Prologue — Philadelphia Housing Authority Authority v. McDowdell (No. 05-866)

() Suprame (Court, U.S.

No. 05-866 JAN 5 - 2006

OFFICE OF THE CLERK

IN THE

Supreme Court of the United States

PHILADELPHIA HOUSING AUTHORITY,

JOHN WHITE and BARRY MILLER,

Petitioners,

Vv.

JACKIE MCDOWELL, et al.,

Respondents.

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Third Circuit

PETITION FOR A WRIT OF CERTIORARI

ALAN C. KESSLER

<— ABBE F. FLETMAI

Counsel of Record

VIRGINIA LYNN HOGBEN “one

STEPHANIE L. KOSTA

WOLF, BLOCK, SCHORR AND

SOLIS-COHEN LLP

1650 Arch Street, 22nd Floor

Philadelphia, PA 19103-2097

(215) 977-2000

January 5, 2006 Counsel for Petitioner

The Philadelphia Housing Authority

WILSON-EPESPRINTING CO., INC. — (202)789-0096 — WASHINGTON, D.C. 20001

QUESTION PRESENTED FOR REVIEW

Did the Court of Appeals err in requiring a district court to

order a public housing agency to pay substantial com-

pensatory civil contempt sanctions for past noncompliance

with a consent decree’s procedural requirements where the

housing agency had already come into compliance with the

consent decree, and the residents were not damaged or

harmed by the agency’s earlier noncompliance with the

procedural requirements of the consent decree and of the

United States Department of Housing & Urban Development

procedural regulations that it tracks?

(i)

ii

LIST OF PARTIES ©

The plaintiffs in this proceeding are Jackie McDowell, an

individual, as. a representative of a class of individual

residents of the Philadelphia Housing Authority (“PHA”).

The defendants are PHA, a governmental party, and two

individuals, John White and Barry Miller, former PHA

officials. No corporate disclosure statement is required

because there are no nongovernmental corporations who are a

party to this proceeding.

TABLE OF CONTENTS

Page

QUESTION PRESENTED FOR REVIEW .......ssssseee-+:

RE SLED IS ii

TABLE OF AUTHORITIES .....csscsssssscssssssesecssssesseeee eo.

