Gibbs v. General Motors Corporation Supplemental Reply Brief for Plaintiff Appellant
Public Court Documents
April 22, 1992
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Brief Collection, LDF Court Filings. Gibbs v. General Motors Corporation Supplemental Reply Brief for Plaintiff Appellant, 1992. e6550e59-b39a-ee11-be36-6045bdeb8873. LDF Archives, Thurgood Marshall Institute. https://ldfrecollection.org/archives/archives-search/archives-item/4f0727b5-0af2-487c-b247-f69fd1f4cb9b/gibbs-v-general-motors-corporation-supplemental-reply-brief-for-plaintiff-appellant. Accessed May 08, 2025.
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No. 91-55170
IN THE
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
LEROY GIBBS,
Plaintiff-Appellant,
v.
GENERAL MOTORS CORPORATION, et al.,
Defendants-Appellees.
On Appeal From the United States District Court
for the Central District of California
No. 85-4725-AHS
SUPPLEMENTAL REPLY BRIEF FOR PLAINTIFF-APPELLANT
LAW OFFICES OF LEROY S. WALKER
PETER J. LAURA
MICKEY J. WHEATLEY
6300 Wilshire Boulevard
Suite 1455
Los Angeles, CA 90048
(213) 966-4555
JULIUS L. CHAMBERS
ERIC SCHNAPPER
NAACP Legal Defense and
Educational Fund, Inc.
99 Hudson Street. 16th Floor
New York, New York 10013
(212) 219-1900
TABLE OF CONTENTS
Page
I. Introduction .......................... 1
II Section 101 Should Be Applied To This Case
Because It Is Procedural and Remedial . . . 4
III. The Language of the Act Applies Section 101
to Pre-Existing Claims ................. 16
IV. The Legislative History Demonstrates that
Section 101 Applies to Pre-Existing
C l a i m s .................................. 19
V. Section 101 Should Be Applied Here Because It
Is Restorative Legislation .............. 21
VI. Patterson v. McLean Credit Union Should Not
Be Applied Retroactively ................. 24
Conclusion........................................ 25
TABLE OF AUTHORITIES
Albemarle Paper Co. v. Moody, 422 U.S. 405 (1975) . . . 11
Arnold v. Maynard, 942 F.2d 761 (10th Cir. 1991) . . . 22
Atonio v. Wards Cove Packing Co. (9th Cir.)
(NOS. 91-350 6, 91-35861) 3
Auffm'ordt v. Rasin, 102 U.S. 620 (1881) ............ 13
Beatty v. United States, 191 F.2d 317
(8th Cir. 1951) 14
Benitez v. Portland General Elec.,
58 FEP Cas. 449 (D. Ore. Feb. 26, 1992) ........ 3
Bradley v. Richmond School Bd.,
416 U.S. 696 (1974) 9,11,12,19
Brown v. General Services Administration,
425 U.S. 820 (1976) 7
Bunch v. United States, 548 F.2d 336
(9th Cir. 1977) 5,6
Dargel v. Henderson, 200 F.2d 564
(Em. Ct. App. 1952) 14
DeVargas v. Mason & Hanger-Silas Mason Co.,
911 F. 2d 1377 (10th Cir. 1990).................. 22
Downs v. Blount, 170 F.2d 15 (5th Cir. 1909) ........ 14
F.D.I.C. v. New Hampshire Insurance Co.,
1991 U.S.App. LEXIS 30071 (9th Cir. 1991) . . . . 8
Federal Reserve Bank of Richmond v. Karlin,
7 F. 2d 50 (4th Cir. 1935) ...................... 14
Federal Shopping Way, Inc. v. McQuaid,
457 F. 2d 176 (9th Cir. 1972).................... 14
Fernando v. Hotel Nikko Saipan,
C.A . No. 91-0013 (D. Northern Mariana Islands,
March 7, 1992).................................. 3
Ferrero v. Associated Materials,
923 F. 2d 1441 (11th Cir. 1991) ................ 11
Cases: Page
li
Cases: Page
Friel v. Cessna Aircraft Co.,
751 F. 2d 1037 (9th cir. 1985) ................ 9,11
Grove City College v. Bell, 465 U.S. 555 (1984) . . . 22
Grummit v. Sturgeon Bay Winter Sports Club,
354 F. 2d 564 (7th Cir. 1966) ...................... 14
Hastings v. Earth Satellite Corp.,
628 F. 2d 85 (D.C.Cir. 1980) .................. 7
Idaho v. Howmet Turbine Development Co.,
814 F. 2d 1376 (9th Cir. 1987) 8
Johnson v. Railway Express Agency,
421 U.S. 454 (1975) .......................... 5,6
Kaiser Aluminum & Chemical Corp. v. Bonjorno,
108 L.Ed. 2d 842 (1990) ...................... 12,14
Koger V. Ball, 497 F.2d 702 (4th Cir. 1974) ........ 14
Kruso v. International Tel. & Tel. Corp.,
872 F. 2d 1416 (9th Cir. 1989) 9,11
Larkin v. Saffarans, 15 F. 147
(C.C.W.D. Tenn. 1883) 13
League to Save Lake Tahoe, Inc., v. Trounday,
598 F. 2d 1184 (9th Cir. 1979) 8
Lee v. Sullivan, _F. Supp.__,
1992 WL 59020 (N.D.Cal. March 26, 1992) . . . . 3
Luckenback S.S.Co. v. Norton,
106 F. 2d 137 (3d Cir. 1939) .................. 14
Mahroom v. Hook, 563 F.2d 1369
(9th Cir. 1977) ............................. 5,6
Matter of Reynolds, 726 F.2d 1430
(9th Cir. 1984) ............................. 9
McCullough v. Consolidated Rail Corp.,
1992 WL 41489 (N.D.I11.) 2
McBurney v. Carson, 99 U.S. 567 (1879) ............ 13
i i i
Cases: Page
Mozee v. American Commercial Marine Serv. Co.,
_F.2d__, 1992 U.S.App.LEXIS 9857
(7th Cir. 1992) .............................. 1,2,12
O'Hare v. General Marine Transport Corp.,
740 F. 2d 160 (2d Cir. 1984).................. 7
Orr v. United States, 174 F. 2d 577
(2d Cir 1949) 14
Patterson v. McLean Credit Union,
491 U.S. 164 (1989) Passim
Percell v. International Business Machines, Inc.,
1992 WL 46478 (E.D.N.C.) 2
Reynolds v. Martin (9th Cir.)(No. 91-15237) ........ 3
Ribando v. United Airlines, Inc., 1992 WL 55194
(N.D.I11.) 2
Sampeyreac v. United States,
32 U.S. 222 (1833)............................ 13
Sanders v. Culinary Workers Local No. 226,
_F.Supp.__, 1992 WL 25407
(D. Nev. Feb. 11, 1992) 3
Steinle v. Boeing Co., 1992 WL 45400 (D.Kan.) . . . . 2
Stender v. Lucky Stores, 780 F.Supp. 1302
(N.D.Cal. 1991) ............................... 3
Stephens v. Cherokee Nation, 174 U.S. 445 (1899) . . 13
Sturges v. Carter, 114 U.S. 511 (1885) ............ 13,15
Thompson v. Sawyer, 678 F.2d 257
(D.C.Cir. 1981) ............................... 7
Turner v. United States, 410 F. 2d 837
(5th Cir. 1969) .............................. 14
Twenty Per Cent Cases, 87 U.S. 179 (1874).......... 13
United States v. Department of Mental Health,
__F.Supp.__, 1992 WL 45359
(E.D.Cal. March 2, 1992) 3
IV
Cases: Page
United States v. Haughton, 413 F.2d 736
(9th Cir. 1969) .............................. 14
United States v. Heth,
7 U.S. (3 Cranch) 399 (1806).................. 13
United States v. Miller, 830 F.2d 1073
(9th Cir. 1987) .............................. 8
United States v. Monsanto, 858 F.2d 160
(4th Cir. 1988) 7
United States v. R.W. Meyer, 889 F.2d 1497
(6th Cir. 1989) 7
Van Allmen v. State of Connecticut
Teachers Ret. Bd.,
613 F. 2d 356 (2d Cir. 1979) .................. 7
Vogel v. Cincinnati, __F.2d__,
58 FEP Cas. 402 (6th Cir. 1992) .............. 1,2,9
Winfree v. Northern Pacific Railway,
227 U.S. 296 (1913) 13
Statutes
42 U.S.C. §1981 .................................... Passim
98 Stat. 1837 8
103 Stat. 1 8 5 ...................................... 8
Title VII, 1964 Civil Rights A c t .................. Passim
1972 Amendments to Title V I I ...................... 5,6,8
Age Discrimination in Employment Act .............. 6
Civil Rights Act of 1 9 9 1 .......................... Passim
Civil Rights Restoration A c t ...................... 22
Clean Air A c t ...................................... 8
Comprehensive Environmental Response
Compensation and Liability Act ................ 8
v
8
Financial Institutional Reform, Recovery
and Enforcement Act of 1989 . . . .
Legislative Materials
136 Cong. Rec. (1990).............................. 20,21
137 Cong. Rec. (1991) ............................ 19,20,23
S. Rep. 101-315 (1990) .......................... 23
H.R.Rep. 101-644 (1990) .......................... 21,23
Letter of Attorney General Thornburgh
to Senator Edward Kennedy, April 13, 1990 . . 21
Memorandum for the President, Oct. 22, 1990 . . . . 21
Other Authorities
H.C. Black, Interpretation of Laws (2d ed. 1911) 15
H. Broom, Legal Maxims (8th ed. 1911) ............ 16
C. Endlich, Commentary on the Interpretation of
Statutes (1888) ............................ 16
J. Kent, Commentaries on American Law ............ , 14
W.G. Myer, Vested Rights (1891) .................. , 16
J. Story, Commentaries on the Constitution (1851) . , 15
Executive Order 8802 (1941) ........................ 11
EEOC Policy Guidance (Dec. 27, 1991) .............. 17-19
50 Am. Jur. "Statutes", §482 (1944) ................ 16
59 Corpus Juris §696 (1932) ........................ 16
v i
No. 91-55170
IN THE
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
LEROY GIBBS,
Plaintiff-Appellant,
v.
GENERAL MOTORS CORPORATION, et al.,
Defendants-Appellees.
On Appeal From the United States District Court
for the Central District of California
No. 85-4725-AHS
SUPPLEMENTAL REPLY BRIEF FOR PLAINTIFF-APPELLANT
I. Introduction
As the opening supplemental briefs of both parties amply attest, there has been a
large volume of litigation regarding whether the 1991 Civil Rights Act, or specific
provisions thereof, apply to pre-Act claims. Notwithstanding the breadth and intensity of
this controversy, even the decisions on which appellees rely reject most of appellees’
arguments. The Sixth Circuit decision in Vogel v. Cincinnati,__ F.2d___ , 58 FEP Cas. 402
(6th Cir. 1992),1 and the Seventh Circuit decision in Mozee v. American Commercial Marine
i 58 FEP Cas. at 404:
Serv. Co., ___ F.2d __ , 1992 U.S. App. LEXIS 9857 (7th Cir., May 7, 1992),* 2 both
conclude that neither the language nor the legislative history of the Civil Rights Act3
indicate that the Act is inapplicable to pre-existing claims. Numerous district courts,
including all of the district court cases relied on in the Addendum to Appellee’s
supplemental brief, have reached the same conclusion.4 The circuit courts in Vogel and
Mozee held that, in the absence of clear congressional intent, the applicability of a new law
to a pre-existing claim turns on whether the law would affect the substantive rights of the
"The 1991 Act, on its face, does not make clear whether it
should be applied retroactively or prospectively.... The
legislative history does not provide any guidance on this
question."
2 1992 U.S. App. LEXIS 9857 at *10-*12:
"Section 402(a)’s language is hopelessly ambiguous as to the
issue of whether Congress intended the 1991 Civil Rights Act
to apply retroactively to pending cases.... A clear indication of
congressional intent cannot be deciphered from the legislative
history or the 1991 Act’s language."
3 Appellants adhere to our position, set forth in our Supplemental Brief and in this
brief, that the language and legislative history of the Act demonstrate that section 101
applies to pre-existing claims.
4 McCullough v. Consolidated Rail Corp., 1992 WL 41489 (N.D. 111.) pp. 3-4 ("[T]he
text is unclear ... from [the legislative history] it is difficult to discern a clear legislative
directive"); Percell v. International Business Machines, Inc., 1992 WL 46478 (E.D.N.C.), p.
3 ("[T]he court’s task is not resolved by the words of the statute ... [T]he legislative history
is not helpful...."); Ribando v. United Airlines, Inc., 1992 WL 55194 (N.D.111.), pp. 3-4
("[Tjhis court finds there to be no clear textual guidance upon which this court may rely....
From [the legislative history] it is difficult to discern a clear legislative directive"); Steinle
v. Boeing Co., 1992 WL 45400 (D. Kan. 1992), pp. 3-4 ("This Court concludes that the
language of the Act does not evidence a clear congressional intent for or against its
application in pending cases.... [T]he court concludes that the legislative history of the Act
does not clearly indicate one way or the other whether Congress intended the Act to apply
to pending cases.")
2
parties, or instead is, as to these parties, procedural or remedial. We, and apparently
appellees, agree that that is the Ninth Circuit standard where congressional intent is
unclear.5 Within this circuit,6 five of the six district court decisions on this issue have
concluded that the Civil Rights Act, or specific sections thereof, do apply to pre-existing
claims.7 The only decision to the contrary neither cites nor purports to apply the
established Ninth Circuit standard.8
This appeal also raises the separate and distinct issue of whether, in light of the
passage of the Civil Rights Act, the decision in Patterson v. McLean Credit Union. 491
U.S. 164 (1989), should no longer be applied retroactively. So far as we have been able to
ascertain this is a question of first impression, which has not been discussed by any judicial
decision since the passage of the Act in November, 1991.
5 The application of that standard to this case is discussed in part IV of our
Supplemental Brief and in part II of the instant brief.
6 Questions regarding the applicability of the Civil Rights Act to pre-existing claims
are pending before this court in two other cases. Reynolds v. Martin, (No. 91-15237), noted
in our Supplemental Brief, p. 2 n.l, was argued on May 14, 1992. Atonio v. Wards Cove
Packing Co., Nos. 91-35306, 91-35861, is scheduled for argument on June 1, 1992.
7 Slender v. Lucky Stores, 780 F. Supp. 1302 (N.D. Cal. 1991); Sanders v. Culinaty
Workers Union Local No. 226, __ F. Supp. __, 1992 WL 25407 (D. Nev. Feb. 11, 1992);
United Slates v. Department of Mental Health, F. Supp. , 1992 WL 45359 (E.D. Cal.
March 2, 1992); Lee v. Sullivan, __ F. Supp. _ , 1992 WL 59020 (N.D. Cal. March 26,
1992); Fernando v. Hotel Nikko Saipan, C.A. No. 91-0013 (D. Northern Mariana Islands,
March 7, 1992).
8 Benitez v. Portland General Elec., 58 FEP Cas. 449, 1992 U.S. Dist. LEXIS 5259 (D.
Ore. Feb. 26, 1992).
3
II. Section 101 Should Be Applied To This Case Because It Is Procedural and
Remedial
We urged in our Supplemental Brief that legislation regarding procedures and
remedies should be applied to pre-existing claims absent clear congressional directives to
the contrary. (Pp. 30-35). Appellant acknowledges that this is the controlling Ninth Circuit
standard.9
Application of section 101 would affect the instant litigation in two ways. First, it
would permit a plaintiff such as appellant to bring suit directly in federal court, without first
filing charges with EEOC or meeting the various Title VII deadlines. Second, a plaintiff
in a section 1981 action may obtain more complete relief than is available in a Title VII
action, i.e. compensatory or punitive damages. In Patterson v. McLean Credit Union, 491
U.A. 164 (1989), the Supreme Court repeatedly characterized the differences between
section 1981 and Title VII as pertaining to "procedure" and "remedial":
Interpreting § 1981 to cover postformation conduct ... would ... undermine
the detailed and well-crafted procedures of Title VII. In Title VII, Congress
set up elaborate administrative procedures.... Only after these procedures have
been exhausted ..., may [a plaintiff] bring a title VII action.... Where conduct
is covered by both § 1981 and Title VII, the detailed procedures of Title VII
are a dead letter.... We should be reluctant however, to read an earlier
statute broadly where the result is to circumvent the detailed remedial scheme
..., in a later statute ... [Pjetitioner chose to pursue only remedies under §
1981, and not under Title VII.... By reading § 1981 ... as limited ... we may
preserve the integrity of Title VII’s procedures....
9 Supplemental Brief of Appellees, pp. 19 ("this Court ... applies the well-established
presumption against retroactivity, but exempts from the general rule statutes which only
change procedures or remedies"), 23 n. 25 ("a limited exception to the general rule of
prospective application of a new statute where the law changes procedures or remedies
only"), pp. 30-31 ("This Court ... applies the normal presumption against retroactivity to
substantive changes and recognizes a limited exception to the rule for purely procedural or
remedial changes").
4
491 U.S. at 180-81 (emphasis added). Johnson v. Railway Express Agency, 421 U.S. 454,
459-62 (1975), held:
"Despite Title VII’s range ... the aggrieved individual clearly is not deprived
of other remedies he possesses and is not limited to Title VII in his search for
relief.... ’... [Remedies available ... under Title VII are co-extensive with the
individual’s right to sue under ... § 1981 ... the two procedures augment each
other ....’ .... An individual who establishes a cause of action under § 1981
is entitled to ... compensatory and ... punitive damages ... [a]nd ... is not
restricted to the ... back pay recovery under Title VII. ... Petitioner and the
United States ..., concede, as they must, the independence of the avenues of
relief respectively available under Title VII and the other § 1981.... Congress
has made available ... independent administrative and judicial remedies....
[T]he remedies available under Title VII and under § 1981 ... are separate...."
We urge that Patterson and Johnson compel the conclusion that section 101 is procedural
and remedial.
(1) Appellees urge that section 101 is substantive because it broadens the types
of discrimination forbidden by section 1981.10 This argument is foreclosed by this court’s
decisions in Mahroom v. Hook, 563 F.2d 1369 (9th Cir. 1977), and Bunch v. United States,
548 F.2d 336. 339 (9th Cir. 1977). Mahroom concerned 1972 legislation which expanded
Title VII to forbid employment discrimination by the federal government, and to create a
new cause of action against federal agencies. This court held the 1972 law was procedural
and remedial because federal employment discrimination was already forbidden by other
laws:
Section 717(c) is merely a procedural statute that affects the remedies
available to federal employees suffering from employment discrimination.
Their right to be free from such discrimination has been assured for years.
10 Supplemental Brief of Appellees, pp. 27-28 and n. 27.
5
Mahroom, 563 F.2d at 1373 (emphasis in original). Bunch concerned 1974 legislation which
amended the ADEA to forbid age discrimination by the federal government, and to create
a new cause of action against federal agencies. Because such age discrimination had
previously been forbidden by other provisions, this court held:
The ADEA amendments, like the 1972 Title VII amendments, did not create
new substantive rights, but simply created new procedures and remedies for
the vindication of pre-existing rights.
Bunch, 548 F.2d at 339. Appellees do not deny that federal and state law forbade the acts
of discrimination which they are alleged to have committed. Under these circumstances
the practical effect of section 101, like the provisions in Mahroom and Bunch, is merely to
supplement the available remedies.
(2) Appellees appear to suggest that section 101 is "substantive" because it
authorizes awards of compensatory and punitive damages, while Title VII authorizes only
back pay awards.11 But statutes regarding the quantum of monetary relief to be awarded
are by definition legislation regarding remedies. The Supreme Court decisions in Patterson
and Johnson expressly described the broader monetary relief available under section 1981
as remedial. The decisions of this court presuming the applicability to pre-existing claims
of new remedies surely include changes which increase the remedy available as well as
legislation which reduces remedies. Indeed, Mahroom was just such a case, because the
1972 amendments to Title VII for the first time expressly authorized back pay awards
against federal agencies, whereas "it was doubtful that back pay" could have been awarded
11 Id. pp. 27, 33.
6
by the courts against federal agencies prior to 1972. Brown v. General Services
Administration, 425 U.S. 820, 826 (1976).
The courts of appeals have repeatedly applied to pre-existing claims new legislation
providing an additional monetary remedy to enforce already established substantive
prohibitions. Hastings v. Earth Satellite Corp., 628 F.2d 85, 92-94 (D.C. Cir. 1980) (applying
to pre-Act claim law eliminating cap on damages);12 Thompson v. Sawyer, 678 F.2d 257,
278-96 (D.C. Cir. 1981) (applying to pre-Act claim law authorizing recovery of liquidated
compensatory damages); O’Hare v. General Marine Transport Corp., 740 F.2d 160, 171 (2d
Cir. 1984) (additional remedy of double interest and liquidated damages); United States v.
Monsanto, 858 F.2d 160, 175-76 (4th Cir. 1988) (additional remedy of pre-judgment
interest); United States v. R.W. Meyer, 889 F.2d 1497, 1505-06 (6th Cir. 1989) (additional
remedy of pre-judgment interest); cf Van Allmen v. State of Connecticut Teachers Ret. Bd.,
613 F.2d 356, 360 (2d Cir. 1979) ("simply asserting that financial payments are unforeseen
does not mean they will produce ’manifest injustice’").
(3) Appellees urge, in the alternative, that even if section 101 is procedural and
remedial, the rule favoring application of procedural and remedial changes in the law is
12 The court explained:
"The existence of the $24,000 ceiling in effect allowed the
employer to avoid the responsibility for the full costs associated
with his enterprise because it deprived his employees of
compensation.... Removing the artificial ceiling, therefore,
creates no injustice. It instead removes an obstacle to fair
treatment...."
7
irrelevant because other provisions of the Civil Rights Act will affect the substantive rights
of other litigants. Appellees note, for example, that section 107 of the Act for the first time
forbids race based adjustments in the scores of job related tests.13
This argument is precluded by numerous decisions of this court. For example,
Mahroom applied to pre-existing claims section 717 of the 1972 Amendments to Title VII,
without regard to the fact that other provisions of the same statute were clearly substantive.
Section 2 of the 1972 Amendments, for example, expanded the coverage of Title VII to
forbid for the first time discrimination on the basis of sex, religion and national origin by
employers with 15-24 employees.14 Other decisions of this court applied to pre-existing
claims procedural and remedial section or subsections that were part of statutes with
numerous substantive provisions. See, e.g., United States v. Miller, 830 F.2d 1073, 1075-76
(9th Cir. 1987) (Comprehensive Crime Control Act of 1984, 98 Stat. 1837) (statute is 362
pages long); F.D.I.C. v. New Hampshire Insurance Co., 1991 U.S. App. LEXIS 30071 (9th
Cir. 1991) (FIRREA, 103 Stat. 185) (more than 100 separate sections); Idaho v. Howmet
Turbine Component Co., 814 F.2d 1376, 1378 (9th Cir. 1987) (amendment to
Comprehensive Environmental Response Compensation and Liability Act); League to Save
Lake Tahoe, Inc. v. Trounday, 598 F.2d 1164, 1172 (9th Cir. 1979) (1977 Clean Air Act
amendments).
(4) Appellees urge that, even if section 101 does not affect their substantive
rights, it might affect the substantive rights of other defendants. But the touchstone of this
13 Supplemental Brief of Appellees, pp. 27, 33.
14 Compare 86 Stat. 103 with 78 Stat. 247.
8
court’s decisions is whether application of a provision to a particular pre-act claim would
affect the substantive rights of the parties. See, e.g., Friel v. Cessna Aircraft Co., 751 F.2d
1037, 1039 (9th Cir. 1985) ("No conduct on the part of either party would have differed if
the statute had been in effect at the time...."); Kruso v. International Tel. & Tel. Corp., 872
F.2d 1416, 1425 (9th Cir. 1989) (same); Matter o f Reynolds, 726 F.2d 1430, 1424 (9th Cir.
1984) (key consideration is "the impact of the change in the law upon the rights of the
parties"). In Vogel the Sixth Circuit held that the dispositive issue was whether the
application of the 1991 Act would affect the substantive rights "of the parties to this
action."15 Appellees themselves repeatedly refer to the standard under Bradley v.
Richmond School Bd., 416 U.S. 696 (1974), as turning on what impact a new law would
have on the rights of "the parties."16
If, as we urge, the only effect of section 101 in the instant litigation is procedural
and remedial, it is difficult to imagine why application of that section here should be denied
simply because some other section of the Act, or this section in some hypothetical context,
might affect the substantive rights of some other litigant. If the Civil Rights Act did affect
the substantive rights of appellees in this case, surely they would object, and with good
reason, if the court were to apply the Act to appellees merely because the application of
other provisions to other litigants might be procedural and remedial.
15 58 FEP Cas. at 404.
16 Supplemental Brief of Appellees, pp. 25-27.
9
(5) Appellees insist that it would be "manifestly unjust" to apply section 101 in
the instant case.17 Indeed, appellees plead throughout their brief that a terrible injustice
would be done if appellant were merely accorded a day in court to prove his allegations of
racial discrimination. Permitting a trial on the merits, appellees insist, would be "patently
unfair"18 and "doubly unfair,"19 because "it is unfair to change the rules of the game
midway through the contest".20
These protestations bear no relationship whatever to the actual circumstances of this
litigation. The complaint in this action alleges intentional racial discrimination in
employment. It is a moral certainty that every official of the General Motors Corporation
knew full well at all times that such racial discrimination was entirely unlawful. Had the
district court not erroneously dismissed this case, the claims would have been tried under
prevailing § 1981 principles prior to the June 1989 decision in Patterson. Appellees seek
to avoid liability for discriminatory acts that occurred in 1982-85 on the ground that,
between June 1989 and November 1991, the now overturned decision in Patterson
precluded most section 1981 actions. We do not question appellees’ right to seek to invoke
the temporary defense windfall created by Patterson. But appellees’ brief reads at times as
though employers have a right to expect that courts will create, expand, or at least preserve
remedial defects which will obstruct enforcement of the nation’s anti-discrimination laws.
17 Supplemental Brief of Appellees, pp. 25-27.
18 Id. at 26.
19 Id. at 34.
10
"[Ojne cannot have a vested right in a state of the law which left the injured party without,
or with only a defective remedy." Ferrero v. Associated Materials, 923 F.2d 1441, 1446 (11th
Cir. 1991).
Appellee’s argument regarding the application of Bradley is clearly incorrect.
Appellees contend "Bradley counsels against" applying a new law unless one of the litigants
is a government entity.21 To the contrary, Bradley favors application of new laws to pre-
Act claims where litigation concerns matters "of great national concern." 416 U.S. at 719.
The Supreme Court itself has described "eradicating discrimination throughout the economy
and making persons whole for injuries suffered through past discrimination" as "[ijmportant
national goals." Albemarle Paper Co. v. Moody, 422 U.S. 405, 417, 421 (1975). This court
has repeatedly applied new laws to pre-existing litigation among private parties. Kniso v.
International Telephone & Telegraph, 872 F.2d 1416 (9th Cir. 1989); Friel v. Cessna Aircraft
Co., 751 F.2d 1037 (9th Cir. 1985). Appellees object that it would be inappropriate under
Bradley to impose on General Motors "new legal requirements." The requirements of
section 101 -- that appellees not discriminate in employment on the basis of race -- date,
at the least, from the adoption of the 1964 Civil Rights Act. As a federal contractor,
General Motors has in fact been forbidden to discriminate since the issuance in 1941 by
President Roosevelt of Executive Order 8802.
(6) Finally, appellees appear to suggest that the panel deciding this case should
reject the established Ninth Circuit distinction between substantive and procedural/remedial
laws, and refuse to apply any new laws to existing litigation absent an express congressional
21 Id. at 25.
11
directive to do so. This suggestion should not be followed for several reasons. First, the
distinction between substantive and procedural/remedial laws is the controlling law in this
circuit, which no panel is at liberty to disregard. If that distinction is to be overthrown, it
must be by the Ninth Circuit en banc. Second, as the Seventh Circuit emphasized in
Mozee, the lower courts have no authority to disregard a Supreme Court decision, in this
instance Bradley, which the Supreme Court itself has deliberately declined to overrule.
1992 U.S. App. LEXIS 9857 at *17-*18, (citing Rodriguez de Quijas v. Shearson/American
Express, 490 U.S. 477 (1989)).
Third, the vitality of this circuit’s established standards is a matter whose importance
reaches far beyond the Civil Rights Act. The overwhelming majority of decisions in this
circuit and elsewhere applying Bradley are not private civil rights cases. We set forth in
Appendix B a list of the 19 decisions of this court which during the last decade applied new
laws to pre-existing claims. None of these decisions involved private civil rights litigation.
Over the course of the last decade the litigant which has invoked Bradley most often and
most insistently has been the United States Department of Justice. We reproduce in the
Appendices C-H six Justice Department briefs filed within the last two years defending and
seeking to apply the decision in Bradley.
Fourth, Justice Scalia’s concurring opinion in Kaiser Aluminum & Chemical Corp. v.
Bonjomo, 108 L.Ed.2d 842 (1990) on which appellees rely, is historically inaccurate. The
history of this issue is voluminous, and we summarize it only briefly. The Supreme Court
decisions disfavoring "retroactive" application of legislation were, from the outset, limited
12
to, indeed understood to refer only to, legislation affecting vested rights.22 New legislation
regarding remedies and procedures was always treated differently by the Supreme Court.
The Court observed in 1833,
Almost every new law, providing a new remedy, affects and operates upon
causes of action existing at the time the law is passed.... It therefore forms
no objection to the [statute in question] that the cause of action existed
antecedent to its passage, so far as it applies to the remedy, and does not
affect the right.
Sampeyreac v. United States, 32 U.S. 222, 239 (1833). The Supreme Court routinely
interpreted new legislation regarding remedies to apply to pre-existing claims.23 In 1913
the Court held that remedial statutes were "exceptions" to any presumption against applying
new laws to existing claims, noting "the extensive effect which courts have given to remedial
statutes, applying them ... to the past as well as the future." Winfree v. Northern Pacific
Railway, 227 U.S. 296, 301 (1913).
The lower courts have recognized for a century this circuit’s distinction between
substantive and procedural/remedial laws. An 1883 decision observed that
both in the civil and common law, the repugnance to retrospective legislation
was not understood to extend to remedial legislation.... [Particularly should
this be so where new remedies are given.
Larkin v. Saffarans, 15 F. 147, 149-50 (C.C.W.D. Tenn. 1883). Forty years ago the District
of Columbia Circuit noted:
See, e.g., United States v. Heth, 7 U.S. (3 Cranch) 399, 414 (1806) ("vested
rights"); Twenty Per Cent Cases, 87 U.S. 179, 187-88 (1874) ("vested rights"); Auffm ’ordl v.
Rasin, 102 U.S. 620 (1881) ("vested lights").
23 Me Burney v. Carson, 99 U.S. 567, 569 (1879) ("It is a remedial statute"); Sturges v.
Carter, 114 U.S. 511, 518 (1885) ("a new remedy"); Stephens v. Cherokee Nation, 174 U.S.
445, 477 (1899) ("A new remedy".)
13
The general rule of course is that statutes ordinarily will be presumed to have
only a prospective and not a retroactive operation unless a contrary legislative
intent is apparent. But this rule does not apply to statutes which effect
merely changes in remedies or modes of procedure for enforcing existing
liabilities.
Beatty v. United States, 191 F.2d 317 (8th Cir. 1951).24
Justice Scalia’s opinion in Bonjomo seriously misrepresents the views of nineteenth
century authorities on this issue. Justice Scalia in Bonjomo quotes Chancellor Kent’s
statement that "it cannot be admitted that a statute shall, by any fiction or relation, have
any effect before it was actually passed." Kaiser Aluminum v.Bonjorno 108 L.Ed.2d at 865,
quoting J. Kent, Commentaries on American Law *455. But Kent goes on to explain that
his objection is to a law "affecting and changing vested rights", and emphasizes that the
doctrine quoted by Scalia
is not understood to apply to remedial statutes, which may be of a
retrospective nature, provided they do not impair contracts, or disturb
absolute vested rights, and only go to confirm rights already existing, and in
furtherance of the remedy ... adding to the means of enforcing existing
obligations.
Commentaries on American Law at *455-*456 (Emphasis added). Justice Scalia quotes
Justice Story’s statement that
"4 See also Koger v. Ball, 497 F.2d 702, 705 (4th Cir. 1974) (decided two weeks before
Bradley) ("procedural statutes that affect remedies are generally applied to cases pending
at the time of enactment. Of course, retrospective application is not allowed when it will
work a manifest injustice by destroying a vested right"); Federal Shopping Way, Inc. v.
McQuaid, 457 F.2d 176, 180 (9th Cir. 1972); United States v. Haughton, 413 F.2d 736, 738
(9th Cir. 1969); Turner v. United States, 410 F.2d 837, 842 (5th Cir. 1969); Grummit v.
Sturgeon Bay Winter Sports Club, 354 F.2d 564, 568 (7th Cir. 1966); Dargel v. Henderson, 200
F.2d 564, 566 (Em. Ct. App. 1952); Orr v. United States, 174 F.2d 577, 580 (2d Cir. 1949);
Luckenbach S.S. Co. v. Norton, 106 F.2d 137, 138 (3d Cir. 1939); Federal Reserve Bank of
Richmond v. Karlin, 7 F.2d 50, 52 (4th Cir. 1935); Downs v. Blount, 170 F.15, 21 (5th Cir.
