Arthur v. Starrett City Associates Memorandum of the Starrett Defendants in Support of the Settlement Agreement and in Response to the Comments of the United States

    UNITED STATES DISTRICT COURT 
EASTERN DISTRICT OF NEW YORK

x
MARIO ARTHUR, HAROLD DEPASS,
ANN LONG, and JOSEPH PERCIVAL, 
individually and on behalf of all 
others similarly situated,

Plaintiffs,
DIANE HERNDON, individually and 
on behalf of all others similarly 
situated,

Plaintiff-Intervenor, 79 Civ. 3096 (ERN)
-against-

•

STARRETT CITY ASSOCIATES, STARRETT 
CITY, INC., DELMAR MANAGEMENT COMPANY, : 
and YVONNE SCRUGGS-LEFTWICH, Com­
missioner, State of New York, Divi- :
sion of Housing and Community Renewal,

Defendants.
~ — “ — — — — — — — — — — — — — — x

MEMORANDUM OF THE STARRETT DEFENDANTS 
IN SUPPORT OF THE SETTLEMENT AGREEMENT AND IN 
RESPONSE TO THE COMMENTS OF THE UNITED STATES

PAUL. WEISS. RIFKIND, WHARTON 8 GARRISON
A P A R T N E R S H IP  IN C L U D IN G  P R O F E S S IO N A L  C O R P O R A T IO N S

A t t o r n e y s  a t  L aw

3 4 5  Pa r k  A v e n u e . N e w  Y o r k . N Y. 10154



UNITED STATES DISTRICT COURT 
EASTERN DISTRICT OF NEW YORK

---------------------------

MARIO ARTHUR, HAROLD DEPASS, :
ANN LONG, and JOSEPH PERCIVAL, 
individually and on behalf of all :
others similarly situated,

Plaintiffs,
DIANE HERNDON, individually and 
on behalf of all others similarly :situated,

Plaintiff-Intervenor, 
-against-

. STARRETT CITY ASSOCIATES, STARRETT 
CITY, INC., DELMAR MANAGEMENT COMPANY, 
and YVONNE SCRUGGS-LEFTWICH, Com­
missioner, State of New York, Divi­
sion of Housing and Community Renewal,

Defendants.

79 Civ. 3096 (ERN)

x

MEMORANDUM OF THE STARRETT DEFENDANTS 
IN SUPPORT OF THE SETTLEMENT AGREEMENT AND IN 
RESPONSE TO THE COMMENTS OF THE UNITED STATES

PRELIMINARY STATEMENT

On April 30, 1984, after four and a half years of 
litigation and months of intensive settlement negotiations, 
the parties to this action entered into a detailed Stipulation 
of Settlement and Consent Decree. The parties submitted the 
settlement agreement to the Court for its approval, and the



2

Court ordered that all members of the plaintiff class be 
notified of the settlement. In addition, the Court directed 
that class members be given an opportunity to comment on the 
agreement. The Court established a 45-day comment period 
within which such comments were to be submitted. The comment 
period ended on June 28, 1984. Only four members of the 
plaintiff class submitted comments, and none opposed the 
settlement.

The settlement agreement now before the Court 
represents the product of long and hotly contested litiga­
tion. It is a carefully crafted document that embodies the 
best judgment of experienced counsel for all parties on the 
proper disposition of this lawsuit. All parties have 
concluded that the settlement agreement, as it stands, will 
best serve the interests of persons seeking apartments at 
Starrett City, persons now living there, and persons who may 
in the future apply for housing at Starrett or other state- 
supervised housing developments in the City of New York.

That conclusion was reached only after all disputed 
issues in the case were fully ventilated through the adver- 
sary process. Hundreds of documents were produced, dozens of 
depositions were taken, and extensive expert reports were 
prepared. The history of Starrett City, the rental practices 
employed there, the justification for those practices, and 
the experience of other publicly assisted housing developments 
in the area surrounding Starrett City were all thoroughly



investigated. The parties reached their agreement only after 
careful consideration of all available options, including the 
potential costs and benefits of further litigation.

