Thompson v. Washington Opinion

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Mmtpfr (tart xtf Apppaln
FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 75-1789
Reverend Chester C. Thompson, Individually and 

on behalf of all others similarly situated, appellants

v.
Walter E. Washington, Individually and as 

Commissioner of the District of Columbia and as 
“ The Authority” of the National Capitol Housing 

Authority under Executive Order, et al.
(D.C. Civil 3000-69)

No. 75-1910
Elizabeth Marshall, et al., appellants 

v.
Patricia Roberts Harris, Individually and in her 
capacity as Secretary of Housing and Urban 

Development, et al.
(D.C. Civil 2288-70)

Appeals from the United States District Court 
for the District of Columbia

Argued October 27, 1976 
Decided February 15, 1977



2

Mr. Edward E. Schwab, with whom Patrick J. Christ­
mas was on the brief, for appellants.

Robert L. Klarquist, Attorney, Department of Justice 
with whom Peter R. Taft, Assistant Attorney General 
and Jacques B. Gelin, Attorney, Department of Justice 
were on the brief, for appellees in case No. 75-1789. 
Wallace H. Johnson, Assistant Attorney General at the 
time the record was filed and Lawrence E. Shearer, At­
torney Department of Justice also entered appearances 
for appellees in No. 75-1789.

Karen I. Ward, Assistant United States Attorney, with 
whom Earl J. Silbert, United States Attorney, John A. 
Terry and John R. Dugan, Assistant United States At­
torneys were on the brief, for federal appellees in case 
No. 75-1910.

Steven G. Friedman, with whom C. Richard Beyda was 
on the brief, for appellees, Linda Pollin Memorial Hous­
ing Corporation, et ah, in case No. 75-1910.

Before Wright, McGowan and MacKinnon, Circuit 
Judges.

Opinion for the Court filed by Circuit Judge McGowan.
McGowan, Circuit Judge: In Thompson v. Washing­

ton, 497 F.2d 626 (D.C. Cir. 1973) (“ Thompson / ” ), 
this court held that tenants of low-rent public housing 
operated by the National Capital Housing Authority 
(“ NCHA” ) are entitled to receive notice and an oppor­
tunity to make written presentations prior to official 
approval of any rent increase, and the case was re­
manded to the District Court for further proceedings not 
inconsistent with our opinion, id. at 643. In Marshall v. 
Lynn, 497 F.2d 643 (D.C. Cir. 1973) (“Marshall / ” ), 
cert, denied, 419 U.S. 970 (1974), decided on the same 
day, it was held that the same procedural rights must be 
granted to tenants of a low- and moderate-income hous­
ing project constructed and financed by a private non-



a

profit corporation, the Linda Pollin Memorial Housing 
Corporation, pursuant to 1221(d )(3 ) of the National 
Housing Act, if the project received both FHA mortgage 
insurance and below-market-interest-rate loans. A re­
mand was made to the District Court to determine 
whether the project in fact was given below-market- 
interest-rate loans and, if so, “ to enter an appropriate 
order effecting the procedural rights of tenants . . .
Id. at 648.

These two cases are now before this court on appeals 
by the two groups of tenants from the respective deci­
sions of the District Court upon remand. The issue in 
each is whether the District Court improperly limited the 
scope of the equitable relief awarded to the tenants.

I
The essential point of contention is the degree to which 

rent increases effectuated prior to this court’s decisions 
in Thompson I and Marshall I, without the procedural 
safeguards set forth in those opinions, must now be 
undone. In each of the cases at bar, the tenants unsuc­
cessfully attempted to block what later proved to be 
improperly processed rent increases scheduled to go into 
effect in 1970. The complaint in Thompson was filed in 
the District Court in October 1969 by the named ap­
pellant on his own behalf and on behalf of approximately 
6,000 public housing tenants and their families, seeking 
declaratory and injunctive relief against a rent increase 
by NCHA intended to take effect in January 1970.1 On 
December 24, 1969, the District Court denied a pre-

1 The complaint named as defendants the current Mayor of 
the District of Columbia, Walter E. Washington, who was 
then a Commissioner of the District; several officials of 
NCHA; and the Secretary of the Department of Housing and 
Urban Development ( “ HUD” ) and two of his subordinates.