1909).
14
retrospective laws are ... generally unjust; and ... neither accord with sound
legislation nor with the fundamental principles of the social contract.
108 L.Ed.2d at 865, quoting J. Story, Commentaries on the Constitution, § 1398 (1851). But
Story defined "retrospective law", not to refer to any new statute affecting any pending case,
but more narrowly as a
statute which takes away or impairs vested rights acquired under existing
laws, or creates a new obligation, imposes a new duty, or attaches a disability,
in respect to transactions or considerations past.
Society v. Wheeler, 1 Gall. 139 (1814). Over a century ago the Supreme Court read Story’s
definition to mean that a statute providing a new remedy to enforce an existing right was
not, even as applied to a pre-Act violation, a "retroactive law". Sturges v. Carter, 114 U.S.
511, 519 (1885).
These distinctions were analyzed in Black’s Interpretation of Laws (2d ed. 1911), by
the celebrated author of Black’s Law Dictionary. Black summarized "the General Rule" to
incorporate certain established exceptions:
Except in the case of remedial statutes and those which relate to procedure
in the courts, it is a general rule that acts of the legislature will not be so
construed to make them operate retrospectively....
(P. 385). A different rule of construction applied to statutes creating new remedies:
Remedial statutes are to be liberally construed; and if a retrospective
interpretation will promote the ends of justice and further the design of the
legislature in enacting them, or make them applicable to cases which are
within the reason and spirit of the enactment, though not within its direct
words, they should receive such a construction, provided it is not inconsistent
with the language employed.... In the class of statutes which may be
construed retrospectively are those which create a new remedy, or enlarge the
existing remedy for existing causes of action.
15
(Pp. 404-410). Numerous other authorities endorsed this distinction in the late nineteenth
and early twentieth centuries.25
III. The Language of the Act Applies Section 101 to Pre-Existing Claims
Appellees contend that "the phrase ’take effect on the date of enactment’ must be
prospective in nature," because "take effect" is commonly defined to mean "to become
operative ... to produce a result."26 Insofar as the Civil Rights Act is procedural and
remedial, however, this very definition supports the conclusion that the Act applies to pre
existing claims. A procedural or remedial provision specifies how a judge (or in some
instances a jury) is to process and remedy a claim seeking redress for unlawful behavior.
The question at issue in the instant appeal is whether the courts will permit appellant to
utilize the remedies afforded by amended section 1981 to redress the alleged acts of
discrimination. The Civil Rights Act embodies a directive to the courts to permit use of
such remedies, a directive which is "operative" on the courts after November 21, 1991. We
do not contend that section 101 was intended to somehow "produce a result" in the 1980’s,
when the alleged discrimination occurred. We urge only that section 101 was intended,
after November 21, 1991, to "produce a result" in the federal courts, to wit that litigants
would be permitted to utilize the amended section 1981 remedial scheme.
25 C. Endlich, Commentary on the Interpretation of Statutes, 362-67, 386-87, 411, 412
(1888); W.G. Myer, Vested Rights, 18 (1891); H. Broom, Legal Maxims, 27 (8th ed. 1911);
59 Corpus Juris § 696, 700, pp. 1171-74 (1932); 50 Am. Jur. "Statutes", § 482, pp. 505-06
(1944).
26 Supplemental Brief of Appellees, pp. 3-4.
16
Appellees also rely on the EEOC Policy Guidance of December 27, 1991.27 The
most important thing about the Policy Guidance is what it is not — it does not purport to
be an interpretation of the actual meaning or intent of the Civil Rights Act with regard to
pre-existing claims. The Policy Guidance concludes that the statutory language actually
supports application of the law to pre-existing claims, albeit not conclusively:
Two sections of the Act contain specific exemptions for pre-Act conduct,
arguably suggesting that the remaining provisions of the Act, including
section 102, are to be applied to pending cases. Section 109(c) [and] ...
Section 402(b) .... While the above sections may create an inference that the
remainder of the Act has retroactive effect, it cannot be said that "the []
language [of those sections] requires the result."28
The Policy Guidance does not purport to find the legislative history supports non
application, and clearly does not regard Senator Dole’s memorandum as authoritative:
[T]he legislative history offers conflicting views on the retroactivity of the Act
and does not conclusively resolve the issue. Compare, e.g., .... (statement of
and interpretative memorandum submitted by Senator Danforth) ... (section-
by-section analysis submitted by Senator Dole) ... (document submitted by
Senator Dole) ... (statements of Senators Durenberger and Simpson) with ...
(statement of Senator Kennedy) ... (statement of and exhibit submitted by
Senator Kennedy.)29
This discussion of the language and legislative history of the Act comes to no conclusion
as to whether the Act applies to pre-existing claims.
The balance of the Policy Guidance deals neither with the actual intent of Congress
nor with any substantive EEOC policy regarding the desirability of awarding damages for
27 Supplemental Brief of Appellees, p. 16.
28 Policy Guidance, pp. 3-4.
29 Policy Guidance, p. 4.
17
pre-existing claims. Rather, the remaining EEOC analysis discusses only the judicial
precedents. Here too the Commission finds the precedents conflicting and inconclusive:
One could argue that employers would indeed suffer manifest injustice if they
were required to pay damages for conduct before the law provided for such
a penalty. However, it could also be argued that, in light of the public
concerns inherent to Civil Rights Act litigation, requiring employers to pay
unforeseen damages for unlawful discrimination is not manifestly unjust.
Thus, in light of the ambiguity in legislative history and Supreme
Court precedent, the issue of whether the damages provisions in the new Act
should be applied retroactively is much in question.30
In sum, almost all of the Policy Guidance is devoted to explaining that the EEOC is unsure
of the meaning of the statutory language, of the significance of its legislative history, or of
the direction of the relevant judicial decisions.
The Commission’s operative decision and reasoning is to be found in the two
sentences at the end of the Policy Guidance:
Bowen represents the Supreme Court’s more recent holding on this issue, and
the Commission will follow the dictates of that case with regard to the
retroactivity of the damages provision. Accordingly, the Commission will not
seek damages in charges filed prior to enactment of the Act, or in post-Act
changes that challenge pre-Act conduct.31
These sentences purport to interpret, not the Civil Rights Act, but Bowen, concluding that
Bowen, if it controls, would "dictate]" that section 102 not be applied to pre-existing claims.
Even here the Commission follows Bowen, not because it believes the decision is the better
statement of the law, but merely because that decision is the "more recent". It would surely
30 Policy Guidance, pp. 6-7 (footnotes omitted).
31 Policy Guidance, p. 7.
18
be inappropriate to attach significance to any interpretation of Bradley and Bowen by the
members of the EEOC, particularly since the Commissioners are not required to be, and
most in fact are not, lawyers." As is set forth in Appendices C-H, the Department of
Justice is currently arguing on behalf of other federal agencies that Bradley remains good
law.
IV. The Legislative History Demonstrates That Section 101 Applies to Pre-Existing
Claims
Appellees misapprehend in several important respects the legislative history of the
1991 Act:
(1) Appellees assert that Senator Kennedy’s views are not "meaningful" because
he was not one of the "legislators who crafted ... the compromise."32 In fact, however, the
compromise was labeled by both sides as the "Danforth-Kennedy Substitute".33 The final
1991 debates are replete with references to Senator Kennedy as being, with Senator
Danforth, the key negotiator of the terms of the compromise bill.34
32 Supplemental Brief of Appellees, p. 17.
33 137 Cong. Rec. S 15233 (Sen. Kennedy), S 15239 (Sen. Gorton)(daily ed. Oct. 25,
1991); S 15390-91 (Sen. Bingaman)(daily ed., Oct. 29, 1991); S 15463 (Sen. Kassebaum),
S 15468 (Sen. Adams), S 15485 (Sen. Kohl), S 15490 (Sen. Durenberger)(daily ed. Oct. 30,
1991).
34 137 Cong. Rec. S 15238 (Sen. Hatch), S 15240 (Sen. Gorton), S 15276 (Sen.
Danforth)(daily ed., Oct. 25, 1991); S 15463 (Sens. Dodd and Kassebaum), S 15465 (Sen.
Harkin), S 15471 (Sen. Chafee), S 15489 (Sen. Leahy), S 15491 (Sen. Kerrey), S 15495
(Sens. Dixon and Danforth), S 15496 (Sen. Akaka), S 15497 (Sen. Wellstone), S 15498
(Sen. Dole)(daiIy ed. Oct. 30, 1991).
19
(2) Appellees assert that Congressman Edwards was neither a sponsor of the
legislation nor "a key figure in crafting the bill".35 In fact Congressman Edwards was a
sponsor of the final compromise36, and was one of the floor managers of the 1991 bill.37
(3) Appellees note that Senator Dole placed in the Congressional Record a
written statement suggesting that section 402(b) did not provide treatment for the Wards
Cove company different from that accorded other employers under the Act.38 This written
statement was only printed in the Congressional Record the day after the Senate vote.
What Senator Dole actually said aloud on the floor of the Senate prior to the vote was
precisely the opposite, that section 402(b) contained "[ljanguage exempting the Wards Cove
Packing Co."39
(4) The vetoed 1990 bill contained two types of provisions regarding pre-Act
claims; some dealt with cases still pending on the day of enactment, while others would
have required that final judgments be reopened. Appellees, after summarizing the
provisions regarding pending cases, state "President Bush cited these ’unfair retroactivity
rules’ as one of his reasons for vetoing that bill. See 136 Cong. Rec. s 16562."40 In fact,
35 Supplemental Brief of Appellees, p. 17.
30 137 Cong. Rec. H 9526 (daily ed. Nov. 7, 1991).
37 1 37 Cong. Rec. H 3849, H 3849-H 3863 (daily ed. June 4, 1991).
38 Supplemental Brief of Appellees, pp. 9-10.
39 137 Cong. Rec. S 15953 (daily ed. Nov. 5, 1991)(emphasis added).
40 Supplemental Brief of Appellees, p.6.
20
however, President Bush did not "cite" the particular provisions listed by appellees, either
at p. S 16562 or anywhere else.
(5) The President’s veto was explained in an accompanying memorandum from
the Attorney General, who stated that the President objected to applying the new law "to
cases already decided".41 Appellees suggest the Attorney General meant to refer to cases
still pending on appeal. The Attorney General’s remark, however, was merely reiteration
of the Administration’s objections to "upsetting final judgments".42 Even conservatives
understood the Attorney General’s objections to be limited to final judgments.43 Senator
Hatch, who was the leading supporter of the Administration during the 1990 debates
regarding the veto, stated expressly that he favored legislation that would overturn Patterson
and be applicable to Brenda Patterson’s own pending litigation.44
V. Section 101 Should Be Applied Here Because It Is Restorative Legislation
Appellees misapprehend the holdings of the well reasoned decisions, cited in our
earlier brief, which presume restorative legislation applicable to pre-existing claims.
Appellees mischaracterize these cases as purporting to hold that subsequent congressional
41 Memorandum for the President, Oct. 22, 1990, p.10.
42 Letter of Attorney General Thornburgh to Senator Edward Kennedy, April 3, 1990,
p.10 (emphasis added).
43 See H.R.Rep. 101-644, pt.2, p.71 (1990) (Additional views of Rep. Sensenbrenner,
et al.).
44 136 Cong. Rec. S 16565 (daily ed. Oct. 24, 1990):
"This [vetoed] bill ... is an employer-employee relations bill, except for the
overrule of the Patterson versus McLean case which would take care of
Brenda Patterson. We are prepared to do that right now."
21
action somehow proves that earlier Supreme Court decisions "misconstrued the actions of
a prior Congress."45 Appellees argue that any such earlier Supreme Court decision is
dispositive as to the meaning of the prior law, and appellees thus insist that there could be
no such thing as "restorative legislation."46
The problem which the cases at issue in fact address is a different one — legislation
that is "restorative" in the sense that it reestablishes the rule of law which existed under
prevailing precedents prior to the Supreme Court decision at issue. The lower court
decisions set forth in our earlier brief properly conclude that where Congress enacts
legislation to restore the law to where it stood under such prior precedents, Congress can
be presumed to have intended the legislation to cover litigants who acted at a time when
those precedents were still controlling.47
Congress clearly and properly understood that section 101 was "restorative" in the
sense that it returned the law to where it stood under pre-Patterson case law. The
legislative history of section 101 is less murky than some other provisions, because section
101 was relatively uncontroversial and remained essentially unchanged through the
legislative process. The Senate Report discussed the predecessor of section 101 under the
45 Supplemental Brief of Appellees, p. 35.
46 ]d- at 36.
47 The circumstances of DeVargas v. Mason & Hanger-Silas Mason Co., 911 F.2d 1377
(10th Cir. 1990) are clearly distinguishable. DeVargas concerned the applicability of the
Civil Rights Restoration Act, which overturned the decision in Grove City College v. Bell.
465 U.S. 555 (1984). The plaintiff in DeVargas sought to apply that Act, which forbad
previously lawful conduct to acts occurring after Grove City. In the instant case appellant
seeks to apply the remedial provisions of section 101 to a cause of action that arose before
Patterson. In a subsequent decision the Tenth Circuit limited DeVargas to statutes affecting
substantive rights. Arnold v. Maynard, 942 F.2d 761, 762 n.2 (10th Cir. 1991) (citing Friel).
22
heading "The Need To Restore The Prohibition Against All Racial Discrimination in the
Making and Enforcement of Contracts".48 The discussion in the first House Report was
headed "Restoring the Prohibition Against All Race Discrimination in the Making and
Enforcement of Contracts",49 and observed that "[i]n cutting back the scope of the right
to ’make’ and ’enforce’ contracts, Patterson also has been interpreted to eliminate . . .
claims that the courts had previously recognized under Section 1981."50 The second House
Report utilized the heading 'Restoring Prohibition Against All Discrimination in the Making
and Enforcement of Contracts",51 explaining that "[b]y restoring the broad scope of
Section 1981, Congress will ensure that Americans may not be harassed, fired or otherwise
discriminated against in contracts because of their race."52 In the floor debates members
of both parties and Houses described section 101 as "restoring" the law to where it had
stood prior to Patterson,53
48 S. Rep. 101-315, p. 11 (1990) (emphasis added).
49 H.R.Rep. 101-644, pt. 2, p. 86 (1990). (emphasis added).
50 Id. at 88 n.96.
51 H.R.Rep. 101-644, pt. 1, p. 42 (1990) (emphasis added).
52 Id. at 9 (emphasis added).
53 See, e.g., 137 Cong. Rec. S 15235 (Sen. Kennedy) (daily ed., Oct. 25, 1991); S 15285
(Sen. Seymour) (daily ed., Oct. 28, 1991); S 15383 (Sen. Jeffords) S 15391 (Sen. Breaux)
(daily ed., Oct. 29, 1991); S 15482 (Sen. Gore); S 15483 (Sen. Danforth), S 15489 (Sen.
Leahy) (daily ed., Oct. 30, 1991); H 9526 (Rep. Edwards) (daily ed. Nov. 7, 1991).
23
VI. Patterson v. McLean Credit Union Should Not Be Applied Retroactively
Appellees properly acknowledge that the determination whether to apply a new
decision retroactively turns in part on whether the decision "overruled clear circuit
precedent on which [a] party was entitled to rely."54 Appellees then assert:
Neither before nor after Gibbs filed his complaint herein (July 19, 1985) was
there any clear Ninth Circuit precedent interpreting and holding that Section
1981 includes within its protections on-the-job racial harassment or
discrimination in the terms and conditions of employment, including alleged
demotion or denial of promotion55
This description of Ninth Circuit case law is not correct. We set forth a representative list
of Ninth Circuit pre-Patterson decisions in Appendix A.
The retroactivity cases cited by appellees, all decided prior to the adoption of the
1991 Civil Rights Act, did not and could not consider whether enactment of the 1991 Act
rendered inappropriate retroactive application of Patterson. The very question posed by the
instant circumstances is unique. Ordinarily the issue is whether a decision, already being
applied prospectively, should also be applied retroactively. In this instance, however,
Patterson will not be applied prospectively, because it has been overturned by Congress.
With the holding in Patterson now a dead letter as to future claims, appellees urge that
Patterson be applied posthumously. For the reasons set forth in our earlier brief, we urge
that traditional judicial criteria preclude a posthumous retroactive application of a decision
which Congress has overruled.
54
55
Supplemental Brief of Appellees, p. 41, n. 42.
Id.
24
CONCLUSION
For the above reasons, the decision of the district court should be reversed, and the
case remanded for a jury trial of all discrimination claims that arose on or after July 15,
1982.
Respectfully submitted,
LAW OFFICES OF LEROY S. WALKER
PETER F. LAURA
MICKEY J. WHEATLEY
6300 Wilshire Boulevard
Suite 1455
Los Angeles, CA 90048
(213) 966-4555
JULIUS L. CHAMBERS
ERIC SCHNAPPER
NAACP Legal Defense and
Educational Fund, Inc.
99 Hudson St., 16th Floor
New York, New York 10013
(212) 219-1900
Attorneys for Plaintiff-Appellant
25
APPENDICES
A. Ninth Circuit Decisions Prior to Patterson Applying Section 1981
to Post-Formation Conduct.
B. Ninth Circuit Decisions Applying New Laws to Pre-Act Claims,
1982-1992.
C. Reply Brief of United States, United States v. Allied Corp., Civil No.
C—83 — 589 8 FMS (N.D. Cal.)
D. United States' Reply to Defendants' Oral Motion to Dismiss,
United States v. Cannon, Civil Action No. 6-91-951-3K (D.S.C.)
E. Brief of Appellee United States, United States v. Peppertree Apartments,
No. 89-7850 (11th Cir.)
F. Memorandum of the United States, United States v. Presidio Investments,
CIV-90-0063-TUC-ACM (D. Ariz.)
G. Response of the United States, United States v. Rent America, Inc., No.
89-6188-PAINE (S.D. Fla.)
H. Government's Opposition to Defendant's Memorandum, United States
v. Bostick, Crim. No. F 14117-88 (Sup. Ct. D.C.)
:
I
J
iI
!
APPENDIX A
Ninth Circuit Decisions
Prior to Patterson Applying Section
1981 to Post-Formation Conduct
(1) Jurado v. Eleven-Fifty Corp., 813 F.2d 1406, 1408, 1412 (9th Cir.
1987) (terms and conditions of employment dismissal).
(2) Mitchell v. Keith, 752 F.2d 385 (9th Cir. 1985) (dismissal).
(3) Domingo v. New England Fish Co., 727 F.2d 1429, 1434-35, 1446 (9th
Cir. 1984) (terms and conditions of employment; promotions).
(4) White v. Washington Public Power and Supply System, 692 F.2d 1286 (9th
Cir. 1982) (promotion, harassment, job segregation).
(5) Chung v. Pomona Valley Community Hospital, 667 F.2d 788, 791-92 (9th
Cir. 1982) (promotions, demotion, terms and conditions of
employment).
(6) Williams v. Owens-Illinois, 665 F.2d 918, 922, 928 (9th Cir. 1982)
(assignments, promotions, harassment, discharge).
(7) Plummer v. Weston Intern. Hotels Co., Inc., 656 F.2d 502, 502, 506 (9th
Cir. 1981) (promotion).
(8) Sethy v. Alameda County Water Dist. , 545 F.2d 1157, 1159, 1162 (9th
Cir. 1976) (en banc) (dismissal; "various episodes of alleged
racial indignity" on the job).
(9) Bowers v. Campbell, 505 F.2d 1155, 1157 and n.2 (9th Cir. 1974)
(demotion, denial of promotions, harassment, reprimands).
APPENDIX B
Ninth Circuit Decisions
Applying New Laws to Pre-Act Claims
1982-1992
San Pedro Fishermen's Welfare Trust Fund Local v. Di Bernardo, 664
F.2d 1344 , 1346 (9th Cir. 1982) (1980 amendments to ERISA).
Ward v.
amendment
Schweiker,
to Social
686 F.2d 762,
Security Act) .
764 (9 th Cir. 1982) (1980
Rivera v,
amendment
. Becerra,
to Federal
714 F.2d 887,
Unemployment Tax
896
Act)
(9th Cir. 1983) (1980
Rawlings v. Heckler, 725 F.2d 1192, 1194 (9 th Cir. 1984) (Equal
Access to Justice Act).
Matter of Reynolds, 726 F.2d 1420, 1422-26 (9th Cir. 1984) (1981
amendment to Bankruptcy Act).
United States v. Ford, 737 F.2d 1506, 1508 (9th Cir. 1984) (Equal
Access to Justice Act).
Long v. United States I.R.S., 742 F.2d 1173, 1183 (9th Cir. 1984)
(Economic Recovery Tax Act).
Friel v. Cessna Aircraft Co., 751 F.2d 1037, 1038-40 (9th Cir.
1985) (1982 amendment to Death on the High Seas Act).
Campbell v. United States, 809 F.2d 563, 569-71 (9th Cir. 1987)
(Federal Courts Improvement Act).
State of Idaho v. Howmet Turbine Component Co., 814 F.2d 1376, 1378
(9th Cir. 1987) (amendment to Comprehensive Environmental Response,
Compensation, and Liability Act).
U.S. v. Miller, 830 F.2d 1073, 1075-76 (9th Cir. 1987)
(Comprehensive Crime Control Act of 1984).
Kruso v. International Telephone & Telegraph Corp., 872 F.2d 1416,
1424-25 (9th Cir. 1989) (Judicial Improvements and Access to
Justice Act of 1988).
Nichols v. Stapleton, 877 F.2d 1401, 1403 (9th Cir. 1989) (Judicial
Improvements and Access to Justice Act).
Delta Computer Corp. v. Samsung Semiconductor & Telecommunications
Co., 879 F. 2d 662, 663-65 (9th Cir. 1989) (amendment to Federal
Arbitration Act).
la
Bryant v. Ford Motor Co., 886 F.2d 1526, 1528 (9th Cir. 1989)
(amendment to removal statute).
In re Pacific Far East Lines, Inc. 889 F.2d 242, 247 (9th Cir.
1989) (Referees' Salary and Expense Fund Act).
Commonwealth of Northern Mariana Islands v. Kawano, 917 F.2d 379,
381-82 (9th Cir. 1990) (Commonwealth Judicial Reorganization Act)
Gonzalez v. Aloha Airlines, Inc., 940 F.2d 1312, 1316 (9th Cir.
1991) (Statute of Limitations)
F.D.I.C. v. New Hampshire Insurance Co., 1991 U.S. App. LEXIS 30071
(9th Cir. 1991) (FIRREA)
2a
RICHARD B. STEWART
Assistant Attorney General
Land and Natural Resources Division
WILLIAM W. WESTERFIELD, III
KAREN DWORKIN
Environmental Enforcement Section
Land and Natural Resources Division
P.0. Box 7611
Ben Franklin Station
Washington, D.C. 20044
(202) 633-2810
RICHARD L. BEAL
Environmental Enforcement Section
Land and Natural Resources Division
U.S. Department of Justice
100 Van Ness Avenue, 22nd Floor
San Francisco, California 94102
(415) 556-9027
12 Attorneys for Plaintiff
13 IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
14
15
16
17
18
19
20
21
22
23
24
25
26
UNITED STATES OF AMERICA,
Plaintiff,
v .
ALLIED CORPORATION,
et al.,
Defendants.
AND RELATED COUNTERCLAIMS,
CROSS-CLAIMS, AND THIRD-PARTY
COMPLAINTS________________ __
UNITED STATES OF AMERICA,
Plaintiff,
v .
CHEMICAL & PIGMENT COMPANY, et al.,
Defendants.
AND RELATED CROSS CLAIMS AND
THIRD PARTY CLAIMS___________
)
)
) CIVIL NO. C-83—5898 FMS
)
)
)
)
)
)
)
)
)
)
) CIVIL NO. C —8 3—58 9 6 FMS
)
) CONSOLIDATED CASES
)
) REPLY OF UNITED STATES TO
) OPPOSITION BRIEFS OF
) DEFENDANTS TO U.S. MOTION
) ON THE APPROPRIATE STANDARD
) AND SCOPE OF REVIEW, ETC.
)
) _______ ___________
Date: December 5, 1989
Time: 2:30 p.m.
Court: Hon. Fern. Smith
OBOilJ
mar l)
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I. INTRODUCTION........................................... 1
II. SECTIONS 120 AND 211 DO NOT PREEMPT PRESIDENTIAL
AUTHORITY UNDER SECTION 104............................ 1
A. Section 211 Is Limited in Scope, and Does
Not Preempt Federal Response Authority
Elsewhere in CERCLA............................... 2
B. The President's Authority to Formulate and Take
Response Actions Was Delegated to the Secretary
of Defense........................................ 6
C. Section 120 of CERCLA Does Not Operate to Alter
the Scope and Standard of Judicial Review Under
Section 113....................................... 8
D. Section 113(j) Applied to Presidential Decisions,
Not to EPA Decisions.............................. 13
E. The Government's Claim for Cost Recovery
is Under Section 107, Not Section 106............. 16
III. THE COURT MUST APPLY SARA BECAUSE IT IS THE LAW
IN EFFECT AT THIS TIME........................
A. Bradley Correctly States the Law Applicable
to This Case......................................j_8
B. Bradlev Requires That Section 113(j) Be Applied
Be Applied to This Case............................
C. The Enactment cf Section 113(j) Did Not Change
the Standard of Review of Agency Response Actions..21
IV. DEFENDANTS' RIGHT TO DUE PROCESS IS NOT DENIED
BY APPLYING SECTION 113 (J)............................. 25
A. Defendants' Allegations of Conflict
of Interest Do Not Constitute Violations
of Procedural Due Process for a CERCLA
Remedy Decision............................
B. The Application of Section 133(j) of CERCLA
in this Case Does Not Violate Due Process..
DEFENDANTS HAVE NOT MADE A SUFFICIENT SHOWING
THAT SUPPLEMENTATION OF THE ADMINISTRATIVE RECORD IS REQUIRED................
l
FO U rf O I O l l )
M A I |j
1
2 :! A. The Administrative Record Complies With Section113 (k) of CERCLA..................... 31
3
4
B. The Administrative Record Includes All of
the Documents Generated in the Response Whichthe EPA Guidance Requires Be Included.. 34
5 i
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C. All Documents Generated in the Response Need
Not Be Included in the Administrative Record 35
7
8
D. Documents Properly Identified as Privileged Need Not Be Included in the Administrative Record...................
9
10
The Administrative Record Was Compiled toComply With Section 113(k) of CERCLAand Not as Part of An Overall LitigationStrategy.......................................... .
11 F. The Navy Did Not Act In Bad Faith.. ^
12 VI-
13
THE COURT SHOULD ISSUE PROTECTIVE ORDERS WITH RESPECT TO THE DEPOSITIONS OF DR. CULLINANE AND DR. JENKINS..........
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CONCLUSION.......
XI
OBD 113
^ A K |j
1 TABLE OF AUTHORITIES
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18
Allied-Signal, Inc, v. Luhan, et al.. Civil No.
C-89-2893 FMS (N.D. Cal. (related case)...................... 38
American Jewish Congress v. Kreps. 574 F.2d 624,
629 n. 36 (D.C. Cir. 1978)....................................11
American Paper Institute, Inc, v. American
Electric Power Service Coro.. 461 U.S. 402, 412
(1983)....................................................... 22
Anderson Bros. Ford v. Valencia. 452 U.S. 205,
217 n. 15 (1981).............................................. 18
Armstrong v. Manzo. 380 U.S. 545, 552 (1965).................30
Avoyelles Sportmen's League, Inc, v. Marsh.
715 F. 2d 897, 906 n.17 (5th Cir. 1983)....................... 16
Bradley v. Richmond School Board. 416 U.S. 696
711 (1974)....................................... 17, 18, 19, 21
Branch v. Phillips Petroleum Co.. 638 F.2d 873,
881 (5th Cir. 1981)(quoting Carl Zeiss)......................41
Buttrev v. United States. 690 F.2d 1170 (5th
Cir. 1982), cert, denied. 103 s. ct. 2087( 1983 )........................................
Camp v. Pitts. 411 U.S. 138 ( 1973)................
Campbel1 v. Untied States. 809 F.2d 563,575-77 (9th Cir. 1987)
19
20
21
22
Carl Zeiss gu:v-.g y, V-E-B. Carl Zeiss. Jena.
40 F.R.D. 318, 324-325 (D.D.C.1966), aff'd. 384
F.2d 979 (D.C. Cir. 1967, cert, denied. 389
U.S. 952 (1967)...............................
Catholic Social Services. Inc.. v. Meese,
664 F.Supp. 1378, 1382-8 3 (E.D. Ca. 1983).....
39, 40, 41
14
23 C — isen? v? Preserve overtcr. Park, inc.
v - Voloe. 401 U.S. 402, 413, 414 (1971)
24
25 Ccestal States Cas Cere-_v■ Deot. of Energy.
617 F.2d 854, 562-863, 866 (D.C. Cir. 1980).
26 Commodity Futures Trading Commission v.
i i i
form oaon)
M A H |j
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)• 113
H 13
1 gg-s.PetrP Marketing Group, ine. . 680 F.2d 573,, 577 (9th cir. 1982).....................
il ...........'I:j connallv v. Georgia. 429 U.S. 245 (1977)......
Consumer Product Safety Comm'n v. gtf
Svlvania. Inc. . 447 U.S. 102, 108 (1980)......
County of Bergen v. Dole. 620 F.Supp.
1009, 1016 (D.C.N.J. 1985), aff'd 800
F.2d 1130 (3rd Cir. 1986)....................
Dedham Water Co. v. Cumberland Farms
Dairy. Inc.. 805 F.2d 1074, 1081 (1stCir. 1986)..................................
Environmental Defense Fund. Inc, v.
Costle, 657 F.2d 275, 284-286 (D.C.
Cir. 1981)............................
Escondido Mutual Water Co. v. Federal
Energy Regulatory Commission. 692 F.2d 1223,■j 1234 (9th Cir. 1982)..........................
Florida Power and Light Co. v. Lorion. 470 U.S.
729, 105 S. Ct. 1598, 84 L.Ed. 2d. 643 (1985)..
Gjbson v. Berrvhi11. 411 U.S. 564 (1973)......
Green V. Commissioner. 707 F.2d 404, 405 (9th Cir. 1983)................
Kaiser Alypipum & Chemical Coro, v. U.S..
157 F.Supp. 939, 945-946 (Ct. Cl. 1958)
.̂ynch V.— B3h^/ 747 F.2d 528, 531 (9th Cir. 1984)....
O H — — EPA, 564 F.2d 1253 (9th Cir. 1977)..
fatter oi SQFha, 736 F.2d 1317, 1320 (9th Cir. 1984)
ilatbew? V, Eldndgp, 424 U.S. 319, 334 (1976)......
Master Pf Reynolds. 726 F.2d 1420, 1422-23 1424 (9th Cir. 1984)...................
566dFP2da ? 4 fn^ o V; " V' g ' P<?p̂ Al r ZSZZJZ,366 F.2d 242, 252 (D.C. Cir. 1977)
National Wildlife Federation v. U.S. Fnrp^t
Sem i t e , 861 F.2d I114> I118-H20 (9th Cir. 1988)
IV
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>•113A 13
NLRB v. Sears. Roebuck & Co,. 421 U.S. 132, 150
(1975) (quoting Carl Zeiss)............................... 41, 42
PhilbrooK v. Glodaett. 421 U.S. 707, 713, 95 s.
Ct. 1893, 1898, 44 L.Ed.2d 525 (1975)..................... 3, 14
Public Power Council v. Johnson. 674 F.2d 791,
793-795 (9th Cir. 1982)..........................36, 37, 38, 47
Quincv oil. Inc, v. Federal Energy Administration.
468 F.Supp. 383 , 386-387 (D. Mass. 1979)..................... 36
Rosario v. Amalgamated Ladies Garmet Cutters'
Union. Local 10. I.L.G.W.U,. 605 F.2d 1228
(2nd Cir. 1979)..............................................26
Saha Thai Steel Pipe Co.. Ltd, v. United States.
661 F.Supp. 1198, 1202 (CIT 1987)............................ 37
Save Our Wetlands. Inc, v. Sands. 711 F.2d 634,
635-642 (5th Cir. 1983).......................................
Sea Coast Anti-Pollution Leacrue v. Costle. 572 F.2d
872, 877 (1st Cir. 1978)
824 (1978).............
. cert, denied. 439 U.S.
Star Kist Foods, Inc. v. United States. 600 F.Supp.
212, 216-217 (CIT 1984).
State of Ohio v. United States Department of
Interior. 880 F.2d 43, 145-147 (D.c. cir. 1989)........
Texas Steel Co. v. Donovan. 93 F.R.D. 619. 621
(N.D. Tex. 1982).......
Tuney v. State of Ohio. 273 U.S. 510 (1927)............
United Retail & Wholesale Employee's Teamsters
Union Local Nd-_115 Pension Plan v. Yahn &
McPonnel. Inc.. 787 F.2d 128, 141 (3rd Cir. 1986),
affirmed by equally divided court. 107 S. Ct. 2171 (1987)........................................................
