Federal Appeals Court Holds that Landlord May Be Liable for Deliberate Indifference to Tenant-on-Tenant Discrimination

The United States Court of Appeals for the Seventh Circuit recently addressed a matter of first impression regarding landlord liability under the Fair Housing Act (FHA): whether a landlord may be liable under the FHA for failing to address tenant-on-tenant discrimination. The court answered with a resounding “yes,” holding that the FHA creates liability where a landlord has actual notice of harassment based on protected status and chooses not to take reasonable steps within their power to stop the harassment. According to Lambda Legal, who brought the lawsuit, “the court has now put all landlords on notice that they have an obligation to take action to stop known harassment.” The effects of this decision will be felt nationwide and will certainly spark additional litigation against landlords and property-management companies.

Martha Wetzel moved into Glen Saint Andrew Living Community after Judy Kahn, her partner of 30 years, died. Wetzel’s tenancy at Glen Saint Andrew was governed by a lease agreement that guaranteed three meals served in a central location, access to the community room, and use of the laundry facilities. The agreement also conditioned Wetzel’s tenancy on refraining from “activity that [St. Andrew] determines unreasonably interferes with the peaceful use and enjoyment of the community by other tenants” or “a direct threat to the health and safety of other individuals.”

Wetzel alleges that she spoke openly to tenants and staff about her sexual orientation. According to Wetzel, she “was talking to the ladies and getting to know people, and they were talking about their children” when she volunteered that she raised a son with Judy Kahn. “They were shocked that I had a partner who was a woman . . . I could feel it.”According to the complaint, Wetzel’s fellow tenants responded with verbal and physical abuse. For instance, one resident “told Wetzel that he reveled in the memory of the Orlando massacre[,]” and another told her that “homosexuals will burn in hell.” One resident “rammed his walker into Wetzel’s scooter forcefully enough to knock her off a ramp,” and another “bashed her wheelchair into a dining table that Wetzel occupied, flipping the table on top of Wetzel.” In yet another instance, Wetzel was struck from behind hard enough to throw her from her scooter, causing her to suffer a “bump on her head and a black eye.”

Wetzel reported the abuse to Glen Saint Andrew’s staff, who “told Wetzel not to worry about the harassment, dismissed the conduct as accidental, denied Wetzel’s accounts, and branded her a liar.” Wetzel also alleged that Glen Saint Andrew took steps to retaliate against her by “relegate[ing] [her] to a less desirable dining room location . . . barr[ing] her from the lobby except to get coffee and halt[ing] her cleaning services, thus depriving her of access to areas specifically protected in the Agreement.” Glen Saint Andrew also purportedly accused her of smoking in her room and withheld the customary rent reminder in an apparent effort to manufacture a justification for her eviction. Ultimately, Wetzel filed a lawsuit against Glen Saint Andrew and several individual defendants, claiming that they violated the FHA by failing to “ensure a non-discriminatory living environment and retaliat[ing] against her for complaining about sex-based harassment.”

The defendants moved to dismiss, asserting that the FHA does not make a landlord liable for tenant-on-tenant harassment unless the landlord’s inaction was caused by discriminatory animus, and that – to the extent that Wetzel’s lawsuit relied on 42 U.S.C. § 3604(b) – this section does not apply to harassment claims brought by a tenant already occupying her home (post-acquisition harassment claims). The trial court agreed with the defendants and dismissed Wetzel’s claims. Wetzel appealed to the Seventh Circuit Court of Appeals.

Recognizing that the text of the FHA itself does not contain a test for landlord liability, the Seventh Circuit looked to Title VII, which governs employment discrimination, and Title IX, which governs discrimination in education. Under Title VII, an employer may be liable when its own negligence is the cause of prohibited harassment. Similarly, courts interpreting Title IX have held that school districts may be liable for student-on-student harassment when the district decides to remain idle even though it has actual knowledge of the harassment. The Seventh Circuit, therefore, reasoned that, because Title VII and IX are functionally equivalent to the FHA, the FHA must likewise allow liability for deliberate indifference to harassment: “Wetzel may be in [uncharted] territory . . . the Supreme Court’s interpretation of analogous anti-discrimination statutes satisfies us that her claim against St. Andrew is covered by the Act.”

The court also rejected Glen Saint Andrews’ arguments premised on Wetzel’s post-acquisition harassment claims. Specifically, the court recognized that 42 U.S.C. § 3604(b) protects individuals against discrimination in the “provision of services or facilities in connection” with the “terms, conditions, or privileges of sale or rental.” Here, the court held that Wetzel’s allegations that her fellow tenants’ harassment “impeded her from eating the meals she had paid for at the dining hall, visiting the lobby and other common spaces, and obtaining access to the laundry room” were sufficient to assert a post-acquisition claim because these actions deprived Wetzel of services and facilities to which she was entitled. The court also relied on the common law of property, which affords tenants the privilege of using the “totality of the rented premises.” Finally, the court rejected Glen Saint Andrews’ contention that Wetzel’s retaliation claim required allegations of discriminatory animus because, under well-settled law within the Seventh Circuit, the only claim under the FHA that requires intentional discrimination is an interference claim.

Although the Seventh Circuit’s admittedly “broad” reading of the FHA increases the risk of liability for landlords and property management companies, there are two important questions the Wetzel court left open that could limit the decision’s reach. First, while the court held that landlords are liable for deliberate indifference to tenant-on-tenant discrimination when they have actual notice, the court said nothing about constructive notice. On this issue, though, the U.S. Department of Housing and Urban Development (HUD) regulations hold landlords responsible for deliberate indifference when they “knew or should have known of the discrimination”  See 24 C.F.R. § 100.7(a)(1)(iii) (emphasis added).

Second, the Wetzel case involves an assisted living facility that provides various services to its tenants, and where the staff has a heightened level of responsibility over tenants’ wellbeing. This fact made it easier for the court to draw a comparison to Title IX, which applies to educational institutions. It is not altogether clear how a court would apply this analysis to other types of facilities.

Nevertheless, landlords and property management companies would be well-served to review their policies relating to harassment complaints, and provide training sessions with staff members regarding both their internal policies and the requirements of the FHA.