. Id. at 1474. This court

rejected the plaintiffs’ claim and held that welfare recipients

had no right to notice of the “passage of statutes” which

reduced their benefits or to a “grace period” before benefits

were reduced. Id. at 1473–74.

Rosas, however, relied on the fact that there was no “pre-

existing regulation intended to forestall the implementation

of a congressionally mandated program change until

[program participants] were provided with notice of that

change.” Id. at 1475. Where, as here, a pre-existing

regulation does forestall the implementation of a reduction in

benefits for a one year period, it is the plaintiffs’ property

interest in that term of benefits that procedural due process

protects.16 Accordingly, the question in this case is not

16

Similarly, as the prior panel noted, the district court and the Housing

Authority’s reliance on Atkins v. Parker, 472 U.S. 115 (1985) is

misplaced. In that case, Congress changed the eligibility standards

required for benefits under the Food Stamp Act. There, the Court held

that “Congress has plenary power to define the scope and duration of the

NOZZI V. HACLA 23

whether the plaintiffs have an interest protected by due

process—it is clear that they do—but rather “[w]hat process

is due to protect plaintiffs’ well-settled property interest.”

Nozzi, 425 F. App’x at 542.

B. The Process Due

Once a substantive right has been created, “it is the Due

Process Clause which provides the procedural minimums, and

not a statute or regulation.” Geneva Towers, 504 F.2d at 491

n.13; Nozzi, 425 F. App’x at 542 (“Technical compliance

with regulatory procedures does not automatically satisfy due

process requirements.”). For this reason, in analyzing the

plaintiffs’ due process claim, we do not address whether the

Housing Authority complied with the requirements of 24

C.F.R. § 982.505(c)(3), but whether the Housing Authority

complied with the requirements of the due process clause.

We conclude that it failed to do so, and indeed, that the flyer

was totally inadequate for that purpose.

Procedural safeguards come in many forms, including,

inter alia, “timely and adequate notice,” pre-termination

hearings, the opportunity to present written and oral

arguments, and the ability to confront adverse witnesses. See

Goldberg v. Kelly, 397 U.S. 254, 267 (1970). Which

protections are due in a given case requires a careful analysis

of the importance of the rights and the other interests at stake.

entitlement to food-stamp benefits” and thus welfare recipients were not

deprived of due process by Congress’s adjustment. Id. at 129. The

Housing Authority, however, does not have plenary power to implement

a change in the payment standard. Rather its authority is limited to

changing the amount of assistance one year or more after it has informed

beneficiaries of the change.

24 NOZZI V. HACLA

Mathews v. Eldridge, 424 U.S. 319, 334–35 (1976); Mullane

v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314

(1950). Accordingly, in Mathews v. Eldridge, the Supreme

Court set forth a three-part inquiry to determine whether the

procedures provided to protect a liberty or property interest

are constitutionally sufficient. 424 U.S. at 334–35. First,

courts must look at the nature of the interest that will be

affected by the official action, and in particular, to the

“degree of potential deprivation that may be created.” Id. at

341. Second, courts must consider the “fairness and

reliability” of the existing procedures and the “probable

value, if any, of additional procedural safeguards.” Id. at 343.

Finally, courts must assess the public interest, which

“includes the administrative burden and other societal costs

that would be associated with” additional or substitute

procedures. Id. at 347.17 Here, plaintiffs request notice of

any intended changes to their housing subsidies provided at

least one year in advance of the change.

17

As the district court noted, the Supreme Court applies a streamlined

test when the only question to be decided is whether the government has

provided sufficient notice and there is no request for further procedural

safeguards. Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306

(1950). Under Mullane, courts must determine whether the notice given

was “reasonably calculated, under all the circumstances, to apprise

interested parties of the pendency of the action and afford them an

opportunity to present their objections.” Id. at 314. If we were to review

this case ab initio, we might simply apply Mullane to the facts of this case,

as might well be appropriate. See Dusenbery v. United States, 534 U.S.

161, 167–68 (2002). Because the prior panel instructed the district court

to apply Mathews, we also conduct our due process analysis in terms of

the Mathews test. We note, however, that the choice of test is not

dispositive here. For reasons that we explain below, the notice afforded

to the plaintiffs in this case was insufficient under either test.

NOZZI V. HACLA 25

1. The Private Interest at Stake

First, the private interest at stake in this case and the

“degree of potential deprivation,” Mathews, 424 U.S. at 341,

is substantial. The 2004 decrease in payment standards

affected Section 8 beneficiaries’ rent by an average of $104

per month, a deprivation that could be “very serious to a poor

person.” Geneva Towers, 504 F.2d at 492; see also Escalera

v. New York City Hous. Auth., 425 F.2d 853, 864 (2d Cir.