OPINIONS AND ORDERS OF THE COURTS

SEE ARS OOM 1

STATEMENT OF JURISDICTION .....cccccccsscssssececsseee 2

FEDERAL REGULATIONS INVOLVED.........cce...-0 2

STATEMENT OF THE CASE o.cseeccccscssssesscccscssesesecsee 3

REASONS FOR GRANTING THE PETITION........... 7

A. The Third Circuit’s Opinion Conflicts with the

Decisions of this Court and Other Circuits

Limiting the Courts’ Civil Contempt Powers.... 8

B. The Third Circuit’s Decision Affects the Inter-

pretation of HUD’s Utility Allowance Regu-

lations and Conflicts with the Fourth: Circuit’s

Interpretation of those HUD Regulations ......... 11

C. The Third Circuit’s Opinion Conflicts with the

Decisions of this Court and Other Circuits on

the Measure of Harm from Violation of

IIS II sieiccocencscdecanceiesicinosnesnicabicntbienite 12

CATE MION crscesicvinsesnescinsicaspiioivvasiniansinivehobivetinsenetee 14

APPENDICES

Appendix A—McDowell v. Philadelphia Housing

Authority, 423 F.3d 233 (3rd Cir. 2005 .............004 la-12a

Appendix B——Order of the United States District

Court, No. 97-CV-2302, (E.D. Pa. March 9,

MT I oo issceissies saiisiaccetitnainnssioncictinisede 13a-14a

iV

TABLE OF CONTENTS—Continued

Page

Appendix C—Order of Court of Appeals denying

PHA’s Petition for seen dated October 17,

IE szssithicapisincenigsdieticsietevacniniabiaseieiaieubiabadeseciions 15a-16a

Appendix D—United States Department of Hous-

ing and Urban Development regulations, 24

Cres OE POON MOOD scctusesescssnseaciizacensiovscess 17a-22a

Appendix E—Order of the United States District

Court, No. 97-CV-2302, dated January 12, 1998,

and attached Consent Decree..............ccccccseseesereees 23a-28a

Appendix F—PHA Determination of Gas Utility

Allowances for Scattered-Sites, Final Report,

GE ID FI iicetiacthacsickcarsicin ebsictlnnliiaed 29a-60a

Appendix G—Memorandum of PHA to Correct

Statement in Prior Brief dated June 9, 2003 ......... 6la-78a

v

TABLE OF AUTHORITIES

CASES Page

‘Brewer v. Chauvin, 938 F.2d 860 (8th Cir. 1991)... 13

Carey v. Piphus, 435 U.S. 247 (1978) .....ccceceseees 13

Dorsey v. Housing Authority of Baltimore City,

984 F.2d 622 (4th Cir. 1993) ......:...ccsccssscesseeeees 12

_ Federal Trade Commission v. Kuykendall, 371

PSS FAS (IGE Cae. BODE) nncecvesvererscsovesicsssccreceeess 10

International Union, United Mine Workers of

America v. Bagwell, 512 U.S. 821 (1994)......... 8

Kassim v. City of Schenectady, 415 F.3d 246 (2d

Si PD cicieincpenvsiebucittadapesiceitevnsstienceepniiniateties 13

McBride v. Coleman, 955 F.2d 571 (8th Cir.

ae aiissicdiescatapiciiascdsiciniiteackiiciinisaseimnethiaeliiastdaing 10

Memphis Community School District v. Stachura,

A ey EE COED isiaisinsdacaciedicaviscenmeearicaioitin 13

United States v. United Mine Workers of

America, 330 U.S. 258 (1947) ....cssccsessccseessoeseeee 8

STATUTES

Se a eteis BE AIO ichccieschentabeneceibeoicharebientictipiningubedatnn 2

REGULATIONS

Kg od = BE yo: Siem etrerenmenerrere yet recrences 3,4

24 C.F.R. §§ 965.501-965.508 ............ccceescesceeeeees 3,4

Be ee. PU sissieabititiacsdinimiaicrtinniotsneevisnessievoinnl 3, 5,9

oe ik 0 PIR ntcipicsencsentntinsininbiasiteinitinasineii 2, 4, 5, 8, 12

BOGE Bie GG FOI IU T secsinsecevecsavovs 2, 3,4, 5, 6, 8, 9, 11, 13

IN THE

Supreme Court of the United States

No.

PHILADELPHIA HOUSING AUTHORITY,

JOHN WHITE and BARRY MILLER,

Petitioners,

Vv.

JACKIE MCDOWELL, et al.,

Respondents.

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Third Circuit

PETITION FOR A WRIT OF CERTIORARI

OPINIONS AND ORDERS OF THE COURTS BELOW

The opinion and order of the United States Court of Ap-

peals for the Third Circuit are reported at 423 F.3d 233 (3d

Cir. 2005). The order of the United States District Court, No.

97-CV-02302 (E.D. Pa. March 9, 2004), is unreported. Cop-

ies of the Court of Appeals’ and District Court’s opinions and

orders are provided in the Appendix hereto at App. la-12a

and App. 13a-14a respectively.

Petitioner’s Petition for Rehearing in the Court of Appeals

was denied by the Court of Appeals by order dated October

17, 2005. A copy of that October 17, 2005 order is also

provided in the Appendix at App. 1Sa-16a.

2

STATEMENT OF JURISDICTION

The judg -t of the United States Court of Appeals for the

Third Circu .- as entered on September 13, 2005. A timely

petition for rehearing was filed by petitioner Philadelphia

Housing Authority on September 27, 2005. The petition for

rehearing was denied by order of the Court of Appeals dated

October 17, 2005. (App. 15a-16a). This Court has juris-

diction to review the judgment of the Court of Appeals for

the Third Circuit by writ of certiorari pursuant to 28 U.S.C.