United States v. Hardaoe. No. 86-1401-p,
slip op. at 5 (W.D. Ok. Sept. 8, 1988)........... 16, 17, 23, 24
United Staes v. Monsanto Company. 858
F.2d 160, 164 (4th Cir. 1988)................................ 12
United Staes v. Nicolet, Inc.. No. 85-3060 slip
op. at 7, (E.D. Pa. May 12, 1987)........................ 15 20
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United States v. Northeastern Pharmaceutical
& Chemical Co,. Inc. (''NEPACCO”) . 810 F.2d 726,
748 (8th Cir. 1986), cert, denied. 108 S. Ct.
146 (1987).......................................
United States v. Ottati & Goss, Inc.. 694
F.Supp. 977, 1001 (D.N.H. 1988), appeal filed.
Nos. 89-1063 and 89-1065 (1st Cir. 1989)......
22
23, 24
United States v. .Reilly Tar & Chemical Corn..
6 546 F.Supp. 1100, 1112 (D. Minn. 1982)...... 30
7 United States v. Rohm & Hass. 669 F. Supp. 672,
676, 677 (D.N.J. 1987).................................. 19, 20
8
United States V. Security Industrial Bank.9 Ij 459 U.S. 70, 71, 80 (1982).............................. 18, 19
10
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United States v. Seymour Recycling Coro.. 679
F.Supp. 859, 862 (S.D. Ind. 1987), appeal pending.
No. 87-8045 (7th Cir.)...............................15, 20, 30
United States v. Ward. 618 F.Supp. 884, 900-901
(D.C.N.C. 1985)......................................... 23, 24
United States v. Western Processing Co.. No.
C83-252 M, slip op. at 5 (W.D. Wash.,
Feb. 19, 1986)...................................... 23, 24, 25
USX Corp. V. United States. 664 F.Supp. 519,
524 (CIT 1987)......................................
17 Ward v- Village of Monroeville. 409 U.S. 57 (1972)...........26
FEDERAL STATUTES
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3 U.S.C. § 301.....................
5 U.S.C. § 706(2) (A)...................10 U.S.C. § 2701(c)....................
10 U.S.C. § 2701(c)(1)..................10 U.S.C. § 2702.................
42 U.S.C. § 9601................
42 U.S.C. § 9604(a)................
42 U.S.C. § 9604(b)...........
42 U.S.C. § 9613(f) (2)..................42 U.S.C. § 9613 (j).....................
42 U.S.C. § 9613(k) (1)..................
42 U.S.c. § 9613 (k) (2) (B)................42 U.S.C. § 9613 (JO (2) (C)................
42 U.S.C. § 9615.................
CERCLA Section 103(d)
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MA R 13
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mu* u
CERCLA Section
CERCLA Section
CERCLA Section
CERCLA Section
CERCLA Section
CERCLA Section
CERCLA Section
CERCLA Section
CERCLA Section
CERCLA Section
CERCLA Section
CERCLA Section
CERCLA Section
104........................
104(a).....................
104 (b)....... .............
104(C) (4).................
106........................
106(a)....................
107................ 16, 17,
107(a)....................
113........................
113(f)(2).................113(g)(2).................
113(h)....................
113 (j ).........1, 5, 8, 9,
19, 20, 21,
CERCLA Section
CERCLA Section
CERCLA Section
CERCLA Section
CERCLA Section
CERCLA Section
CERCLA Section
CERCLA Section
CERCLA Section
CERCLA Section
CERCLA Section
CERCLA Section
SARA, Pub. L.
H3(j) (1)...........
H3(j) (2)...........
113(k)..............
H3(k) (1)...........
113(k) (2) (B)........
113(k) (2) (C)........
115.................
120...................
120(a)(1)...........
120(c)..............
211...................
211(C)(1)...........
No. 99-499, 100 Stat.
1,
1613
1» 2, 3, 5, 6,
..... 3, 6, 7,
..........4, 6,
............ 16, 23,
............ 13, 16,23, 24, 27, 28, 30,
............. 8, 16,
2,
12, 13, 14, 15, 17,
23, 24, 25, 29, 31,
................. 13,
................. 14,.... 7, 30, 31, 32,
2, 8, 9, 10, 11,
...... 8, 9, 10,
31,
31,
14,
12,
11,
.... 1, 2, 3, 5
(1986)........!
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1
ZEDERAL RULES OF CIVIL PROCEDURE
40 C.F.R. Part 300, Subpart F (1985)
LESISLATIVE MATERIALS
132 Cong. Rec. S14918 (daily ed. Oct. 3, 1986)
132 Cong. Rec. S14928 (daily ed. Oct. 3, 1986)
132 Cong. Rec. H9602 (daily ed. Oct. 8, 1986).
132 Cong. Rec. H9581 (daily ed. Oct. 8, 1986).
H.R. Rep. No. 962, 99th Cong. 2d Sess.
240-241 (1986)............................
H.R. Rep. No. 2005.............................
S. Rep. No. 11, 99th Cong., 1st Sess.
57, 58 (1985).............................
Executive Order 12580, 52 Fed. Reg. 2923
(Jan. 13, 1987)...........................
Executive Order 12580, Sec. 2(d), 52 Fed. Reg.
2923 (Jan. 13, 1987)......................
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MISCELLANEOUS
Davis/ Administrative Law Treatise. §§ 1:3, 1:4 (2d Ed. 1978)..............................
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2 Webster's New Collegiate Dictionary 1969
(G. & c. Merriam Co. 1981).............. .
U.S. CONST. Art. II, § 1, cl. 1.......... 6
3
vixi
FORM O B D - I I J MAM I)
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oio-uj ̂A* |J
I. INTRODUCTION
The following memorandum replies to three memoranda
filed by different groups of defendants in opposition to the
Memorandum of the United States in Support of Motion for a Rulmc
on the Appropriate Standard and Scope of Review of the Navy's
Remedial Action Plan, for an Order Limiting the Scope of
Discovery, and for a Protective Order ("Opening Brief"). The
principal memorandum in opposition was filed on behalf of Allied-
Signal, Inc., Chemical & Pigment Company, and other defendants
("the Majority Defendants"). This memorandum is referred to as
Majority Defendants' Brief (or "Maj. Def. Br."). a second
memorandum was filed on behalf of o. E. Cooper, to which we refer
as Opposition of o. e . Cooper (or "0. E. Cooper Opp."). The
third memorandum was filed on behalf of defendants Santa Fe Land
Improvement Company, Santa Fe Southern Pacific Foundation, and
the Atchison, Topeka and Santa Fe Railway Company. This
memorandum is referred to as Opposition of Santa Fe Defendants
(or "Opp. of Santa Fe").
As shown below, the arguments of all of the defendants
m opposition to the United States' Motion are without merit and
misconstrue the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. § 9601 et sen as
amended by the Superfund Amendments and Reauthorization Act of
1986 ("SARA"), Pub. L. No. 99-499, 100 Stat. 1613
(1986)(hereinafter referred to as "CERCLA" unless referring
specifically to the SARA amendments). it is clear both from the
statutory language, legislative history and caselaw, that -he
standards of Secrion 113(j) apply to the review of response
actions taken and remedy selected for the Naval Weapons Station
' ~ ~ 0US 120 AND 211 D0 NOT PREEMPT PRESIDENTIAL AUTHORITY
The Majority Defendants argue that Section 120 or
Section 211 of CERCLA preempts the President from delegating his
res e authority m Section 104 of CERCIA to the Department of
the Defense ("DOD"). The Majority Defendants start their
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REPLY OF THE UNITED STATES TO OPPOSITION BRIEFS
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F O t M O i O - I I J
* A t IJ
argument with two and one-half pages of citation of concents by
various Congressmen on the slow pace of cleanup at Federal and
in particular DOD, facilities. The point of including these
remarks seeas to be that the 'Congress did not trust the
military to do the job right,' from which this Court is urged to
read more into Sections 120 and 211 than is stated there, and to
disregard the express language of Sections 104 and 112 of
CERCLA. m reality. Congress required the military, not EPA or
some other entity, to do the job of cleaning up its own sites
under the full authority of CERCLA as a whole. Defendants-
arguments that Congress limited the authority of the military to
cleanup its sites are untoward.
A. Section 211 is Limited in Scope, and Does Not pr M n n r
‘g^e‘a» P-esponse Authority Elsewhere in CERCT.a .____ ‘
Specifically, the Majority Defendants' argue that
Section 211 is the ssslusivg grant of response authority under
CERCLA co the Seoretary of Defense. They contend that this
conclusion must follow because Congress specifically required the
Secretary of Defense to 'carry out^ our * • * a11 response actions
with respect to releases of hazardous substances from . . . (D0D
acuities].' 10. D.S.C. 52701(C). Therefore, they argue
congress 'micro-managed' the Federal response to hazardous
substance contamination at military facilities, and thus
'bypassed the President.' Ma}. Def. Br. at 13.
argument must fail for the simple reason that it
lear .rom the language of Section 211 that it is not the
: : i ; r ; ot — ' « "CD. Th. interpretation of a
5 2 i 1CS P l a i " l a n g u a ,e - F in n , 7 4 7 F . id78, 521 (9th Cir. 1984). There is no need to go beyond its
l a n ^ n U"leSS 11 ^ a“ lqUOUS °r rendered so by other statutory
ln coni:ll=' "1“ it. Eacgndido Mutual «.<■.. — ■■
6 9 2 T 2 d !222 1224 ,9th
lr. 1982). Moreover, it is the duty of the court to give
significance to every word, phrase, sentence, and part .of an act
m pursuit of the legislative purpose, and to give effect to the
- 2 -
***** OF THE UNITED STATES TO OPPOSITION BRIEFS
statute as a whole, and not render it partially or entirely void.
Matter ai B<?rfra, 736 F.2d 1317, 1320 (9th cir. 1984). Phiiumn-,
Qlodqert/ 421 U.S. 707, 713, 95 S. Ct. 1393, 1898, 44 L.Ed.2d
525 (1975)(a court should strive to interpret one section of a
statute consistently with the language of other sections and the
statute as a whole). ajgo Green v. Commissinner 707 F.2d
404, 405 (9th Cir. 1983). If ambiguity exists, then legislative
history is examined to determine Congressional intent. Commnri i
Dityr?? Tracing Commission v. Co Petro Marketing Group. rnr. 68Q
F.2d 573, 577 (9th Cir. 1982). However, "absent a clearly
expressed legislative intention to the contrary, that language
must ordinarily be regarded as conclusive." Consume*- Prnrinr-r
safetv Coram'n v. GTE Svlvania, Inc.. 447 U.S. 102, 108 (1980).
The plain language of Section 211(c)(1) states that,
"The Secretary shall gaSTV ou£ (in accordance with the provisions
of this chapter and CERCLA) all response actions with respect to
releases of hazardous substances from . . . [DOD facilities]
•' 10 u -s -c- § 2701(c)(1)(emphasis added). Defendants argue
that this language ("carry out") creates a direct and exclusive
Congressional delegation of response authority to the Secretary
of Defense under CERCLA (thus, "bypass[ing] the President
• '). Maj. Def. Br. at 15. Obviously, however, "carry out* does
not mean a sole or exclusive grant of authority, but instead
means "to put into execution (carry out a plan)," or "complete."
Webster's New Collegiate Dictionary 169 (G. & C. M e m a m Co.
1981). This language is straight-forward and unambiguous.
In contrast to Section 211, Section 104 of CERCLA
broadly authorizes the President to act in response to the
release of hazardous substances, and in substantial detail
specifies the kinds of response actions the President may take.
Specifically, under Section 104(a), 42 U.S.C. § 9604(a), the
President may respond directly by undertaking removal or remedial
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REPLY OF THE UNITED STATES TO OPPOSITION BRIEFS
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M UI IJ
actions,1 or any other response measure consistent with the
National Contingency Plan ("NCP")2 * * which the President deems
necessary to protect the public health or welfare or the
environment whenever any hazardous substance is released or there
is a substantial threat of such a release into the environment.
Before taking remedial action, the site is studied, alternatives
are examined, and a preferred clean-up remedy is selected.
Section 104(b) of CERCLA, 42 U.S.C. § 9604(b), provides
that, with respect to such response actions, the President "may
undertake such investigations, monitoring, surveys, testing, and
other information gathering" deemed necessary to identify the
existence and extent of the release or threat thereof, the source
and nature of the hazardous substances or contaminants involved,
and "the extent of danger to the public health or welfare or to'
the environment." The President is also authorized to "undertake
such planning, legal, fiscal, economic, engineering,
,, , i A *IaB°Val action' typically involves immediate actions t a Superfund site— fencing, excavation and disposal of the
by"he°s!S!nal ^ 4 2“ Ss7cn si'olu:!)’1*1! 1-2* *5? ?hreaC P°s*d
this case, the Navy conducted partial removals of substances on Parcels 572 and 5a l ■ °f ha2ardous
which it seeks reimbursement from the d e f e n d e d ln 1982-83, for
mucft larger portion of government « L o S «
is r « . S acr'c'"'-10" °£ thB Action P l a n f 3 3 S
2 As explained in the Opening Brief, the ncp -is
promulgated^under^the f
the removal of oil and hazardous substances Ia rI pC ' rrequired the revision of the NCP to conforaVn Congress
9605 (a) . The new NCP has been proposed by EPA but nnt * §
“ e ^ O e opirat“ ;.ne" S tne
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REPLY OF THE UNITED STATES TO OPPOSITION BRIEFS
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architectural, and other studies or investigations as he nay deem
necessary or appropriate to plan and direct response actions, to
recover the costs thereof, and to enforce the provisions of
[CERCLA].* Response action is to be taken in confornance with
the NCP.
Section 104 is a broad and detailed grant of Federal
power to the President to act. It is distinct, therefore, from
the limited requirement of Section 211(c)(1) that the Secretary
of Defense, or his delegatee, carry out such response actions at
DOD facilities. The effect of the latter provision, then, when
read in conjunction with Section 104 is plainly to require the
Secretary of Defense, or his delegatee, to implement the powers
granted to the President under Section 104 at DOD facilities.
Thus, reading Section 211(c)(1) with Section 104 does not render
Section 211(c)(1) ambiguous, but explains its purpose and
provides a consistent construction of both sections and of the
statute as a whole.
Moreover, there is no mention in Section 211 of an
"exclusive" grant of Federal response authority under CERCLA that
preempts executive authority given to the President under
Section 104 and elsewhere in CERCIA. Rather, the text of Section
211(c)(1) expressly " . . . the [other] provisions
of . . . CERCLA. . .' Section 104 and Section 113(j) (which
limit judicial review of response actions) are among these
provisions. The Majority Defendants' argument that Section 211
supercedes or preempts other provisions of CERCLA has no merit,
as is shown by the express incorporation of other provisions of
CERCLA in Section 211.3
*.H , B«cause the statutory language is clear, an analysis of
“ enr ihere1!! ™ S?0ry ?£ Sec-*°n 211 is not needed. in any event, here is no legislative history on Section 211 whioh Ivor,
suggests that Congress intended for Section 211 to deprive the
tho ridr V f authorities granted elsewhere in the statute Thus
C ^ c ? : f oe"d: ? r i e ^ sSi a t ° v e 1nisĈ e t e l y unsupp™ d
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B. The President's Authority to Formulate and Take
Response Actions Was Delegated to the Secretary of
Bsfen?e-___________________________ 1
P O * M O I O . I I J
* A A I J
As stated in the Opening Brief, the President has
delegated his powers under Sections 104(a) and (b) to the
Secretary of Defense in so far as it affects the Naval Weapons
Station. Opening Brief at 4. Though the Majority Defendants
suggest otherwise (Maj. Def. Br. at 1, 10, and 15), there can be
no dispute that the President has the Constitutional authority to
delegate such powers. Delegation is provided for in the
Constitution: "The executive power shall be vested in the
President of the United States of America.-' U.S. CONST, art ~
§ 1, cl. i. And it has been specifically allowed by Congress:
The President of the United States is
authorized to designate and empower the head of any department or agency in the executive
branch, or any official thereof who is
required to be appointed by and with the
advice and consent of the Senate, to perform
without approval, ratification, or other
Kn by thB Presidant . . . any function which is vested in the President by law.
Such designation and authorization shall be'
in writing, shall be published in the Federal
Register, shall be subject to such terms
conditions limitations as the President'may
h ^ ia' 3nd Sha11 be rev°cable at any time by the President in whole or in part. 7
3 U.S.C. § 301.
Furthermore, Congress specifically authorized the
President to delegate his CERCLA powers:
13 authori2ed to delegate and aaaign any duties or powers imposed upon or aasigned to him and to promulgate any
regulations necessary to carry out the provisions of this subchapter.
42 U.S.C. S 9615. Thus, defendants- suggestion that the
President did not have the authority to delegate his response
powers under Section 104 to the Secretary of Defense is
incorrect. As stated in the Opening Brief, the President
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delegated these powers as they relate to releases from facilities
under the jurisdiction of the Departments of Defense and Energy "
m Section 2(d) of Executive Order 12580, 52 Fed. Reg. 2923 (Jan.
13, 1987):
• • . the functions vested in the President
by Sections 104(a), (b) and (c)(4), 113(k)
• • ^re delegated to the Secretaries of
Defense and Energy, with respect to releases
or threatened releases where either the
release is on or the sole source of the
release is from any facility or vessel under
the jurisdiction, custody or control of their departments, respectively.
(A copy of Executive Order 12580 is attached to Opp. of Santa
Fe) .
Moreover, as can be seen above, the President also
delegated the authorities of Section 113(k) to DOD. These
include the authority to compile the 'administrative record upon
which the President shall base the selection of a response
action,' and establish procedures for 'the participation of
interested persons, including potentially responsible parties in
the development of the administrative record on which the
President will base the selection of remedial actions and on
which judicial review of remedial actions will be based." 42
U.S.c. S 9613(k)(i) and 0O(2)(B). Thus, it can not be denied
hhat the response authorities and administrative record
authorities of the President under CERCLA hav4 been delegated to
the Secretary of Defense.
Furrher, the Secretary of Defense delegated the
authority to act: tor him to th. Deputy Secretary o£ Defense who
in turn, delegated the authorities delegated to the Secretary of
Defense under Executive Order 12,580 to the Deputy Assistant
secretary of Defense (Environment). On October 4, 1989, the
Deputy Assistant Secretary of Defense (Environment) concurred
With and, to the extent required by law, ratified the Department
“ 6 aVY s selec-l°n of a Final Remedial Action Plan, as well
080-11J IJ
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as selected the Final Remedial Action Plan itself. Declaration
of William H. Parker, III, 1 2; Administrative Record, Item GG.4
C. Section 120 of CERCLA Does Not Operate to Alter the
Scope and Standard of Judicial Review Under Section
All defendants in their opposition briefs have made
preemption arguments to the effect that Section 120(a)(1), which
subjects Federal entities to CERCLA "in the same manner and to
the same extent, both procedurally and substantively, as any
nongovernmental entity . . .', preempts all other Federal
authorities under CERCLA. Their reasoning is as follows.
Assuming that the Navy is a liable party under Section 107(a) of
CERCLA (an owner of property at which there is a release or
threatened release of hazardous substances, and having no
defenses), Section 120(a)(1) requires that it be treated as a
nongovernmental entity. And since the decisions of
nongovernmental entities are not entitled to the limited and
deferential standard and scope of review of Section 113(j), the
remedy decision for the Naval Weapons Station is subject to
navs review. Maj. Def. Br. at 2 and 16-21; Opposition of Santa
Fe Defendants at 3-7; and 0. E. Cooper's Opposition at 2-8.
Among the many problems with this argument is (l) that
it violates the rules of statutory construction discussed above;
and (2) it would lead to the result of depriving Federal
facilities their enforcement authorities, causing them to shirk
their responsibilities under CERCLA.
The specific clause in question in Section 120(a)(1),
'in the same manner and to the same extent, both procedurally and
substantively, as any nongovernmental entity, including liability
a , . throughout this brief, unless otherwise noted the
administrative actions of the Department of the S a w ' Mncludino
and |!®leCw^on of a fmal remedial action plan on April 6 1989?
*£2 J * ! actlonf of the Department of Defense (including its concurrence and, to the extent required by law ratifirarinn *
die Navy's final pian, and selection of the fiAai Dlfn
are characterized collectively as the Navy's actions ’
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O l O - i l )
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under section 9607 of this title,* is broad language subject to
varying interpretations. The defendants contend that this
language means that when an agency is a potentially liable party,
the agency must be treated as a private owner of contaminated
property, and is not entitled to the deferential review of
Section 113(j).5 Moreover, since Section 120(a)(1) makes no
reference to Section 113(j), nor to specific government agencies,
the defendants' interpretation would work to deprive anv
government agency which may be liable under CERCLA of any
authority it would otherwise have under CERCLA. This clearly was
not what Congress intended.
Examining Congressional intent, we refer the Court to
the final Conference Committee Report in 1986, which reconciled
conflicting versions of House and Senate amendments to CERCLA on
Section 120:
This provision clarifies that all guidelines
ru-̂es' regulations and criteria promulgated
pursuant to CERCLA must be complied with by
all Federally-owned or operated facilities
unless specifically exempted by this Act.
Federally agencies must comply with all
procedural and substantive provisions of the National Contingency Plan.
H.R. Rep. No. 962, 99th Cong. 2d Sess. 240-41 (1986).6
In the floor debate which accompanied the presentation
of H.R. 2005, which later became SARA, several senators remarked
on the intent of Section 120(a)(1). Senator Mitchell, a member
Conference Committee, commented as follows:
d . = u i o ^ r ^ y
or o r d S S U" S T S . i d e ^ ’
s s s : \ 3% s s ;
specif ica!lynthlt p o ^ i o ^ t f ^ i c h t£e ^ S ^ S S c ^ o ^ ' “ dapplies, was enacted verbatim by Congress The rnnfor
c o ^ t t e e Report dede no order Lt(1) .
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[S]ection 120 clarifies that sovereign
immunity is broadly waived. By clarifying
Federal facilities are to be treated
nongovernmental entities, sovereign immuni is waived.
as
~Y
132 Cong. Rec. S14918 (daily ed. Oct. 3, 1986).
Senator Chafee, also a member of the Conference
Committee, added the following remarks:
It is specifically intended that Federal
agencies be required to comply with all
procedural and substantive provisions of the
national contingency plan [NCP]. This
includes the mandatory development of a
remedial investigation/feasibility study to
assure the adequate consideration of all
relevant factors in choosing and implementing a remedy in accordance with the NCP.
132 Cong. Rec. S14928 (daily ed. Oct. 3, 1986).
These comments evidence that two distinct concerns
were to be addressed by Section 120(a)(1). One was that Federal
agencies (or more properly the Federal Government) were to be
subject to liability under CERCLA to the same extent as other
responsible parties. The second concern was that the Federal
agencies comply procedurally and substantively with all
provisions of the NCP and other applicable regulations to assure
the proper selection and implementation of a remedy.
The concerns expressed by Senator
by Representative Fazio in the House, one of
of Section 120:
Chaffee were echoed
the primary authors
II
2 1 S ^ ? r S , r e i t e r a “ “ e m l e ° £ c u r r e n tlaw that all cleanup standards and other
reĉ irements— except as specified— shall apply to Federal facilities in the same aanner as they apply to private sites. These
timetables, standards and requirements are enforceable under the citizens' suits provisions of the legislation as
nondiscretionary duties of the Federal Government.
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132 Cong. Rec. H9602 (daily ed. Oct. 8, 1986). And, in brief
remarks, Representative Synar of Oklahoma, also a member of the
Conference Committee and a member of the House Judiciary
Committee, agreed with Senator Mitchell that Section 120(a)(1)
operated to subject the Federal Government to civil liability
under CERCLA:
The Superfund Amendments and Reauthorization
Act of 1986 preserve the clear statutory
authority to bring civil actions and issue
administrative orders against Federal facilities.
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132 Cong. Rec. H9581 (daily ed. Oct. 8, 1986).
The Reparr of the Conference Committee and its
conferees during final debate of H.R. 2005 represent the only
explanation of Congressional intent in the legislative history of
Section 120(a)(1). The Conference Committee was clearly
interested in Federal compliance with all criteria, guidance,
rules, and regulations, particularly the NCP. it makes no
mention of placing the Federal Government 'in the shoes of a
private party' in all respects, thus restricting or eliminating
other Federal authorities and responsibilities in CERCIA. Where
as here, 'the conference report [was] commended to the entire
Congress,' its conclusions 'carry greater weight than other of
T V 2 T T ™ hlSCOry-' W h Congress v S74
F-2d 624. 629 n.36 (D.C. Cir. 2978). When neither Section
120(e)(1) „or its legislative history make any reference to
restricting or voiding other Federal authority under CERCLA it
is clear that Congress did not enact Section 120(a)(1) to do so.
The remarks by Senator Mitchell and Congressmen Fazio
illustrate this point another way. Each took pains to mention
“ at action 120 'clarifies- or 'reiterates the rule of current
law.' senator Mitchell wanted it understood that Section 120
clarified' gxASV. nq law that the Federal Government was subject
to civil suit, meaning that SARA works no substantive change in
he scope of Federal liability. Representative Fazio wanted to
■ M OBO i«) IJ
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emphasize that Section 120 "reiterates the rule of current law
that all cleanup standards and other legal requirements
shall apply to Federal facilities in the same manner as they
apply to private sites." Thus, Section 120 was to make no
substantive change in the application of legal requirements to
the Federal Government. This legislative intent flatly
contradicts the defendants' position that Section 120 alters the
status of the Federal Government when it is liable.
Defendants' position also violates another canon of
statutory construction, which is that courts must strive to
interpret sections of a statute consistently with other sections
so as to produce a harmonious whole, and not render the statute
partially or entirely void. Clearly, defendants' argument would
render Section 113(j) entirely void as it applies to remedy
decisions by the DOD, since, as discussed above, these are
decisions in selecting response actions which have been delegatee
c L S l PT ldent' “ “°Uld 3150 SUbje~ EP* *— y decisions to,
“ s t0 is G222 review if EPA were a liable parry, eince
Of course, EPA is an agency of the United States.7
Moreover, defendants' interpretation of Section
120(a)(1) could preclude the Unired Scares from exercising its
sovereign powers in cases vnere ir is also a liable parry. In
N a v a l T " ' ;°r eXa"Pie’ Uni“ d States is the ° ™ r of theNaval weapons station and. according to all defendants'
counterclaims, also an alleged liable party. If it were to be
reared in all respects as a private entity, then it could not
to i i a t T j 1*1”* ^ 1C’10n against ^ defendant and extend
con“”*dution protection under Section 113(f)(2), 42
Superfundusite on.
materials to a site See Un^ed at.. Moratory wastes or other F.2d 160, 164 (4th d V ‘ rignsanto CnTnpar|y 858
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U.s.c. § 9613(f)(2).8 Moreover, (under defendants' reasoning) i-
a case where EPA was alleged to be a responsible party, as the
Navy is here, it could not issue an Order under Section 106(a),
42 U.S.C § 9606(a), to protect the public health, welfare, and
the environment in the event of an imminent and substantial
endangerment. Likewise, EPA could not request the Justice
Department to obtain injunctive relief to abate such a danger or
threat because the President's authority under Section 106(a) has
been delegated to EPA, which as a private party, could not
exercise it. Surely, defendants can not seriously argue for an
interpretation of CERCLA which would lead to such chaotic
results.
rnCJi?nn113(j) Appiies to Presidential Decisions, Motto EPA Decisions._________________
In an attempt to bolster the arguments discussed
above, the defendants' contend that only EPA "is given the right
under the Act to create a record of which Court review is limited
within the purview of §96l3(j).' o. E. Cooper Opposition at 6.
* * * alSg Maj* Def* Br* at 17‘2^ Santa Fe Opposition at 6-8. Mr.
Cooper offers no authority for his conclusion. The other
defendants do cite legislative history of Section 113(j) and
certain caselaw. No defendant, however, refers the Court to the
actual language of the statute; no doubt because it refutes
their position.
A« we discussed in the Opening Brief, the requirement
tiiat rhe Courr review of the Navy's remedy decision to
the administrative record comes from the language in Section
(j ) (1) , which reads :
• • • judicial review of any issues
concerning the adequacy of any response
defendants with
= ° - ' ’ nd^ S - ^ a t a n , - : : ; c o ^ n ^ D e L e e * " T * ° U
P rties, and _hus jeopardize the settlements.
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M l )
I I)
action taken or ordered by the Presiri»nr
shall be limited to the administrative record.
(Emphasis added.) This language has been underscored to
emphasize that Congress did not limit judicial review of EPA
actions, but limited review of Presidential actions.
Similarly, Section 113(j)(2) requires that:
• * ’ . court shall uphold the President's Igcisicn :n selecting the response acti?n
unless the objecting party can demonstrate
on the administrative record, that the
decision was arbitrary and capricious or
otherwise not in accordance with law.
(Emphasis added.) The language of subsection (j) could not be
more explicit. Had Congress intended to limit judicial review
to EPA actions, it could have used the word 'Administrator,' as
it did m Section 103(d)(recordkeeping), Section 120(e)
(consultation requirements where a Federal facility is on the
NPL), and elsewhere in the statute. it did not. Moreover,
Congress explicitly authorized the President to delegate '.
duties or powers imposed upon or assigned to him. « 42
U.S.C. § 9615. The language of Section 115 can not be more
Plain. Thus, any defendant's citation to legislative history is
unnecessary and inappropriate in light of such clear and
unambiguous language. ^ccndido Mutual w*i-or m . „
Sagrqv RgqmatPTY smaia; catholic .social
^ V ~ 664 Supp. 1378 , 13 8 2-83 (E.D. Cal. 19^3)
Also, a construction of Section 113(j) which would read
into it, 'the Administrator,' and read out of it, 'the
President, * would net only disregard the language of the statute
' bUt UOUl‘1 contradict Sections 104 and 115. This is also
laperbissible because it would void the authorities granted to
-. e President in these sections. Matter nf sunra ,
EUl.trodlr V glodqer-. s uexI. under the rules of statutory
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construction applicable in this Circuit, this Court should apply
the statute as written.9
Moreover, the caselaw to which the Majority Defendants
refer, like the legislative history cited by Santa Fe, is
misleading. Of the five cases cited by the Majority Defendants
as authority that Section 113(j) should not apply to a remedy
selection by an agency other than EPA, three predated Section
113(j). Maj. Def. Br. at 13. Thus, they could not possibly
speak to the application of 113(j). The remaining cases, United
States v- Seymour Recycling C o m . . 679 F. Supp. 359, 362 (S.D.
Ind. 1987), appeal Rending, No. 87-8045 (7th Cir.) and U. S. v
EiRRlet, No. 85-3060, slip. op. at 7 (E.D. Pa., May 12, 1987),
are strong affirmations of application of Section 113(j). if
they do not endorse the application of Section 113(j) to a remedy
selection by DOD or the Navy, it is only because these cases did"
not involve remedy selections by DOD or the Navy.
Further, defendants' cannot argue that the Department
of Defense has no expertise in the cleanup of hazardous wastes.
Congress explicitly provided in Section 211 of SARA, 10 U.S.C. §
2702, that as part of the Defense Environmental Restoration
Program, the Secretary of Defense 'shall carry out a program of
research, development, and demonstration with respect to
hazardous wastes . . . in consultation and cooperation with the
Administrator [EPA]. . .- in Section 211, DOD is explicitly
authorized to consult and contract for the expertise of other
agencies, which the Navy did m this case with the Army Corps of
Engineers Waterways Experiment Station. Declaration of J. Martin
b o l s t L ^ h - ? ^ 3 Cire lec?lsiatlve history that supposedly
EPA . Section 113 (j) is meant only for
” S a n ^ F e ^ r K c e ' t o 2 i « 2 L 2 E T ' S “ ^ ^Glictaan, to wit: 'the reoedy selected by of
Glicfcnan never addressed 'he'issueat" j|;rre*Ponslble one as Rep.
of 113(3) in his re»arts. °£ exren,: o£ che authority
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Robertson, ̂ 3. Additionally, courts have recognized that
government agencies are entitled to rely upon the expertise of
private consultants, and that such reliance does not change the
standard of review (arbitrary and capricious based on the
administrative record). $££ Avpyelies Sportnen's Learns rnP, ..
Macai1' 715 F *2d 897' 906 N-l7 (5th Cir. 1983) (as long as the
agency conducts its own independent and thorough review of the
consultants' reports, the agency's reliance on outside reports is
within its discretion and does not change the standard of
review); SSS algo Save Our Wetlands. Tnc. v 711 F.2d 634
635-642 (5th Cir. 1983)(Army Corps may rely on outside
consultants in preparation of environmental impact statements);
Suttrev v. United Sr^fPS, 690 F.2d 1170 (5th Cir. 1982), cer- .'
denied' 103 s *ct- 2087 (1983) (Army Corps wetlands determination
reviewed under arbitrary and capricious standard where Corps '
relied on information supplied by other individuals and
agencies). Accordingly, the defendants can not be heard to
complain that Section 113(j) should apply only to EPA.
E. The Government's Claim for Cost Recovery is Under Sggtlgn 107, Not section in* _________ is Under
In an attempt to overcome the limitation that the
Hardaqe C°Urr placed on its decision, that it only applied
Section 106 claims, 0. E. Cooper makes the unusual argument
that Section 113(j) should not apply because the Government's
action is 'properly an action under Section 106(a)', not 107. o.