The settlement as it stands is a unified whole.
The individual provisions and the relationship among the 
various portions of the agreement are the result of a finely 
balanced compromise in which all aspects of the settlement * 
are interdependent. The New York State defendant's agreement 
to increase minority access to other state-supervised housing 
developments in New York City, the Starrett defendants' agree­
ment to increase the number of apartments rented to blacks and 
Hispanics at Starrett, and the plaintiffs' agreement that 
controlled tenant selection on the basis of race can continue 
to be used at Starrett to maintain integration are all critical 
components of the settlement. None of the parties, working 
alone, would have produced the agreement that now exists; all 
of the parties, working together, have concluded that the 
present agreement is the best way of resolving this lawsuit.

There is only one fly in the ointment, and a most 
unwelcome fly it is. On June 28, 1984, the final day of the 
comment period, the federal government submitted comments 
urging this Court to delete a single provision —  Paragraph 
31 of the settlement agreement and to insist that the 
parties adhere to the agreement as modified. The government 
did not choose to address "the question of whether the



4

proposed settlement is fair, reasonable or adequate" (Comments, 
at 5). Instead, the government used sniper tactics, asking 
the Court to remove two sentences of a 30-page agreement, on the 
ground that the government considers them mere surplusage.
This is officious intermeddling of the most egregious kind.

To compound the problem, the government did not 
limit itself to an attempted interference with a carefully 
negotiated settlement. Simultaneously with the filing of its 
comments, the government filed its own lawsuit challenging 
the rental practices of Starrett City. Thus, on the very eve 
of the satisfactory conclusion of a lawsuit that has occupied 
the time and attention of the parties and the Court for four 
and a half years, the government has sought to start the 
process all over again. The government has purportedly taken 
this step to advance the interests of black applicants for 
housing at Starrett City. But those are the very persons on 
whose behalf the present action has been litigated and 
settled. Their interests have already been protected.

Moreover, and most appalling, the government's 
current interference comes against a background of adamant 
and persistent government refusals to become involved in this 
case in any way whatsoever. The government's brazenness in 
reversing its prior position, and its blatant disrespect for 
the parties and the Court, who have struggled with this 
litigation for several years, are truly unconscionable.



Almost four years ago, in the early stages of this 
litigation, defendants moved to dismiss plaintiffs' complaint 
for failure to join the United States Department of Housing 
and Urban Development as an indispensable party. The Starrett 
defendants argued that in the absence of the federal govern­
ment, the controversy could not be completely resolved and 
the Starrett defendants would be exposed to the risk of 
inconsistent obligations to this Court and to HUD. See Fed.
R. Civ. P. 19(a). The government scoffed at this argument 
and opposed joinder.* See the March 31, 1980 and February 
24, 1981 letters from the U.S. Attorney to this Court. Even 
when the Court offered the government a choice between 
participating as a plaintiff or a defendant, the government 
insisted that it did not need or want to be involved in the 
case in any way. The Court therefore denied defendants' 
motion, and the action has proceeded without any contribution 
from the government.

The defendants' worst fears have now been realized. 
After the parties have settled the case, the government has 
changed its mind. The present administration in Washington 
—  an administration that has been roundly and repeatedly 
criticized for its neglect of civil rights enforcement —  has

The United States was granted leave to appear and 
present its position on the motion.



6

now determined in this election year that its political 
purposes are best served by interfering here. This Court 
should not permit political whim to affect the settlement of 
a lawsuit in which the government has rejected defendants' 
efforts to make HUD a party and has deliberately remained 
outside the fray. The government had ample opportunity to 
participate in this action. It chose not to. Its recourse 
now is in its independent action against the Starrett defen­
dants; it has no role to play in the settlement of this case.

In any event, the government's reasons for 
requesting the Court to strike Paragraph 31 of the settle­
ment agreement are wholly without merit. The Court should 
reject them.