1970) (“[E]ven small charges can have great impact on the

budgets of public housing tenants, who are by hypothesis

below a certain economic level.”). For plaintiffs Nozzi and

Palaez, the payment standard yielded 48% and 177%

increases in their respective rent obligations. This reduction

in a tenant’s subsidies and accompanying increase in the cost

of housing “could force tenants to forego other perhaps

necessary purchases and could even force some tenants to

seek other less expensive housing.” Geneva Towers,

504 F.2d at 491.

Furthermore, for many Section 8 beneficiaries, subsidies

from the Voucher Program for a stable and renewable one-

year term are the difference between safe, decent housing and

being homeless. A tenant’s inability to pay for an unexpected

increase in his portion of the rent and utilities could result in

eviction, which ultimately would require the public housing

agency to terminate benefits, U.S. Dep’t of Housing & Urban

Dev., Housing Choice Voucher Program Guidebook, at 15-1,

5, and render it impossible for the tenant to pay for a new

unit. This deprivation is especially dire considering the

vulnerability of Section 8 recipients, a large portion of whom

are elderly or disabled, and many of whom, like Plaintiff

Pelaez, have young children.

26 NOZZI V. HACLA

2. The Risk of Erroneous Deprivation

Turning to the second Mathews inquiry, we must examine

whether the procedures provided to the plaintiffs risked

erroneous deprivation of their right to stable and renewable

Section 8 benefits, as well as the value of any additional

safeguards. Plaintiffs here simply request fair notice: simple

and unadorned, reasonably comprehensible notice provided

at least one year in advance of the change. Thus, to

determine the fairness and reliability of the safeguards

provided by the Housing Association and the probative value

of this requested safeguard we look—as the district court

did—to Mullane and its progeny for guidance.

“[W]hen notice is a person’s due, process which is a mere

gesture is not due process.” Mullane, 339 U.S. at 314. To be

constitutionally adequate, notice must be “reasonably

calculated, under all the circumstances, to apprise interested

parties . . . with due regard for the practicalities and

particularities of the case[.]” Id. at 314. The means employed

must be “reasonably certain” to “actually inform” the party,

id., and in choosing the means, one must take account of the

“capacities and circumstances” of the parties to whom the

notice is addressed, Goldberg, 397 U.S. at 268–69; Memphis

Light, Gas & Water Division v. Craft, 436 U.S. 1, 14 n.15

(1978).

The flyer was, without doubt, entirely insufficient to meet

this standard. In no respect does it reasonably inform its

intended recipients of the changes to the payment standard,

the meaning of those changes, or, most important, their effect

upon the recipient. Because of this, Section 8 beneficiaries

were not meaningfully advised regarding the payment

standard and were, accordingly, deprived of their right to a

NOZZI V. HACLA 27

one-year term of stable benefits in which to plan for the

impending potential hardship.

To begin with, the flyer, which essentially mirrored the

language of 24 C.F.R. § 982.505(c)(3), is incomprehensible

to anyone without a relatively sophisticated understanding of

the Voucher Program’s payment calculations. It uses the

term “payment standards” six times without ever defining or

explaining the term’s meaning. A short and simple

explanation, such as “this means that the Housing Authority

has reduced the maximum amount it will contribute towards

recipients’ rent,” would have provided at least a small

measure of clarity. The absence of such a minimal statement

is particularly troublesome because, to the ordinary Section

8 beneficiary, the flyer might well suggest that the

beneficiary’s expected rent contribution would decrease. See

ER 117 (“Effective April 2, 2004 the Housing Authority

lowered the payment standards used to determine your

portion of the rent.”). Moreover, the flyer which stated that

the change to the payment standards was “[e]ffective April 2,

2004” was attached to an RE-38 that showed the tenant’s

expected rent contribution for the current year. This could be

confusing to many tenants as that number was unaffected by

the change and could give the impression that the change to

the payment standard would not affect the tenant’s subsidy

amount at all—indeed that his subsidy would be higher than

the lower payment standard should allow.

Further, the flyer in no way explained the potential effect

of the change: that it could potentially increase the tenant’s

expected rent contribution and decrease his subsidy. Indeed,

as the Housing Authority estimated at the time, this change

would affect roughly 45% of Section 8 beneficiaries and

require them to pay an average of $104 more in rent each

28 NOZZI V. HACLA

month. None of this information, however, was included in

the flyer. Finally, the flyer was devoid of any name, address,

or other information that Section 8 beneficiaries could contact

for assistance understanding the flyer’s contents. The totality

of these deficiencies makes it is impossible to say that the

flyer was reasonably calculated to give notice to the average

recipient, or possibly even to the average reasonable jurist.18

The Housing Authority relies upon three actions that it

asserts correct this failure inherent on the face of the flyer.

None does so, singly or collectively. As discussed, absent

circumstantial changes such as an increase in income or

change in family composition, the plaintiffs had a legitimate

expectation in a one-year term of stable Section 8 benefits.

The first of the Housing Authority’s actions that it cites is the

four-week notice, which was sent only thirty days before the

increase in the tenants’ rent contribution was scheduled to be

implemented. This notice could not possibly provide notice

a full year in advance of the scheduled change.19

18

Similarly unavailing is the Housing Authority’s reliance on a letter

purportedly sent to all beneficiaries on April 19, 2005. The Housing

Authority did not assert that this letter is in the record, nor is there any

evidence of it being so. It is only mentioned in passing in a discussion in

the deposition of one of the Housing Authority’s employees. That

employee declared only that it was “similar to” the flyer. For the reasons

already discussed, any letter that was simply “similar to” the flyer would

be inadequate to provide the necessary notice for the same reasons as the

flyer itself. Furthermore, the letter, like the four-week notice discussed in

the next paragraph, was sent too late to have been of any use to many

beneficiaries.