4

liminary injunction, and on November 25, 1970, this 
court left that action undisturbed on the ground that 
the tenants were unlikely to prevail on the merits. 
McKinney v. Washington, 442 F.2d 726 (D.C. Cir. 1970). 
Thereafter, on October 15, 1971, the District Court dis­
missed Thompson’s complaint. Thompson then took the 
appeal which resulted in this court’s decision in Thomp­
son I.

The complaint in Marshall was filed on July 30, 1970, 
on behalf of a class defined as all tenants of the Linda 
Pollin Memorial Housing Project, to enjoin implementa­
tion of a rent increase otherwise scheduled to go into 
effect on August 1, 1970.2 The District Court did not 
prevent the increase in rents from being collected, but 
did grant the tenants a temporary restraining order 
and preliminary injunction which required that the 
amount of the increase be placed in an interest-bearing 
escrow account. However, on July 15, 1971 the District 
Court, relying heavily on this court’s decision in Mc­
Kinney v. Washington, supra, granted summary judg­
ment in favor of the defendants, and several days there­
after ordered that the funds in the escrow account be 
disbursed to the non-profit owner. The tenants appealed 
the grant of summary judgment, but did not seek a stay 
of the District Court’s order, nor an injunction during 
the pendency of the appeal, to preserve the escrow ac­
count previously established.

This court’s decisions in Thompson I  and Marshall I 
upheld the merits of the tenants’ claims to an op­
portunity to be heard on proposed rent increases, and 
reversed the District Court’s judgments in favor of the

2 Defendants eventually included the Secretary of HUD; 
officials of the Federal Housing Administration ( “ FHA” ), 
now a division of HUD; the Linda Pollin Memorial Housing 
Corporation; and the company which managed the Pollin 
Project.



5

housing officials. They did not address the nature of the 
relief to be awarded to the tenants. Upon remand to 
the District Court, tenants’ counsel3 sought the follow­
ing equitable relief in each of the two cases: (1) rein­
statement of the rent schedule in force prior to the dis­
puted increase in 1970; (2) recalculation of rents for the 
period following that increase, utilizing the procedures 
for tenant participation set out in Thompson I and Mar­
shall I, or their equivalent, and restitution of such 
amounts as might be determined to have been excessive; 
and (3) an injunction ordering that all future rent in­
creases accord the procedural rights contemplated by 
Thompson I and Marshall I. In both cases, however, the 
District Court declined to reinstate the pre-1970 rents 
or require reprocessing of the disputed rent increases; 
denied restitution; and limited relief to a declaratory 
judgment that future rent increases must be processed 
under procedures complying with the requirements set 
out in Thompson I  and Marshall I. Thompson v. Wash­
ington, Civil No. 3000-69 (D.D.C., June 6, 1975) ; Mar­
shall v. Lynn, Civil No. 2288-70 (D.D.C., June 27, 1975).

Meanwhile, on September 11, 1974, the Department of 
Housing and Urban Development, which has statutory 
responsibility for approving any rent increase by a local 
public housing authority such as NCHA, see 42 U.S.C. 
§ 1401 (1970), or a § 221(d) (3) project such as the 
Linda Pollin Project, see Marshall I, 497 F.2d at 645-46, 
responded to Thompson I and Marshall I by promulgat­
ing regulations, effective in October 1974, guaranteeing 
tenants affected by subsequent rent increases the pro­
cedural rights mandated by those decisions. 39 Fed. 
Reg. 32736, as amended, 24 C.F.R. Parts 401, 410. At 
oral argument, tenants’ counsel informed us that there

3 The two groups of tenants apparently have been repre­
sented by the same attorney, at least since Thompson I and 
Marshall I.