I
THE COURT LACKS AUTHORITY TO 

ALTER THE TERMS OF A SETTLEMENT 
AGREEMENT WITHOUT THE PARTIES' CONSENT

In passing upon a proposed settlement of a class 
action, a court's charge is extremely limited: it is only 
to determine whether the settlement is fair, reasonable, and 
adequate from the perspective of absent class members, not to 
decide the merits of the controversy. See Newman v. Stern,
464 F.2d 689, 691-92 (2d Cir.), cert, denied, 409 U.S. 1039 
(1972); Plummer v. Chemical Bank, 91 F.R.D. 434, 438 (S.D.N.Y.
1981), aff'd and remanded, 668 F.2d 654 (2d Cir. 1982).



In the case of an uncontested settlement, such as
the one involved here, the court's role is even more deferen­
tial. "When a settlement has been the subject of arms-length 
bargaining, with class counsel in a position to evaluate 
accurately the chances of the class prevailing if the case 
went to trial and where no objections are raised by any of 
the affected parties, there is a strong presumption in favor 
of the settlement." Guardians Ass'n of New York City Police 
Dept, v. Civil Service Commission, 527 F. Supp. 751, 757 
(S.D.N.Y. 1981).

In reviewing an uncontroverted settlement agree­
ment, a court has two options: it can approve the settle­
ment, or, if it finds the settlement unfair or unreasonable 
or plainly unlawful, it can refuse its approval. If the court 
refuses to approve the agreement, it can inform the parties of 
its reasons, and it may, to a limited degree, suggest changes 
in the settlement terms that would aid in overcoming the 
court's objections. The court may not, however, simply alter j 
the settlement and insist that the parties adhere to the 
modified agreement. Pettway v. American Cast Iron Pipe Co.,
576 F.2d 1157, 1172 (5th Cir. 1978), cert, denied, 439 U.S.
1 1 15 ( 1979) .

The government's comments rest on the erroneous 
premise that the Court can rewrite an uncontested settle­
ment and still compel the parties to submit to the rewritten



8

agreement. The government is mistaken. Piecemeal interven­
tion of the kind sought by the government is not authorized 
in the Second Circuit. The leading recent case is Plummer 
v. Chemical Bank, supra, in which the Court of Appeals 
expressly stated: "The district court judge should not take 
it upon himself to modify the terms of the proposed settle­
ment decree, nor should he participate in any bargaining for 
better terms."* 668 F.2d at 655 n.1.

The government asks this Court to depart from 
controlling precedent in the Second Circuit for no reason 
other than to accommodate the government's distaste for a 
single paragraph in a settlement agreement to which the 
government is not; even a party. Not surprisingly, the govern­
ment has failed to cite any case in which a court has deleted 
an operative provision of a proposed consent decree against 
the wishes of the parties and has nevertheless required the 
parties to adhere to the remainder of the decree. The one 
case on which the government relies, Liddell v. Board of
~^UCat^°n' F.2d 626 (8th Cir.), cert, denied, 459 U.S. 877 
(1982), does not support the government's position. The 
district court in Liddell adopted the parties' proposed

I! makeSf6!”lnent sense. Settlement of civil riqhtsactions is preferred to litigation because it promotes 
voluntary compliance, increases judicial efficiencv and 
reduces the cost of litigation, 'see Kirklandv.
T^ i i r e?1 9 8 3) C; ^ ^ Ct^onal services,-7TTTT2d 11777^1128v cert, denied. u.S. in* e

voluntary'settlement
parties ttemselvel. ten"S a9reed upon *  «>•



9

consent decree "without significant modification." Id. at 
634. The only changes made by the court were matters of form, 
not substance. For example, the court added quotations from 
prior court opinions and supplemented the parties' description 
of the procedural history of the case. The court did not 
delete any provision of the operative section of the decree.

