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The Inclusive Communities Project, Inc. v. Abbott

United States District Court, N.D. Texas, Dallas Division

May 29, 2018

THE INCLUSIVE COMMUNITIES PROJECT, INC., Plaintiff,
v.
GOVERNOR GREG ABBOTT only in his official capacity as Governor of The State of Texas, and the CITY OF DALLAS, Defendants.

          MEMORANDUM OPINION AND ORDER

          SIDNEY A. FITZWATER UNITED STATES DISTRICT JUDGE

         This is an action by plaintiff Inclusive Communities Project, Inc. (“ICP”) to invalidate Tex. Loc. Gov't Code Ann. § 250.007 (West Supp. 2017)-a statute that precludes Texas cities from prohibiting source of income discrimination in rental housing-and City of Dallas Code §§ 20A-3(21) & 20A-4(a)-an ordinance that prohibits source of income discrimination in housing except to the extent the ordinance itself is prohibited by § 250.007. Defendants are Governor Greg Abbott (“Governor Abbott”) and the City of Dallas (“the City”). Concluding that ICP lacks constitutional standing to bring its claims and that the action against Governor Abbott is barred by the Eleventh Amendment, the court grants Governor Abbott's and the City's motions to dismiss under Fed.R.Civ.P. 12(b)(1) for lack of subject matter jurisdiction, denies as moot their Rule 12(b)(6) motions to dismiss for failure to state a claim, and dismisses this action without prejudice by judgment filed today.

         I

         ICP sues Governor Abbott and the City, challenging a Texas state statute, Tex. Loc. Gov't Code Ann. § 250.007 (West Supp. 2017) (“the Statute”), and a City ordinance, City of Dallas Code §§ 20A-3(21) & 20A-4(a) (“the Ordinance”), both of which relate to the administration of the federal Housing Choice Voucher program, formerly referred to as “Section 8.” Under the program, vouchers are provided to approved participants to enable them to financially supplement housing rental payments that they owe to private landlords. Because federal law does not mandate that landlords participate in the Voucher program, renters who seek to use program vouchers must find housing provided by landlords who will accept the vouchers in payment of rent. Although the Voucher program is federally funded, it is administered by local public housing authorities: in Dallas, the Dallas Housing Authority (“DHA”)

         In November 2014 the City entered into a Voluntary Compliance Agreement (“VCA”) with the U.S. Department of Housing and Urban Development (“HUD”) under which the City agreed that

[t]he City Manager and City Attorney will formally introduce to the Dallas city council for a public meeting and adoption an ordinance prohibiting source of income discrimination, including discrimination against Housing Choice Voucher holders. The proposed ordinance shall provide for administrative enforcement with damages and penalties for noncompliance if permitted by Texas law. The parties agree that [this action] shall be complete when the Dallas city council formally convenes to publicly consider adoption of such an ordinance.

2d Am. Compl. ¶23 (emphasis added).

         In December 2014 the City of Austin, Texas (“Austin”) enacted its own ordinance that prohibited landlords from discriminating against prospective tenants on the basis of source of income. It defined “source of income” to include “housing vouchers and other subsidies provided by government or non-governmental entities.” Id. at ¶ 26.

         During the 2015 legislative session, the Texas Legislature enacted the Statute, which provides, in pertinent part:

[e]xcept as provided by this section, a municipality or county may not adopt or enforce an ordinance or regulation that prohibits an owner, lessee, sublessee, assignee, managing agent, or other person having the right to lease, sublease, or rent a housing accommodation from refusing to lease or rent the housing accommodation to a person because the person's lawful source of income to pay rent includes funding from a federal housing assistance program.

Tex. Loc. Gov't Code Ann. § 250.007 (West Supp. 2017). According to the second amended complaint, the legislative record indicates that Texas legislators explicitly took “the City of Dallas obligation to consider a voucher discrimination ordinance and the City of Austin enactment of such an ordinance into consideration as factors supporting the enactment of the Statute.” 2d Am. Compl. ¶ 28.

         One year after Texas enacted the Statute, the City adopted the Ordinance, which provides:

(a) A person commits an offense if he, because of race, color, sex, religion, handicap, familial status, [or] national origin, or source of income:
(1) refuses to negotiate with a person for the sale or rental of a housing accommodation or otherwise denies or makes unavailable a housing accommodation to a person;
(2) refuses to sell or rent, or otherwise makes unavailable, a housing accommodation to another person after the other person makes an offer to buy or rent the accommodation; or
(3) discriminates against a person in the terms, conditions, or privileges of, or in providing a service or facility in connection with, the sale or rental of a housing accommodation.