6

has been a recent rent increase at the Pollin Project, 
utilizing the procedures established by the regulations. 
Thus, the rent schedule currently in effect at the Pollin 
Project is in full compliance with the requirements 
established by this court; and the only issue now before 
us in the Marshall case is whether rents for the time 
period prior to the properly processed increase must be 
recalculated, in order to award restitution of any 
amounts found to have been excessive.

In contrast, counsel represented to us that the rent 
schedule applicable to tenants in NCHA projects has 
not been revised upward since the disputed increase in 
1970. By ordering only that future rent increases com­
ply with the requirements of Thompson I, the District 
Court in the Thompson case appears to have left in ef­
fect a rent schedule which is the result of a defective 
decisionmaking process. In the Thompson case, there­
fore, we must decide not only whether reprocessing of 
rents charged in the past is necessary in order to allow 
restitution of any excess amounts paid, but also whether 
the current rent schedule must be reevaluated, using 
proper procedures for tenant participation, to ensure 
that tenants paying rents under that schedule will not be 
overcharged in the future.

In reviewing the decisions of the District Court in 
these cases, we are mindful of the broad latitude an 
equity court has in shaping relief. The District Court 
must be upheld if its actions are reasonable in light of 
all the circumstances involved. As the Supreme Court 
stated in Lemon v. Kurtzman, 411 U.S. 192 (1973) 
{ “Lemon II” ) :

In shaping equity decrees, the trial court is vested 
with broad discretionary power; appellate review is 
correspondingly narrow. . . . Moreover, . . . equi­
table remedies are a special blend of what is neces­
sary, what is fair, and what is workable. . . .



7

In equity, as nowhere else, courts eschew rigid 
absolutes and look to the practical realities and ne­
cessities inescapably involved in reconciling compet­
ing interests . . . .

Id. at 200-01 (citations and footnotes omitted).

Lemon I (Lemon v. Kurtzman, 403 U.S. 602 (1971)) 
had held unconstitutional, as a violation of the First 
Amendment’s Establishment Clause, a state statute which 
provided for reimbursement of nonpublic sectarian schools 
for certain secular educational services. Upon remand, 
the District Court enjoined payment under this statute 
for any services performed after the date of the decision 
in Lemon I, but permitted reimbursement for services 
provided prior to that date. In Lemon II, the Court up­
held the District Court’s decree, emphasizing that the 
schools had incurred expenses in reliance on the statute 
and would suffer financial hardship if reimbursement 
were denied. 411 U.S. at 203-04. The Court further 
noted that the schools’ reliance was reasonable and in 
good faith, inasmuch as “ Lemon I ‘decid[ed] an issue 
of first impression whose resolution was not clearly fore­
shadowed,’ ” 4 and was reinforced by the fact that plain­
tiffs had not pressed for an injunction suspending pay­
ments during the pendency of Lemon I. Id. at 204-07.

Since “ [restitution is essentially an equitable remedy,” 
Democratic Central Committee v. Washington Metropoli­
tan Area Transit Commission, 485 F.2d 786, 824 (D.C. 
Cir. 1973), cert, denied, 415 U.S. 935 (1974), the gen­
eral principles governing the shaping and review of equi­
table decrees are fully applicable to awards of restitu­
tion. This court has described the standards which should 
guide an equity court when a government agency has

4 411 U.S. at 206, quoting Chevron Oil Co. v. Huson, 404 
U.S. 97, 106 (1971).



8

unlawfully authorized a rate increase by a regulated 
entity, as follows: 5

Ordinarily . . .  the proper disposition on setting 
aside a rate increase unlawfully ordered by the 
[agency] would be to compel the regulated company 
to restore the entire difference between the higher 
fares collected under the invalid order and the 
amount that it would have received from the fare 
schedule previously in effect. More fundamentally, 
however, our decision in this regard is to be gov­
erned by the equitable considerations which apply 
to suits for restitution generally. The basic ques­
tion is whether “the money was obtained in such 
circumstances that the possessor will give offense to 
equity and good consicence if permitted to retain it,” 
and is “no longer whether the law would put him 
in possession of the money if the transaction were a 
new one.” Since restitution is not a matter of right, 
but is “ ex gratia, resting in the exercise of a sound 
discretion,”  it lies within our authority to direct 
restitution in an amount less than the whole sum 
of the increased fares collected under the invalid 
order, or to deny it altogether, if compelling equi­
table considerations so dictate.