19

The Housing Authority relies on Willis v. United States, 787 F.2d

1089 (7th Cir. 1986) for the proposition that this Court should consider

subsequent steps like the four-week notice. That case is of no relevance.

There, a plaintiff claimed that procedures attending the forfeiture of his

NOZZI V. HACLA 29

The two other actions consisted of general advice offered

prior to the receipt of the flyer: the holding of “public

outreach meetings” and the conducting of “training sessions.”

Both fell woefully short of advising the Section 8 recipients

of the meaning or effect of the change in the payment

standards.

First, the public outreach meetings cannot serve to render

the Housing Authority’s deficient notice consistent with due

process. In 2004, the Housing Authority held several

meetings about significant changes to the agency’s operations

that were open to the public. A number of topics were

discussed at these meetings, including the challenges faced by

the Housing Authority in implementing the Section 8

program, the use of criminal background and credit checks of

Section 8 beneficiaries, the portability of Section 8 benefits

across apartments, and the Housing Authority’s efforts to

stabilize rent in the area. As the Housing Authority noted,

“part of the discussion” at these meetings, among the other

topics listed, were changes to the payment standard and the

impact on Section 8 beneficiaries.

These general meetings, however, are no substitute for

notice provided directly to the individual tenants. As Mullane

automobile did not comport with the requirements of due process because

he only received a form letter containing nothing more than “legal

‘jargon.’” Id. at 1093. The Seventh Circuit held that, while there was “no

question that the language in the letter Willis received would not be

adequate notice in itself,” that letter in combination with a second letter

enclosed within the same envelope adequately informed Willis of the

forfeiture proceedings. Id. Unlike Willis, however, the Housing

Authority’s four-week notice was not contemporaneous with the flyer, and

therefore could not possibly help Section 8 beneficiaries comprehend the

legal jargon in the flyer at the time it was to be read.

30 NOZZI V. HACLA

established, “[w]here the names and post addresses of those

affected . . . are at hand, the reasons disappear for resort to

means less likely than the mails to apprise” affected persons.

339 U.S. at 315 (emphasis added). The Housing Authority

certainly knew the names and addresses of the Section 8

tenants for whom it was supplying housing benefits, and

indeed sent the flyers directly to the tenants, but it failed to

provide an understandable notice directly to them at the time

it would be relevant to the loss or diminution of their

benefits.20 All things considered, therefore, the public

outreach meetings were not “reasonably certain to inform

those affected” of the change to the payment standard, or the

effect of such change. Mullane, 339 U.S. at 315 (emphasis

added). Indeed, even construed most favorably to the

Housing Authority, the outreach meetings when considered

along with all the other factors in this case fail to raise a

genuine issue of fact as to whether the steps taken by the

Housing Authority provided constitutionally adequate notice

of the potential change to the plaintiffs’ property rights.

Second, the training sessions held by the Housing

Authority, even when considered along with all the other

factors relied on by the Authority, also cannot have rendered

the flyer “reasonably certain to inform” the average Section

8 beneficiary of the potential reduction in benefits to occur

one year later. Federal regulations require that the Housing

Authority give certain information to beneficiaries when they

20

The Housing Authority manages the benefits of approximately 45,000

Section 8 beneficiaries, around 45% of whom were estimated to have been

adversely affected by the changes to the payment standards. The Housing

Authority’s agent did not recall how these beneficiaries were informed of

the time and place of these meetings, nor could she recall whether more

than 50 people attended the meeting that she attended.

NOZZI V. HACLA 31

are first selected to participate in the Voucher Program. 24

C.F.R. § 982.301. According to declarations from Housing

Authority employees, the Authority fulfills this requirement

by requiring all new beneficiaries to attend a one hour

“Session,” during which Housing Authority staff explains to

the new beneficiaries how a tenant’s rent contribution is

calculated, which includes an explanation of the term

“payment standard.” The Housing Authority argues that this

explanation served to give sufficient meaning to the contents

of the otherwise incomprehensible flyer.

For many affected beneficiaries, however, this

information was provided years before the flyer was sent.

For others, it may have been only a period of up to twelve

months. As Mullane makes clear, the fact that the Housing

Authority provided tenants with this information “months and

perhaps years in advance” of the change to the payment

standard does not justify “dispensing with a serious effort to

inform [the beneficiaries] personally” of the change to their

benefits at a time the information would be directly

meaningful. Mullane, 339 U.S. at 318.21 Thus, regardless of

21

Mullane dealt with the question of what notice was sufficient to

apprise beneficiaries of a judicial settlement of accounts in a common trust

fund. In that case, when the common trust fund was created, the trust

company mailed a notice to every person who might be entitled to a share

of the fund’s income. That notice included copies of state statutes that

explained that a judicial settlement of accounts would periodically occur

after the fund’s establishment, and that participants would be notified of

the settlement through publications in their local newspaper. The

Supreme Court held that this procedure failed to comply with the

requirements of due process and that the trustee was required to undertake

a “serious effort to inform [those affected] personally of the accounting.”