As we demonstrate below, Paragraph 31 is a central 
feature of the settlement agreement. It is far from "meaning­
less surplusage." In the absence of any suggestion that 
the settlement is unfair or unreasonable to the plaintiff 
class, the only legitimate basis on which this Court could 
object to Paragraph 31 is if it were plainly unlawful.
Berkman v. City of New York, 705 F.2d 584, 597 (2d Cir. 1983) 
On the contrary, however, Paragraph 31 is fully consistent 
with the governing law.

II
STARRETT CITY'S RENTAL PRACTICES ARE LAWFUL

Presumably in recognition of the relevant Second 
Circuit precedents, the government does not even try to 
maintain that Paragraph 31 is plainly unlawful. The most the 
government can say is that it has challenged Starrett City's 
rental practices in an independent lawsuit. But, the mere 
fact that such a lawsuit has been filed cannot justify 
disapproval of the settlement agreement.



10

Where the alleged illegality of a settlement agree­
ment is not clear —  i«e., where the challenged practices 
have not already been held to be illegal —  an uncontroverted 
settlement should be approved. See Robertson v. National 
Basketball Ass'n, 556 F.2d 682, 686 (2d Cir. 1977). Moreover, 
as the Starrett defendants have argued in their pretrial 
brief, and as we now show, the challenged tenant selection 
practices of Starrett City are entirely lawful.

In the first place, it is perfectly clear that not 
all race-conscious action under government auspices is 
impermissible. That much has been established at least since 
the Supreme Court's school desegregation cases. Court-ordered 
remedies for past discrimination, virtually by definition, 
use race as a factor in apportioning public benefits. Yet no 
one would seriously suggest that court-ordered busing is 
unlawful simply because it takes race into account.

The Supreme Court has expressly held that racial 
quotas may be temporarily imposed, as a remedial measure, to 
promote racial balance in public schools. Swann v. Charlotte- 
Mecklenberg Board of Education, 402 U.S. 1 (1971). By itself, 
therefore, reliance on race is not sufficient to establish a 
constitutional or statutory violation.

Nevertheless, it could be argued, the state should 
not be permitted to use race as a factor in allocating scarce 
public goods, i.e. , benefits that are sufficiently limited in
quantity or sufficiently expensive that the state cannot (or



will not) make them available to everyone. Although it may 
be permissible to consider race when moving students from one 
public school to another —  so the argument would run —  the 
state does not enjoy the same leeway when it distributes 
to some a benefit that it denies to others. Admissions to 
schools of higher education and employment opportunities 
could fall in this category.

The position may have some intuitive appeal, but 
it too has been rejected by the Supreme Court. In three 
recent decisions, the Court has held that race may be taken 
into account in appropriate circumstances to increase minority 
access to scarce goods and thereby ameliorate the effects of 
past discrimination. Fullilove v. Klutznick, 448 U.S. 448 
( 1980)̂  (sustaining federal statute that required 10% of appro­
priated funds to be used for supplies or services provided by 
minority business enterprises); United Steelworkers v. Weber, 
443 U.S, 193 (1979) (Title VII case upholding voluntary 
private quota reserving for blacks 50% of openings in a craft 
training program); Regents of the University of California v. 
Bakke, 438 U.S. 265 ( 1978) (state may take race into account 
in admitting students to medical school).

Third and finally, one might argue that even if it 
may be permissible to use race-conscious selection methods to 
ensure that some portion of a scarce benefit is distributed
to minorities, such methods may not be used under any circum-



12

stances if to do so would impose an additional burden on 
minorities. One might say, in other words, that governmental 
intervention based on race may be lawful if minorities are 
advantaged but not if they are disadvantaged. The theory 
would be that, if minorities are disadvantaged, neither the 
furtherance of integration nor any other public purpose can 
be sufficiently significant to justify differing treatment 
based on race.