Thus restitution is the appropriate remedy for illegal 
rate and rent increases unless compelling equitable con­

6 Williams v. Washington Metropolitan Area Transit Com­
mission, 415 F.2d 922, 944 (D.C. Cir. 1968) (en banc), cert 
denied, 393 U.S. 1081 (1969), quoting Atlantic Coast Line 
R.R. v. Florida, 295 U.S. 301, 310 (1935). Accord, Demo­
cratic Central Committee v. Washington Metropolitan Area 
Transit Commission, supra at 825. Williams involved a petition 
for direct review of an order by the Washington Metropolitan 
Area Transit Commission concluding that a particular rate 
of return on the D.C. Transit System’s operating revenues 
was just and reasonable. Thus, in contrast to the instant cases 
in whch we are merely providing appellate review of equity 
decrees entered by the trial courts, Williams required us to 
function as the equity court of first resort.



9

siderations dictate otherwise. Applying the foregoing- 
principles to the cases at hand, we conclude that in each 
case the District Court’s decision not to order reproces­
sing of past rents, for the purpose of awarding restitu­
tion to tenants found to have been overcharged, was 
proper. We therefore affirm the judgment of the District 
Court in No. 75-1910, Marshall v. Harris. In No. 75- 
1789, Thompson v. Washington, we reach the same con­
clusion with respect to recalculation and restitution, but 
we also conclude that the District Court’s decision to 
leave an invalidly derived rent schedule in effect for 
the indefinite future was not justified by the record 
before it. Consequently, we reverse in part the District 
Court’s judgment in that case, and remand for further 
proceedings not inconsistent with this opinion. Our rea­
soning in each case is set out in greater detail below.

II

No. 75-1910, Marshall v. Harris

After finding that the Linda Pollin Memorial Housing 
Project does receive a federal subsidy in the form of 
below-market-interest-rate loans, the District Court nev­
ertheless concluded that “ retroactive application of the 
tenants’ procedural rights in this case would be unjust 
and inappropriate by reason of the financial difficulties 
currently being experienced by the . . . Project,” and 
declined to order reevaluation and possible restitution of 
rent increases since August 1970. Marshall v. Lynn, 
Civil No. 2288-70, supra.

The Court’s conclusion was amply supported by evi­
dence in the record. An affidavit submitted by the Area 
Director of the District of Columbia Area Office of HUD 
stated his belief that reprocessing of rents, with restitu­
tion of any excess charges, would aggravate the already 
serious financial problems of the Project, and would



10

therefore not be in the best interests of either the tenants 
or HUD:

b. The costs incurred by the nonprofit mortgagor in 
providing these tenants with notice and an oppor­
tunity to submit written comments concerning 
the 1970 application, [sic] would have to be ab­
sorbed by project funds and would add to the 
deteriorating financial condition of the project.
As it now exists, the project is unable to estab­
lish an effective maintenance and repair program 
without the benefit of financial arrangements 
that have increased its financial deficit. The 
siphoning off of additional funds to provide for 
tenant participation for the review of an appli­
cation almost five years old, [sic] would not ap­
pear to be in the present tenants’ interest or in 
the interest of HUD.

c. HUD might determine that the amount of the 
1970 rent increase was not fully justified at that 
time and the Court might order a refund. The 
monies needed to provide the refund would have 
to come from project revenues or future rentals, 
as would the monies needed to trace qualified 
tenants to provide them with the refund. The 
administrative costs of providing these refunds 
would outweigh any financial benefit that these 
tenants might derive. Furthermore, a further 
drain of project revenue resulting from a re­
fund would probably lead to foreclosure action 
by HUD to protect its security interest in the 
project.