Most relevant to this case, the Supreme Court held that the trustee could

not dispense with this effort merely because it had previously provided

information to those affected. Instead, the Court held, those affected must

32 NOZZI V. HACLA

whether the term “payment standard” was explained to

tenants years or months before the flyer was sent, the

Housing Authority was required to send a timely notice that

provided meaningful information about the change to the

payment standard and the change’s potential adverse effect on

the tenant’s benefits.

Furthermore, the payment standard was far from a

primary subject of the Housing Authority’s one-hour

introductory Session to the Section 8 program. At that

Session, information must be provided to new beneficiaries

regarding: where they may lease a unit, which landlords may

be willing to lease a unit to them, how long they have to find

a unit, how they may request an extension, the advantage of

choosing to live in an area that does not have a high

concentration of low-income families, how to complete the

forms required to request approval of a rental unit, 24 C.F.R.

§ 982.301, how people with disabilities can request a

reasonable accommodation, the amount of utilities that a

tenant would be allowed to use, and what steps tenants can

take to avoid housing discrimination. In that same one hour

period, the Housing Authority also attempted to explain how

the Voucher Program worked generally, including the

formula used to calculate a tenant’s portion of the rent and the

complicated and convoluted role that the payment standards

play in that calculation.

In light of the overwhelming amount of information and

the complex and variegated subject matter involved, any data

as to the meaning and effect of payment standards would

likely not be retained for a number of years or even a number

be informed, at the time of the impending settlement, “that steps were

being taken affecting their interests.” Id. at 318 (emphasis added).

NOZZI V. HACLA 33

of months by the average Section 8 beneficiary. It certainly

could not make the flyer, which was confusing, inadequate,

and indeed unintelligible on its face, “reasonably certain” to

inform Section 8 beneficiaries of a potential reduction in their

subsidies to take place one year after receipt of the flyer.

Mullane, 339 U.S. at 318.22 Thus, even when considered

along with all the other factors relied on by the Housing

Authority, no genuine issue of fact exists with respect to

whether the beneficiaries’ attendance at a Session renders the

otherwise wholly inadequate flyer compliant with due

process.

In sum, there can be no genuine dispute of fact as to

whether the Housing Authority provided constitutionally

adequate notice of the change to the payment standard, or

more important, the meaning and effect of the change on the

plaintiffs’ Section 8 benefits. The Housing Authority simply

failed to do so. The simplest means of ensuring adequate

notice was the means requested by the plaintiffs: a simple

and clear letter, written in plain English (or Spanish), mailed

directly to the plaintiffs one year in advance of the date of the

change’s implementation—a letter that contained an

understandable explanation of the change and the effect of

that change on Section 8 benefits; in other words, a flyer that

met the requirements of due process.

22

Although we assume for the purposes of the above analysis that all

beneficiaries actually attended one of these required Sessions, we note that

some evidence suggests that not all beneficiaries actually did so. Plaintiff

Pelaez states, for example, that she did not remember attending a training

session, and has no recollection of “ever having the concept of Voucher

Payment Standards explained to [her.]”

34 NOZZI V. HACLA

A proper notice would have made plaintiffs aware of the

seriousness of the Housing Authority’s actions. It might have

stated, for example, that the Housing Authority estimated that

“approximately 45% of [the] approximately 45,000 Section

8 tenants [would] be adversely affected by the April 2004

[payment standard] decrease, and [would] have to pay an

average of $104 more in rent each month if they chose to

remain in their current units.” It might also have provided

beneficiaries with a number to call in case they had questions

about the upcoming change or needed help finding a more

affordable apartment in light of the change. Instead, the

Housing Authority’s flyer failed even to achieve the

minimum that due process requires: an explanation of the

change to the payment standard and its likely effect upon

tenants—an explanation that could reasonably be understood

by the average Section 8 beneficiary. The failure to do so

deprived the plaintiffs of the necessary one-year period of

stable benefits in which to seek to avoid any impending

hardship, and thus, of due process of law.

3. The Burden of Providing the Requested

Procedure

Turning to the third Mathews inquiry, affording the

procedure requested by the plaintiffs would place no burden

on the Housing Authority. The plaintiffs do not ask for a

hearing, an individual meeting, or even an explanation of the

precise amount by which their portion of the rent would

increase. They ask only for an elementary explanation of

what a change to the payment standard means and what effect

it has on tenants’ rights. The Housing Authority’s argument

that it could not have sent a more precise notice because it

could not have prospectively calculated whether the

plaintiffs’ rent would increase at the time it sent the flyer

NOZZI V. HACLA 35

stems from a fundamental misunderstanding of the plaintiffs’

challenge. The plaintiffs recognize that there are situations in

which a tenant’s subsidies would not decrease despite the

change to the payment standard.23 The plaintiffs merely seek

a uniform notice that adequately explains the effect of the

change in payment standard in a manner sufficient to

reasonably ensure that plaintiffs knew that they might well

have to plan for and adjust to a potential decrease in their

subsidy and an accompanying increase in the rent they must

pay commencing one year from the time they received the

flyer.