E. Cooper Opposition at 9-16.
The United States filed this action for response costs
: “ : * r r n 107 a t “ *“ * and £°r judgment pursuant
tDH23 U -S -C - 5 2201- “ - » « an action for injunctive relief
under Section 106(a), despite Mr. Cooper's allegations to the
contrary. Fed.R.clv.P. 8(a) is clear that a claim for relief is
ple!dClent 11 ^ Sh0rT and Plai" « « “ •"' showini? that theP 6r entl'-led to relief.' The United States' Third Amended
™ :llegeS 311 — r section 107,a,C^,c_A for recovery of response costs incurred by the United
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States and for declaratory [judgment for liability of costs to me
incurred by the United States in response to the release or
threatened release of hazardous substances at the Naval Weapons
Station. Thus, these claims are sufficient to state a claim
under Section 107 on their face. e ^ , United „
SaElsyipq Poster?' Ajjs'n. of Oticagp, 347 U.S. 136, i39 (1954).
Thus, Mr. Cooper's arguments relevant to United c*-a>pc. „
dardaqe, •, which was a Section 106(a) action, are
irrelevant.
Further, defendant's assertion that plaintiff's 107(a)
action can only be brought for past response costs, the relevance
of which still escapes the Government, is flatly contradicted by
Section 113(g)(2). That provision provides that a 107 cost
recovery action may be brought "at any time after such costs have
been incurred' and that the Court 'shall enter a declaratory
judgment on liability for response costs' that will be binding on
any ac..on to recover further response costs. 42 U.S.C §
9613(g)(2). The United States claim for declaratory judgment is
such an action for further (j_£., future) response costs. This
argument, like so many other of defendants' arguments, is clear-/
unsupported by the law, and has caused the Government to incur
unnecessary time and expense m response.
^ 1 ^ ST A?PLY SARA BECAUSE IT IS THE LAW IN EFFECT
S"C °n ° ' CERCI^ became effective on October
.7, 1986, during the pendency of this civil action. in its
Opening Brief, the United States explained that Bradley y
•'■M O S D • | >
*** 13
*16 U.S. 696. -11 (1974), requires the
=u.. to apply cne law m efiect at m e tine o£ its decision
even tnouqn it was enacted wnil. m e action was pending, unless
doing^so would result m tamiest injustice or m e r e is statutory
^ - e c _ = n °r legislative history to the contrary. Opening Brief
6 Lnired Stares explained that where, as here, the
amendment to a statute merely confirms and codifies an existing
swandar., application of the new statute is required and no
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analysis is necessary. Opening Brief at 14. see
Anderson Sz-QS- Ford V. Valencia. 452 U. S. 205, 217 n.15 (1981).
Nevertheless, we also explained that the Bradley test has been
met.
The Majority Defendants make a three-pronged attack
against the application of Section 113(j). First, defendants
deny that Bradley provides the appropriate test of whether
Section 113(j) applies. As shown below, defendants' argument
fails because of its misplaced reliance upon United starpc ^
Seccriv- Industrial -59 U.S. 70, 71, 80 (1982), which
involved an attempt to retroactively apply a law that would have
destroyed a vested property right. Second, the Majority
Defendants contend that even if £radlev applies, it requires thai
Section 113(j) not be applied. Plaintiff will demonstrate that
there is no manifest injustice in the application of Section
H3(j). Third, Majority Defendants argue that prior to SARA,
CERCLA required sift 112X2 review of agency response actions. The
United States will demonstrate that prior to the enactment of
Section 113(j), the law was that judicial review of informal
agency action was on the administrative record under the
arbitrary and capricious standard, that Congress understood that
!! T laV' and lnrendCd dy enac-aent of Section 113(j)
-n and *-~a y tr.e application of those rules to aoencv
response actions under CERCUk.
A‘ Thfs‘-^p3rreC~:/ Stat:es zhe Law Applicable to
The Majority Defendants' argue that because Bradley
involved a question of '.ppellate jurisprudence," it does not
g m when ^aws become effective while cases are pending m
"*’■ :e; Er « -.«ey argue that
= plain=-" .--narily that the argument that
only governs when a law beccoes effective durtng appeal
Oasis m logit. If a law becoces effective while a
mat.er is before the appellate court, it should also be effective
f O t M O t O - H J
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REPLY CF THE UNITE
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at the district level. The Majority Defendants have offered no
reason why the district court is any less obligated to apply the
current law than is the circuit court. If the law were
otherwise, then litigants would have to appeal all decisions in
these situations to the circuit courts before current law could
be applied. Thus, in addition to being illogical, such a rule
would lead to a hugh waste of judicial resources. Moreover, the
cases applying Hadley in this Circuit have recognized no such
distinction. S^e Campbell v. United States. 809 F.2d 563, 575-
77 (9th Cir. 1987) (reversing the district court's refusal to
apply the rate of post-judgment interest prescribed by a statute
enacted while the case was pending); Matter of Reynold 726 F.2d
1420, 1422-24 (9th Cir. 1984)(basis for reversal was that the
district court should have applied the law in effect at the time
of its decision).
In Ssrcri-y Industrial 3anK, each of seven appellees
had loaned a debtor money, then obtained and perfected a lien on
the debtor's personal property. Thereafter the Bankruptcy Code
was amended to permit bankrupt debtors to avoid liens on such
property. Id. at 71. The Bankruptcy Court refused to apply the
amendment retroactively. The Court of Appeals reasoned that the
.aw violated the Fifth Amendment because it effected a taking
of the secured creditors' vested property interests reoresented
by .lens on personal property. The Supreme Court affirmed and
held that a statute that affects vested property rights will not
be given retroactive application. I t distinguished its situation
“ °m 03565 Where neW S’arure a£!ects only procedural changes
or changes in the form of the legal remedy. at 80. 5 ^
Matter of . Thus, Sfic^-y Industrial is
.napposite. Sfifi lifted States and Kans, 669 f . supp.
' 676' 677 -987) (Section 113(j) merely modifies
procedure and form of legal remedy).
aridlg^Requires that Section 113 (j) Be Applied to 19
o«o . 1 1 REPLY OF THE UNITED
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"IS TO OPPOSITION BRIEFS
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As stated in plaintiff's Opening Brief, the legislative
history to Section 113 (j) directs that Section 113(j) be applied
retroactively. Opening Hr. at 15-16. See also United
£g,yrnt?ur Recycling cn— ., sup-3 ("There is no statutory or
legislative direction indicating that Section 113(j) should not
be applied to pending cases. Indeed, the legislative history <s
to the contrary."); United States v. Nicolet rnr. sucr, ,
("Nothing in the amendments or the legislative history [of SARA1
indicates that the amendments were not intended to be applied
retroactively.'); Link e d Staggs v. Rghp j jjaas, supra, at 677
(Congress actually intended Section 113 (j) to apply to ongoing
cases). ^
The Majonry Defendants- sole argument ho the contrarv
is based on a portion of a 1985 Senate Report which suggests that
1. taior deficiencies are found to exist in the administrative
record, judicial review of the response may be Is Maj
ef. Br. at 31-32. The quotation relied upon, however, is taken
out of context, and even then fails to say anything to suggest
~ * t Secrion 113 (3) would not be applied to pending cases. We
provide the full statement that Defendants' edited, and underlie
their quotation: --
decisionsC^ C1A does not explicitly state how
1udi1 -an v t“nCerr‘lng response actions will be lly reviewed' courts have suggested >-hat .eview of decisions concerning the
response, other administrative decisions is
on the oasis of the administrative record
l S £ c ^ ? =iar — es confirms S a tjudicial review of a response action is
thecae* * on record and
S i r e s p o n s e costs shall be awarded)11111 w*‘e action was arhitrary and
“ S ' S S S °r r‘0t ° ^ erV1Se ln accordance
Reliance on an administrative -ecnr-n
assure that the oasis for the response decisions is clearly a’— '—u 1 .
scrutiny bv -he 1 d d open topar— - es* ^ • and resP°nsible--miting [judicial review of
response actions to the administrative record
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f O » M O I O . i l ]'‘A* |j REPLY OF "vr r-’n-r—. — _______* OPPOSITION BRIEFS
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also expedites the process of review, avoids
the need for time-consuming and burdensome
discovery, and assures that the reviewing
court's attention is focused on the
information and criteria used in selecting
the response.
IZ na-ior deficiencies are shown to ev-i s- * -
m g administrative record that has been
asggfflPled. judicial review of the response *n
ap enforcement or cost recover; action nav ~o
dS..novo, . ̂ .e. , cogn to the introduction nf
gvidgnce by all parties. Existing
administrative law principles will govern
whether supplementary materials explaining or
clarifying the record may be introduced at
trial; however, under most circumstances,
judicial review should be limited to the
administrative record itself.
S. Rep. Mo. 11, 99th Cong., 1st Sess. 57, 58 (1985). The quote
is a clear statement of the intent of Congress that the
provisions of Section 113(j) affirm and clarify the existing law
relating to judicial review of response actions, that they be
reviewed only on an arbitrary and capricious standard on the
administrative record.
The other exception enunciated by Bradley, pertaining
to 'manifest injustice,' anticipates consideration of three
factors. These factors were analyzed at pages 17 and la of the
Gove..cent's Opening Brief. 10 There, we showed that Federal
Courts which have faced this issue under CERCUi have uniformly
held that application of Section 113 (j) does not result m
manifest injustice.
C‘ °J Secrion 113 ( j ) Did Not Change theStanza., ?gv;?w c: Agency Response frctinnc
Section 113 (j) did not alter the existing standard for
e review of agency response actions taken pursuant to CERCLA
although prior to SARA. CEROID did not specify the proper
the
the
■° These
nature
change
of
m
are: .) the nature and identity of the
their rights, and 3) the nature of the law upon those rights.
parties, 2)
impact of
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REPLY OF THE UNI D STATES TO OPPOSITION BRIEFS
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issue an order precluding discovery on the adequacy of the
response action selected for the Naval Weapons Station, which
would include protective orders preventing the depositions of
Doctors Cullinane and Jenkins.
Respectfully submitted,
RICHARD B. STEWART
Assistant Attorney General
Land and Natural Resources Division
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Environmental Enforcement Section
Land and Natural Resources Division
United States Department of JusticeP.O. Box 7611
Ben Franklin Station
Washington, D.C. 20044
(202) 633-2810
RICHARD L. BEAL
Environmental Enforcement Section
Land and Natural Resources Division
United States Department of Justice
100 Van Ness Avenue, 22nd Floor
San Francisco, California 94102 (415) 556-9027
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22 of Counsel:
Attorneys for Plaintiff
United States of America
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J . MARTIN ROBERTSON
Department of Navy
Office of the General Counsel
Litigation Office
100 Van Ness Avenue, 22nd Floor
San Francisco, California 94102
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REPLY OF THE UNITED STATES TO OPPOSITION BRIEFS
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83<;i PIE 303
111 UNITED STATES DISTRICT COURT TOR
THE DISTRICT OP SOUTH CAROLINA
Greenville Division
UNITED STATES OF .AMERICA,
Pli lint iff,
v.
A.D. CANNON, JR.,
ADC LIMITED PARTNjSRSHIF,
CANNON MANAGEMENT,
and
MARY LEE WATSON,
Defendants.
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) CIVIL ACTION NO. 6:91-951-3K
>
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UNITED STATES' REPLY TO
££PENDANTS' SSMi MOTION TO PTHMTgp
This ac1:ion was filed by the united States on April 11,
1991, on behalf of Rena Ellis, pursuant to stalrutory procedures
created by the Fair Housing Amendments Act of .\988. Defendants
have argued that these procedures are improperly invoked in this
case and that the government's suit is time barred. These
arguments are without m«irit.
The United States' suit challenges defendants' racially
discriminatory treatment of Rena Ellis which occurred when she
attempted to rent an apartment from them on March 12, 1988. Ten
days after the incident, Ellis filed an administrative complaint
with the U.S. Department of Housing and Urban Development (HUD).
® This filiT19 vns well within the 180 days prescribed for filing *
such complaints under the statutory procedures then in effect.
E00'3Sbd 83!St V l S 202 Qf:£l 26. 06 dbW
■* jt
Pair Housing Act, Title VIII o:f the 1968 Civil Rights Act,
Section 810(b). Under the 19«a Act, HUD could: investigate and
attempt to resolve complaints "by informal methods of conference,
conciliation, and persuasion." 1968 Act, S 810(a). if the
informal conciliation attempts were unsuccessful, HDD had no
authority under tbs 1968 Act to pursue further enforcement
action, individuals seeking judicial enforcement of rights
guaranteed by the Pair Housing Act were required to commence
their own civil action in federal court within 180 days of the
alleged discrimination. 1968 Act, S 810(d). Ms. m i s did not
file such a suit, but has relied on the federal government's
enforcement procedures to vindicate her rights.
Ms. Ilha's complaint was still pending et HUD when the
Fair Housing Amendments Act was enacted on September 13, 1988 and
when it took effect six months later on March 12, 1989.1/ Under
the 1988 Amendments, HUD retain, its investigatory and
conciliation responsibility but now has additional enforcement
authority to be exercised where conciliation fails. & & C2
u.s.c. s 3610. HID now makes a final determination of whether
reasonable cauee exists to believe discrimination has occurred
and, if it decides affirmatively, issues a charge of
discrimination against the responds*:. When a charge i. i.su.d,
oithar the COBplalnln7 or re.por'ding party nay elect to have thl
that1^ “ 0^ , e i 1j=̂ ’̂ ,fb^ “ c,̂ ' i " « P t ioi,0f the 1968 Act
the inveetigatory period euggeeted by withinTOlune of c explain:. rec,siv|2 a r n ualL5 l°i l °f the
Diacrim<T'.'t-^nrl r ro 22a_;!9 (19*2" y ' 388 Hsasing
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either the complaining or responding party may elect to have the
matter tried in federal court. 42 U.S.C. s 3612(a) and (o).1/
The new statutory procedures were applied to the Ellis
complaint and defendants elected federal court adjudication.
Defendants argue, however# that: the government's suit is untimely
(1) because Ms. Ellis' independent right to file her own suit had
expired by the tine the government filed its action on her
behalf, or (2) because HUD failed to issue the charge within the
100 day period sec forth under the new statutory provisions (see
t 42 tt.s.C. 5 3610(g). As we demonstrate below, neither of these
arguments is meritorious.
P00'39fcld 82£! l PIS 203 . 9P;£I 2G , 0£ dbW
A. THE NEW PROCEDURES OF THE FAIR HOUSING AMENDMENTS ACT ARE PRONERLY rrNVpftpn IN THIS CASE______________________
This is a case growing out of the federal government's
enforcement authority. Whether or not the statute of limitations
applicable to a private suit by Ms. Ellis has expired is thus of
no consequence. There is no dispute that Ms. Ellis'
administrative complaint was originally timely filed. The core
issue, therefore, is not whether the Amended Fair Housing Act
would grant a retroactive extension of a statute of limitations
for private suits, but rather whether it is appropriate for HUD
!?0 ?¥cl1 a^ect^on is made,, the matter is heard bv an
^ Judge‘ "Onder the new enforcement schema
■fcheP̂ kTT613 maY intervene in the government's suit or*in*??,**? (42 U.S.C. S 3612(C)(2), and 42 U S C c
S 3613) ! They alS° retsin “ independent right to sue (42*0.8.c.
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to apply its new enforcement scheme to a timely administrative
complaint pending when the new procedures took effect. We
believe that it is.
The united States asks this Court to apply the time-
honored principle that "a court; is to apply the law in effect at
the time it renders its decision, unless doing so would result in
manifest injustice or there is a statutory direction or
legislative history to the contrary.-' Bradley v. Richmond
Bofltd, 41G U.S. 6J6, 711 (1974). The only court to directly
a^ ress the guest Lon of whether' the Amended Act's new procedures
may be applied to pre-Amendment: conduct has concluded that such
application is proper. United States v. Rent America ffnrp _ 734
F. Supp. 474 (S.D. Fla. 1990). m Rent America. the defendants
contended, as do 'ihe defendants here, that the enhanced penalty
provisions of the Amended Act could not apply to discriminatory
practices which occurred prior to the enactment of the
Amendments. The court rejected the defendants' claim, and held
that application of the remedial provisions was not ''manifestly
unjust" under the Bradley standard and did not violate the Due
Process or Ex Post Facto provisions of the United States
Constitution. Rent Americar 734 F. Supp. at 4)50.
As Bant America and Bradley make clear, a statute is
f r a u d to apply to e w e . pending at the time of enactment unless
there is a 'clear indication' from Congress that the statute is
not to apply. ties t o , 416 U.S. at 712-16. There 1. no such
Indication here. Indeed, in lasting its implementing regulations
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tinder the Act, HUD stated explicitly that the new remedies and
enforcement procedures are to apply retroactively. As the agency
charged with admi:iistaring the Fair Housing Act, HtJD's
interpretation of the statute is entitled to considerable
deference. £ladS-;gn9, Realtors V. village of BeliwQOd r 441 u.s.
91, 107 (1979); EaitlSjinte y, Metropolitan Life IntnwnnP
409 TJ.S. 205, 210 (1972). The Preamble to the regulations
states, in pert inant part:
The 198U Amendments (except as to discriminatory
housing practices involving handicap and familial
status) do not create new legal duties or
responsibilities. Rather, they merely provide a
new process by which aggrieved persons may enforce
existing rights protected under Title v x u . I.a., the
1988 Amendments create new procedures for the filing
investigation and conciliation of complaints
concerning discriminatory housing practices and
strengthen the remedies available to victims of
housing discrimination by providing for administrative
hearings, and. by increasing the availability of civil
penalties, attorney's fees, etc. Because the new
remedied and enforcement procedures do not affect
vested rights, retroactive application is entirely
appropriate. BradlffY, SHREA, (increasedavailability of attorney's fees); Frilel v.
Alrgraft:.,..Cgtf 751 F.2d 1037 (9th cir.. 1985) (extension
of limitations period); Montana Power Cq . y.
£pvgr ftmm,/ 445 F.2d 739 (D.c. Cir. 1970) (changeiS
tribunal); ancl 5camltt_jy._Sturceon Bav Winter
Oafrj 2;54 F .2d 564 (7th Cir. 1965)(change in procedure). •
54 Fad. (Reg. at 3259 (1389), 24 C.F.R. Ch.X, Stiboh. A, App. I, p.
577.
In the absence of expirees language to the contrary, the
current law must apply unless i1: would be manifestly unjust to do
so. in determining whether retroactive application of a new law
• i8 unjust,” a court Bust eonsidar (a) the natur. and
5
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m
\
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identity of the parties, (b) the nature of their rights, and (c)
the nature of the impact of the change in law 'upon those rights.*
Bradlsx, 416 U.S. at 718; Rent: America. 734 F. ‘supp. 479.
The first consideration, "nature and identity of the
parties,* focuses primarily on whether the action is a private
case between individuals, or a case involving "great national
concerns." firad^ay, 41S D.S. at 718-19 (quoting united ^
£sliQ<?ngr ftggy, 5 U.S. .103 (isci)). When a statute manifests an
important national policy, the court must respect that policy end
apply it. As the Court stated in Schooner
[I]n mere private cases between individuals, a
court will and ought to struggle hard against
a construction which will, by retrospective
operation, affect the rights of parties, but
in greac national concerns, where individual
rights . • . jire sacrificed for national purposes,
. . . the court must decide according to existing1&V8 •
Schooner Pgngyr 5 U.S. at 10.
This suit ie not brought by a private party, but by the
United States, to implement a statute to which Congress
accorded the highnst national priority. T r a f f l c a ^ Y .
Mfitrppolltan Life Ins, ftp,, 409 U.S. 205, 211-12 (1972). Indeed,
a principal purpose of the Amendments was to strengthan the
government's enforcement: powers which were generally considered
inadequate under the 19(18 ict. H.R. Rap. Ho. 711, 100th Cong.,
2d Saas. (1988), it 16-17.
The government's rola in this case is not merely to
serve as free counsel for an individual claiming to have baan
victimized by discrimination, even though the government seeks
6
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v
specific relief on her behalf .-3/ xn General Telephone v. ^ggS/
446 U.S. 318 (1980), the Supreme Court interpreted an analogous
enforcement scheme and recognized the government's interest in
vindicating the public right of freedom from discrimination.
Commenting on the government's unique role in {securing public
rights, the Court noted that:
Tha [government] is not merely a pro::y for victims of
discrimination. . . . Although the [government] can
secure itpecific relief, such as . . damages for
backpay or benefits denied, on behalf of discrimination
victims, the [government] is guided by the overriding
public interest in equal employment opportunity . . .
asserted. through direst Federal enforcement.
general lelgpiyanff, 446 u .s. at 326.
Because housing discrimination litigation is in fact
initiated to enforce a public right as mandated by Congress, it
is qualitatively different from "mere private cases between
individuals." fit* Rent America. 734 F. Supp. at 479. Thus, the
first Bradley factor is met.
The second Bfcgdlty consideration examines the nature of
rights at issue and determines whether the new legislation
a^ ec^s ***¥ rights that have "matured or become unconditional."
Brafllpy/ 416 U.S. at 720. Becaaise Ms. Ellis did not file her own
lawsuit within 180 days of the discriminatory incident (the
statute of limitations in effect: under the 1968 Act), the
defendants claim that the government cannot maintain this
enforcement action on her behalf. In other words, defendants
- i y e“ t? z £ tig*t i m a o d — —
7
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claim that thair right to avoid penalty tor thair discriminatory
conduct has now '■natural or become unconditional.' Again,
defendants' position confuses two vary separate aspects of the
fair Housing Act. As discussed: above, the Fair Housing Act
provides rights for a private complainant to litigate private
Claims as wall as providing the government with authority to
exercise its enforcement powers. Although based upon the same
set of operative facts, these rights are mutually exclusive.!/
in the :Instant case, defendants' discriminatory conduct
was unlawful before the effective date of the 1988 Act. in fact
discrimination on the bnsi. of race has been proscribed
throughout the twenty-four year history of the Fair Housing Act,
and defendants have no -right' to avoid new penalties or
administrative procedures for conduct which was unlawful at the
time it occurred. Sna Ii«nt Anar Ion, 734 F. supp. at 480.
Moreover, the mer. fact that Ms. Bllis' right to maintain a
private cause of action had expired prior to the effective date
W a t 2??. 12C > S ^ (1»»0).
mutually exclusive is also eupxxirted th® govarnjn®nt are
instant case, Dwivadi vafitot.: ?0) ’ 111 c<»tra«t to the
the United States but was an a*nf®rcemen't action brought by
acting as ' p ^ “ e ^ t ” ne£ £ £ * « " * * g f ~ ™ t e Pj « i 2
made an argument sim ilar to dlflmdants' ™ i 5? 6. Defendants
private complainants' 180-dav !fr argument here that the
had expired p r i S r S t ie d f i e S ? ? d S o f r t ! 1568 Actcould not be revived. The court Amended Act and
statute of limitations u n d e r ^ . S ! ? d2 a? J lth0“?h toe extended
revive a private action that hid S S S f S not *» » M d to
HDD regulations exiorassly provideT?=? “ * 1968 the
retroactively applied ln H T O Aet to *•CBmGnr proceedings. £d. at 1527.
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010•3Sbd 0351 PIS 302 1 £ :5 I 2S. 00 dttW
of the Amended Arrt does not create a •matured" or •unconditional/'’
right to avoid enforcement by the government.
The third consideration requires an examination
of the impact, if any, that ths change in law may have upon
existing rights. Bzafllsy, 416 u.S. 720. It -’stems from the
possibility that new and unanticipated obligations may be imposed
upon a party without notice or an opportunity to be heard. *
If the law would have caused the defendant to change his conduct
had he known of his obligations, a court is mere likely to find
♦ man^fest injustice in subjecting him to enforcement of the new
law. i£. The Amended Act, as applied to the defendants, did not
affect the proscription against racial discrimination that
existed at tha time of the ill«>gal activity/ father it only
expanded the enforcement and remedial provisions of the 1968 Act.
Defendants cannot sariously suggest that they would not have
discriminated against Ms. Ellis had they known that new
administrative procedures would be available to persons who filed
complaints with FID because the defendants were liable for such
discriminatory ac:s at the time that they were committed.
To deny relief to the government in -this action would
be •manifestly unjust,• given the important public policy at
issue. The court should reject defendants- claim that the
government's suit is untimely.
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B. THE GCVERNW3JIT'S EJIFOHCZIDEJIT ACTION IS NOT UHTUSZLY
BECAUSE OE HUD'S FUTURE TO COMPLETE ITS INVESTIGATION
IN TOO PAYS--- ..------------------ ---------------------
There is no language in 'the Act. -which, creates a statute
of limitations to bar future governmental enforcesemt if HUD
fails to complete its investigation within a certain period, goa
42 U.5.C. S 3610(b ). Nhile the original Act indicated that such
processing should be completed in thirty, days, and the Amended
Act denotes a lOO day time period far such processing, neither
time limitation is jurisdictional, .la the statute indicates, if
it is impracticable fer HUD to complete its processing of the
complaint in the suggested time, HUD is not barred from
proceeding. 42 U.S.C. S 3610(a) (1) (B) (ivj. flee United States v.
Hakkl. Fair Housing-Fi.ir Lending (P-H) para. 15,676 at 16,473
i
(E.D.Pa. 1990) (holdinct that the loo day investigation requirement
is not jurisdictional because there is no stated consequence for
failure to comply with its terms). S^q also Unltad States v.
curies, at al. . No. 9.L-5743 WJH. (IOC) (C.D.Cal. Jan. 29, 1992)
(copy attached)(order denying defendants' motion to dismiss
alleging that HUD non-compliance wifi 100 day investigation ia
jurisdictional).
This issue ias ali:o arisen in HDD a u proceedings, and
the A U decisions hold that non-compliance with the provision
that complaints are to be processed within 100 days is not a
ground for dismissal. Secretary of HUD v ̂ Baumgardner,
Fair Housing-Fair Lsrdfng fP-H) para. 23,006 at 25,097 (November
15, 1990) (Andretta, A.L.J.)(holding that although BOD did not
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comply with it* ova r«*gii.ations, ncoft~compllanca la mot grounds
for dismissal because the regula1:ians relate to BCD's
investigatory function, not to BUD'e right to maJaxtain an
enforcement action),3J
CUHOJJSIOJh
Oxe cana iideratlona set forth in pradlerg and Sent
America and the other cited authority all support applying the
remedial and enforcement provisions of the Fair Bousing
Amendments Act to the circumstances of tide case. Retroactive
application ia coiisistent with natisting lav and legislative
intent and vill assist the Unitaid states- in the achievement of
important policy ijoals. Application of the Amended Act vill not
result in any injustice to the defendants. In addition, HUD's
failure to follow administrative procedures is not jurisdictional
»nH has no bearing an tie court's ability to adjudicate this
case.
t
5y j w reemiremant that the United States file its suit 30 days
after an election to proceed in federal court (42 U.S.C. 5
3fil2(o)) is arguably in the nature of a statute
But as is true *ith respect tx) the timeliness of Ms. ®S i l X n t to HDD, tt.ru 1. no .iiopute tt.t tt. filing of ttu
xjnited States' complaijit in this court was timnly-
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For the fcregoing reason*, defendants' oral notion to
dismiss should ha denied.
Margaret B. Seymour Assistant U. S. Attsmey
P.0. Bon 2266
Columbia, S.C. 29202
(803) 765-5483
I.D. Mo. 1562
Respectfully submitted,
; . W
ftPaul P. Babcock Joan A. /wagagna.
Thomas Ji— xeary
Cheryl L. ZieglerAttorneys
Bousing and Civil Enforcement
Section
Civil Rights Division U.S. Department of Justice
P.O. Box 65998
Washington, D.C. 20035-5998
(202) 514—4752
I!
Dated: February 12, 1992
S
12
1 3.5-2-0 2 10 10=26 205 254 1500. GORDON SILBERMAN UIIGGINS CHILDS
f
IN THE
UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
NO. 89-7850
UNITED STATES OF AMERICA,
Plaintif f/Appellee,
v.
PEPPERTREE APARTMENTS et al.,
GEORGE BAILES , Jr.,
Defendant/Appellant.
Appeal from the United States District Court
For the Northern District of Alabama
BRIEF OF APPELLEE
FRANK W . DONALDSON
United States Attorney
ROBERT P. BARCLIFT
Assistant United States Attorney
Attorneys for Appellee
005 P
1992-02-10 10:26 205 254 1500 GORDON SILBERMAN WIGGINS CHILDS 005 F
IN THE
UNITED STATES COURT OF APPEALS
vrm THE ELEVENTH CIRCUIT
NO. 89-7850
UNITED STATES OF AMERICA,
Plaintiff/Appellee,
v .
p e p p e r t r e e APARTMENTS «t al•»
GEORGE BAILES, Jr.,
Defendant/Appellant.
Appeal
For
from the United States District Court
the Northern District of Alabama
b r i e f OF APPELLEE
1902-02-10 10=27 GORDON SILBERMAN WIGGINS CHILDS 005205 254 1500
CERTIFICATE OF INTERESTED PERSONS
The undersigned counsel for Appellee certifies
that the following list represents all persons having an
interest in the outcome of this case*
Honorable Sam C . Pointer
United states District Judge
Federal Courthouse
Birmingham, Alabama 35203
Honorable Ralph J. Bolen Attorney for George L. Bailee, Jr.
Defendant-Appellant 423 Frank Nelson Building
Birmingham, Alabama 35203
George 1>. Bailee, Jr.
Suite 103#4 office Park circle
Birmingham, Alabama 35223
Honorable Frank K. Donaldson
United States Attorney
200 Federal Building
Birmingham, Alabama 3 5 2 0 3
H o n o r a b l e R o b e r t P . B a r c l i f t
Assistant U n i t e d States A t t o r n e y
200 Federal B u i l d i n g
1800 5t h A v e n u e N o r t h
B i r m i n g h a m , A l a b a m a 3 5 2 0 3
Honorable John P. Kennedy
Associate General Counsel
Department of Housing &
Urban Development
Honorable Geoffrey L. Patton
United States Department of
Housing fc Urban Development
451 Seventh Street, S.W.
Washington, D.C. 2 0 4 1 0 - 0 5 0 0
i
1392-02-10 10:27 205 254 1500 GORDON SILBERMAN WIGGINS CHIi_DS 00
STATEMENT BEfiARDINfS ORAL ARGUMENT
Appellee requests o r a l a r g u m e n t b e c a u s e t h i s c a s e
involves the important issue of w h e t h e r t h e g o v e r n m e n t may
collect increased penalties for v i o l a t i o n s c o m m i t t e d b e f o r e
the penalty w a s e n a c t e d .
1332-02 10 10 = 27 205 254 1 500 GORDON SILBERMAN UIIGGINS CHILDS
TART.E OF CONTENTS
Certificate of Interested Persons . * .
Statement Regarding Oral Argument .
Table of contents ....................
Table of Citations....................
Statement of Jurisdiction ............
Statement of the Issues ..............
Statement of the C a s e ...............
a. Proceedings Below..........
b. Facts......................
C. Standards of Review........
Summary of the Argument ............
Argument................................
Cone)n s i ..................................
Certificate of Service..............
Page
1
11
iii
iv
vii
2
3
• 3
5
11
12
13
40
41
005 F
i i i
1392-02 10 10=28 205 254 1500 GORDON SILBERMAN WIGGINS CHILDS 005
TABLE QF CITATIONS
Cases EA2£
B e n n e tt v. New J e r s e y . 4 7 0 U.S. 632 (1985) ....................... 31
Bowen v. Public Agencies Opposed to Social Security
E n t r a p m e n t . 477 U.S. 41 ( 1986) .................................. 35, 36
Dradlev v. School Beard of the Cltv of Richmond,
416 U.S. 696, 71 1 (1974) . . . 2 3 - 2 5 , 27, 28, 30, 33, 34, 36, 37
D e d h a m W a t e r Co. v. C u m b e r l a n d F a r m s D a i r y . Inc..
805 F . 2d 1074, 1 0 8 5 ( 1st Cir. 1 9 8 6 ) .................................. 24
H a s t i n g s v. E a r t h S a t e l l i t e C o r p . . 62 8 F . 2 d 85, 9 3 - 9 4
(D.C. Cir. 1980) ................................................... .. 31
K e l s o e v, F e d e r a l C r o p I n s u r a n c e C o r o . . 724 F . S u p p .
448 (E.D. T e x . , 1 9 8 8 ) ..................................... 27, 30, 31*, 34
Louis Vuitton S.A. v. Spencer Handbags Coro.. 7 6 5 F . 2 d
966 (2d Cir. 1985) ...................................................... 3 6 - 3 8
M e r c a n t i l e B a n k & T r u s t Co. v. F i d e l i t y S D e p o s i t ..Co,./
750 F . 2 d 838 ( 1 1 t h Cir. 1 9 8 5 ) .................... . .................... 11
Nascm v . B r o w n . 595 F - 2 d 801, 806 (D.C. C i r . 1979) ........... 15
N a t i o n a l _ W i l d l i f e Federation v. M a r s h . 747 F . 2 d 616,
6 1 9 - 2 0 (11th Cir. 1984) ................................................... 23
Q r r e q o v. H U D . 701 F . S u p p . 1384, 1397
(N.D. 111. 1988) ............................................................. 35
P a n t e x T o w i n g C o rp. v. G l l d e w e l l . 763 F . 2 d 1241
( 1 1th Cir. 1985) ......................................................... 1 5 - 2 0
T h o r p e v. H o u s i n g . A u t h o r i t y of t he C i t y of D u r h a m .