§ 1254(1).

FEDERAL REGULATIONS INVOLVED

Section 965.507 of the United States Department of

Housing and Urban Development’s regulations (24 C.F.R.

§ 965.507) provides:

§ 965.507 Review and revision of allowances.

(a) Annual review. The PHA [public housing agency]

shall review at least annually the basis on which utility

allowances have been established and, if reasonably re-

quired in order to continue adherence to the standards

stated in § 965.505, shall establish revised allowances.

The review shall include all changes in circumstances

(including completion of modernization and/or other en-

ergy conservation measures implemented by the PHA)

indicating probability of a significant change in reason-

able consumption requirements and changes in utility

rates.

(b) Revision as a result of rate changes. The PHA may

revise its allowances for resident-purchased utilities be-

tween annual reviews if there is a rate change (including

fuel adjustments) and shall be required to do so if such

change, by itself or together with prior rate changes not

adjusted for, results in a change of 10 percent or more

from the rates on which such allowances were based.

Adjustments to resident payments as a result of such

changes shall be retroactive to the first day of the month

3

following the month in which the last rate change taken

into account in such revision became effective. Such

rates changes shall not be subject to the 60 day notice

requirement of § 965.502(c).

Also involved in this appeal are 24 C.F.R. §§ 965.501-965.506

and § 965.508. Copies of 24 C.F.R. §§ 965.501-965.508 are

reproduced in the Appendix at App. 17a-22a.

STATEMENT OF THE CASE

This is an appeal from a ruling that requires a public hous-

ing agency, the Philadelphia Housing Authority (“PHA”), to

pay substantial compensatory civil contempt sanctions to its

residents for past noncompliance with procedural utility al-

lowance revision requirements of a Consent Decree, although

the residents were not harmed by, and indeed benefited from,

the noncompliance with the utility allowaace revision re-

quirements. The Consent Decree, moreover, tracks United

States Department of Housing and Urban Development

(“HUD”) regulations and the United States Court of Appeals

for the Third Circuit interpreted those HUD regulations in its

opinion. The Court of Appeals’ decision therefore also inter-

feres with HUD’s regulations and imposes duties on public

housing agencies different than those HUD chose to impose

in its regulations. :

The Consent Decree governs PHA’s utility allowances for

its public housing residents. Utility allowances are the

amounits that a public housing agency, such as PHA, must pay

or credit toward the monthly rent it charges to residents

who buy utility services directly from a utility.' 24 C.F.R.

' If the utility allowance is less than a resident's monthly rent, the al-

lowance is credited against his or her rent. If the allowance is greater than

a resident’s rent, PHA sends the resident a monthly check in the amount

of the difference. For example, if a resident pays $100 a month in rent

and has a $40 a month utility allowance, he or she would get a $40 a month

credit and owe only $60 in rent. If, however, the resident pays $100 in

4

§ 960.253, §§ 965.501-08. Utility allowances reduce the

resident’s rent or require a payment by the housing agency

toward the resident’s utilities so that the resident’s rent and

reasonable utility costs do not exceed federal rent limitations.

24 C.F.R. § 960.253. Utility allowances are based on both

consumption estimates and the applicable utility rates. 24

C.F.R. § 965.505, § 965.507.

PHA entered into the Consent Decree in 1998 in settlement

of a class action suit brought by a resident to enforce HUD’s

utility allowance regulations, 24 C.F.R. § 965.501 et seq.

(App. 2a-4a). The Consent Decree required PHA (1) to make

certain increases in its gas utility allowances for 1996 and

1997; (2) to review its utility allowances annually and, if ap-

propriate, revise them; and (3) to revise its utility allowances

between annual reviews when there were increases of 10

percent or more in the utility rates on which the allowance

was partly based. (App. 25a-26a).