Affidavit of Harry W. Staller, Brief and Appendix for 
Government Appellees at 21.

In addition, an affidavit filed on behalf of the Linda 
Pollin Corporation summarized the Corporation’s finan­
cial statements for fiscal years 1971 through 1974 and 
characterized them as “ reveal [ing] a progressively



11

worsening financial situation”  in which steadily rising 
costs have resulted in substantial losses in every year of 
the Project’s operation. Affidavit of Conrad N. Angel, 
Brief and Appendix for Government Appellees at 16. 
The affidavit also noted that, despite the rent increases 
authorized by HUD, rental income from the Project has 
been insufficient to meet the operating and maintenance 
costs of the Project. Id. The tenants did not contest or 
refute the accuracy of any of the information contained 
in these affidavits, and proffered no proof likely to estab­
lish that the 1970 rent increase resulted in rental levels 
which were excessive under the circumstances.

As in Lemon II, the tenants’ failure to exhaust all ave­
nues for relief pending appeal undercuts the equities of 
their position, and reinforces the reliance interests of the 
Pollin Corporation. The tenants did not seek a stay of 
the District Court’s order disbursing the escrow account, 
and the funds were subsequently used to pay operating 
and maintenance expenses at the Pollin Project. Brief 
for Linda Pollin Corporation at 4; see Affidavit of Con­
rad N. Angel, supra. Certainly it does not offend “equity 
and good conscience” to withhold restitution of monies 
already spent on the tenants’ behalf by a non-profit land­
lord brought into being at the urging of the Government 
for the advancement of the public interest in adequate 
housing.

Tenants might argue that, given the decision in Mc­
Kinney v. Washington, supra, that the similar claim of 
the tenants in the Thompson case was unlikely to pre­
vail on the merits, application for a stay pending appeal 
would probably have been futile. However, rather than 
putting the Linda Pollin Corporation on notice immedi­
ately after the escrow account was disbursed, or even at 
the first status call following remand from our decision 
in Marshall I, tenants’ counsel waited until January 29, 
1975 to inform the District Court that the tenants in­



12

tended to seek restitution of all or part of the 1970 
rent increase. Indeed, the holding in McKinney illustrates 
the reasonableness of the Pollin Corporation’s reliance 
on the validity of the rent increase; like Lemon I, Mar­
shall I “ decided an issue of first impression whose resolu­
tion was not clearly foreshadowed.” See note 4 and ac­
companying text, supra.

On the record before us, we have no warrant for dis­
turbing, as deficient either in reason or equity, the Dis­
trict Court’s decision not to order reprocessing or restitu­
tion of past rents. Since the rent schedule currently in 
effect at the Pollin Project was processed with an op­
portunity for full tenant participation, and the only issue 
before us is the scope of the relief ordered with respect 
to past rents, the judgment of the District Court in No. 
75-1910, Marshall v. Harris, is affirmed in all respects.

Ill

No. 75-1789, Thompson v. Washington

Our task in reviewing the District Court’s decision in 
this case is made more difficult by the District Court’s 
failure to specify its grounds for refusing to award any 
relief from the 1970 rent increase. The District Judge, 
in an unreported order, merely stated the following:

Upon consideration of Plaintiffs’ Motion for Sum­
mary Judgment and Defendants’ Motion to Dismiss, 
. . .  it appear [s] to the Court that Plaintiffs are 
entitled to prospective relief only . . . .

Thompson v. Washington, Civil No. 3000-69, supra. 
Nevertheless, with regard to the reprocessing and pos­
sible restitution of past rents, the considerations which 
motivated the District Court are apparent from the face 
of the papers filed in support of the tenants’ motion for 
summary judgment and the opposing motion to dismiss.