393 U.S. 268 ( 1969 ) ......................................................... 25
T h r a s h e r v. S t a t e F a r m T i r e & C a s u a l t y Co.. 734 F . 2 d
637 (11th Cir. 1984 ) ...................................................... 11
T u r n e r v , U n i t e d S t a t e s . 4 1 0 F . 2 d 837, 842
(5th Cir. 1969 ) ................................................... . . . • • 31
U n d e r w o o d v. H u n t e r . 730 F . 2 d 614 (11th C i r . 1984) c i t i n g
P u l l m a n - S t a n d a r d v. S w i n t , 4 5 6 U.S. 273, 287 (1982) ........... H
i v
1932-02-10 10:28 205 254 1500 GORDON SILBERMAN WIGGINS CHILDS 005
27, 30
United 5tates v.Ettrick Wood Products, ISSa /
683 F.Supp. 1262, 1266 (W.D. Wise. 1988) . . . . 26,. 26, 27, 30, 33
United States v. Fernandez-Tol,e_dQ, 749 F.2d 703,
705 (11th Cir. 1 9 8 5 ) ........................................ 31
United States v. Hj.ll, 676 F.Supp 1158, 1167
(N.D. Fla. 1987) (emphasis in original).........2b, H , Ji, -s'*
united states v. Mechem, 509 F.2d 1193, 1196
(10th Cir- 1975) 31
united States v. Oakwood Downriver Medical Cejvt££,687 F.Supp. 302, 307-8 (E.D. Mich. 1 9 8 8 ) .......... 24, 30, 33
United States v. Pani, 717 F.Supp. 1013, 1017
(S.D. N.¥. 1989 ) 34
United States vSchooner Peqov, 5 U.S. (1 Cranch)
103, 2 L.Ed. 49 (1801) ....................................
United States v,._ Schumann. 861 F.2d 1234, 1238
(11th Cir. 1988) 23
United States v. Utah Construction and Mining CoinpanVx.
384 U.S. 394 , 422 ( 1966 ) .................................. 15
United States v. Vanella. 619 F.2d 384, 385-6
(5th Cir. 1980)................ ........................... ; 31
University of Tennessee v,_Elliott, 478 U.S. 788,
7 9 7 - 8 ( 1986) .................................................................
Statutes and Regulations:
24 C . F . R . P a r t 2 4 .................................................................3
24 C.F.R. S 24.305(b).............................................21
24 C.F.R. Part 2 6 ..................................... . • - 9' 19
24 C.F.R. S .............................................. 10
24 C.F.R. S 26.24(d).............................................. 10
v
1932-02-10 10:29 205 254 1500 GORDON SILBERMAN UIGGINS CHILDS 005
Statutes and Regulations:
. . . 6
. . . 9
. . .9
.5, 28
. 5, 28
24 C.F.R. S 221.529 . . . ........................
41 Fed. Reg. 5304 (January 27, 1977)..................
52 Fed. Reg. 42634 (November 6, 1987)..................
12 U.S.C. S 17151(a) ..................................
12 U.S.C. S 17151(d)(4) ..............................
12 U.S.C. S 1715z-4a.............. 21/ 22/ 24, 25, 30, 33, 38
12 U.S.C. S 1715z-4a(a)(2) ............................
12 U.S.C. S 1715r-4a(c) ..............................
15 U.S.C. S ...........................................
31 U.S.C. S 3729-33 .................................. .
. 21
7, 37
\ 36
. 24
Other References:
11Fed.R.Civ.F. ................................................
Pub. L. No. 90-448 S 302, 82 Stat. 506 (August 1, 1968). . . . 29
Pub. L. No. 99-562 S 2, 100 Stat. 3153 (October 27, 1986). • • 24
Pub. L. No. 100-242, 101 Stati 1908 (February 5, 1988). . -30̂ 38
Pub. L. No. 100-242, 101 Stat. 1913 ........................... 22
H.R. Conf. Rep. No. 100-122(1), 100th Cong., lst^Sess. 1, ^
rpnr-irted in 1987 U.S. Code Cong. & Admin. News 3317..........
H.R. Conf. Rep. No. 100-426, 100th Cong., 1st Sees. 161,reprinted in 1987 U.S. Code Cong, t Admin. News 3458 ........
H.R. Conf. Rep. No. 100-426, 100th Cong., 1st Sees. 214,
reprinted in 1987 U.S. Code Cong. & Admin. News 3511..........*■
H.R. Conf. Rep. No. 100-426, 100th Cong. 1st Sees. 216/
reprinted in 1987 U.S. Code Cong, i Admin. News 3513. • • •
133 Cong. Rec. S 18607-23, H 12047-95
(daily edition December 21, . ............................
,27
25
vi
1992-02-10 10:29 GORDON SILBERMAN WIGGINS CHILDS 005205 254 1500
STATEMENT OF JURISDICTION
The Court has jurisdiction over this case under
2S u.s.C. $ 1291 because it is the appeal of a final
decision of the United States District Court for the
Northern District of Alabama granting summary judgment to
the appellee. This Court, by its Order of April 12, 1990,
has px-eviously determined that it has jurisdiction in this
matter.
v n
1992-02-10 10:29 205 254 1500 GORDON SILBERMAN WIGGINS CHILDS 00
STATEMENT o r THE ISSUES
1. Did appellant present any genuine issues Of
material fact that would raise a legal defense to this
action and preclude the granting of summary judgment for the
government?
2. Did the District Court err in holding that the
ruling in an administrative hearing collaterally estops
appellant from relitigating the issue of whether he violated
his Regulatory Agreement contracts with HUD?
3. Did the District Court err in awarding double
damages to appellee under 12 U-S.C. S 1715z-4a for
violations which took place prior to the enactment of the
double damages remedy?
2
1992-02-10 10:30 205 254 1500 GORDON SILBERMAN WIGGINS CHILDS 005
On May 5, 1989, the United States of America filed
a . Proceedings Below
STATEMENT OF THE CASS
ite complaint against appellant Bailee and several
organizations controlled by Bailes which own and manage four
multi family apartment projects which receive mortgage
insurance and other financial assistance from the Department
of Housing and Urban Development. (R-l-1). The complaint
alleged that from 1983 to 1985, the defendants had paid
$90,311 in project income to themselves in violation of the
terms of Regulatory Agreement contracts with HUD. The
complaint sought double damages for these violations as
expressly authorized by 12 U.S.C. 17152-4a.
for summary judgment and a supporting memorandum. (R-l-4).
The motion was based on the doctrine of collateral estoppel
and asserted that defendants' violations of the Regulatory
Agreements had already been established at an administrative
hearing before HUD's Board of Contract Appeals. The
defendants filed a response to this motion on June 27, 1989.
(R-l-6).
July 12, 1989, granting the motion for summary judgmenV-
against Bailes and awarding the United States double damages
On June 6, 1989, the United States filed a motion
The District Court entered an Order and Opinion on
3
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in t.ho amount of $186/622 plus other cost* allowed by
statute. (R-l-8 and 1-9).
Defendant Bailes filed a motion to reconsider this
Order on July 25, 1989. (R-l-10). This motion challenged
as e r m r the Court's award of double damages because the
double damages remedy was enacted on February 5, 1988, while
the violations of the Regulatory Agreements took place from
19R7 to 1985.
In an Order and Opinion dated October 10, 1989,
the District Court denied Bailes' motion to reconsider.
(R-l-14 and 1-15). On November 9, 1989, Bailes filed a
Notice of Appeal (R-l-20) from the District Court's Order of
July 12, 1989, (R-l-9) granting summary judgment to the
United States.
1992-02-10 10:31 205 254 1500 GORDON SILBERMAN WIGGINS CnIi_DS 00
b. Facts
A. The ProlectB and HUD•s Administrative-Controls
Peppertree Apartments, City Court II ApartmentB,
Rainbow Apartments and College Manor Apartments are
multifamily housing projects located in the cities of
Bessemer, Talladega, Rainbow City and Gadsden, Alabama,
respectively. (Rl-1-2). Each Of the projects was built
with the proceeds of a loan which was insured against
default by the Secretary of Housing and Urban Development
(HUD) under authority granted by Section 221(d)(4) of the
National Housing Act, 12 U-S.q. 17151(d)(4). (Rl-1-3,4).
The purpose of that section is "to assist private industry
in providing housing for low and moderate income families
and displaced families." 12 U.S.C. 17151(a). The loans on
Peppertree Apartments and City Court II Apartments were made
in Oct_uber 1979, while the loan on Rainbow Apartments was
made in February 1981 and the loan on College Manor
Apartments was made in October 1980. The amount of each
loan ranges from $1,003,003 (City Court II) to $1,629,200
(College Manor).
While each of the projects is owned by a separate
partnership entity (i.e. Peppertree Apartments, City Court
II Company, Rainbow Apartments Company and College Manor,
Ltd., all of which were defendants below), all of them are,
as a practical matter, controlled by George L. Bailee, Jr.
(Bailes). Bailes is a managing or general partner in each
5
1992-02-10 10:31 205 254 1500 GORDON SILBERMAN WIGGINS CHILDS 005
n i these entities and is the sole owner of Bailes Realty
Company which, at all times relevant to this action, was the
managing agent for each of the projects. Bailes personally
signed all checks for expenditures from the projects' bank
accounts.
In consideration for the mortgage insurance
provided by HUD, each of the owners entered into an
identical Regulatory Agreement contract with HUD under which
it agreed to operate the project in accordance with the
terms of the Agreement. (Rl-1, Exhibits A-D). HUD's
authority to regulate the operation of a project in this
manner is found in Section 221(d)(4) ("the Secretary may, in
his discretion, require the mortgagor to be regulated or
restricted as to rents or sales, charges, capital structure,
rate of return and methods of operation") and in 24 C.F.R.
S 221.529. Such regulation is necessary to assure that a
project continues to provide adequate housing for low- and
moderate-income families and displaced families as intended
by Congress.
The Regulatory Agreements prohibit the owners from
using project rents and income for any purpose other than
reasonable operating expenses and necessary repairs."
Paragraph 8(b). The only times these funds can be used for
other purposes are when the project has "surplus cash*^as
defined in paragraph 16(f) or when the owner has HUD's prior
written approval for an otherwise unauthorized expenditure.
6
1 9 9 2 - 0 2 - 1 0 10=32 205 254 1500 GORDON SIL5ERMAN HIGGINS CHILDS 00
Paragraph 8(b) is supplemented by paragraph 8(e)
which prohibits distribution of project assets or income
except from surplus cash and except under conditions set
forth therein. Both paragraphs 8(b) and 8(e) are designed
to ensure that the needs of the project and the tenant* are
fully met before project funds are distributed to the owner.
If the owners violate their Regulatory Agreements,
HUD has a wide range of remedies. These include the right
to apply to any court, state or federal, for an injunction
against any violation, for specific performance of the
Agreement or "for such other relief as may be appropriate,”
paragraph 14(d). in addition, the government "may recover
double the value of the assets and income of the project
that [a] court determines to have been used in violation of
the regulatory agreement" 12 U-S.C. $ 1715z-4a(c). The
government may also recover the reasonable costB it incurs
when bringing an action to recover the diverted funds. id-
>
B. The Owners’ Violation of the Regulatory Agreements
In August 1986, HUD's Office of Inspector General
(01G) xssued an Audit Report which stated that during the
period frorr September 1, 1983 to December 31, 1985, Bailes
and Bailes Realty Company, in their capacities as managers
of the projects, had taken a net total of $104,911 from the
four projects and spent that money for purposes not
authorized by the Regulatory Agreements. Specifically,
Bailee had written 103 checks on project accounts for a
7
1992-02-10 10:32 GORDON SILBERMAN WIGGINS CHILDS 005205 254 1500
rota] of $1,519,711 and placed that amount directly or
indirectly in money market bank accounts which he had
established in his own name. While Bailee had returned
$1,414,800 of this money, he had not repaid the remaining
$104,911 and had never accounted for or repaid the interest
he had earned on the total amount he had withdrawn.
The OIG determined that these expenditures
violated the Regulatory Agreements because the projects had
no surplus cash when Bailes wrote the checks, because the
expenditures were not made for reasonable operating expenses
or necessary repairs or under circumstances permitted under
paragraph 8(e), and because Bailes did not have written
permission from the secretary before taking the money.
Based on these findings, the OIG recommended that Bailes be
required to immediately repay the $104,911 he was retaining
in violation of the Regulatory Agreements.
C . Administrative Proceedings
Shortly after the OIG's Audit Report was issued,
HUD made a written demand that Bailes return the $104,911.
Although Bailes did not dispute the fact that he took the
money, he nevertheless refused to put it back.
Consequently, HUD determined that Bailes should be debarred
from further participation in HUD programs for a period of
five years. When Bailes received notice of his proposed
debarment, he requested a hearing on the matter before HUD”S
Board of Contract Appeals in order to challenge the legal
8
19.3 2 - 0 2 - 10 1 0 = 33 205 254 1500 GORDON SILBERMAN WIGGINS CH I l DS 00
• T'.c. factual basis for the debarment. Bailee had an absolute
right to such a hearing.1
Bailes' request for a hearing was the beginning of
a quasi-judicial administrative proceeding before an
Administrative Judge of HUD'S Board Of Contract Appeals
which was held under rules set out in 24 C.F.R. Part 26.
That proceeding was formally initiated by the Administrative
Judge's Notice of Docketing and Order (Rl-4/ Exhibit E-l).
Subsequently, as required by 24 C.F.R. 5 26.10/ HUD filed a
complaint against Bailee alleging, among other things, that
he had distributed $1,519,711 in project funds in Violation
of the Regulatory Agreements. This was the same amount that
Bailes had put into his money market accounts as alleged in
the OTG's Audit Report. As a remedy for these activities,
HUD requested the Administrative Judge to enter a
determination debarring Bailes and Bailes Realty Company
from further participation in HUD programs for a period of
7
five years. (Rl-4, Exhibit E-2).
The administrative proceeding culminated in a
hearing on Bailes' proposed debarment which lasted four
days, November 1-4, 1988, and took place in Birmingham,
Alabama. At the hearing, Bailes presented evidence and
1 The debarment was undertaken pursuant to regulation in
effect on May 14, 1987, the date on which HUD issued its notice of
proposed debarment. Those regulation*, 41 Fed. Reg. 5304
(January 27, 1977 ) were codified as 24 C.F.R. Part 24 and were
^superseded on November 16, 1987, 52 Fed. Reg. 42634 (November 6,
.987 ) .
992 -02 -10 10:33 205 254 1500 GORDON SILEERMAN WIGGINS CHILDS 00
cres®-examined witness*#. 24 C.F.R. 5 26.23. At the close
of the hearing, the Administrative Judge issued a ruling
from the bench. 24 C.F.R. 5 26.24(d). (Rl-4, Exhibit
E-4). In that ruling, the Administrative Judge found that
Bailes had made a net distribution of $90,311 ($1,519,711/
less repayment of the $1,414,800 shown in the Audit Report
and of an additional $14,600 which Bailes allegedly returned
after the administrative proceeding had begun) to his money
market accounts and that he had not replaced that money
despite knowing that these distributions violated the
Regulatory Agreements. (Rl-4, Exhibit E-4 at 541-43,
550-52). The Administrative Judge further found that Bailes
had not accounted for or repaid interest earned on these
accounts. Such use of project funds was, the Administrative
Judge stated, "outrageous, inexcusable and shocking"
therefore, rendering a five year debarment "warranted and
necessary." (Rl-4, Exhibit E-4 at 551-553).
10
GORDON SILBERMAN WIGGINS CHILDS 00I19.52-02-10 10:34
i
i
2 0 5 2 5 4 1 5 0 0
c. Standards of Review
In reviewing an order which grants a motion for
summary judgment, this Court must examine the record which
was before the District Court to determine if there is a
genuine issue as to any material faet. The Court will
conduct an independent review of the record using the
standard contained in Rule 56(c ) , Federal Rules of Civil
Procedure. Mercantile Bank & Trust Co. v • _Fiti.C-lltv &
Deposit Co.. 750 F.2d 838 (11th Cir. 1985); Thrasher v.
State Farm Fire & Casualty Co., 734 T•2d 637 (11th Cir.
1984 ) .
Questions of law, such as whether the District
Court properly applied the doctrine of collateral estoppel
to the facts in this case and whether the District Court
awarded the proper relief, are subject to independent
review. Conclusions of law may be set aside if they rest on
an erroneous view of the law. ' Underwood v. Hunter. 730 F.2d .
614 (iith Cir. 1984) citing Pullman-Standard v. Swint, 456
U.S. 273, 287 (1982).
11I
1932 -02-10 10:34 205 254 1500 GORDON SILBERMAN UIIGGINS CHILDS 0 0
SUMMARY OF THE ARGUMENT
The District Court properly granted summary
judgment for the United States because there are no genuine
issues of material fact. All of the relevant facts were
readily determined from the uncontradicted documents which
were filed by the government in support of its motion.
Appellant has not produced any evidence at the District
Court or in this Court which contradicts any of the facts
alleged by the United States.
The District court/ having found that all of the
necessary criteria were met, correctly applied the doctrine
of collateral estoppel as it exists in this Circuit to the
facts in this case. Under that doctrine, the District Court
appropriately held that the determination of HUD'S
Administrative Judge that appellant Bailes has violated his
Regulatory Agreement contracts with HUD prevents him from
relitigating that issue in federal court. ;
The District Court properly relied on Supreme
Court case law to hold that the United States may recover
double damages from Bailes for his violations of the
Regulatory Agreements even though those violations took
place before the double damages remedy was enacted.
12
1 9 3 2 - 0 2 - 1 0 10=34 205 254 1500 GORDON SlLBERMAN NIGGING Chi^DB uu:
ARGUMENT
A. Appellant Has Not Raised Any Genuine Issues
of Material Fact Which Would Preclude the
Granting of Surrunarv Judgment For the United
States.
Summary judgment was not only appropriate in this
case but inevitable because none of the material facts are
in dispute. Bailes does not deny that he was in full
control of the bank accounts for the four housing projects
which are the subject of this litigation. He freely admits
that he took $1,519,711 from the projects' bank accounts and *
placed them in money market certificates. Appellant's Brief
at 7. Bailes further admits that he disregarded HUD's
demand that he return $90,311 of that amount to the
projects' accounts. Appellant's Brief at 8. Moreover, he
readily agrees that an administrative hearing concerning his
use of project funds was held before HUD's Board of Contract
Appeals, Appellant's Brief at 8, and does not deny that, the
pleadings and transcripts from that hearing which were
attached to the government's motion for summary judgment
(R-l-4, Exhibits E-l through E-5) are authentic.
Bailes' retention of $90,311 in project funds violates the
Regulatory Agreements. But this is a purely legal issue.
Likewise, the real issue before the District Court in the
motion for summary judgment was also legal: whether the
rulmg of the Board of Contract Appeals precludes Bailes
The parties are plainly at odds as to whether
13
1922-02-10 10:35 205 254 1500 GORDON SILBERMAN UlIGGINS CHILDS 005
from claiming that his retention of $90,311 in project
income does not violate the Regulatory Agreements. Under
these circumstances, the Court could, and did, resolve this
issue entirely from the facts then before it, and such a
resolution was entirely proper.
The only issues on which Bailee even appears to
claim a material or genuine issue of fact are 1) the precise
issue which was presented to the Board of Contract Appeals
and 2) the exact nature of the Board's ruling. Appellant's
Brief at 17-20. However, these issues are not really in
dispute. The Court was able to conclusively resolve them in
favor of the government by referring to the relevant,
undisputedly authentic pleadings and transcripts of the
Board's hearing which were available to it as part of the
record in this case. The Court's Opinion states explicitly
that
The Administrative Judge found that Bailee had
made a net distribution of $90,311 t© hi* money .
market accounts and that he had not replaced that
money despite knowing these distributions violated
the Regulatory Agreements.
(R-1-8-2) .
With no issue of material fact before it, the
District Court had no choice but to grant summary judgment.
Accordingly, there la no legal basis on which this Court may
overturn that ruling. 1—
14
1332-02-10 10=35 205 254 1500 GORDON S1LBERMAN ulIGGINS CHIi_DS 00
B. The District-Court Properly Applied the
Doctrine of Collateral Estoppel tP Prevent
Bailee From Disputing That He Had Violated
the Regulatory Agreements.
The District Court properly held that under the
doctrine of collateral estoppel, the Board of Contract
Appeals’ ruling prevents Bailes from relitigating the issue
of whether he retained $90,311 in violation of the
Regulatory Agreement.
Bailes admits, as he must, that administrative
proceedings before government agencies may collaterally
estop relitigation in district courts. Appellant's Brief at
14-15. Agency action will have this effect when the agency
"is acting in a judicial capacity and resolves disputed
issues of fact properly before it which the parties have had
adequate opportunity to litigate." United States v. Utah
Construction and Mining Company. 384 O.S. 394, 422 (1966).
Accord, University of Tennessee v. Elliott. 478 U.S. 788,
797-8 (1986); Nasem v. Brown. 595 F.2d 801, 806 (D.C. Cir.
1979).
In the Eleventh Circuit, the findings of an
administrative agency will prevent relitigation of the
issues that led to those findings if five criteria have been
wet. Pantex Towing Corp. v. Glldewell. 763 F.2d 1241 (11th
Cir. 1985). These criteria are:
1. There is identity of the parties or their
privies in the two proceedings; 2
2. There iB identity of issues;
15
1932-02-10 10:36 205 254 1500 GORDON SIL5ERMAN WIGGINS CHILDS 005 F
3. The parties had an adequate opportunity to
litigate the issues in the administrative
proceeding;
4 • The issues to be estopped were actually
litigated and determined in the
administrative proceeding; and
5. The findings on the issues to be estopped
were necessary to the administrative
decision.
Id ■ at 124 5. Notwithstanding Bailes' arguments to the
contrary, thic case fully meets the Pantex standard, and
collateral estoppel applies.
The first Pantex test, identity of the parties or
their privies, is clearly met here. The parties in the
administrative action were the government and Bailee; the
parties in this action are the government, Bailes, and
several organizations controlled by him. Bailes is either
the general partner or the owner of all of these
organizations. (R-l-4, Exhibit E-4 at 540). Although these
entities were not themselves parties in the administrative
proceeding, their interests were fully represented, or could
have been, by Bailes. Under these circumstances, there can
be no doubt that Bailee was their "privy" in the
administrative proceeding. Therefore, all of the parties to
this action were also present, directly or indirectly
through Bailes, at the administrative proceeding, and there
is a complete identity of the parties in the two actions-.-
It is important to note, however, that the District Court
judgment entered on July 12, 1989, is against George Lewis
16
1 9 9 2 - 0 2 - 1 0 10:36 205 254 1500 GORDON SILBERMAN WIGGINS CHILDS 005
Bailes, only and not the various Defendant companies.
(Rl-9). Clearly then, the parties actually affected by both
proceedings are identical.
Bailee claims that the absence of his affiliates
from the administrative hearing precludes an identity of
parties because those entities had no right to "appear/
object, cross examine witnesses or offer testimony at the
administrative hearing." Appellant's Brief at 17. Bailes
has not presented any evidence at all, however, to show that
the interest of those companies was any different from his
own or that their appearance would have in any way altered
the course of the hearing or led the Administrative Judge to
a different conclusion. To the contrary, the evidence shows
that Bailee and his companies had identical interests and
that all of those interests were well represented at the
hearing.
The second Pantex test has been met because thet
same issue is involved in both proceedings: whether Bailes
distributed project funds in violation of the Regulatory
Agreements.51 Count I of the complaint filed by HUD in the
administrative hearing specifically charges Bailes with
making 103 disbursements of project funds which violated the
Regulatory Agreements. (R-l-4, Exhibit E-2 at 5). The
Administrative Judge clearly recognized that this was an.
The reference in Count I of the administrative complaint to
•paragraph 6E" of the regulatory agreements appears to be a
^typographical error. The correct reference is to paragraph 8E.
17
1392-02-10 10=37 205 254 1500 GORDON SILBERMAN WIGGINS ChlicDS 00
{ sf'.i# at. the hearing. (R-l-4, Exhibit E-4 at 538-539).
Similarly, paragraphs 19-22 of the complaint in this action
charge Bailes and the other defendants with opending project
funds in violation of the Regulatory Agreements and failing,
to return $90,311 of those funds upon demand from HUD.
(R-l-1-5). A comparison of these documents leaves no doubt
t-.hrtt the question of whether Bailes had complied with his
Regulatory Agreement duties was a central issue in both
proceedings.
Bailes is completely and demonstrably wrong when
he claims that there is no identity of issues because “the
only issue that was before the administrative hearing was
the disbarment for failure to comply with HUD's demand" that
return the money that he had taken from the projects, and
because "Bailes' alleged breach of contract [wasj never
before the administrative hearing." Appellant's Brief at
17. (Emphasis in original) This claim ignores the plain
language of the Administrative Judge's opinion as well as
Count i of the administrative complaint and the six other
counts which charge Bailes with additional violations of his
obligations to HUD. (R-l-4, Exhibit E-4 at 538-539 and
Exhibit E-2 at 5-9) .
The third Pantex test is met because Bailes had an
adequate opportunity to litigate the relevant issues in £he
administrative hearing. As described above, the hearing was
quasi-judicial in nature and was carried out under HUD
18
1 9 9 2 -0 2 -10 10=37 205 254 1500 GORDON SILBERMAN WIGGINS Ch lLDS 005
rwniariors assuring that the parties have the full rights
of a litigant in a formal judicial tribunal- 24 C.F.R.
Part 26- See the Notice of Docketing and Order filed in the
hearing. (R-l-4, Exhibit E-l). These regulation* assured
Bailes of a full and complete opportunity to litigate the
issues, and Bailes has not denied, either at the District
Court level or in his appellate brief, that he had such an
opportunity-
Under the fourth Pantex test, the issues to be
estopped must actually have been litigated and determined in ̂
the administrative proceeding. This test is also met. The
Administrative Judge specifically determined that Bailes had
placed "project operating funds into money market accounts
where they were commingled with non-project moneys in
violation of the Regulatory Agreement. And over $90,000 has
still not been replaced." (R-l-4, Exhibit E-4 at 550-551).
The Administrative Judge found that these violations were
"outrageous, inexcusable and shocking." id. at 551-
Elsewhere in her opinion, the Administrative Judge set the
exact amount of the money taken in violation Of the owners
contractual obligations at $90,311, as of th® dare of the
hearing. Id. at 543. That is precisely the violation the
government has alleged in this action, and $90,311 is the
precise amount it seeks to recover, exclusive of double -
damages and costs. (R-l-1-5,6).
19
1932-02-10 10=38 205 254 1500 GORDON SIL6ERMAN WIGGINS Cn iLDS Uu5
Bailes seriously distorts the record in this case
and misunderstands what happened at the hearing when he
alleges that "There is no indication that the administrative
court ever reached or needed to determine whether Mr. Bailes
had violated any agreement. The court only determined that
the office of inspector general of HUD had made a
determination, and made a demand with which Bailee had
failed to comply." Appellant's Brief at 18. In view of the
plain language of the Administrative Judge's opinion as
quoted above, this claim is specious. The Administrative
Judge did, in fact, find in the most explicit and forceful
terms that Bailes had violated the Regulatory Agreement.
Finally, the Administrative Judge's finding that
Bailes had made unauthorized use of project funds was
essential to her determination that Bailes should be
debarred from doing business with the government for the
full five years proposed by HUD. "The decision is really
based on the financial [activities]...It ie the financial
disregard and the [disregard of] financial duty that are
making me apply the five years." (R-l-4, Exhibit E-4 at
554-555 ). Accordingly, the last. Pantex test has been met.
Bailes claims that the Board of Contract Appeals
has no jurisdiction "to resolve issues involving a contract
dispute." Appellant's Brief at 19. Aside from the C__
absurdity of stating that a Board of Contract Appeals cannot
resolve contract disputes, this claim is also wrong because
20
1392-02-10 10=38 205 254 1500 GORDON 2 I LB l RMAN UIGGINS Cnii_DG 00
one of the stated grounds for which parties can be debarred
from doing business with HUD is the violation of the terms
of a contract. 24 C.F.R. S 24.305(b). Obviously, the Board
of Contract Appeals has jurisdiction to determine if a
party, like Bailes, has violated a contract if it is to
debar that party for committing a contract violation. In
addition, Bailee had the opportunity to challenge the
jurisdiction of the Board of Contract Appeals before, during
and after the hearing and in his opposition to the motion
for summary judgment, but he did not do so. He has long ago
lost his chance to raise this issue.
C . The District Court Properly Awarded the
Double Damages Remedy Provided in 12 U.S..-CL..
17I5z-4a.
1. Bailes is a "person" within the meaning Of
12 U.S.C. S 1715z-4a.
In enacting 12 U.S.C. Sl7l5z-4a, Congress provided
hud with a powerful remedy against project owners and their
affiliates who use project income in violation of their
regulatory agreements. To ensure the widest possible
coverage for this provision, Congress made it applicable
against 'any person" who misuses project income and defined
"person" to include, among other parties, a project owner,
any partner of an ownership entity, and any agent of thS "
owner. 12 U.S.C. S1715z-4a(a )(2).
21
1392-02-10 10:33 205 254 1500 GORDON SILBERMAN WIGGINS CHILDS 005
Bailee makes the astonishing claim that remedies
cannot be awarded against him under 12 U.S.C. Sl7l5s*-4a
because he is not a “person" within the meaning of that
provision. Appellant's Brief at 21-23. However, it has
already been established that he is the general partner of
each of the four entities which own the housing projects
which are the subject of this action, (R-l—4, Exhibit E—4 at
540), and Bailee has never denied this. Clearly, therefore,
Bailes is a "partner of an entity owning the project" and a
"person" subject to the double damages remedy.
Moreover, Bailes readily admits that each of the
four projects was managed by Bailes Realty Company, and that
he is the "general manager" of that company. Appellant's
Brief at 7, 8. He also admits that he peraonally took over
$1,500,000.00 from the projects and then put most of it
back. Appellant's Brief at 8. In light of these
admissions, the conclusion is inescapable that in addition
to being a partner of the owners, he is also the owners'
agent and, therefore, a "person" under 12 U.S.C. 5 I7l5z-4a.
2. Double damages against appellant are
appropriate.
The parties do not dispute that the double damages
remedy was enacted on February 5, 1988 (Section 421 of the
Housing and Community Development Act of 1987, Pub. L.;_No.
100-242, 101 Stat. 1913) or that the last of Bailes' alleged
violations of the Regulatory Agreements t o o k place more than
22
1992-02-10 10:39 205 254 1500 GORDON SILBERMAN WIGGINS Chii_DS 00
two years before that date. However, these facts alone are
far from dispositive. To the contrary, when fashioning a
remedy for illegal conduct, a court generally must apply the
remedy that exists at the time it makes its decision, even
if that remedy did not exist when the violations being
remedied took place. This is consistent with the
fundamental-principal that
a court is to apply the law in effect at the
time it renders its decision unless doing so
would result in manifest injustice or there
is a statutory direction or legislative history to the contrary.
Bradley vL School Board Of the City of Richmond. 416 U.S.
696, 7ii ( 1974 ). A£C9Jtd, United States v. Schumann. 861
F.2d 1234, 1238 (11th Cir. 1988); National Wildlife
Marsh, 747 F.2d 616, 619-20 (11th Cir. 1984).
gradley creates a presumption that statutes will
flPPly retroactively and prescribes a two-step analysis to
determine if that presumption should be displaced. The
first step is to determine from the statute itself and from »*
its legislative history if Congress intended it to have only
prospective application. The second step is to determine if
retroactive application would result in "manifest
injustice." This second step requires the court to review
three factors: (1) the nature and identity of the parties;
(2) the nature of their rights; and, (3) the nature of the
impact Of the change in law upon those rights. Bradley. 416
U.S. at 711-21. None of these three factors alone is
23
1332-02-10 10:40 205 25*+ louu u u r t D U N Ci i l _ D C . r f M h N i«i i u u i
do«-orminative; if two of the three factors weigh in favor of
retroactive application, the statute will be given such
effect. United States v. Oakwood Downriver Medical Center,
687 F.Supp. 302, 307-8 (E.D. Mich. 1988). The central issue
in determining whether retroactive application will cause
manifest injustice is "whether the 'disappointment of
private expectations caused by the retroactive application
will outweigh the public interest in enforcement of the new
rul*?.'" id. quoting Dedham Water Co. v. Cumberland Farms
Dairy, Inc.. 805 F.2d 1074, 1085 (1st Cir. 1986).
Therefore, the double damages remedy under
12 U.S.C. S 1715z-4a is fully available in this case unless
the Bj adlev analysis demonstrates that the presumption of
immediate application should be displaced. To date, there
have been no judicial decisions interpreting this provision
other than one being appealed here. Nevertheless,
application of the Bradley analysis and reference to recent
case6 involving increased civil penalties for violating the
False Claims Act3 will clearly show that the double damages
remedy should be given full effect in this case. * 31
Among other things, the False Claims Amendments Act of 1986,
Pub. L. No. 99-562 S 2; 100 Stat. 3153 (October 27, 1986) increased
the damages payable for violation of the False Claims Act,
31 U.S.C. $ 3729-33, from double to triple and increased the
required forfeiture from $2,000 to between $5,000 and $10,000.