Surely this information could be readily incorporated into

the standard form without placing any burden on the

government’s fiscal and administrative resources. There is no

reason to conclude, after all, that “printing six paragraphs of

information is any more burdensome than printing four

paragraphs of information.” Henry v. Gross, 803 F.2d 757,

768 (2d Cir. 1986). Indeed, the Housing Authority printed a

more thorough explanation in letters that it sent to people

other than those directly affected by the change. Around the

same time that the Housing Authority sent the flyer to the

existing tenants, it sent a letter to Voucher Program

beneficiaries who had not yet found a unit to rent. That letter

explained that the payment standard “is the most the Housing

Authority can pay for a unit. If the rent for your unit is

higher, you must pay the difference in rent.” An even clearer

explanation was sent to the Mayor, to members of the Los

Angeles City Council, and to the members of the United

States Congress from California just before the change in the

23

A change in the payment standard would not affect, for example, a

tenant whose entire unit cost less to rent than the new, decreased payment

standard.

36 NOZZI V. HACLA

payment standard was implemented. Those letters explained

that the change to the payment standard “means many tenants

will soon begin paying more rent or, if they choose, move to

a less expensive unit,” and that the “average increase is

estimated at $100/month.”24 Notably missing from the list of

people who received an adequate explanation are the people

who needed it most—the same people that due process

requires receive adequate notice—those Section 8

beneficiaries whose rent might actually be increased by the

change.

Accordingly, all of the Mathews v. Eldridge factors weigh

in favor of the notice that the plaintiffs seek. The Housing

Authority’s flyer, with its total absence of any effort to

explain the payment standard and its relation to tenants’

obligations, was inadequate on its face, and the Housing

Authority has not shown that any additional steps were

reasonably calculated to actually inform the plaintiffs of the

necessary information.25 Moreover, it is beyond dispute that

the Housing Authority could, at no extra cost or expense,

24

The letters sent to high-ranking officials, unlike the flyer that was sent

to the plaintiffs, also provided a list of people who could help the Section

8 beneficiaries with a housing search.

25

We reject the Housing Authority’s arguments that (1) there was a

minimal risk that plaintiffs would have been erroneously deprived of their

property interest because it legally decreased the payment standard and

that (2) any error connected with the notice was harmless because the

“benefit change would have admittedly been the same.” Again, these

arguments stem from a misunderstanding of the nature of plaintiffs’

protected property interest. While the Housing Authority could lawfully

change the payment standard, the plaintiffs have a legitimate expectation

in a one-year term of benefits to plan for and adjust to upcoming changes.

The Housing Authority’s failure to provide adequate notice deprived them

of that right.

NOZZI V. HACLA 37

have provided the notice that would have afforded the tenants

the due process they requested.

The state due process claims are subject to the same

analysis, except that under state law there is an additional

factor to consider: the “dignitary interest in informing

individuals of the nature, grounds, and consequences of the

action.” Today’s Fresh Start, 303 P.3d at 1150. This factor

strongly favors the plaintiffs. The district court, therefore,

erred in granting summary judgment to the defendants on

both due process claims.

C. Remedy

Ordinarily, where there has not been a cross-motion for

summary judgment, we would reverse and remand to the

district court for further factual development. We conclude,

however, that even when viewing the facts in the light most

favorable to the Housing Authority, there is no genuine

dispute of material fact for a fact-finder to decide. In this

case, therefore, the appropriate remedy is to grant summary

judgment in favor of the plaintiffs nostra sponte.

“We have long recognized that, where the party moving

for summary judgment has had a full and fair opportunity to

prove its case, but has not succeeded in doing so, a court [of

appeal] may enter summary judgment sua sponte for the

nonmoving party.” Albino v. Baca, 747 F.3d 1162, 1176 (9th

Cir. 2014) (en banc); see also Gospel Missions of Am. v. City

of L.A., 328 F.3d 548, 553 (9th Cir. 2003) (“Even when there

has been no cross-motion for summary judgment, a district

court may enter summary judgment sua sponte against a

moving party if the losing party has had a ‘full and fair

opportunity to ventilate the issues involved in the matter.’”

38 NOZZI V. HACLA

(quoting Cool Fuel, Inc. v. Connett, 685 F.2d 309, 312 (9th

Cir. 1982)). So long as the moving party has “be[en] given

reasonable notice that the sufficiency of his or her claim will

be in issue,” Buckingham v. United States, 998 F.2d 735, 742

(9th Cir. 1993), and has therefore had “adequate time to

develop the facts on which the litigant [would] depend to

oppose summary judgment,” Portsmouth Square v.

Shareholders Protective Comm., 770 F.2d 866, 869 (9th Cir.