13
The tenants* motion sought restitution under the prin­

ciples set out in Williams v. Washington Metropolitan 
Area Transit Commission and Democratic Central Com­
mittee v. Washington Metropolitan Area Transit Com­
mission, discussed above in Part I. In response, the 
officials of NCHA argued that “ retroactive” relief6 
from a procedurally defective rent schedule was not 
warranted in this case, since Thompson I decided an 
issue of first impression, and recalculation and res­
titution of past rents would be far more inequitable 
to NCHA than would denial of these remedies to 
the tenants. As to the balance of equities, the hous­
ing authorities asserted in particular that (1) re­
computation of rents would be virtually impossible 
since many tenants had moved out of NCHA housing 
subsequent to the rent increase, and accurate data on 
which to compute rents was no longer available; (2) the 
rent increases had not been set aside in a fund which 
could be used to supply restitution, and NCHA is hard- 
pressed to meet operating and maintenance expenses and 
does not have contingency or other funds with which to 
make retroactive payments to tenants; and (3) the rent

6 Appellees framed their argument in terms of retroactivity 
analysis, quoting at length from the Supreme Court’s decision 
in Chevron Oil Co. v. Huson, 404 U.S. 97, 106-07 (1971). 
However, as the Court recognized in Lemon II, 411 U.S. at 
199-200, determining the proper scope of an equitable decree 
is a distinct problem from the question, raised in the retro­
activity cases, of whether a new holding should be applied 
in other cases which in relevant aspects began before the new 
rule of law was announced. Even so, the Court in Lemon II 
noted that the guidelines established in the retroactivity cases 
are helpful in reviewing the retrospective reach of an injunc­
tive decree, id., and proceeded to examine the balance of 
equities, and, more particularly, the degree of reliance by the 
defendants and the extent to which the holding of Lemon I 
was foreshadowed, see id. at 201-03, 206. Thus, appellees’ 
doctrinal imprecision in no way undermines the validity of the 
factors which they relied upon in their motion to the District 
Court.



14

schedule was, in any event, only procedurally invalid, and 
did not necessarily result in excessive rental charges. 
Moreover, contended appellees, the hardship suffered by 
the tenants was slight, because in December 1969 Con­
gress enacted the so-called Brooke Amendment to the 
United States Housing Act, effective ninety days there­
after, providing that rents for public low-rent housing- 
may not exceed one-fourth of any family’s income. Pub. 
L. 91-152, Sec. 213, 83 Stat 389 (1969), now codified 
at 42 U.S.C. § 1402(1) (1970).

We think these factors formed a reasonable basis for 
denying the tenants’ request for reprocessing and resti­
tution of past rents. The tenants did not serve notice 
that they would seek restitution until January 22, 1975, 
at a calendar call in the District Court upon remand 
from Thompson I, and thus appellees neither set aside 
funds resulting from the rent increase nor collected data 
from tenants to facilitate reprocessing of the rent sched­
ule. The holding in Thompson I was no more clearly 
foreshadowed than the holding in Marshall I, and hence 
appellees’ reliance upon the previous state of the law 
was no more unreasonable here.

Perhaps most importantly, the administrative costs of 
reconstructing past events, and the restitution which 
might result, would have to come out of an NCHA bud­
get which is already severely strained. Our opinion in 
Thompson I documented the critical financial deteriora­
tion which beset NCHA in the years preceding the 1970 
rent increase, and which we characterized as a prime 
example of “ the current financial crisis generally affect­
ing public housing.” See 497 F.2d at 629-30. By October 
of 1969, NCHA’s reserve funds had been completely ex­
hausted by operating deficits, and the rent increase was 
made in order to satisfy HUD’s demand that NCHA de­
vise a rent schedule which would generate sufficient in­
come to assure NCHA’s financial stability. Earlier in



15

the year, HUD had rejected NCHA’s budget proposal 
since projected operating and maintenance costs exceeded 
projected income.