24
1 9 3 2 - 0 2 - 1 0 10:40 205 254 1500 GORDON SILBERMAN WIGGINS ChILDS 005
a. Statutory Direction and Legislative Hi-Stoxy
The first step of the Bradley analysis is to
determine if there is clear evidence of congressional
intent, either in the statute itself or in the legislative
history, that the statute is to apply prospectively only,
in this case, neither the statute itself nor its legislative
history even discusses this issue. 12 U-S.C. S 1715t-4a;
H.R. Conf. Rep. No. 100-426, 100th Cong . , 1st Sess.
reprinted in 1987 U.S. Code Cong, k Admin. News 3458; H.R.
Conf. Rep. No. 100-122(1), 100th Cong., 1st Sess. Z£££iSS£d
in 1987 U.S. Code Cong, k Admin. News 3317; 133 Cong. Rec.
C 16607-23, ii 12047-95 (daily edition December 21/ 1987).
In the absence of such a discussion, Congress has expressed
no intention to limit its applicability, and the Bradley
presumption of retroactivity remains in place. Even if a
statute "does not explicitly recite that it is to be applied
to pending cases, it is to be given recognition and effect."
■Bradley. 416 U.S. at 715 citing Thorpe v. Housing AuthoriJiy
of the Cltv of Durham. 393 U.S. 268 (1969).
However, the absence of relevant statutory
direction or legislative history does not end this step Of
the analysis. Implicit congressional intent to displace the
Bradley presumption may be found by examining the purposes
of the statute. In a case involving amendments to the Raise
Claims Act, the Court found that 'if the purpose of the
amendments would be furthered only by prospective
25
1932-02-10 10:41 205 254 1500 GORDON SILBERMAN WIGGINS CHILDS 005
*nr>l tcation, it is reasonable to assume that Congress did
not intend for the amendments to apply retroactively."
United States v. Hjll, 676 F.Supp 1158, 1167 (N.D. Fla.
1987) (emphasie in original). But, the Court went on to
find that the purposes of the amendments, including the
amendment increasing the penalties for violating the Act,
would be furthered by retroactive application and that there
was no evidence of congressional intent to limit their
effect. Id. Similarly, the purposes of the double damages
provision show that it is to be given full and immediate
effect..
Retroactive application of the double damages
remedy will serve several purposes. Not only will it allow
the government to recoup money it has actually lost through
fraud, it will also permit recovery of the costs of
detecting fraud which was committed prior to February 5,
1988, and of the costs of taking administrative action
against those who committed the fraud. In this case alone, r
the government's expenses in the debarment proceeding
against Bailes and Bailes Realty Company were substantial.
The increased recovery of government money through
retroactive increase of civil penalties has been explicitly
endorsed as a valid legislative purpose. United States v.
Ettri£k Wood Product?, Xnc., 683 F.Supp. 1262, 1266 (W.D. *
Wise. 1988). Another stated purpose is to "expand the
ability of the Secretary [of HUDJ to deter the use of assets
26
1332-02-10 10:41 205 254 1500 GORDON SILBERMAN WIGGINS CHILDS 005
and income of multifamily housing projects in violation of
the project's regulatory agreement." H.R. Conf. Rep. No.
100-426, 100th Cong. 1st Sese. 216, reprinted in 1987 U.S.
Code Cong. & Admin. News 3513. The court in Hill recognized
that retroactive application Of increased penalties might
indeed deter future violation of the False Claims Act. 676
F.Supp. at 1167.
remedy will so plainly be furthered by retroactive
application, coupled with the silence of the statute and the
legislative history, shows that there is no Congressional
intent whatsoever to limit its effect.
legislative history indicates that the statute should be
applied retroactively, "the court must look to the factors
enumerated in Bradley to determine whether retroactive
application would result in 'manifest injustice.'"
United State? Ex. Rol. McCov v. California Medical Review,
Inc^, 723 F.Supp. 1363, 1368 (N.D. Cal. 1989). Accord.
Kelsoe v. Federal Crop Insurance Corp.. 724 F.Supp. 448
(E.D. Tex., 1988); United States v. Ettrick Wood Products,
Inc^, 683 F.Supp. at 1265. Here, none of these three L..
factors support a "manifest injustice" exception to the
Bradley presumption. Moreover, any disappointment of
defendants' private expectations caused by the retroactive
The fact that the purposes of the double damages
b. Man n est Injustice
Where neither the statutory language nor
27
1992-02-10 10=42 205 254 1500 GORDON SILBERMAN WIGGINS Cm Il DS 00
apolication of the double damages remedy is greatly
outweighed by the public interest in preventing fraud
against the government, particularly by those who benefit
substantially from the programs they have defrauded, and in
enhancing the recovery of government money lost through
fraud.
i . Nature and Identity of the Parties
The Supreme Court has stated that in contrast
to "mere private cases between individuals," cases which
involve "great national concerns" must be decided "according
to existing law." Bradley. 416 U.S. at 717-19, quoting
United States v. Schooner Peacrv. 5 U.S. (1 Cranch) 103, 2
L.Ed. 49 (1801). Under Bradley, a court should determine if
great national concerns are involved by identifying the
parties.
Here, the parties are the federal government
and, opposing it, an individual who has participated
directly or indirectly in a federal housing program
administered by HUD. Under this program (found at Section
221(d)(4) of the National Housing Act, 12 U.S.C.
S 1715 Id(4), HUD has enabled the defendant to build, own,
and manage four housing projects by providing over
$5,500,000 in mortgage insurance. Although the stated and
primary purpose of the program is to assist private inftustry
in providing housing for low and moderate income families
and displaced families, 12 U.S.C. S 17151(a), the defendant,
28
205 254 1500 GORDON SILBe.RM4sN W i GG i Ncs Cnii_Dci uu:1992-02-10 10:42v
part-owner and operator of the projects, has also received a
substantial benefit from the financial risk taken by the
government.
it goes without saying that the prevention of
fraud in federal housing programs is a great national
concern. In fact, when it passed the Housing and Community
Development Act of 1987, which included the double damages
provision at Section 421, Congress stated that it expected
HUD to “use all legal remedies available to protect FHA from
fraudulent practices." H.R. Conf. Rep. No. 100-426, 100th
Cong. 1st Sess. 214, reprinted in 1987 U-S. Code Cong. &
Admin. News 3511. Fraud against HUD not only exposes the
government to financial losses and insurance risks beyond
those anticipated by Congress, but also prevents low income
tonantB from receiving the maximum benefit from the
investment of federal funds. There is an even greater
public interest in preventing .fraud by parties like Bailee
who have already received significant benefits from the
program they are accused of defrauding. Moreover, the
enactment of a double damages remedy 1b a further expression
of Congress' specific and long-standing concern over misuse
of project funds. For example, the former Section 239(b) of
the National Housing Act, Pub. L. No. 90-448 S 302, 82
29
i
1932-02-10 10:43 209 254 1500 GORDON SILBERMAN WIGGINS CHILDS 00
Ptat 506 (August 1, 1968) * , provided criminal sanctions for
an owner who violates a project's Regulatory Agreement in
this way.
Plainly, this is not a "mere private case
between individuals" or one in which the private
expectations of the defcndantc take precedence over the very
significant public interest. Bailee admits that this is the
case. Appellant'6 Brief at 27. As such, the first of the
three Bradley factors favors retroactive application of
12 U.S.C. S I7l5z-4a.
«
ii. The Nature of the Parties' Rights
The seeond Bradley factor also favors
retroactive application of the double damages remedy. That
factor requires the court to determine if retroactivity
"would infringe upon or deprive a person of a right that had
matured or become unconditional.” Bradley. 416 U.S. at 720.
It is well established that parties have no 'matured" right
to imposition of a particular level of damages against them
for violation of the False Claims Act. Keleoe v. Federal
Crop Insurance Carp.. 724 F.Supp. at 451; United States Ex.
— McCpy v._California Medical Review. Inc.. 72 3 F.Supp at
1369; United States v. Oakwood Downriver Medical Clinic. 687
F.Supp. at 307; United States y, Ettrick Wood Products.
* Section 239(b) was deleted by Section 416(c)(3) of the
Housing and Community Development Act of 1987, Pub. L. No.
100-242; 101 Stat. 1908 (February 5, 1988) and Section 254 of the
National Housing Act was added.
30
1992-02-10 10:43 205 254 1500 GORDON SlLBERMAN WIGGINS CHILDS 00
I r r r . <532 F.Supp. at 1266; United States v. Hill, 676
F.Supp. at 1169. Likewise, defendants have no "matured"
right to a specific penalty for violation of their
Regulatory Agreements.
These cases are consistent with the general
rule that "changes in statute law relating only to procedure
or remedy are usually held immediately applicable to pending
cases." Turner v. United States. 410 F.2d 837, 842 (5th
Cir. 1969 ). Accord. United States v, rernandez-Tole.dS, 749
F.2d 703, 705 (11th Cir. 1985); Hastings v. Earth Satellite #
Coro.. 628 F.2d 85, 93-94 (D.C. Cir. 1980); united States _y,
vanella. 619 F.2d 384, 385-6 (5th Cir. 1980). Thia is
because there is no matured right to any particular remedy.
Even when some substantive rights may be affected, a new
statute will apply if "the predominant purpose . . . is
procedural and remedial." United States v. MecheiD/ 509 F.2d
1193, 1196 (10th Cir. 1975).
The case of Bennett v. New Jersey, 470 U.S.
632 (1985), cited by Bailes at p. 29 of his brief, add6
nothing to this discussion. As the excerpt cited by Bailes
demonstrates, Bennett involved a substantive change in an
existing statute rather than the creation of a new remedy.
X e l s o e v. F e d e r a l Crop I n s u r a n c e Corn.. 724 F.Supp. at 449.
That distinction alone makes Bennett irrelevant to the facts
h e r e .
31
1 9 9 2 - 0 2 - 1 0 10 = 44 205 254 1500 GORDON S 1LBERMAN NIGGING u v
Bailes claims that retroactivity would
infringe on his allegedly matured and unconditional right
under the Regulatory Agreements to have HUD seek against him
only those remedies which are specifically mentioned
therein. Appellant's Brief at 28. Once again, he has
completely misread the relevant documents, and he has no
such right.
Paragraph 14 of the Regulatory Agreements
(R-l-l, Exhibits A-D) describes certain remedies that HUD
may pursue if the owners do not comply with their
obligations. However, this provision does not in any way
prevent HUD from seeking other remedies. Instead, paragraph
14 is explicitly and purposely open-ended, permitting HUD to
(d) Apply to any Court, State or Federal, for
specific performance of this Agreement, for an
injunction against any violation of this
Agreement, for the appointment of a receiver to
take over and operate the project in accordance
with the terms of this Agreement, or for such
Other relief as mav be appropriate, since the
injury to the Secretary [of HUD} arising from a
default under any of the terms of this Agreement
would be irreparable and the amount -of the damages
would be difficult to ascertain. (Emphasis added.)
For this reason, Bailes has no right, matured or otherwise,
to insist that HUD limit the remedies it can seek against
him. To the contrary, the Regulatory Agreements give HUD
the explicit right to seek any remedy against Bailes that
wij.1 best effectuate the purposes of the program under which
the projects were financed and protect the federal
investment in those projects. Thus, retroactive application
32
crV 92-02-10 10=44 205 254 1500 GORDON SILBERMAN WIGGINS CHILDS
of the double damages remedy will not unjustly infringe on
any right currently available to Bailes.
iii. Nature of the Impact of the Change in
Law upon the Parties' Rights
Under the third Bradley factor, manifest
injustice will result if a statute imposes new and
unanticipated obligations without notice and an opportunity
to be heard. Bradley. 416 U.S. at 720. Here, 12 U.S.C.
S 17i5z-4a imposes no such obligation.
In B r a d l e y , the Supreme Court found no
m a n i f e s t injustice where a statute imposed "no change in the
s u b s t a n t i v e obligation of the p a r t i e s . " 416 U.S. at 720.
T h i s r e a s o n i n g is e q u a l l y a p p l i c a b l e here because the double
d a m a g e s r e m e d y d o e s not a l t e r or diminish defendants'
s u b s t a n t i a l r i g h t s . 12 U . S . C . S 1 7 1 5 z - 4 a d o e s not prohibit
c o n d u c t t h a t wa s p r e v i o u s l y p e r m i t t e d by the Regulatory
A g r e e m e n t s , n o r d o c s it i m p o s e any additional duties under
t h o s e a g r e e m e n t s ; it m e r e l y i n c r e a s e s the measure of d a m a g e s .
t h a t r e s u l t f r o m v i o l a t i o n of defendants' obligations.
S i m i l a r l y , t h e i n c r e a s e d p e n a l t y u n d e r t h e
F a l s e C l a i m s A c t "does not i m p o s e an additional duty on
d e f e n d a n t s . It m e r e l y c h a n g e s the m e a s u r e of d a m a g e s t h a t
r e s u l t f r o m a v i o l a t i o n of t h e A c t . " U n i t e d S t a t e s v.
E t t r i c k W o o d P r o d u c t s , I n c . . 683 F . S u p p . at 1266. A c c o r d .
U n i t e d S t a t e s v. Q a k w o o d D o w n r i v e r M e d i c a l C e n t e r . 687
F.Supp. at 307 (False C l a i m s A c t A m e n d m e n t s "do not alter
l i a b i l i t y or c h a n g e c o n d u c t p r e v i o u s l y d e t e r m i n e d lawful.").
005
33
1332-02-10 10=45 205 254 1500 GORDON SIL5ERMAN WIGGINS CHILDS 005
In Hill. the eourt also stated that the third
Bradley factor would not support a finding of manifest
injustice "without a plausible suggestion of likely
significant and justified reliance on the prior law." 676
F.Supp. at 1170. Aeeord, Kelsoe v. Federal Crop Insurance
CffiCHt> 124 F.Supp. at 452; United States v. Pani. 717
F.Supp. 1013, 1017 (S.D. N.y. 1989). In the present case,
Bailes alleges for the first time in his appellate brief
that he “relied upon the [Regulatory Agreement] contracts in
making his decision to expend the funds which are currently
at issue." Appellant's Brief at 25. This claim, however,
is a transparent fabrication.
Based on Bailes' own statements, the
Administrative Judge found that he took the project funds
because he no longer felt himself bound by the Regulatory
Agreements after HUD had refused to grant a rent increase
that he had requested. (R-l-4, Exhibit E-4 at 549-550).
Now, he claims the exact opposite by stating that he took
the money precisely because he felt that the Regulatory
Agreements were still in effect. Not surprisingly, he
provides no proof for his assertions. The only way to
credit such a claim would be to hold that Bailes felt that
HUD was bound by the Agreements but that he was not. His
apparent lack of understanding of basic contract law is
surprising in view of the fact that Bailes attended law
school (R-l-4, Exhibit E-4 at 551). In addition, he is
34
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•stopped by the Administrative Judge's finding from
asserting a new explanation for his behavior.
Finally, Bailee contends that retroactive
application of the double damages remedy would Impose an
unanticipated obligation on hire because he could not
reasonably have foreseen in 1979 that Congress would have
enacted Euch a remedy in 1988. Appellant's Brief at 28—29.
But it is well established that all contracts with the
government are subject to subsequent legislation by
Congress. The Supreme Court stated very clearly in gowen v̂ . .
Public Agencies,Opposed to social security Entrapment/ 477
U.S. 41 (1986) that
While the Federal Government, as sovereign, has
the power to enter contracts that confer vested
rights, and the concomitant duty to honor those
rights, we have declined in the context of
commercial contracts to find that a "sovereign
forever waives the right to exercise one of its
sovereign powers unless it expressly reserves the
right to exercise that power in" the contract.
Rather, we have emphasized that "without regard to
its source, sovereign power, even when ;
unexercised, is an enduring presence that govcrne
all contracts subject to the sovereign's
jurisdiction, and will remain intact unless
surrendered in unmistakable terms." Therefore,
contractual arrangements, including those to which
a sovereign itself is party, "remain subject to
subsequent legislation" by the sovereign.
477 U.S. at 52 (citations omitted).
This concept is clearly applicable where the
a regulatory program created by Congress
has retained its power to modify or
Accord. O r r e a o v. HUD. 701 f.Supp.
contract is part of
over which Congress
amend. id. at 55.
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•394, 1397 (N.D. 111. 1988). Bowen, is particularly
instructive because it recognizes Congress' power to change
substantive contractual rights as well as the remedial
rights involved here. In view of Congress' continuing right
to alter its programs, both substantively and remedially, to
meet changing needs. Bailee simply cannot claim that the
enactment of the double damages remedy was •‘unanticipated"
as that term is used when applying the Bradley test.
3. The double damages remedy does not violate ex
post facto restrictions.
in louis vuitton s . >enceg Handbags Corr>-/
765 F.2d 966 (2d Cir. 1985), the Second Circuit Court Of
A p p e a l s held that remedies under Section 1503(2)(B) of the
T r a d e m a r k Counterfeiting Act of 1984, 15 U.S.C. S 1117(b),
which were enacted eleven days before the start of trial
should not be applied retroactively. That law amended an
earlier statute to make mandatory a treble damages remedy
which had previously been discretionary. The court chose to
interpret the new act prospectively in order to avoid
constitutional questions arising from the ex post facto
c l a u s e and the due process clause of the Fifth Amendment.
Bailee mistakenly believes that Vuitton is applicable here.
The Vuitton decision does not in any way alter the
validity of the Bradley analysis which was used by the
District Court in this case. Vuitton does not involve the
federal government nor does it even discuss Bradley, let
36
alone zhcw why it is inapplicable to the facts in that case.
For these reasons alone, Vuitton has no relevance. Beyond
that, the Trademark Counterfeiting amendments differ
markedly from the double damages remedy and the False Claims
Act amendments because, as Bailes admits at p. 33 of his
brief, they were intended to be punitive and not
compensatory. The double damages statute, on the other
hand, is at least partly compensatory because it enables HUD
to recover costs expended in sanctioning those who violate
their regulatory agreements as well as the audit and legal
costs specifically authorized in the statute. 12 U.S.C.
§ 1715z-4a(c). In this case, it enables HUD to recover the
substantial costs of the four-day administrative hearing and
related expenses.
Another distinction between this case and Vuitton
is that the latter is merely a dispute between private
parties while this case involves a great national concern.
Even under the Bradley analysis, the Vuitton court could
have found manifest injustice in applying sanctions
retroactively in an entirely nonpublic case. As shown
above, the same analysis favors retroactive application here.
Bailes incorrectly asserts that the double damages
statute, like the statute in Vuitton. is an amendment to an
earlier, less penal provision. Appellant's Brief at 33-35.
The double damages provision is not an amendment to
anything; it was created by Congress as a brand new remedy. The
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i>r provision referred to by Bailee is a criminal
statute, the former Section 239(b) of the National Housing
Act which was deleted by Section 416(c)(3) of the Housing
and Community Development Act of 1987, Pub. L. No. 100-242,
101 Stat. 1908 (February 5, 1988). At the same time it made
this deletion, and in the same section of the statute,
Congress added another criminal statute which it designated
as Section 254 to the National Housing Act. That provision
specifies criminal penalties for parties who use project
income for purposes other than to meet actual and necessary
project expenses when the project loan is in default or when
the project has no surplus cash. Section 416(b), Housing
and Community Development Act of 1987, eupra.
In contrast, the double damages provision is a
purely civil remedy which was added in Section 421 of the
Housing and Community Development Act of 1987, a completely
different section, and which was not specifically designated
for inclusion in the Notional Housing Act. Thus, if there
was a replacement for the remedies contained in Section
239(b), as Bailes suggests, they are found in Section 254
and not in the double damages statute. Since 12 I). S • C .
S1715z-4a is not a successor to any previous statute, it
does not raise the ex post facto question
presented in Vuitton. --
The concerns expressed in Vuitton about the ex
post facto provision are not applicable here simply because
38
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♦-ho fy; statutes involved, although superficially similar,
are actually quite different. The double damages statute is
much more closely analogous to the False Claims Act
Amendments, and the cases cited above which permit
retroactive application of increased penalties for violating
that statute provide the most compelling guidance for
deciding the issue in this case.
39
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CONCLUSION
For the foregoing reasons the decision of the
District Court is due to be affirmed.
Respectfully submitted,
FRANK W. DONALDSON
United States Attorney
'P
ROBERT P. BARCLIFT
Assistant United States Attorney
40
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CERTIFICATE Of SERVICE
I hereby certify that a copy of the foregoing brief has
been served on the appellant by nailing a copy to his attorney:
Honorable Ralph J. Bolen, 423 Frank Nelson Building/ Birmingham,
Alabama 35203, this the day of June, 1990.
fidbvct 'P fo&uJ-ibt
ROBERT P. BARCLIFT B
Assistant United States Attorney
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>183
John R. Dunne
Assistant Attorney General
Paul F. Hancock
Joseph D. Rich
Christopher T. Shaheen
Attorneys
Housing and Civil Enforcement Section
Civil Rights Division
United States Department of Justice P.O. Box 65998
Washington, D.C. 20035-5998
(202) 514-4753
Stephen M. McNamee
United States Attorney
Acapulco Building
110 S. Church Street
Tucson, Arizona 85701
(602) 629-6511
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
TUCSON DIVISION
UNITED STATES OF AMERICA, )
)Plaintiff, )
)
v - )
PRESIDIO INVESTMENTS, LTD.; j
and EDWARD SANDQUIST, )
)Defendants. )
■--------------_)
CIV-90-0063-TUC-ACM
MEMORANDUM OF THE UNITED
STATES IN OPPOSITION TO DEFENDANT'S MOTION TO DTSMTSS
On June 13, 1991, defendant Edward Sandquist filed a motion to
ismiss this action on numerous grounds, including lack of
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1 jurisdiction.A/ The United States hereby responds and contends
that defendant's motion is without merit and should be denied.
I. STATEMENT OP THE CASE
A. FACTUAL BACKGROUND OF THIS ACTION
Janet Blair, the party on whose behalf the United States
filed this action, moved into the Presidio Apartments, managed
and partially owned by defendant Sandquist, in September 1987.
Shortly after she moved into her apartment, Ms. Blair was
subjected to the first of several unwanted physical sexual
advances by Mr. Sandquist when he grabbed and kissed her.
Several weeks later, Mr. Sandquist again grabbed Ms. Blair and
kissed her. The third and most serious physical sexual advance
occurred in late December 1987 in the kitchen of Ms. Blair's
apartment. On this occasion, Mr. Sandquist grabbed Ms. Blair and
forcibly kissed her causing the inside of her lip to be cut and
bloody and her neck to be bruised.
y Defendant claim that the Uniced States lacks jurisdiction in
rnis case is based primarily on arguments that the claim is
rhlrld?by the statute of 1imitations under the old Act, and that the enforcement provisions of the amended Act cannot apply
retroactively to his conduct. However, because this
attack 9°es more to the merits of the claim than
appropriate5 a claim lack of jurisdiction is notappropriate. [I]f a complainant seeks relief under the
Constitution or the laws of the United States, dismissal
generally must be for failure to state a claim, not for want of
jurisdiction. * Marine Coatings of Alabama. TnC. v Tin i t-ort
,T* ^ e!l_792 F*2 d 1565 (11th Cir. 1986) (citino Bellv Snort 1,7
CoS-7738F(2d4 * *637 ; 7-' g°U"hern Pacific Transportation.^ltim 7A ? 5 Cir‘ 1985) (n°ting that assertion of a“nder a federal statute is alone sufficient to empower a
\to assume jurisdiction in order to determine whether the statute in fact provides such a right)
- 2 -
OtD tt] DO!
1 action based on pre-Amendments discrimination. we too believe
that this is the central issue raised by defendant's motion and
address it in Part B below.
form 080-183
W-8-76 DOJ
B. THE enforcement provisions of the fair housing
AMENDMENTS ACT OF 1988 APPLY TO THIS ACTION
The essence of the defendant's argument, then, is that HUD
should not have retroactively applied the current procedural and
remedial provisions of the amended Fair Housing Act to a
complaint which was pending when the amended Act became effective
and is based on pre-Amendments discrimination.12/ In defending
this application of the law, the United States merely asks this
Court to honor the well-established principle that "a court is to
apply the law in effect at the time it renders its decision,
unless doing so would result in manifest injustice or there is a
Pa9e 10 of his Memorandum, defdendant states that "it is
perhaps incorrect to define the issue as involving an 'extension'
f the statute of limitations [and] perhaps more correct to
define the issue in terms of whether the new law can be retroactively applied....'
^/Defendant argues that the complaint was not "pending" because
fhn°^ aPPear to be actively investigating the complaint after the Amendments went into effect. However, an agency
rS 'pendin9* on a <?lven date if the "charge was on file with the Commission and [it] had not yet taken final
Bratton v. petniehep Steel Corp. 649 F.2d 658 (9th Cir.
Jor r?-?-n9 Whether a claiffi was pending before the EEOCfor meeting filing requirements). in this case it is clear that
iUtoWeffStiU P^°cessin(3 the complaint when the Amendments went
5££eCt’ The partles were not notified until April 7 1989that HUD would attempt to conciliate the complaint.P Thereafter
haying failed in that attempt, HUD proceeded to issue a after'
on ™ e S b i r ° ^ 0fi?89S°"?hle ? “Se and ° Char9e of Discriminationon December 13, 1989. Therefore, the HUD complaint clearlv had
Jet into'effeet? reDalnecl pendin9 « the time the amended
- 12 -
statutory direction or legislative history to the contrary.4'
Bradley V. Richmond School Board. 416 U.S. 696, 711 (1974). See
alSfi Goida V. Saipan Stevedoring. Co.. 855 F.2d 625, 630-31 (9th
Cir. 1988); DeGurules v. I.N.S.. 833 F.2d 861, 863 (9th Cir.
198?); gtate Of .Idaho V. Howmat Turbine Co.. 814 F.2d 1376, 1378
(9th Cir. 1987); Campbell v. United States. 809 F.2d 563, 575
(9th Cir. 1987).
Defendant contends that this Court should abandon that
tradition in this case and suggests that the procedural and
remedial provisions of the amended Act cannot be applied to
conduct which occurred prior to enactment of the Act. Defendant
fails to acknowledge that the only court which has addressed the
question of application of the procedural and remedial provisions
of the amended Act to pre-Amendments conduct has held that such
application is proper. United States v. Rent America C o m . . 734
F. Supp. 474 (S.D. Fla. 1990). In Rent America, the defendants
contended, similar to the contention made by the defendant here,
that the enhanced penalty provisions of the amended Act could not
apply to discriminatory practices which occurred before enactment
of the Amendments. The court rejected the defendants' claim,
holding that retroactive application of the remedial provisions
was not 'manifestly unjust' under the Bradley standard and did
not violate the Due Process or Ex Post Facto provisions of the
United States Constitution. Rept frnerjcfl, 734 F. Supp. at 480.
This court should follow the reasoning of the Rent America court
and apply the enforcement provisions of Section 812 of the
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amended Act to the defendants pre-Amendments conduct in this
case.
As Rent America and Bradley make clear, a statute will be
assumed to apply to cases pending at the time of its passage
unless there is a 'clear indication' that it is not to apply.
/ 416 U.S. at 712-16. There is no such clear indication
in this case. In fact, the regulations promulgated by HUD
implementing the Fair Housing Amendments Act explicitly state
that the new remedies and enforcement procedures are to apply
retroactively:
The 1988 Amendments (except as to discriminatory
housing practices involving handicap and familial
status) do not create new legal duties or
responsibilities. Rather, they merely provide a
new process by which aggrieved persons may enforce
existing rights protected under Title VIII. I.e., the
1988 Amendments create new procedures for the filing
investigation and conciliation of complaints
concerning discriminatory housing practices and
strengthen the remedies available to victims of
housing discrimination by providing for administrative
hearings, and by increasing the availability of civil
penalties, attorney's fees, etc. Because the new
remedies and enforcement procedures do not affect
vested rights, retroactive application is entirely
appropriate. B.ge, g,q., Bradley, supra, (increased
availability of attorney's fees); Friel v. Cessna
Aircraft Co., 751 F.2d 1037 (9th Cir. 1985) (extension
of limitations period); Montana Power Co. v. Federal
Bgwet Copn,, 445 F.2d 739 (D.C. Cir. 1970) (change
ln tribunal); and Grumnutt v. Sturgeon Bav Winter
Bporfs club, 354 F.2d 564 (7th Cir. 1965) (change in procedure).
54 Fed. Reg. at 3259 (1989); 24 C.F.R. Ch.I, Subch. A, App.I,
p.577. As the agency charged with administering the Fair Housing
Act, HUD's interpretation of the statute is entitled to
considerable deference. Gladstone v. Village of BPliwnnH 441
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U.S. 91, 107 (1979); Xr,afficantg V. Metropolitan Life Insurant
409 D.S. 205, 210 (1972).
Without any indication to the contrary, the current law must
apply unless it would be manifestly unjust to do so. In
determining whether retroactive application of a new law is
'manifestly unjust,' a court is to consider (a) the nature and
identity of the parties, (b) the nature of their rights, and (c)
the nature of the impact of the change in law upon those rights.'
Bradley> 416 U.S. at 417; Goida. 855 F.2d at 630.
The first consideration, 'nature and identity of the
parties', focuses on whether the action is a private case between
individuals, or a case involving 'great national concerns.'
United States v. gchooper P?ggy, 5 U.S. 103 (1801); Campbel1 . 809
F.2d at 575; PeGurujes, 833 F.2d at 863. When a statute
manifests important national policy, the court must respect that
policy and apply it. As the Court stated in Schooner pPnnv.
in mere private cases between individuals, a
court will and ought to struggle hard against
a construction which will, by retrospective
operation, affect the rights of parties, but
m great national concerns, where individual
rights... are sacrificed for national purposes, '
... the court must decide according to existing
5 U.S. at 10. The Fair Housing Act seeks to eradicate
discrimination in housing, a clear national priority.il/ Housing
discrimination litigation is qualitatively different from 'mere
i!/ As Congress
is the policy of
constitutional 1
United States.*
restated in Section 801 of the amended Act,
the United States to provide, within
imitations, for fair housino thrmmhm 42 U.S.C. §3601. housing throughout the
'[i]t
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M I 3
private cases between individuals.' Rent America. 734 F. Supp.
at 479. As the court in Rent America noted in reference to
enforcement of the Fair Housing Act, 'Certainly even the
Defendants cannot deny that the present case is of great national
concern and, therefore, of the type anticipated by the Supreme
court in Schooner Peggy and more recently affirmed in Bradley.'
Rent A?neriC3> 734 F. Supp. at 479. See also DeGurules. 833 F.2d
at 863.
The second Bradley consideration, the nature of the rights,
refers to whether the new legislation affects any rights that
have 'matured or become unconditional.' 416 U.S. at 720. Here,
defendant's discriminatory conduct was unlawful before the
effective date of the 1988 Act, and he has no 'right' to avoid
new penalties or administrative procedures for conduct which was
unlawful at the time it occurred. £ee Rent America. 734 F. Supp.
at 480. Moreover, the mere fact that Ms. Blair's private cause
of action may have expired prior to effective date of the
Amendments did not result in a 'matured' or 'unconditional' right
to avoid any enforcement action by HUD. At the time that the
statute of limitations for Ms. Blair's private cause of action
may have expired, the Amendments had been passed and there was
far from any certainty on the part of the defendant, nor Ms.
- 16 -
Blair,15/ that enforcement action by HUD pursuant to the
Amendments would not occur as the enforcement process was
completed.
The third Bfflfllgy consideration requires an examination of
the impact, if any, that the change in law may have upon existing
rights. 416 U.S. 720. It 'stems from the possibility that new
and unanticipated obligations may be imposed upon a party without
notice or an opportunity to be heard.' if the law would
have caused the defendant to change his conduct had he known of
his obligations, a court is more likely to find manifest
injustice in subjecting him to enforcement of the new law. id.
The amended Act, as applied to the defendants, did not affect the
prohibition against sex discrimination that existed at the time
of the illegal activity; rather it only expanded the enforcement
and remedial provisions of the Act. Surely, defendant does not
suggest that he would not have sexually harassed Ms. Blair if he
had known that new administrative procedures would be available
to persons who filed complaints with HUD, when he was liable for
such actions at the time that they were committed.
As we have discussed, the HUD enforcement action clearly was
still^pending at the time that the statute of limitations on^ s
until" a^K10n °ay h3Ve exP ired' and remained pendingun^il well after the Amendments went into effect in March 1989
in such circumstances, it may very well have been ?ha? 5s' Blai^
deeded not to initiate a private action under the Fair fusing
her behalf6 m C°Uld take such action onner behalf In determining whether retroactive application of
t£at if1?* ’”anJ£eStly un’ust’' the c°“« should slio „ n s ? d «
t o t b i t * ^ enforcement procedure is not applied retroactively
thi aCK1?n .̂ Xt 1S MS‘ Blair who wil1 suffer a grave injustice the inability to have her federal fair housing Ilaib aSjuIicate
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In sum, the considerations set forth in Bradley all support
applying the remedial and enforcement provisions of the 1988 Act
I to the defendants. Such application will serve important public
interests and will not result in any injustice to the defendants.
Defendant also makes an argument based on the due process
clause which is very similar to his retroactivity argument. Due
process claims can only apply to vested rights, Weaver v.
SrahflP/ 450 U.S. 24, 30 (1981), and defendant can hardly argue
that he had a vested right to discriminate prior to the effective
date of the amended Act. UL. at 25-26. £es Rent America. 734 F.