1985), sua sponte summary judgment is appropriate. Doing

so preserves judicial resources by preventing courts from

having to preside over “unnecessary trials” where no genuine

issues of fact are in dispute, which is consistent with the

overall “objective of [Federal Rule of Civil Procedure 56] of

expediting the disposition of cases.” 10A Charles A. Wright,

Arthur R. Miller & Mary K. Kane, Federal Practice and

Procedure § 2720, at 345 (3d ed. 1998).

The Housing Authority has been afforded ample

opportunity to develop the facts on which it would oppose

summary judgment. To begin with, “[a]s the movant[] for

summary judgment in this case, [the Housing Authority]

w[as] on notice of the need to come forward with all [its]

evidence in support of this motion, and [it] had every

incentive to do so.” Albino, 747 F.3d at 1177. Moreover, the

Housing Authority has had two rounds of litigation in which

to develop the facts necessary to oppose summary judgment.

The issues here are identical to those litigated before the

district court in Nozzi I. At that time, the plaintiffs made a

cross-motion for summary judgment, and the Housing

Authority had a full and complete opportunity to develop

facts to oppose it. On remand, the Housing Authority had the

opportunity to develop additional facts, but it declined to do

so. Instead, it strategically chose to move for a pre-trial

disposition before the close of discovery and effectively cut

NOZZI V. HACLA 39

short any additional factual development. In short, the

Housing Authority had more than enough notice that the

sufficiency of its defense was at issue.

Despite having this opportunity, the Housing Authority

has not produced evidence suggesting that there is an issue of

material fact that is appropriate for resolution by a fact-finder.

As explained in greater detail above, it is beyond dispute that

the flyer was constitutionally inadequate. On its face, it was

clearly inadequate and failed to provide notice in a form that

Section 8 recipients could comprehend. The Housing

Authority’s subsequent steps cannot solve the flyer’s

deficiency as a matter of law, as those steps occurred too late

to protect the plaintiffs’ legitimate expectation in an

unaffected one-year period of benefits in which to plan for

any adverse effects of the change.

Additionally, the Housing Authority’s reliance on the

training sessions and the public outreach meetings fails to

raise a genuine issue of material fact appropriate for

resolution by a jury. The meetings it held could not, as a

matter of law, have been sufficient to afford the plaintiffs the

notice that due process requires. The training sessions when

beneficiaries first entered the program provided relatively

minimal information on the meaning of “payment standard,”

and this information was provided months or years before the

flyer was sent. Thus, the training sessions cannot have served

to ensure that the confusing and inadequate flyer was

“reasonably certain” to “actually inform” the average

beneficiary that he had one year in which to plan for a

potential reduction to his benefits. Because there are no

genuine issues of material fact as to whether the Housing

Authority complied with the requirements of due process, we

remand with instructions to the district court to grant

40 NOZZI V. HACLA

summary judgment in favor of the plaintiffs on the merits of

their federal and state due process claims.

V. THE OTHER STATE LAW CLAIMS

Next, we turn to the plaintiffs’ allegations that the

Housing Authority violated various provisions of the

California Government Code. California has abolished

common law tort liability for public entities. Miklosy v.

Regents of California, 188 P.3d 629 (Cal. 2008). Thus, under

California law, “‘[a] public entity is not liable for an injury,’

‘[e]xcept as otherwise provided by statute.’” Eastburn v.

Regional Fire Prot. Auth., 80 P.3d 656, 657–58 (Cal. 2003)

(quoting Cal. Gov. Code § 815(a)). Plaintiffs claim that the

Housing Authority is liable under two statutes: (1) California

Government Code § 815.6 which governs liability for public

entities that breach their mandatory duties, and (2) California

Government Code § 815.2 which governs vicarious liability

for public employees’ negligence.

A. California Government Code § 815.6

Under California Government Code § 815.6, a public

entity will be liable to a plaintiff for injury “when (1) a

mandatory duty is imposed [on the public entity] by

enactment, (2) the duty was designed to protect against the

kind of injury allegedly suffered, and (3) breach of the duty

proximately caused injury,” unless the public entity can

“establish that it exercised reasonable diligence” in

discharging this mandatory duty. State Dept. of State

Hospitals v. Superior Court, 349 P.3d 1013, 1018 (Cal.

2015); see also Chaudhry v. City of Los Angeles, 751 F.3d

1096, 1106–07 (9th Cir. 2014). The “mandatory duty”

breached by the public entity must be created by a

NOZZI V. HACLA 41

“constitutional provision, statute, charter provision, ordinance

or regulation,” Cal. Gov’t Code § 810.6, including federal

regulations, id. § 811.6 (defining “regulation’ as including

federal regulations).26 Further, it must be “obligatory, rather

than merely discretionary or permissive, in its directions to

the public entity,” and must “require rather than merely

authorize or permit, that a particular action be taken[.]” State

Dept. Of State Hospitals, 349 P.3d at 1018–19 (emphasis in

original).