In these circumstances, reprocessing and restitution of 
past rents might well in fact redound to the disad­
vantage of tenants currently living in NCHA housing. 
Although tenants’ counsel asserts that alternative sources 
of funds for NCHA existed, and the rent increase was 
therefore unnecessary, he has alleged no facts to justify 
this claim. Moreover, while we would not concede that 
the Brooke Amendment has eliminated all hardship to 
tenants, it certainly weakens the equities in favor of 
restitution.

We are unable, however, to find sufficient support in 
the record to justify the District Court’s refusal to order 
a forward-looking reevaluation of the rent schedule which 
went into effect in 1970, in light of current conditions 
and with allowance for the tenant participation con­
templated by Thompson I, to ensure that current rents 
and rents paid in the foreseeable future are not exces­
sive. The administrative costs of reprocessing current 
rents would appear to be much lower than for recalcu­
lating past rents, since present tenants could be more 
easily notified, and current data should be more readily 
accessible. And, of course, installment of a revised rent 
schedule for the future would not entail burdensome re­
funds of past receipts out of NCHA’s current budget.

One ground that might justify avoidance of even the 
relatively moderate administrative costs involved in re­
processing the current rent schedule would be a show­
ing that such a reevaluation would be futile. The dis­
puted rent schedule sets rent primarily on the basis of 
family income and family size, instead of fixing absolute 
dollar amounts for each rental unit. But appellants’ 
counsel concedes that the current rent for most, if not



16

all, of the tenants is effectively determined by the Brooke 
Amendment and not by the current rent schedule, since 
unmodified application of that schedule would result in 
rents exceeding 25% of family income.7 Obviously, if 
the rent for all tenants would be effectively determined 
by the Brooke Amendment even if the pre-1970 rent 
schedule were reinstated— i.e., if application of the pre- 
1970 schedule, without regard to the Brooke Amendment, 
would result in rental levels for all tenants greater than 
25% of their income—then reprocessing of the 1970 
rent increase would be a totally academic exercise. On 
the other hand, if it is possible that a validly determined 
rent schedule would result in rents which are less than 
25% of some tenants’ incomes, then reprocessing would 
not be futile solely on account of the Brooke Amendment.

Assuming for the sake of argument that the Brooke 
Amendment would not make reevaluation of the current 
rent schedule futile, only a showing that the current 
schedule almost certainly does not result in excessive 
rents would be sufficient to justify leaving that invalidly 
processed schedule in effect.8 Notwithstanding our recog­
nition of the difficult financial problems confronting 
NCHA, this court held in Thompson I that tenants have,

7 The effective ceiling created by the Brooke Amendment 
may explain why no upward revision in the rent schedule has 
been sought since 1970. Of course, for tenants who pay less 
than 25% of their income, the disputed schedule has a built-in 
adjustment for inflation to the extent that inflated family in­
comes increase the amount of rent due.

8 We have assumed throughout the accuracy of counsel’s 
representation that the 1970 rent schedule, as modified by the 
terms of the Brooke Amendment, is still in effect. If that 
schedule has in fact been superseded by a schedule processed 
under the standards for tenant participation set out in Thomp­
son I or in HUD’s regulations implementing that decision, 
then reevaluation of the current rent schedule of course would 
not be required under our reasoning.



17

to the degree and in the manner indicated in that 
opinion, a right to participate in the decisionmaking 
process leading up to a rent increase. Although the 
current rent schedule implicates greater reliance in­
terests than would future rent increases, we must be 
careful not to give short shrift to the functional ra­
tionale underlying Thompson I, that is to say, the pos­
sibility that tenants will bring relevant information to 
bear on the propriety of a particular rent level. See 
497 F.2d at 638-39.

We therefore affirm the District Court’s decision to 
deny reprocessing and possible restitution of past rents, 
but remand for further consideration of the propriety 
of ordering a reevaluation of the rent schedule cur­
rently in effect.

The judgment of the District Court in No. 75-1789, 
Thompson v. Washington, is affirmed in part and re­
versed in part, and is remanded for proceedings not in­
consistent with this opinion.

The judgment of the District Court in No. 75-1910, 
Marshall v. Harris, is affirmed.

It is so ordered.