The Consent Decree’s requirements concerning future re-

view and revision of utility allowances track the language of

HUD’s regulation governing review and revision of utility

allowances, 24 C.F.R. § 965.507. The Consent Decree re-

quires that:

6. PHA shall, commencing with 1997, review, at least

annually, the basis on which utility allowances have

been established and, if reasonably required, shall estab-

lish revised allowances.

7. The annual review shall include all changes in cir-

cumstances indicating probability of a significant change

in reasonable consumption requirements and changes in

utility rates.

8. PHA may revise its allowances for resident-pur-

chased utilities between annual reviews if there is a rate

rent but gets a $120 a month utility allowance, he or she would pay no

rent and get a monthly check in the amount of $20.

5

change except that PHA shall revise its allowances for

resident-purchased utilities between annual [reviews] if

any change in utility rates, by itself or together with

prior rate changes not adjusted for, results in a change of

10 percent or more from the rates on which the allow-

ances were based.

9. Adjustments to utility allowances shall be retroactive

to the first day of the month following the month in

which the last rate change taken into account in such

revision became effective.

(App. 3a-4a, 26a). HUD’s utility allowance review and revi- -

sion regulation, 24 C.F.R. § 965.507, similarly provides:

(a) Annual review. The PHA [public housing agency]

shall review at least annually the basis on which utility

allowances have been established and, if reasonably re-

quired in order to continue adherence to the standards

stated in § 965.505, shall establish revised allowances.

The review shall include all changes in circumstances

(including completion of modernization and/or other en-

ergy conservation measures implemented by the PHA)

indicating probability of a significant change in reason-

able consumption requirements and changes in utility

rates.

tie (b) Revision as a result of rate changes. The PHA may

revise its allowances for resident-purchased utilities be-

tween annual reviews if there is a rate change-(including

fuel adjustments) and shall be required to do so if such

change, by itself or together with prior rate changes not

adjusted for, results in a change of 10 percent or more

from the rates on «ich such allowances were based.

Adjustments to resident payments as a result of such

changes shall be retroactive to the first day of the month

following the month in which the last rate change taken

into account in such revision became effective. Such

rates changes shall not be subject to the 60 pay notice

requirement of § 965.502(c).

24 C.F.R. § 965.507. (App. 21a-22a).

6

Respondents, a class of public housing residents, filed a

motion in 2002 to enforce the Consent Decree and for civil

contempt sanctions against PHA, because PHA had not re-

vised gas utility allowances when the local gas utility com-

pany, Philadelphia Gas Works (“PGW”’), had raised its rates

by mcre than 10 percent during the period November 2000

and December 2002. (App. 4a). PHA, in response, made ad-

justments incre=sing its gas utility allowances. (App. 4a). As

a result, PHA was in full compliance with the Consent Decree

as of January 1, 2003. (App. 13a 4 1).

PHA also then undertook to revise its gas utility allow-

ances as required in the Consent Decree and Section 965.507

of the HUD regulations, and as part of that revision analyzed

whether the consumption factor in its utility allowances com-

plied with HUD regulations and guidelines. (App. 29a-60a).

This review and analysis of utility consumption data (adjusted

for weather in accordance with HUD regulations) revealed

that the consumption component that PHA had been using,

and on which the 2000-02 gas utility allowances had been

calculated, grossly exceeded reasonable consumption. (App.

30a-34a, 50a-57a; App. 5a; App. 14a 9] 5-6). As a conse-

quence, PHA residents, notwithstanding the increases in gas

rates, had received almost $9.5 million in excess utility allow-

ance payments and rent reductions over the utility allowances

that they would have received if PHA had complied with the

Consent Decree and revised its utility allowances at the time

of the rate increases in 2000-02. (App. 67a).

The district court, after briefing, submission of evidence

and oral argument, denied respondents’ motion for monetary

civil contempt sanctions on March 9, 2004. (App. 13a—14a).

The court found that the overly high consumption factor in

PHA’s unrevised utility allowances more than compensated

for the lower gas rates on which those utility allowances were

based. (App. 144 99 5-7). Moreover, the court determined

that the lack of a revision of PHA’s gas utility allowances,