We hold that, even taking the facts in the light most

favorable to the Housing Authority, there can be no dispute

that it is liable under the statute. To begin with, as we have

determined above, the Voucher Program regulations create a

mandatory duty to advise plaintiffs of the change in the

payment standard, the meaning of that change, and its effect

upon them. 24 C.F.R. § 982.505(c).27 The Housing

Authority argues that Section 982.505(c) creates only a duty

to send a one-year notice, with no obligations as to the form

of that notice. This is incorrect. At a minimum, the

information given to the tenants about the change in payment

standards and the one-year period that tenants have to prepare

26

See also Hines v. United States, 60 F.3d 1442, 1448–49 (9th Cir.

1995) (holding that under California law, federal regulation created a

mandatory duty), abrogated on other grounds by United States v. Olson,

546 U.S. 43 (2005); Bowman v. Wyatt, 111 Cal. Rptr. 3d 787, 808 n.10

(Ct. App. 2010) (noting that jury was instructed that mandatory duty under

§ 815.6 could be supplied by federal regulation).

27

Notwithstanding the Housing Authority’s assertion to the contrary, the

fact that there is no federal cause of action to enforce directly 24 C.F.R.

§ 982.505(c)(3) does not defeat plaintiffs’ § 815.6 claim. See Haggis v.

City of Los Angeles, 993 P.2d 983, 988 (Cal. 2000) (“It is section 815.6,

not the predicate enactment, that creates the private right of action.”

(emphasis in original)).

42 NOZZI V. HACLA

for its implementation must be reasonably comprehensible by

the intended recipients. A mandatory obligation to provide

notice includes the obligation to provide an intelligible notice

that can be understood by its average intended recipients and

must convey the information required by the regulation.

Next, it is apparent that the regulation was “designed to

protect against the kind of injury” the plaintiffs suffered.

Haggis, 993 P.2d at 987–88. The regulation was created as

an equitable “safeguard” for tenants “against reductions in

subsidy,” that would give Section 8 beneficiaries one year in

which to plan for adjustments to the payment standard that

could adversely affect their subsidy. Section 8 Housing

Choice Voucher Program; Expansion of Payment Standard

Protection, 65 Fed. Reg. at 42508. Here, because plaintiffs

were not given meaningful information about the change in

the payment standard and its meaning and effect, the

plaintiffs were deprived of the very one-year stable planning

period that the regulation was designed to protect.

Finally, the Housing Authority breached this mandatory

duty and this breach was the proximate cause of injury to the

plaintiffs. As described earlier, the flyer was totally

incomprehensible to anyone without a relatively sophisticated

understanding of the machinations of Section 8 subsidy

payments. It did not provide the average recipient with any

meaningful information about the change or its potential

adverse impact. As with the due process claims, the Housing

Authority argues that no injury could have occurred because

it had total discretion to decrease the payment standard. Once

again, the Authority misunderstands the nature of the

plaintiffs’ challenge. The question here is not whether the

payment standard could be decreased, but whether the

manner in which the Housing Authority implemented the

NOZZI V. HACLA 43

decrease breached its mandatory duty to provide advance

notice to plaintiffs of the intended action. The answer is that

it did, and that plaintiffs, who experienced an unexpected and

dramatic increase in their rental obligations, suffered from

that breach.

What remains then, is the question whether the Housing

Authority “exercised reasonable diligence to discharge the

duty.” Cal. Gov’t Code § 815.6. As described in greater

detail above, there are extreme deficiencies in the flyer

provided to the plaintiffs. The Housing Authority has had

two opportunities to come forward with evidence in support

of its motion for summary judgment and a further opportunity

to rebut the cross-motion for summary judgment brought by

the plaintiffs in Nozzi I. Despite this, it has fallen far short of

producing evidence sufficient to raise a genuine issue of fact

as to whether it made reasonable efforts to provide

meaningful information to the plaintiffs about the payment

standard change and its adverse effect upon them.

The Housing Authority initially took the position that it

was “impossible” to draft a different, more comprehensible

notice, but that position is plainly contradicted by the

undisputed evidence. The Housing Authority was clearly

capable of explaining the meaning and effect of the payment

standard. It provided a comprehensible notice to Voucher

Program beneficiaries who had not yet found a unit to rent.

Indeed, it provided an even more thorough explanation of the

meaning and effect of the change to the Mayor, members of

the Los Angeles City Council, and California congressmen.

The Housing Authority produced evidence, in the form of

a declaration by the individual who wrote the flyer,

purportedly showing that he exercised reasonable efforts.

44 NOZZI V. HACLA

Even construing this declaration in the light most favorable

to the defendants, however, it is insufficient to raise a genuine

issue of fact as to whether the Housing Authority exercised

reasonable efforts to comply with the regulation. The

declaration states that the employee drafts all of his notices in

language that can be understood by a person with an eighth

grade education. This is a conclusion that is belied by the

evidence. The flyer unquestionably does not explain the

meaning and effect of the change in the payment standard in

any terms at all, let alone in terms that can be understood by

a person with an eighth grade education. The employee

admittedly simply took the flyer’s language directly from the

regulation, and the Housing Authority did not offer any

evidence that he took any steps to ensure that the language

would provide any meaningful information about the change

that would advise the average recipient of its meaning or

effect. Nor did the Housing Authority offer any evidence

suggesting that the employee considered alternatives to

merely parroting the regulation, such as, inter alia, defining

payment standard—as did the letters sent to house-hunting

Section 8 beneficiaries and to the public officials.