Supp. at 480 (applying the penalty provisions of the amended Act
retroactively and noting that 'Defendants [have] no vested right
to engage in discriminatory practices.'). in short, the factors
deemed important by the Bradley court reflect, to a large extent,
concern about due process rights. Therefore, by definition, any
retroactive application that passes the Bradley test, as is the
case here, cannot give rise to a due process claim.
Defendant cites only gar.pbell v. United States. 809 F.2d 563
(9th Cir. 1987), to support his due process claim. Yet, this
case does not include any due process analysis, and instead
applies the retroactivity analysis suggested by Bradley. More
importantly, contrary to defendant's argument, the analysis of
- 18 -
the Campbell court supports the United States' position that the
HUD enforcement procedures should be applied retroactively
C. THIS ACTION IS NOT BARRED BY LACHES
PerHaps recognizing that there is no applicable statute of
limitations under either the 1968 Act or the 1988 Amendments that
bars the HUD enforcement proceeding, defendant argues that HUD's
failure to follow certain procedural rules and its delay in
filing a charge compel this Court to dismiss this action.
Generally, the doctrine of laches does not apply to the
government when it sues to vindicate the public interest. United
States v.— Ruby Qo., 588 F.2d 697, 704-05 (9th Cir. 1978), cert.
simlsd, 442 U.S. 917 (1979); fiostwjcK Irrigation Dist. v. Dent.
gf Energy, 900 F.2d 1285, 1291-92 (8th Cir. 1990); Lea
^ In Cp p b e ll, a private plaintiff had obtained a judgment
Uni5ed States under the Federal Tort Claims jSt * The plaintiff argued that the court should apply retroactivelv a new
statute, which passed during the pendency of his claim, for
*°“PUt^ 9JP?St“:?Udgment interest. The court applied the Bradlev test and determined that retroactive application of the statute would not be manifestly unjust to the Sited States. StatUte
nn -COrreCtly points out that the Campbel1 court foundln]UStlce because the United States, as opposed to an individual, was the party adversely affected by the retroactive
However, def endant^ncorrectlv extends this reasoning to find manifest injustice in this case Y
; ^ i c e l ¥— ida, 855 F.2d at 630 (citing Campbel1 at 575). Accordinolv
enfn°aCtlV^ aPPlication the amended Act's remedial and 9 Y ' enforcement provisions does not violate the Due Process Clause.
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7S DCU
CONCLUSION
For the foregoing reasons, the court should deny defendant's
motion to dismiss.
By:
Respectfully submitted,
John R. Dunne
Assistant Attorney General
Civil Rights Division
f £ j J
aul F. fiancePaul F. fiancock
Joseph D. Rich
Christopher T. Shaheen
Attorneys
U.S. Department of Justice
Civil Rights Division
Housing and Civil Enforcement Section
P.O. Box 65998
Washington, D.C. 20035-5998 (202) 514-4753
)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
MIAMI DIVISION
UNITED STATES OF AMERICA, CASE NO. 89-6188-PAINE
Plaintiff,
v .
RENT AMERICA, INC.,
SKYLINE RENTAL SYSTEMS, INC.,
JAY HOWARD MAGID, AND
HAL EUBANKS,
Defendants.
__ _______________________________ /
prgPONSE OF THE yNTTFD STATES TO DEFENDANTS' MOTION_TO STRIKE
CLAIMS FOR DAMAGES AND PENALTIES
I. INTRODUCTION
The United States filed this action on March 13, 1989 to
enforce the provisions of the Fair Housing Act (Title VIII of the
Civil Rights Act of 1968, as amended by the Fair Housing
Amendments Act of 1988), 42 U.S.C. 553601 e£ sea, The complaint
alleges that the defendants, who own and operate residential
apartment complexes in the Southern District of Florida, have
engaged in a pattern or practice of discrimination against
persons on the basis of race or color in the rental of such
dwellings in violation of Sections 804(a) - (d) of that Act, 42
U.S.C. 553604(a) - (d). (Complaint, p.2.) Specifically, the
complaint alleges that the defendants have engaged in a pattern
or practice of discrimination by:
(a) Refusing to rent apartments and otherwise making
dwellings unavailable to black persons because of
race or color, in violation of 42 U.S.C. 53604(a);
)- «
(b) Imposing different terms and conditions in the rental of dwellings on account of race or color,
in violation of 42 U.S.C. 53604(b)»
(c) Making statements with respect to the rental of a dwelling that indicates a preference, limitation
or discrimination on the basis of race or color,
in violation of 42 U.S.C. 53604(c), and
(d) Representing to black persons because of race or color that certain dwellings are not available for
inspection or rental when such dwellings are in
fact available, in violation of 42 U.S.C.
§3604(d).
In the March 13 complaint, the prayer for relief sought
injunctive relief pursuant to 42 U.S.C. 53614(d)(1)(A), "monetary
damages" for victims of the discrimination pursuant to 42 U.S.C.
§3614(d)(l)(B), and a civil penalty pursuant to 42 U.S.C.
53614(d)(1)(C). On April 21, 1989 the United States filed an
amended complaint which was designed to clarify the type of
monetary relief that was sought. The prayer for relief in the
amended complaint sought the same relief pursuant to 42 U.S.C.
3614(d)(1)(A) and (C) (i.e., injunctive relief and a civil
penalty) as that sought in the original complaint. However, the
provision seeking monetary damages for victims of the
discrimination was amended in order to set forth explicitly that
both compensatory damages for economic loss, emotional distress,
and deprivation of civil rights and punitive damages were being
sought pursuant to 42 U.S.C. 53614(d)(1)(B).
Since the filing of the complaint the parties have proceeded
with discovery on the liability as well as remedial issues.
During this discovery the United States has identified
-approximately fourteen persons that it claims are victims of the
- 2 -
alleged discrimination of defendants. On Octobar 6 , 1989,
defendants filed a Motion to Strike those portions of the United
States' complaint which seek compensatory and punitive damages,
as well as a civil penalty. The basis for their motion is two
pronged. First, they argue that the portions of the amended Act
which authorize the United States to seek monetary relief, both
damages and civil penalties, cannot be sought retroactively for
discrimination which is alleged to have occurred prior to the the
effective date of the amended Act, March 12, 1989. Second, they
assert that Section 814 of the amended Act limits the United
States' authority to seek monetary relief to seeking damages for
economic loss for victims of discrimination and civil penalties,
and does not authorize punitive damages or compensatory damages
for victims of discrimination in the form of emotional distress.
In seeking monetary relief in this case, the United States
merely seeks to avail itself of the newly fortified remedial
provisions of the Fair Housing Act. Discrimination in housing on
the basis of race has been prohibited by the Fair Housing Act for
over 2 C years. The Fair Housing Act, as amended and applied to
the defendants here, prohibits the same race-based conduct that
the 1968 Act prohibited. Accordingly, this case does not involve
any new substantive liability to which defendants are exposed for
the first time. Moreover, since the defendants, for some time,
have been potentially liable for the same monetary damages which
the United States seeks here, this case, and the amended Act
itself, do not increase the defendants' overall exposure to
liability for monetary damages for victims of unlawful
discrimination.-^/
Below, we set forth in detail the reasons that defendants
motion to strike our claim for monetary damages and civil
penalties is without merit. As way of introduction, we summarize
the manner in which the Fair Housing Act has been amended by the
Fair Housing Amendments Act of 1988. We then demonstrate (1)
that 42 U.S.C. 3614(d)(1)(B) of the amended Act authorizes the
Attorney General to obtain the actual and punitive damages that
we have requested; and (2) that those portions of the amended Act
providing for such monetary damages and civil penalties may,
consistent with the statutory scheme, be applied retroactively to
unlawful discriminatory actions occurring prior to the effective
date of the amended Act: furthermore, retroactive application of
such remedial provisions does not contravene any constitutional
protections asserted by defendants.
1I. THZ FAIP HOUSING ACT, AS AMENDED
Before addressing the specific arguments raised by the
defendants in their Motion, it is important to examine the manner
in which the Fair Housing Amendments Act of 1988 modified the
original Fair Housing Act enacted in 1968, and the reasons for
these changes. We start with a description of the enforcement
1 / Fed era 1 law (as set forth in both the Fair Housing Act of
1968 and 42 U.S.C. §1962)) has prohibited race discrimination in
housing for over twenty years, and has made available to private
litigants monetary damages in the form of punitive damages, and
compensatory damages for emotional distress and actual losses.
-See discussion, pp. 5, 28, footnote 15, below.
. J
mechanism and remedial structure of the Fair Housing Act of 1968
as originally enacted.
Title VIII of the Civil Rights Act of 1968, 42 D.S.C.
§§ 3601-3619, made it unlawful to discriminate in any aspect of
the sale, rental or financing of dwellings or in the provision of
brokerage services or facilities in connection with the sale or
rental of a dwelling because of race, color, religion, sex, or
national origin. Under the provisions of Title VIII, persons who
believed that they had been subjected to a discriminatory housing
practice had two options to obtain redress. Under Section 812 of
the Act, they could file a private action in federal district
court against the alleged perpetrators of the discrimination. If
a violation of the Act was found, relief available included
injunctive relief, actual damages, and up to $1,000 in punitive
damages. However, the $1,000 limitation on punitive damages
under the Fair Housing Act did not apply to fair housing cases
brought under the independent Civil Rights Act of 1866 (42 U.S.C.
§§1981-1982); in such cases brought pursuant to this provision,
victims are entitled to punitive damages without any such
limitation. See, e.g., Karable v. Walker. 704 F.2d 1219, 1221
(11th Cir. 1983); Woods-Drake v. Lundy. 667 F.2d 1198, 1203-04,
n. 11 (5th Cir. 1982) .
Under Section 810 of the Act, such persons could file a
complaint with the Secretary of Housing and Urban Development.
The Department was required to investigate each complaint and to
engage in informal efforts to conciliate the issues in the
5
complaint. However, where these informal efforts were
unsuccessful, Title VIII did not provide the Secretary with any
administrative mechanism for redressing further acts of
discrimination against an individual.
Pursuant to Section 813 of the Act, when the Attorney
General had reasonable cause to believe that a person or group of
persons was engaged in a 'pattern or practice' of discrimination,
he was authorized to bring a lawsuit in federal district court
against such person(s). The Act provided for relief in such a
suit consisting of 'such preventive relief, including a...
permanent or temporary injunction, restraining order, or other
order against the person or persons responsible' for the pJttern
practice. However, prior to enactment of the Fair Housing
Amendments Act, the Attorney General was unable to secure legal
monetary relief for individual victims of housing discrimination
in a pattern or practice suit.
The appellate courts that interpreted the scope of relief
available to the United States in such cases under the 1968 Act
held that only equitable remedies were allowable. United_gtateg
v. Per.t-A-Hsme Systems of Illinois. 602 F.2d 795 (7th Cir. 1979)
United States v. Mitchell. 580 F.2d 789 (5th Cir. 1978); and
United States v. Long. 538 F.2d 1151 (4th Cir. 1975) gfeTLi
denied. 429 U.S. 871 (1976). Those courts ruled that legal
damages for victims of discrimination could not be obtained by
the United States in cases initiated pursuant to the pattern and
practice jurisdiction of the original 1968 statute. In arriving
,t this conclusion, th. court. emphasiaed th.t th. .t.tutory
Tsngu.ge allowed for only 'preventive r.li.f' (interchangeable
with injunctive or editable r.li.f), and on th.t ba.i. denr.d
legel monetary relief. However, these courts indicated that
equitable forms of monetary r.li.f (a-9- restitution, ungust
enrichnent, could be recovered by the United States pursuant to
the remedial authority granted by the Act.
The major purpose of the Pair Housing Amendments Act of 1966
j c.nP.iTihir 13 1988) was to strengthen(Pub. L. 100-430,- approved September 13,
the enforcement provision, of Title VIII and to give the federal
government a greater and more effective role in fair housing
enforcement.^ While the Act also substantively expand, coverage
of the 1966 Act to prohibit discriminatory housing practices
based on handicap and familial status, th. driving force behind
it was to strengthen the enforcement and remedial provisions of
the 1968 Act. The federal enforcement mechanism under the 1966
Farr Housing Act had been criticized as ineffective and as
putting too much of the burden of fair housing enforcement on the
private sector.
in shoring up the federal enforcement scheme, Congress hoped
to remove this burden from the shoulders of those least able to
2J See, e.g., Hou
1988, fair Housin
law has been inef
enforcement mecha
investigates hous
• informal methods
an attempt to res
administrative en
can and will take
__ o * Representatives Report 100-711, June 17,
fectrve' because it lacl£ an effective
nisro .. Under existing law, although HUD
inq discrimination complaints, it can use only
of conference, conciliation and persuasion
olve them___ H .R . 1158 creates anforcement mechanism, so the federal government
an active role in enforcing the law.
7
)
b«ar it, and to grant such persons accaaa to tha substantial
resources of the United States government. £*£, a-g-, H.R. Rep.
NO. 711, 100th Cong., 2d Sess. 13 (1988) ('This bill aeeXs to
fill that void [lack of an effective Title VIII enforcement
mechanism '■ by creating an administrative enforcement system,
which is subject to judicial review, and by removing barriers to
the use of court enforcement by private litigants and the
Department of Justice'); Id*. at 16 ('Although private
enforcement has achieved success in a limited number of cases,
its impact is restricted by the lack of private resources, and is
hampered by a short statute of limitations, and disadvantageous
limitations on punitive damages and attorney's fees ) (footnotes
omitted) ; T V r Housing Amendment o f Hearings on H J *
12 5S Before the Subcom.r . or. Civil and jtyt jona 1—
-he House Comm, or the Judiciary. 100th Cong., 1st Sess. 191
(1957) (comments of Representative Edvards) ('There is universal
and bipartisan agreement that the existing Fair Housing Act lacks
teeth and needs an effective enforcement system. By shifting
primary enforcement responsibility on to private persons, the
Federal Government currently has very little responsibility or
- 8 -
leverage to enforce the law. The question is how to bring about
effective change").2/
Under the new Section 813 of the Act, 42 U.S.C. 13613, a
private individual can still file his or her own lawsuit in
federal court alleging a violation of the Act. Section 3613(c)
of the Act, 42 U.S.C. §3613(0, provides for relief in such
actions and reads in pertinent part, as follows:
(c) Relief Which May Be Granted. — (1) I n j a civil
action under subsection (a), if the court finds that a
discriminatory housing practice has occurred or is about to
occur the court may award to the plaintiff actual and
punitive damages, and subject to subsection (d), may grant
134 Cong. Rec. S10556 (daily ed. August 2,
enforcement
ed. August 1,
a major reason
19fiJs)
1988)
the fair
1 / see also, .(statement of Senator Cranston) (need for
provisions); 134 Cong. Rec. S10467 (daily
(statement of Senator Dole) ('In my view,housing law has not been more effective is that it relies
voluntary conciliation and persuasion. In other words, a law
without its teeth. It does not have the clout necessary to .top
d 'scrimination as it occurs and to assure that housing is still
a complaint is finally resolved'); fair Housingo' 1987: Hearings on S. 558 Before— the— Sub comm..
---1 * Comm, on the Judiciary. 100thDirector,
there when
Amendments
nr. the Constitution of the Senate.
Cong., 1st Sess. 235 (1967) (statement of Henry H a m
Housing Division, Pennsylvania Human Relations Commission)
(improved enforcement authority 'crucial' to victims of
discrimination); 129 Cong. Rec. S625 (daily ed. January 26
(statement of Senator Hatch)(stating that the Act
teeth to [the existing) enforcement mechanism ...actions
1983)
'would add
. the Attorney
on behalf of suchGeneral would be authorized to initiate .individual. For the first time, an aggrieved person would have
access to the resources of Government in PursuingJdomplaints of
title VIII violations'); H.R. Rep
(1980)('The primary weakness in
No. 865, 96th Cong., 2d Sess.
4 ( 19 8 0) ("Tne primary ... the existing law derives from
the almost total dependence upon private efforts to enforce its
provisions').
9
)
as relief, as the court deems appropriate, any permanent or
temporary injunction, temporary restraining ' fromorder (including an order enjoining tha Jefandantfrom
engaging in such practice or ordering such affirmative
action as may be appropriate).
Thus, this provision removes the $1,000 limitation that had
existed for punitive damages that may be awarded.
The amended Act also significantly strengthened the
enforcement mechanism at HUD. Section 810 of the Act, 42 U.S.C.
§3610, provides that any person who believes that he or she has
been subjected to a discriminatory housing practice may file a
complaint with the Secretary of Housing and Urban Development.
The Secretary is required to make an investigation of the alleged
discriminatory housing practice, 42 U.S.C. 3610(a), and, to the
extent feasible, to engage in efforts to conciliate the matters
raised in the complaint at any time after the filing of the
complaint. 42 U.S.C. §3610(b).
In cases where the matters raised in a complaint cannot be
resolved by conciliation, Section 810(g) of the Act requires the
Secretary to determine whether reasonable cause exists to believe
a discriminatory housing practice has occurred or is about to
occur. Where the Secretary makes such a determination, the
Secretary must immediately issue a charge on behalf of the
aggrieved person for further proceedings under Section 812 of the
Act. 42 U.S.C. §3610(g).
The amended Act provides two alternatives for the litigation
of such a charge. The first alternative provides for a hearing
before an administrative law judge. 42 U.S.C. 13612(b). Any
10
)
complainant, respondent, or aggrieved person, however, may elect
to have the claims asserted in the charge decided in a civil
action in the appropriate United States district court. 42
U.S.C. 53612(a). If any person elects to have the case tried in
district court, the Act provides that the Secretary shall
authorize and the Attorney General shall commence and maintain a
civil action seeking relief under section 812. 42 U.S.C.
5 3612(o).
Where an administrative law judge finds that a respondent
has engaged in a discriminatory housing practice, the Act
provides for the issuance of an order for such relief as is^
appropriate, which may include actual damages, injunctive or
other equitable relief, and civil penalties. 42 U.S.C. §
3612(g) (3).47 Where the court in an elected civil action finds
that a discriminatory housing practice has occurred or is about
to occur, the court may grant as relief any relief to which a
private litigant would be entitled in a private Fair Housing Act
action brought under Section 813(a) of the Act. 42 U.S.C.
§3613 (a) .
Pursuant to new Section 814 of the Act, 42 U.S.C. §3614, the
Attorney General retains the 'pattern or practice' authority
which existed under section 813 of the 1968 Act. However, the
Act makes substantial changes in the relief available in such
L / The amount of the penalty can vary from $10,000 to $50,000
depending upon the number of previous discriminatory housing
practices the respondent has been adjudged to have committed in
any administrative hearing or civil action permitted under the
-Fair Housing Act. 42 U.S.C. 5 3612(g)(3)(A)- (C).
11
actions (such as this ona) brought in tha name of tha Dnitad
States. Section 814(d) reads as follows:
(d) Relief Which May Be Granted in Civil Actions Under
Subsections (a) and (b). — (1) In a civil action under
subsection (a) or (b), the court—
(A) may award such preventive relief, including a
permanent or temporary injunction, restraining order,
or other order against the person responsible for a
violation of this title as is necessary to assure the
full enjoyment of the rights granted by this title;
(B) may award such other relief as the court
deems appropriate, including monetary damages to
persons aggrieved; and
(C) may, to vindicate the public interest, assess
a civil penalty against the respondent—
(i) in an amount not exceeding $50,000, for
a first violation; and |
(ii) in an amount not exceeding $100,000,
for any subsequent violation.
Section 814(d)(1)(A) of the new Act tracks almost verbatim
the remedial language of Section 813 of the original Act, and as
discussed, surra. that language has been interpreted to allow
recovery of all forms of equitable relief in pattern or practice
cases, but not to authorize an award of legal monetary damages.
However, sections 814(d)(1)(B) and(C) provide important new
relief that the United States may seek and the court may award
which considerably strengthen the enforcement authority of the
United States in such cases. The issues before this Court arise
as a result of these new provisions.
12
J
'ill. &E51i;wc*
A. PURSUANT TO 42 I3.S-C- <3614 (d W 1 ) (B) . THE UMITEP STATES ISa im v t M itr i!IndcoMPEHsiTraxJlMgss
£nIH?£nTTeN>T m ‘?»?SS F"» v ^ r o f PMLMtBZI.
£ ? ^ 5? g T ^ ? * L PIW P^TTEBL i 2̂ > a T « SPITS gPTOffll W P E R ^
y.s.c.83614 LiQ
In their motion to strike, defendants contend that the
'monetary damages' language of Section 814(d)(1)(B) should be
construed extremely narrowly to mean that the United States is
authorized by the amended Act to seek only out-of-pocket expenses
of victims of unlawful discrimination and is precluded from
seeking either punitive damages or compensatory damages for
emotional distress for such victims (Def. Memorandum, pp. 15-17).
Such a narrow reading of the amended Act is without merit.
An examination of the following factors convincingly demonstrates
that the phrase 'monetary damages' in Section 814(d)(1)(B) is
meant to include all forms of legal monetary relief (e.g.,
punitive damages, compensatory damages for emotional distress or
mental anguish, loss of civil rights, as well as out-of-pocket
monetary losses): (1) the plain statutory language of
§814(d)(1)(B), especially when read in conjunction with other
remedial provisions of the Act; (2) the dual Congressional goals
in passing the Fair Housing Amendments Act of providing a
stronger and more effective enforcement mechanism in the Fair
Housing Act, and avoiding duplicative litigation; and (3) the
special nature of pattern and practice cases. In sum,
defendants' very narrow reading of this provision would
improperly circumscribe the government's ability to enforce
13
effectively the amended Fair Housing Act, and frustrate tha
purpose and goal of Congress in authorizing tha United Statas to
seek such monetary relief.
1. Language of the Statute
Section 814(d) (1) (B) grants broad authority to tha court to
grant, in addition to the relief authorized by the equitable and
civil penalty sections (Sections 814(d)(1)(A) and (C)), the
relief it deems appropriate. Specifically, the court 'may award
such other relief as the court deems appropriate, including
monetary damages to persons aggrieved' (emphasis added). The
term 'monetary damages' is used as an example of what relief may
be 'included' if the court deems such appropriate. There is no
indication in such language that there is any intent to limit the
type of monetary relief available pursuant to this Section. On
its face, therefore, the plain language of Section 814(d)(1)(B)
strongly supports a broad interpretation of the remedial
authority of federal courts in pattern and practice cases
intiated by the United States.
Moreover, when this provision is examined in light of the
remedial provisions applicable to actions initiated or brought on
behalf of aggrieved persons pursuant to the amended Act, there is
an even clearer indication that the term 'monetary damages' is to
be read broadly. As discussed supra. under the amended Act,
aggrieved individuals are provided the choice of bringing suit in
federal court (section 813), pressing their claims
administratively through the HUD enforcement process to
14
enforcement before a HUD administrative law judge (section
812(b)-(n)), or electing to have the Attorney General sue on
their behalf after HUD has investigated and issued a charge of
discrimination (section 812(a) and(o)).
Should the aggrieved individual bring a private action in
federal court under section 813, the Court can grant actua^ and
punitive damages* pursuant to section 813(c). Where the
aggrieved individual uses the administrative route and, after a
finding of reasonable cause, elects for the Attorney General to
initiate a suit under section 812(o) in federal court, a court
nay grant the same relief as it can in a private section 813 suit
__ ^.e . actual and punitive damages (see section 812(o)(3)).
The two types of relief available in private and Attorney
General-elected suits — actual and punitive damages — are also
referred to in section 812(o)(3) by the generic term 'monetary
relief. *-5/ Thus, it is clear that in section 812(o)(3) the term,
'monetary* is meant to include 'actual and punitive' damages.
Section 812(o)(3) reads in pertinent part (emphasis added):
In a civil action under this subsection, if the court finds
that a discriminatory housing practice has occurred or is
about to occur, the court may grant as relief any relief
which a court could grant with respect to such
discriminatory housing practice in a civil action under
section 813. Any relief so granted that would accrue to an
aggrieved person in a civil action under section 813 shall
also accrue to that aggrieved person in a civil action under
this subsection. If monetary is sought for the
benefit of an aggrieved person who does not intervene in the
civil action, the court shall not award such relief if that
aggrieved person has not complied with discovery orders
entered by the court.
15
Moreover, there i» nothing in the statute or legislative history
to suggest that it should mean anything less in section 814.*/
A comparison of the language contained in §814(d)(1)(B)
with the more limiting nature of the remedial language in
sections 812(g)(3)2/ and 813(c) provides further evidence that
the term 'monetary damages* contained in 5814(d)(1)(B) is to be
read broadly. Sections 812(g)(3) and 813(c) limit the type of
monetary relief available in proceedings to adjudicate private
claims of discrimination. The defendants incorrectly argue that,
had Congress intended to provide for punitive damages and damages
for emotional distress in Section 814(d)(1)(B), it would have
specifically done so, as it did in those provisions. Such a
statutory interpretation misreads Congressional intent. Although
it is clear that the types of damages available pursuant to
sections 812 and 813 are specified, it is equally clear that by
virtue of such clarification those sections are 1imjted to the
same. It is the absence of any limitation on 'monetary damages
)
L / in addition, contrary to the apparent assertion of
defendants, it is beyond dispute that the term 'actual' damages
should be interpreted to include emotional distress damages, as
well as other forms of actual damages such as economic loss and
loss of civil rights. Section 812 of the 1968 Act, like section
813 of the amended Act, authorized courts to award 'actual'
damages, and the consistent interpretation of that provision is
to include emotional distress damages in such a recovery. See,
e.g., Marable v. Walker. 704 F.2d 1219 (11th Cir. 1983); £ore v.
Turner. 563 F.2d 159 (5th Cir. 1977).
2/ This provision defines the relief that an ALJ may award in an
administrative proceeding, i.e., injunctive relief, actual
damages suffered by the aggrieved person, and a civil penalty.
16 -
within §814 that favors an expansive construction of this
section.
Indeed, there is H2 express intent in the Act itself or the
legislative history to limit the scope of 'monetary damages' in
pattern or practice cases. If Congress meant to limit the relief
available to the United States, it could have done so, as indeed
expressly did with Administrative Law Judges when it removed
their authority to award punitive damages.£/ The absence of a
similar restraint on the Attorney General's authority to obtain
relief in cases brought pursuant to Section 814 reinforces an
interpretation which gives broad discretion to a court in |
determining the type of monetary relief that is appropriate in
such cases.
2. Congressional Purpose and Legislative History
In our discussion of the background of the amended Fair
Housing Act, supra■ it is very plain that a primary purpose of
Congress in amending the remedial and enforcement provisions of
the Act was to provide more teeth in federal fair housing
enforcement. Congress was concerned both with the lack of
adequate federal enforcement and with the inability of private
individuals, many of them the unfortunate victims of housing
discrimination, effectively to use the existing enforcement
machinery. Accordingly, Congress's efforts were directed not
only at making the federal government the preeminent force in the
&/ See H.R. Report No. 100-711, 100th Cong., 2nd Sess. at 13
(1988), wherein it indicates a conscious decision of Congress to
-deny ALJs the power to award punitive damages.
17 -
war against housing discrimination, but also at doing so in a
manner which enabled private individuals to take most advantage
of the extensive resources and experience of the United States.
This overriding Congressional purpose to strengthen
effective enforcement of the Fair Housing Act provides a further
basis for giving remedial provisions such as §814 (d) (1) (B) a veri-
broad interpretation, as opposed to the most narrow of
interpretations, such as that suggested by defendants and which
would to a large extent emasculate the remedial teeth of the
§814. Now all avenues for challenging unlawful discrimination in
housing under the amended Act — private, administrative and
cases brought by the United States — provide for monetary
relief. This is especially so when the language of Section
814(d) (1) (B) includes the broadest -- not the most restrictive
grant of remedial authority regarding available monetary relief.
Nowhere does the Act limit in any way what is meant by 'monetary
damages' (as is done with other sections).
Moreover, a primary purpose of the 1988 Amendments was to
avoid to the extent possible duplicative litigation by both the
federal government and private parties. This goal was made
explicit in the House Report on the Fair Housing Amendments Act,
particularly with respect to the United States' pattern or
practice authority pursuant to Section 814. In specifically
discussing Section 814(d), the House Report explains the
rationale for allowing 'monetary damages' in pattern and practice
cases, and stresses that '[a]llowing the court to award monetary
18
to persons aggrieved avoids later duplicativa litigation
as such persons bring actions to vindicate their rights.* H.R.
Rep. No. 100-771, 100th Cong., 2d Sess. at 40 (1988).
In private fair housing litigation brought pursuant to
Section 813 of the amended Act, a court may award punitive
damages as well as actual damages, including emotional distress
damages. If the 'monetary damages' courts can grant in Section
814 pattern and practice actions did not include such punitive
and emotional distress damages, Congressional intent is turned on
its head and the duplicative litigation which Congress
specifically sought to avoid would be encouraged.2/
Defendants' reliance upon cases interpreting the Fair
Housing Act of 196S which interpreted that Act to limit relief
available to the United States in pattern or practice cases
provides no support for a narrow interpretation of the new
remedial provisions in the amended Act. (Def. Memorandum, p. 16,
citing United States v. Rer.t-a-Home Systems_of— 111 jnois , supp.a . )
Indeed, if anything, such case law supports the broad
interpretation urged herein. Under the 1968 Act, only the
enforcement provisions relating to private individuals expressly
provided for monetary relief (actual and punitive damages).
1 / Indeed, in this case the United States has identified at least
14 individuals as alleged victims of defendants' discrimination.
If the United States cannot secure damages for these individuals,
only recourse is 'duplicative' litigation either through
private actions pursuant to Section 813, or through intervention
in this case pursuant to Section 814(e), both of which authorize
relief in the form of both actual and punitive damages (see
Sections 813(c) and 814(e)).
19
)
Significantly, it v u this sp.cification of permissible forms of
l.gal damages for private actions, and the complete absence of
language authorizing any form of legal damages for the United
States, that resulted in decisions to deny to the United States
the ability to seek monetary relief. See Lena, SUPXA- Mitchell,
supra: Per.t-a-Komes^ supra- In passing the amended Act, Congress
specifically added language authorizing such relief in order to
address this shortcoming in the 1968 Act and provide a more
affective remedial structure in the Act.
3. The nature of Pattern and Practice Casj
Finally, the very nature of pattern or practice cases
brought by the Attorney General militates in favor of the
broadest reading of a court's remedial authority in such cases.
Pattern or practice lawsuits are aimed at the broadest and most
egregious forms of housing discrimination. Indeed, such cases
strike at the heart of systemic, policy-based practices which in
most cases adversely affect the housing rights of far more
individuals than isolated incidents of discriminatory conduct.
Accordingly, courts should have the broadest authority to remedy
such a violation of the Fair Housing Act. It follows that the
- 20
)
remedial language of 1814(d)(1)(B) should be accorded a broad
interpretation.1 2 /
B. TWF REMEDIAL PROVISIONS OF SECTION PI*
TATR HOUSING AMENDMENTS A<T PF 1988 ARE APPLICABLE
jn DEFENDANTS' PRE-AMENDMENT DISCRIMINATION
To the extent that the United States, as we argue above, is
entitled to seek the full range of monetary relief under
provisions of the amended Fair Housing Act, defendants also
function
practice
both
seeing that its
role, it is logical
1£/ Defendants argue that the availability of civil penalties
under 814(d)(1)(C) is relevant to the scope of monetary relief
available under 814(d)(1)(B) and that it should preclude the
entitlement of the United States to seek punitive damages in
pattern and practice cases. Such an argument misperceives the
of a pattern or practice lawsuit. In pattern or
suits the Attorney General represents the interests of
actual victims of discrimination and the public interest in
civil rights laws are obeyed. In view of this
that all forms of monetary damages be
available in order fully to vindicate the interests of both the
victims of the discrimination, as provided by 814(d)(1)(B), and
the public interest pursuant to 814(d)(1)(C). The damages
scenarios in pattern or practice cases necessarily will vary from
case to case. While punitive damages and civil penalties are
designed to serve a similar purpose-- to provide punishment for,
and deterrent to, unlawful discrimination courts in such
and practices cases should have available either remedy
6ffftetivc en f orccmBnt. For cx&mplc, in some cases it
to award only punitive damages to the victims
of discrimination -- damages that they would be entitled to
pursuant to §813 of the amended Act if they, rather than the
United States, initiated the litigation. In other cases there
may not be identifiable victims, and imposition of a civil
penalty would be appropriate to serve the deterrent goals of the
remedial provisions of the Act. Still other cases of
discrimination may prove to be of a nature that an award of both
punitive damages and civil penalties may be appropriate; although
in light of their often-similar functions, the award of punitive
damages will generally argue for a diminution of the civil
penalty levied. Congress's specification of 'monetary relief m
Section 814 acknowledges that a pattern or practice lawsuit
indeed is a different and more inclusive vehicle for combatting
housing discrimination. This Court should reject defendants'
attempt to thwart Congress's purpose to provide for more
effective relief in Fair Housing Act cases.
pattern
tc ensure
may be appropriate
21
J
challenge application of such provision* to pre-Amendment
conduct. The defendant* contend that all of the provision* of
the Fair Housing Amendments Act should be interpreted to apply
prospectively only and that any monetary relief which the United
States may be entitled to seek should only apply to acts that
occur on or after Karch 12, 1989, the effective date of the
amended Act.^^ Furthermore, defendants assert in any event that
retroactive application of such remedies would violate the Ex
Post Facto Clause and the Due Process Clause of the Fifth
Amendment of the Constitution. These arguments are without
merit.