City of Dallas Code § 20A-4(a) (emphasis added). Although the Ordinance prohibits discrimination based on source of income, the definition of the term “source of income” is explicitly made subject to the Statute's prohibitions. The Ordinance provides that “[s]ource of income means lawful, regular, and verifiable income from whatever source derived (including housing vouchers and other subsidies provided by government or non-governmental entities, child support, or spousal maintenance), except as prohibited by Texas Local Government Code, Section 250.007, as amended.” City of Dallas Code § 20A-3 (21) (emphasis added).

         According to the second amended complaint, the Dallas City Council simultaneously considered, but did not adopt, a second housing ordinance that did not reference § 250.007. In ultimately adopting the Ordinance, the City Council “acknowledged that the Statute controlled as a matter of law and prohibited enactment of an ordinance prohibiting voucher discrimination.” 2d Am. Compl. ¶29.

         ICP is a fair housing focused nonprofit organization that works with households seeking access to housing in predominantly “non-minority” locations in the Dallas area. In support of this mission, “ICP provides counseling, financial assistance, and other services to Black or African American households participating in” the Voucher program as administered by the DHA. 2d Am. Compl. ¶8. Although ICP's assistance is open to all DHA voucher participants, 94% of DHA voucher participants are non-White, and 86% are Black or African American. Moreover, the average demographic census tract in which a Dallas voucher tenant resides is 88% minority. Statewide statistics demonstrate that voucher tenants are disproportionately minorities and live in census tracts with disproportionately high levels of minorities.[1]

         Contending that the Statute injures ICP and its clients, ICP brings this action against Governor Abbott, in his official capacity as Governor of Texas, and the City, seeking declaratory and injunctive relief based on federal statutory and constitutional claims asserted under 42 U.S.C. § 1983.

         Against Governor Abbott, ICP alleges that the Statute “singl[es] out a racially identifiable Black or African American group for unequal treatment, ” in violation of the disparate treatment standard of the Fourteenth Amendment's Equal Protection Clause and 42 U.S.C. § 3604; that the Statute is a state policy that disparately impacts African Americans, in violation of 42 U.S.C. § 3604; that the Statute permits a discriminatory housing practice, in violation of 42 U.S.C. § 3615; that the Statute is not rationally related to a legitimate state interest, in violation of the Fourteenth Amendment's Equal Protection Clause; that the Statute is preempted by 42 U.S.C. § 5304(b)(2); and that the Statute violates the United States Constitution's Supremacy Clause. ICP seeks corresponding declaratory judgment under each of these claims.

         Concerning the City, ICP alleges that, “by complying with the Statute, [the Ordinance] is perpetuating racial segregation and singling out a disproportionately Black group for” disparate treatment, in violation of the Fourteenth Amendment's Equal Protection Clause and 42 U.S.C. § 3604. 2d Am. Compl. ¶154. Based on the premise that the Ordinance “implements” the Statute, ICP also brings against the City the same claims under § 3604, § 3615, the Fourteenth Amendment, and the Supremacy Clause as it does against Governor Abbott. In addition to declaratory judgment, ICP seeks “an injunction requiring the City of Dallas to delete the phrase ‘except as prohibited by Texas Local Government Code, Section 250.007, as amended[]' from the definition of Source of Income in the City of Dallas Fair Housing Ordinance.” 2d. Am. Compl. ¶ 211.

         There are three motions pending before the court: the City's motion to dismiss for failure to state a claim; the City's motion to dismiss for lack of jurisdiction; and Governor Abbott's motion to dismiss plaintiff's second amended complaint for lack of subject matter jurisdiction and failure to state a claim. ICP opposes the motions. The court has heard oral argument.

         II

         The court first considers Governor Abbott's and the City's motions to dismiss under Rule 12(b)(1) for lack of subject matter jurisdiction.

         “Federal courts are courts of limited jurisdiction, and absent jurisdiction conferred by statute, lack the power to adjudicate claims.” Stockman v. Fed. Election Comm'n, 138 F.3d 144, 151 (5th Cir. 1998). A Rule 12(b)(1) motion can mount either a facial or factual challenge. See, e.g., Hunter v. Branch Banking & Tr. Co., 2013 WL 607151, at *2 (N.D. Tex. Feb. 19, 2013) (Fitzwater, C.J.) (citing Paterson v. Weinberger, 644 F.2d 521, 523 (5th Cir. May 1981)). When a party makes a Rule 12(b)(1) motion without including evidence, the challenge to subject matter jurisdiction is facial. Id. The court assesses a facial challenge as it does a Rule 12(b)(6) motion in that it “looks only at the sufficiency of the allegations in the pleading and assumes them to be true. If the allegations are sufficient to allege jurisdiction, the court must deny the motion.” Id. (additional citation omitted) (citing Paterson, 644 F.2d at 523). “The burden of proof for a Rule ...


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