Thus, as with the due process claims, the Housing

Authority had ample opportunity to develop facts to support

its defense against the state law claims, but failed to do so.

Accordingly, we reverse the judgment of the district court and

remand with instructions to grant summary judgment in favor

of the plaintiffs on the merits of this statutory claim.

B. California Government Code § 815.2

Under California Government Code § 815.2, a public

entity is “vicariously liable for its employees’ [non-immune]

negligent acts or omissions within the scope of

NOZZI V. HACLA 45

employment[.]” Eastburn v. Regional Fire Protection

Authority, 80 P.3d 656, 658 (Cal. 2003). The Housing

Authority asserts, and the plaintiffs do not dispute, that

plaintiffs theory of negligence is “essentially

interchangeable” with its § 815.6 claim discussed in Section

V.A above. Indeed, the elements of a vicarious liability claim

against a public entity in California are “virtually identical”

to the elements of a § 815.6 claim. Alejo v. City of Alhambra,

89 Cal. Rptr. 2d 768, 771 & n.3 (Ct. App. 1999); see also San

Mateo Union High School District v. Cnty. of San Mateo,

152 Cal. Rptr. 3d 530, 542–544 (Ct. App. 2013). The above

discussion of the plaintiffs’ § 815.6 claim, therefore, applies

equally to their vicarious liability claim and they are entitled

to summary judgment on the merits of this claim as well.

VI. REASSIGNMENT

Plaintiffs have requested that we use our supervisory

power to reassign this case to a different district judge on

remand. We reassign a case to a different district judge in

“unusual circumstances.” Krechman v. County of Riverside,

723 F.3d 1104, 1111 (9th Cir. 2013). To determine whether

such reassignment is appropriate we look to three factors:

(1) whether the original judge could “reasonably be expected

upon remand to have substantial difficulty in putting out of

his or her mind previously-expressed views or findings

determined to be erroneous or based on evidence that must be

rejected,” (2) whether reassignment is advisable to preserve

the appearance of justice, and (3) whether reassignment

would “entail waste and duplication out of proportion to any

gain in preserving the appearance of fairness.” Id. at

1111–12.

46 NOZZI V. HACLA

On remand from Nozzi I, the district judge made a number

of statements indicating his strong disagreement with this

Court’s holding in Nozzi I. Then, before ruling in favor of the

Housing Authority for the second time, the judge stated,

“When you do argue this in the Ninth Circuit, don’t make just

that argument, because if you do . . . we’ll be back here again,

and I’ll be tearing out my hair and saying I don’t understand

why this happened the way it did. In fact, let me just indicate

that if this case gets reversed, I want it to be like Judge

Wright or Judge Real. I want it to go to some other district

court judge, because I have spent a lot of time on this case.

. . . I pretty much have done all I can.”

The district judge’s statements constitute a “rare and

extraordinary circumstance[]” justifying reassignment.

Krechman, 723 F.3d at 1112. The judge repeatedly made

clear that he would have substantial difficulty setting aside

his previous views of the case. Under these circumstances,

remand is not only “advisable,” Krechman, 723 F.3d at 1111,

but essential in order to preserve the appearance of justice.

Accordingly, we need not consider the third factor.

Krechman, 723 F.3d at 1102 (“The first two factors are

equally important and a finding of either is sufficient to

support reassignment on remand.”). Regardless whether

duplication of effort would be involved, we have no choice

but to send the case to a judge whose designation would

appear to be consistent with the interests of justice.28 Lastly,

we hold that this case must be reassigned to a district judge

28

Although it does not affect our decision, we note that reassignment

will not entail more than minimal duplication as there is little, if any,

overlap between issues to be resolved on remand and the issues previously

considered by the district court.

NOZZI V. HACLA 47

other than one of the two judges named by Judge Wu in order

to “preserve the appearance of justice.” Id.

VII. CONCLUSION

In sum, the district court erred by granting summary

judgment to the Housing Authority. There is no genuine

dispute of fact as to whether the Housing Authority failed to

provide meaningful information to Section 8 beneficiaries

about the change to the payment standard and the effect of

that change upon the beneficiaries and their property

interests. That failure violated both the requirements of the

Voucher Program regulations and the requirements of

procedural due process. It also resulted in a violation of two

state statutes which require public entities to take reasonable

efforts to comply with the mandatory duties established by

federal regulations. Accordingly, we reverse and remand

with instructions for the district court to enter summary

judgment in favor of the plaintiffs on the merits of the federal

and state law claims at issue on this appeal. In order to

preserve the appearance of justice, we order the case

reassigned to a different district judge—a judge other than the

two identified by the current district judge who himself has

declined to hear the case further. On remand, further factual

development may be needed to determine the size and

validity of plaintiffs’ class and to determine the appropriate

remedy.

REVERSED AND REMANDED.

48 NOZZI V. HACLA

APPENDIX A