1. Provisions of the Amended Act Should JLfi_
Tnterpreted to Ap p Iv Fetrosoectively
issue posed by defendants is whether monetary relief
authorized in pattern or practice suits under Section 814 of the
amended Act can be awarded for defendants' pre-Amendment
11/ an initial point, because we allege that the pattern and
practice of discrimination in this case was in place after the
amended Act had taken effect, we believe that the imposition of
civil penalties in this case under the amended Act does not
necessarily raise a retroactivity issue. As discussed earlier in
this Brief, this is a pattern or practice suit brought by the
Attorney General after the amended Act had gone into effect,
attacking a pattern of racial discrimination by defendants. Such
a pattern is by its very nature a continuing policy of
defendants, and the focus of the case should not be limited to
isolated acts of discrimination occurring before the effective
date of the amended Act. If we establish the existence of such a
pre-amendment policy, there is a presumption, in the absence of
evidence to the contrary, that such practices continued at least
up to the date of filing of this case. United States v. Wes£
Peachtree Tenth Core,. 437 F.2d 221, 227-28 (5th Cir. 1971).
Clearly it is highly improbable, given the facts of this case,
that defendants changed their rental practices on March 12, 1989
because of the effectiveness on that date of the amended Act.
22
discrimination. In challenging the United States' ability to
secure such relief, defendants seek to evade their statutory
liability provided by the amended Act to compensate victims of
the alleged discrimination for any damages incurred. They do so
by focusing on certain substantive changes made by the Fair
Housing Act amendments. But these changes are in no manner
related to the pending allegations against defendants, and
defendants should not be allowed to utilize their existence to
support an argument totally immunizing them from retrospective
application of the new remedial provisions of the amended lav.12/
In Bradley v. Richmond School Board. 416 U.S. 696, 711^
(^974) t an important Supreme Court decision which defendants
conveniently choose to ignore in their Motion, the Court stated
tj ât 'a court is to apply the law in effect at the time it
renders its decision, unless doing so would result in manifest
injustice or there is a statutory direction or legislative
12/ As discussed earlier in this Brief, and as noted by
defendants in their Motion, the Fair Housing Amendments Act made
substantive changes in the 1968 Fair Housing Act. Those
substantive changes consist of adding to the statute, as
prohibited bases of discrimination, handicap and familial^status.
Defendants are not before this Court answering to allegations of
handicap or familial status discrimination, nor for any other
conduct which is the subject of a substantive change in the Act.
Pa^her, defendants have been charged with discrimination in
housing on the basis of race, action which has been unlawful
under federal law for decades. Although other changes were made
to the Act, such as provision for a more extensive HUD
enforcement scheme and expanded remedial provisions in the
context of HUD administrative hearings and pattern or practice
suits, such changes are properly characterized as 'procedural' or
'remedial.' Indeed, defendants so characterize themin footnote
5 of their Motion, and appear to acknowledge the validity of
retrospective application of 'remedial' amendments, such as those
*in issue here.
23
history to the contrary.* That proposition is now well-
established. See, Campbell v . PomjnicK * PgwiPlgKi InCi< 872
p . 2d 3 5 8 , 3 6 0 (11th cir. 1 9 8 9 ) ; Pelflfly v. W&fefegX, 872 r.2d 3 5 6
(11th Cir. 1 9 8 9 ) r Castle V . WestQJl, 8 3 7 F.2d 1550, 1562 (11th
Cir. 1 9 8 8 ) ; United States v . Margnqo Cpupty Commission, 7 3 1 F.2d
1 5 4 6 , 1 5 5 3 - 5 5 (11th Cir. 1 9 8 4 ) . A statute will be assumed to
apply to cases pending at the time of its passage unless there is
a 'clear indication' that it is not to apply. BZflSlSX. <16 U.S.
722-16. There is no indication in either the Fair Housing
Amendments Act or its legislative history that the new remedial
authority contained therein is not to apply retroactively.
In determining whether retroactive application of new law is
'manifestly unjust,' a court is to consider (a) the nature and
identity of the parties, (b) the nature of their rights, and (c)
13/ preamble of HUC's Regulations implementing the Fair
Housing Amendments Act cites Bradley in support of the
proposition that 'remedial and procedural legislation not
affecting vested rights, must be applied' retroactively. The
preamble goes on to note that '[v]hile it is true that statutes
that affect substantive rights ordinarily may not be applied
retroactively, United States v. Security Industrial Ban£. 459
U.S. 70, 79 (1982), this principle has no applicability here.'
54 Fed. Reg. 3259 (1989). As pointed out, pqpra, fn. 12,
defendants appear to agree with this proposition.
Congress's specification of March 12, 1989 as the effective
date of the amended Act, cited by defendants in apparent support
of their prospective application argument (Motion, p. 12), is
just that — a statement that the Act would not be effective
until six months after its passage. That statement says nothing
about retroactive application of all or some of the Act's
provisions, nor should it be interpreted to do so. What matters
-is that, on the date this action was filed, the amended Act was
the law in effect.
- 24
)
the nature of the impact of the change in law upon those rights."
Bradley■ 416 U.S. at 417.
The first consideration, "nature and identity of the
parties", focuses on whether the action is a private case between
individuals, or a case involving "great national concerns."
pnitpj states v. Schooner Peggy, 5 U.S. 103 (1801) ; United,, States
V. T*»r»nao Countv Commission. 731 F.2d 1546, 1553-4 (11th Cir.
1984); United States v. Hill. 676 F-Supp. 1158, 1168 (N.D. Fla.
1987). When a statute manifests important national policy, the
court must respect that policy and apply it. As the Court stated
in Schooner Peggy. 5 U.S. at 10, SUPTJ:
in mere private cases between individuals, a
court will and ought to struggle hard against
a construction which will, by retrospective
operation, affect the rights of parties, but
in great national concerns, where individual
rights... are sacrificed for national purposes,
the court must decide according to existing
laws.
Here, the Fair Housing Amendments Act seeks to ensure equal
opportunity in housing, a most fundamental right and an issue of
great national importance. See, Vn;ted gtates_v. Warenqo Cpun£y
remission. 731 F.2d 1546, 1553-4 (11th Cir. 1984).1*/ This
important national policy establishes the eradication of
discrimination in housing as a clear national priority.
The second Bradlev consideration, the nature of the rights,
refers to whether the new legislation affects any rights tha_
11/ As Congress restated in Section 801 of the amended Act,
is the policy of the United States to provide, within
constitutional limitations, for fair housing throughout the
-United States." 42 U.S.C. 53601.
25
^ J
have 'matured or become unconditional'. 416 U.S. at 720. Here,
defendants' discriminatory practices were unlawful before the
effective date of the 1988 Act, and they have no 'right' to avoid
new penalties for the conduct which was unlawful at the time it
occurred. See United States v. Ppwnriver Center,
687 F.Supp. 302, 307 (E.D. Mich. 1988) (where False Claims Act
was amended to increase damages, court held that the defendants
did not have a 'matured" right to the imposition of double as
opposed to treble damages and noted that 'changes in the damage
and forfeiture provisions... do not alter liability, nor change
conduct previously determined lawful.'). As detailed immediately
below, defendants have long been exposed to substantial monetary
liability for housing discrimination. They have no right, vested
or other, not to have such liability take different monetary form,
or increased size.
The third Bradlev consideration requires an examination of
the impact, if any, that the change in law may have upon existing
rights. 416 U.S. 720. It 'stems from the possibility that new
and unanticipated obligations may be imposed upon a party without
notice or an opportunity to be heard.' Ifl. If the law would have
caused the defendant to change its conduct had it known of its
obligations, a court is more likely to find manifest injustice in
applying the new law retroactively. I£.J Hill, 676 F.Supp. at
1170. Here, the defendants were and are liable to the victims of
their discriminatory practices for compensatory and punitive
damages under the 1968 Fair Housing Act and other federal law.
26
)
liability has not changed at all. Thus, allowing tha United
States to recover damages for individuals that have been
available to such persons all along does not impose an
•unanticipated obligation*. As indicated above (p. 5), under the
1968 Act, private individuals could recover actual damages, and
up to $1,000 in punitive damages, upon a finding of a
violation.IS/ Moreover, surely defendants cannot even suggest
that, had they known of this change, they would have altered
their conduct. The 1988 Act, as applied to the defendants, is
merely continued legislation, and broadening the remedial
provisions has not changed defendants' legal posture at all.S£/ * v.
21/ Mor eover, racial discrimination in housing is illegal under
42 u.S.C. §1952 (part of the 1866 Civil Rights Act), and both
actual and unlimited punitive damages are available in actions
brought under that statute. See Grayson v. potyndj— t— Sops
Co., Fair Housing-Fair Lending (Prentice Hall) at 15,516 (E.D.
n Ty ! September 5, 1984) ($500,000 in punitive damages); Philips
v. Hunter Trails Community Assn,, 685 F.2d 184 (7th Cir. 1982)
($100,000 in punitive damages); Miller v. Apartments—i Homes
S’eu Jersey. Inc. . 646 F.2d 101 (3d Cir. 1961) ($25,000 in
punitive damages) : and Pol 11tt v. Bjame^, 660 F. Supp. 172 (S.D.
Ohio 1967) ($25,000 in punitive damages). The presence of
another statute as the source of a pre-existing obligation is
similar to the situation in Bradley. where common law formed the
basis for attorneys' fees recovery prior to enactment of the
statute in issue in that case.
15/ This argument applies with egual force to the amended Act
provisions permitting imposition of civil penalties in pattern or
practice suits. Given the defendants' pre—Amendment exposure to
virtually uniimited monetary liability in the form of actual and
punitive damages, they cannot be heard to allege that the
imposition of civil penalties— the amount of which may be
awarded is restricted by statute and the purpose of which is very
similar to that of punitive damages (see footnote 10, supra) —
raises their current obligation to an 'unanticipated* one which
would have warranted a change in their behavior had they known of
their possible liability for such civil penalties for pre-Act
.. conduct.
27
)
This conclusion is supported further by the preamble of
HUD's implementing regulations, wherein it is provided:
The 1988 Amendments (except as to discriminatory housing practices involving handicap and familial
status) do not create new legal duties or responsibilities. Rather, they merely provide a new process by which aggrieved persons may enforce existing rights protected under Title VIII. I.e., the
1988 Amendments create new procedures for the filing, investigation and conciliation of complaints
concerning discriminatory housing practices and
strengthen the remedies available to victims of housing discrimination by providing for administrative
hearings, and by increasing the availability of civil
penalties, attorney's fees, etc. Because the new remedies and enforcement procedures do not affect vested rights, retroactive application is entirely
appropriate. See. e.q,, Bradley, sypra > (increased
availability of attorney's fees); frittl v - Cessna Aircraft Co.. 751 F.2d 1037 (9th Cir. 1985) (extension
of limitations period) ; Montana_Ppw$r— CP.t. v * Fpdepal
Power Cornr.. 445 F.2d 739 (D.C. Cir. 1970) (change
in tribunal); and Grummitt v. Sturgeon.Bay WlPtAX
Sports Club. 354 F.2d 564 (7th Cir. 1965) (change in
procedure).
54 Fed. Reg. 3259 (1989). The substantive changes of the 1988
Act have no bearing on this case. This action does not challenge
any acts that were lawful when committed. Rather, it attaclcs
practices which have been the focus of federal legislation since
the 19th Century. Thus, defendants do not have any vested rights
within the meaning of Bradley. Likewise, retroactive application
of the amended Act will not result in relief that is otherwise
unavailable to the victims of the discrimination in this case; it
does not present unanticipated liabilities for the defendants.
The considerations set forth in Bradley all support applying the
remedial provisions of the 1988 Act to the defendants. Such
28 -
)
application will serve important public interest* and will not
result in any injustice to the defendants.^/
As stated above, the defendants totally ignore the analysis
of Bradley in arguing that the 1988 Act should not be applied to
their conduct. Instead, they rely on United gtPtES v. Igrnandei^
Toledo. 749 F.2d 703 (11th Cir. 1985) and Sell v. Ifthmiap lines,
I n c , . 363 F. Supp. 156 (M.D. Fla. 1973), cases which differ from
this case in a number of important respects and clearly fall
within the exception to Bradley's presumption of
retroactivity
12/ Bradley also requires an examination of the statute it^felf,
and its legislative history, in determining whether the
presumption of retroactivity should be overridden. While the
statute itself is silent as to whether Congress intended monetary
relief to be available for acts occurring prior to the effective
date of the Amendments, the HUD regulations implementing the Fair
Housing Amendments shed light on this issue. The regulations
specify that discriminatory housing practices involving handicap
and familial status do not violate the Act unless committed
subsequent to March 12, 1989, the effective date of the Act. 54
Fed. Reg. 3292 (1989). However, there is no further similar
statement that the 'monetary damages' provision of section 814 is
to apply only to post-Act discrimination. The absence of such
comments bolsters the argument that the prospective application
of section 814 of the 1988 Act is not warranted here. Indeed, as
noted supra. footnote 13, this part of the regulations indicates,
if anything, that remedial provisions, such as those challenged
here, are to be applied retrospectively.
13 y Another case relied upon by the defendants, Jackson v.
People's Republic of China. 794 F.2d 1490 (11th Cir. 1986), also
relates to a situation where a new statute, if retroactively
applied, would adversely affect vested or substantive rights.
For this reason, the court declined retroactive application of
the statute at issue. This case is in accord with Bradley. Such
a situation simply does not apply here. The 1988 Fair Housing
Amendments Act, with the exception of the proscriptions against
discrimination on the basis of familial status and handicap
(clearly irrelevant to this action), does not change the
"substantive rights and liabilities of defendant*.
29
)
Both Fernande?-Toledo and Bell involved vested rights which
would have been adversely affected had the legislation at issue
in those cases been applied retroactively. In fern*Dfl«-ToI?flg,
defendants were released on bail pursuant to the statute in
effect at the time they applied for bail. Shortly after
defendants' request for bail was granted, the Bail Reform Act of
1984 was enacted. That Act changed bail procedures (including
allowing the government to appeal a bail determination) and other
substantive considerations relevant to whether bail was
permissible. The government appealed the decision to grant bail
and argued for application of the newly enacted Bail Reform Act.
The court first acknowledged the general rule established in
Brad 1ev that "a new statute should apply to cases pending on the
date of its enactment unless manifest injustice would result."
Fernandez-Toledo. 749 F.2d at 705. It then applied the three-
step analysis of Brad!ev and determined that it would be
manifestly unfair to give retroactive effect to the substantive
changes in the Bail Act. The court stated that the defendants
"were entitled to be released and their release was ordered by
the district court before the new law became effective and before
this case was heard by the panel. Their rights to bail had
30 i
already vested, i.a., it was an antecedent right existing before
the change in tha law." Id- at 705.•12/
Likewise, in Bell. the defendant filed a third-party suit
for indemnity under the Longshoreman's and Harbor Worker's
Compensation Act. Shortly after the filing of tha action the Act
was amended to repeal such indemnity actions. The court denied
the third-party plaintiff's petition to apply the amended Act
retroactively and dismissed the indemnity action because the
amended statute affected substantive rights that had already
vested. Bell. 363 F.Supp. at 159.
Unlike the defendants in F$rnande?-TPl?l£ and
defendants here cannot claim an exemption to BrafllCY for, as
shown above, they do not have vested rights that will be affected
)
12J Defendants rely on Fernandez-Tolad2 support their claim
that "where there are both substantive and procedural or remedial
aspects of a statute, partial retroactivity cannot be mandated.
Motion, footnote 2. This statement is erroneous and [ernandes-
T o l e d o does not so state. As discussed immediately above, the^
court in that case, relying on the Bradley "manifest injustice
test found such injustice to exist upon retroactive application
of a 'substantive statutory amendment. Retroactive application of
the bail statute at issue had the potential for denying
defendants previously granted bail, a "vested" right, and
therefore their freedom. Following such a finding, it simply
"declined" to give the Act partial retroactivity and allow the
government to appeal under the new Act; allowing the government
to appeal in that case had the potential for affecting the vested
right which the court had already stated should not be disturbed.
This is a far cry from a "mandate* against partial retroactivity,
just as r»rnandez-Toledo is a far cry from this case. Defendants
here are affected in no pertinent way by the substantive changes
in the amended Act. Unlike in rernandeg-Tolejs, retroactive
application of the non-substantive provisions of the new Act in
this case does not have the potential for substantively affecting
.defendants.
31 -
)
by th. src.nd.d Act. Accordingly, B u d U X ecun..l. r.tro.ctiv.
application of the remedial provision* of the amended Act.
>»Toaetiv _
•air Housing Am_e
pmcr racto Clause
Although defendants concede (Motion, p.4) that tha Ex Post
Facto Clause of the Constitution, Article 1, 510. cl. 1, applies
only to criminal statutes, parisjad^ v. Shauqnessa, 342 U.S.
580, 594 (1952); see also PufreSDS v. 744 F.2d 1543 (11th
Cir. 1984); United States v. PtK.gi— Appalppaas —̂ Inc* ' 829 F *2d
532 (5th Cir. 1987), they nonetheless argue that retroactive
monetary relief in this civil proceeding would violate that
clause. Defendants strenuously assert that punitive damages and
civil penalties are 'penal' in nature, and on that basis alone
seek to avoid the monetary penalties clearly authorized under the
Fair Housing Act. But the presence of such remedies in a
statutory scheme does not transform civil statutes into criminal
ones subject to ex post facto restraints. Indeed, if that were
the case, a substantial part of this nation's body of civil law
would be rendered criminal, with the whole gamut of criminal
protections thereby attaching. The simple fact is that various
forms of 'punishment' are present, and have always been present,
- 32
in numerous civil context*. Such presence her* does not prove
defendants' argument . 2 2 /
Defendants' substantial reliance on United States v. Halper.
57 U.S.L.W. 4526 (1989), in support of their Ex Post Facto
argument is inapposite. First, Halper does not even mention the
Ex Post Facto clause; it relates solely to the double jeopardy
protection provided by the Fifth Amendment. Second, the holding
in Halper is so limited to its own facts, as the Supreme Court
takes great pains to point out, that it is of little assistance
here to defendants. In Helper. the petitioner was convicted of
submitting 65 false medicare claims to the government and was
sentenced to prison and fined 55,000. Under federal lav,
petitioner was also liable for a civil penalty of $2,000 for each
false claim. Due to the number of claims at issue, the
government sought a total of 5130,000 in civil penalties. The
statutory aim of the civil penalty provision was to reimburse the
government for actual cost in investigating and prosecuting the
false claims -- this cost was estimated to be approximately
516,000. The Supreme Court upheld the district court's ruling
that the full statutory amount authorized by the False Claims
J
2 2 / it should be pointed out initially that, in the abstract,
Congress would violate no constitutional prohibition by expressly
making this civil statute operate retroactively. Particularly in
the sphere of economic regulation, it has become accepted that
''legislation readjusting rights and burdens is not unlawful
solely because it upsets otherwise settled expectations. This is
true even though the effect of the legislation is to impose a new
duty or liability based on past acts. " Pension Benefit Guaranty
Cp eP-l v. R. A- Cray t Co.. 467 U.S.717, 729 (1984), quoting Usury
v. Turner Elkhorn Mining Co.. 428 U.S. 1, 15-16 (1976).
33
)
Act, as applied to patitionar, violated tha Doubla Jaopardy
Clausa of tha Fifth Amendment. Tha court dascribad tha amount of
the civil penalties as bearing 'no rational relation" to the
government' s losses, and as constituting a second punishment. XsJ>
at 4530. The Court was clear about the application of this
decision to other cases:
What we announce is a rule for the rare case, the case
such as the one before us, where a fixed-penalty provision
subjects a prolific but small-gauge offender to a sanction
overwhelmingly disproportionate to the damages he has
caused. The rule is one of reason: Where a defendant
previously has sustained a criminal penalty and the civil
penalty bears no relation to the goal of compensating the
government for its loss, but rather appears to qualify as
'punishment' in the plain meaning of the word, than the
defendant is entitled to an accounting of the Government's
damages and costs to determine if the penalty sought in fact
constitutes a second punishment. 2jg.
The facts of this case contrast sharply with Haloer. This
action is a simple civil proceeding. There is no criminal case
cr punishment at issue. Accordingly, the Ex Post Facto clause,
or for that matter the double jeopardy clause, does not apply.
Again, the mere characterization of the punitive damages and
civil penalties as penal is not sufficient to invoke the
protection afforded in criminal p r o c e e d i n g s .2i/
Defendants do not cite to any authority, and to our
knowledge their is none, finding retroactive application of
2 1 / similarly, Trop v. Dulles. 356 U.S. 86 (1958), cited by
the defendants, is a criminal case where the government sought to
impose civil sanctions following criminal punishment. In that
case, the Court ruled that the cruel and unusual punishment
clause of the Eighth Amendment was violated where the government
divested an individual of citizenship following his conviction
for wartime desertion.
34
statutory punitive damages and civil penalties provisions in a
civil context violative of the Ex Post Facto clause. Other cases
cited by the defendants deal with criminal proceedings. Weaver v .
Graham. 450 U.S. 24 (1981) (state statute changing duration of
incarceration for a crime); Boui£. v. City Of 378 U.S.
347 (1964) (state criminal trespass statute). The cases that
consider the Ex Post Facto defense in the context of a civil
proceeding have consistently rejected such a challenge. Uhitft*
States v. D.K.G. Appaloosas. Inc^. 829 F.2d 532 (5th Cir. 1987)
(Ex Post Facto clause not applicable to drug forfeiture statute);
pari siades v. Shauchnessv. 342 U.S. 586 (1952) (deportation
statute is civil proceeding not encompassed by the Ex Post IFacto
clause); DeVeau v. Bra i sted. 363 U.S. 144 (1960) (Waterfront
Commission Act, disqualifying felons from employment, not an Ex
Post Facto law); Surgess v. Salmon. 97 U.S. 381 (1878) (civil
suit for excess tax not subject to Ex Post Facto clause).
Moreover, defendants' claims here do not fall within the
zone of interests sought to be protected by the Ex Post Facto
clause. That clause seeks to ensure that fair notice will be
provided before conduct is made criminal and that persons may
rely on existing law to guide their behavior, and see)cs to
further the goal of criminal law in regulating behavior through
notice of punishment for criminal conduct. Warren v.
States Parole Commission. 659 F.2d 183 (D.C. Cir. 1981). These
concerns are not present here. The defendants have long been on
notice that racially discriminatory housing practices are
35
I
unlawful and that such conduct could expose than to substantial
monetary liability. This is not a case involving th« inposition
of new liability; rather, as to defendants, it involves continued
legislation encompassing the sane legal prohibitions. Race
discrimination in housing, as mentioned, has been unlawful for
many years. The 1988 Fair Housing Amendments Act does not change
the defendants' obligations in that regard. Finally, as
indicated above, given the availability prior to the amended Act
of a full arsenal of monetary relief for housing discrimination,
any claim of defendants that the changes in the monetary relief
structure of the Act would have served as an additional deterrent
to engaging in discriminatory housing practices would be absurd.
Had the new Act been in place when the defendants initially
engaged in unlawful activity, there is no likelihood that
defendant's practices would have changed in any manner. In sum,
defendants' Ex Post Facto concerns are meritless.
3. Retroactive Application of the Femedial Provisions of
the Fa: r Housing Arendner.ts Act Does Not Violate the Due
Process Clause
Defendants raise a due process defense to the retroactive
imposition of monetary relief for their unlawful conduct. The
facts of this case do not give rise to this issue, for the due
process clause only applies to vested rights, Weaver v. graham,
450 U.S. 24, 30 (1981). The defendants can hardly argue that
!they had a right to discriminate prior to the effective date of
36
the amended Act; nor do they have any vested rights to damages of
22/a particular type or amount. See pp. 25-26, FUPrB »
Moreover, this case simply does not implicate normal due
process concerns. The thrust of the due process clause is to
protect parties with vested rights from unfair surprise or harsh
consequences. United States Trust Co. v. Mgw JerSfiS, *31 U.S. 1,
17 n.13 (1976). Here, such a situation does not exist.
Defendants cite Vuitton v. gpenger Handbqga, 765 F.2d 966 (2d
Cir. 1985) , in support of their due process claim. In VmttPD
the district court declined to award treble damages in a private
trademark infringement case where that remedy was made available
by Congress only during the pendency of the suit. The court
recognized that due process 'prohibits retrospective civil
legislation that results in especially "harsh and oppressive'
consequences." Vuitton, 597 F. Supp. at 1194, quoting Phitgj
States Trust Co. v . Nev Jersey, 431 U.S. 1, 17 n.13 (1976).
Consequently, to avoid this problem, the court chose to construe
the treble damages statute as operating prospectively only.
The countervailing considerations that distinguish the Fair
Housing Act from the statute involved in Vuitton are compelling.
In Vuitton the court declined to apply the treble damages statute
retroactively because it could not have deterred the particular
defendants who committed their illegal acts prior to the passage
)
2 2 / To a large extent, this argument dovetails into the Bradley
analysis described above. Clearly, the factors deemed important
by the Bradley Court reflect concern about due process rights not
transgressed here.
- 37
J
Of th« Act. But here, non.tary damages have always been
available under the Fair Housing Act and, in addition, plaintiffs
in 51982 lawsuits have been awarded large punitive damage awards
where discrimination in housing has been found to exist. Thus,
the possibility of awards of large amounts of monetary relief as
a result of defendants' conduct could clearly be foreseen by
defendants and act as a deterrent prior to the passage of the
amended Act. In providing that the United States may now recover
similar relief for such victims of discrimination, as well as
seek another kind of punitive relief in the form of civil
penalties, the amended Act merely changes the circumstances in
which such monetary relief may now be awarded and only minimally
adds to the deterrent effect that of the relief. In sum, the
additional remedial provisions provided by the amended Act here
cannot be said to be 'harsh and oppressive'.
Accordingly, retroactive application of the amended Act's
remedial provisions does not violate the Due Process Clause.
38
IV. rONCLUSIOK
For the above stated reasons, defendants' notion to strike
should be denied.
Respectfully subnitted,
JAMES P. TURNERActing Assistant Attorney General
y ^PJJfUL F. HANCOCK
3SEPH D. RICH
Jane r . taylor
BARBARA KAMMERMAN
CHRISTINE R. LADD
BRIAN F. HEFFERNAN
Attorneys .uni1cinn and civil Enforcement
Section
Civil Rights Division
U.S. Department of Justice
P.0. Box 65998 Washington, D.C. 20035-5998
Telephone: (202) 633-4752
P02FROM LAWYERS' COMMITTEE
SUPERIOR COURT
G? THE0I3Tr::ct op Columbia
UNITED STATES CF AMERICA » Crimini.l No. F 14117-88
v : Judge von Kann
BRYAN C. BCSTICX
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gg'^gCACTIV J3E.
^rTryr&V?'S MEMORANDUM CCNCERNIN5
-ur R**nRM AMENDMENT ACT
Tha Uni tad States of America, by and through its attorney, the
United Status Attorney for the District c:f Columbia, respectfully
submits the following in opposition to defendant's memorandum:
1) On March 15, 1990, defendant Brym Bostick waa convicted
by a jury of second degree murder while armed and carrying a pistol
without a license. or. April 10, 1992- the Court of Appeals
reversed defendant's esccnd degree murder while armed conviction
for the sole reason that tha trial court failed to instruct the
jury concerning a potential defense. Defendant sought immediate
iaeuenca of the mandate which was entered on April 17, 1992. As a
result, a status hsarir.g was. hald at tha trial court level on April
20, 1992 «t which time the court addressed tha defendant's
conditions of raleeaa pending re-trial cf this matter. At this
time, the government moved to have the defendant detained pursuant
to the Bail Reform Amendment Act. Defendant now objects to the
court's consideration cf thLs issue alleging that he is entitled to
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on the same conditions imposed pricr to hii first t--a«.
Defendant argues that to detain hir. pursuant to this jurisdiction's
racantly enacted hail law would conitituta a retroactive
application of the new statute sines ha allegedly comnittad the
murder prior to adoption of this law,
2) Contrary to defendant's assertion, the court is free to
consider defendant’s release status at this juncture and to detain
d®jfc2",ciart pursuant to the Bail Refcn Amendment Act. Thera is »»o
constitutional right to bail. v. 430 A.2d
1321, 1325-31 (en banc) cart, jer.iad 449 U.S. 872 (1931). Instead,
the terns of a defendant's bail are routinely considered an open
natter subject to modification dur:.r.g thu pendency of a case if
changed circumstance# sc warrant, aaa urltnd States v, Zar.hih?/ 761
r.2d 52, 53 (1st Cir. 1985) (discussing Federal Bail Reform Act of
1984) .
3) This approach to the bail issue in the current case is
consistent with the court's historical treatment of bail issues
under the prior bail law in this jurisdiction. For instance,
Section 23-1322 (c)(2) of the previous Bail Act provided that, even
though a defendant had been relaaead by thu court pending trial, if
it subsequently appeared that the defendant was subject to pretrial
detention, the bail issue could be revisit ad upon written motion by
the government. likewise, the current ball law contains a similar
provision in Section 23-1322(d)(7). In ihcrt, the gauntlet does
not drop after the court's initial determination of the bail issue
at the beginning of judicial proceeding*; against the defendant.
U t « J ^ “ L.-iiV 1 - L J w xLLul i i . £ £ F 0 4
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Instead, with regard to a defendant's release status, each day la
a "new day" during the pendency of his caaa and the conditions of
his ralaasa can be changed aa circumstances changa. In this sense,
the broad term "retroactivity" is truly a ralsnener when used in the
analysis cf a tail act issue. Employment o:.' the term unfortunately
leads to confusion since "retroactivity" h«.s bear, indiscriminately
utilized by courts whan discussing the application cf a wide
variety of lnwa/rsgulations under a plethora of factual scenarios.
4) Defendant rslias heavily on the casta cf ,Y..i.
Cac-Tatowr mivaraitv ^capital. 4Si U.S. 204 (198 9) and Ksiaar
Aluminum S Chemical v. Bcnicrna. 494 U.S. 82? (1990) in an
attempt to thwart the analysis of a similar issue as sat forth in
the Memorandum Opinion and Order written by The Hencrsbla Reggie 3.
Walton in the recant case cf United states v. Eric Mean, (docket
number F-5736-91, D.C. Superior Court). However, defendant's
reliance on the authority in question is misplaced. In both of the
civil cases designated by defendant, thti Court was applying a
law/regulation which affected a party's vested monetary rights
(i.s., in Bower.. monies already paid by the government to private
health care providers which the government sought to recapture; in
Kaigar. interest on a monetary judgment obtained by a party prior
to the enactment of a law changing the Lntareet calculation on
judgment*) . In both cases, the parties peisssastd vested property
rights which arguably could be affected by the retroactive
application of a new law/regulation. Under these circumstances, a
ccurt may bu required to determine if ths applicable legisla.ive
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V V U 4 S 9 4 4 1 . «>W M
body ir.tandud the enforcement of tha law/regulation to ba
retroactive since tha vested property ricrht* of a party may ba
affactad by uuch an application.
5) However, aa recited abova, simply bacauaa dafandant was
initially released in tha early stage* of this litigation doaa not
naan ha new possesses a vestad proparty right or liberty intaraat
which prohibits tha court front changing his, condition* of ralaasa.
V. gnamsa. 454 A.2d 1308 , 131 4 (D.C. App. 1982)
dar'gd 46C U.S. 1087 (1383) (overruled on ot;har grounds in lynCil-V.i.
Cnitwri gratae. 557 A.2d 53C (D.C. App. 1989) BradlaY-Y.
Sr̂ ffel aesrd a* S'4 r,v of Richmond. 41<S U.S. 635, 72C (1974)/
gri^sa v. Zarrlrc. 761 F.2d at 56-57.
6) The government1 a notion to detain the dafandant is not
predicated or. a daaire to manipulate the criminal justice systam or
to punish the defendant for pursuing his appellate remedies.
Instead, the question of defendant's bail statue is being revisited
as a natural consequence of hie case being rsmsnded after one of
his convictions was overturned. The government is mevinq for pre
trial detention at defendant's first court appearance following tha
issuance of the mandate and is simply asking the Court to apply the
law as it presently exists in the District of Columbia, flfifl BSlfllty
v. Schcgl sf qitv cl' Richmond, 41.5 U.S. 4t 711. To do
otherwise would require tha Court to ignori the circumstances which
have changed since the inception of thin prosecution and would
frustrate the City Council's clear legislative intent "to permit
the pretrial detention of the moat violent and dangerous offenders
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... and ... provide in additicnii rasisurn of community safety.n
(Committal on the Judiciary, Report to the Council of the District
of Columbia of 1991-1992, at 4 (January 23, 1992)),
ffherefare. the united Scats* respectfully submits this
memorandum in support of its request that the defendant he detained
pending the re-trial of this matter.
JAY B. 3TS7HENS UNIT22 STAT2S ATTORNEY
?. K3VIN CARWILE'—ASSISTANT UNITED STATES ATTORNEY
C~3 .s&rs.fff sayisvrt
I hereby certify that a copy of the foregoing was served by
hand upon the attorney for defendant, David Reiser, Public Defender^
Service, >5‘,Indiana Ave., H.W., Washington, D.C. 20001, this* 2 ^
day of 199^.
ASSISTANT UNITED "STATES ATTORNEY
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