This approach, however, has been emphatically 
rejected by the Second Circuit in Otero v. New York City 
Housing Authority, 484 F.2d 1122, 1125, 1134 (2d Cir. 1973). 
The Court of Appeals there held that if a race-conscious 
tenant selection program is necessary to achieve integration 
in a public housing project, the program may lawfully be 
implemented, even if it imposes additional burdens on some 
minority group members. The Court ruled that Title VIII of 
the Civil Rights Act of 1968 , 42 U.S.C. 3601 et seg., also 
known as the Fair Housing Act, imposes an affirmative duty to 
further the goal of integrated housing. "Action must be 
taken to fulfill, as much as possible, the goal of open, 
integrated residential housing patterns and to prevent the 
increase of segregation, in ghettos, of racial groups whose 
lack of opportunities the Act was designed to combat." 484 
F.2d at 1134. In reaching this conclusion, the Court of 
Appeals relied heavily on the remarks of Senator Mondale,



c 13k

the principal sponsor of Title VIII. In floor debate on the 
bill, Senator Mondale stated that the new.law was "designed to 
replace the ghettos 'by truly integrated and balanced living 
patterns.'" Ibid., quoting 114 Cong. Rec. 3422 (1968).

Given this legal background, the Court of Appeals 
decided that the affirmative duty to integrate imposed by 
Title VIII is a sufficiently important governmental objective 
to justify disadvantaging some minority persons if necessary. 
Referring to the Housing Authority's duty to integrate, the 
Court stated:

We do not view that duty as a "one-way street" limited 
to introduction of non—white persons into a predominantly 
white community. The Authority is obligated to take 
affirmative steps to promote racial integration even 
though this may in some instances not operate to the 
immediate advantage of some non-white persons.

Id. at 1125 (emphasis added). The Court echoed the same
theme later in its opinion.

Congress' desire in providing fair housing through­
out the United States was to stem the spread of 
urban ghettos and to promote open, integrated housing, 
even though the effect in some instances might be to 
prevent some members of a racial minority from residing 
in publicly assisted housing in a particular location.
The affirmative duty to consider the impact of publicly 
assisted housing programs on racial concentration and to 
act affirmatively to promote the policy of fair, inte­
grated housing is not to be put aside whenever racial 
minorities are willing to accept segregated housing.

Id. at 1134 (emphasis added).
Otero thus establishes that race-based governmental 

action that burdens minorities is permissible if such steps 
are necessary to achieve and maintain integration. Following



14

the decision in Bakke, the holding of Otero was reaffirmed by 
the Second Circuit in Parent Association of Andrew Jackson 
High School v. Ambach, 598 F.2d 705, 719-720 (1979).

The Starrett defendants maintain, and have argued 
since the inception of this litigation, that their practices 
are "essential to promote a racially balanced community and to 
avoid . . .  a segregated community." Otero, supra, 484 F.2d 
at 1140. Contrary to the government's suggestion, the Starrett 
City practices are not plainly unlawful.

Ill
PARAGRAPH 31 IS NEITHER AN ADVISORY 
OPINION NOR MEANINGLESS SURPLUSAGE

Paragraph 31 of the settlement agreement has been 
accepted not only by the Starrett defendants but also by the 
Attorney General of the State of New York, the Commissioner of 
the New York State Division of Housing and Community Renewal, 
and experienced plaintiffs' counsel, who are or were affiliated 
with the NAACP, the Open Housing Center, and the Fair Housing 
Clinic of the Columbia University School of Law. The para­
graph was not adopted lightly. It is an integral part of the 
settlement agreement. It was intended to reflect the consen­
sus of all parties that one result of the settlement of this 
case should be the continued maintenance of integration at 
Starrett City through the use of controlled tenant selection 
based on race. In the same way, all parties agreed that the



15

number of apartments rented to blacks and Hispanics at 
Starrett City should be increased, that minority access to 
other state-supervised housing developments in New York City 
should be improved, and that ultimately Starrett City should 
be maintained as an integrated community without resort to 
controlled tenanting. All of these provisions are important 
to the settlement agreement; none can be removed without 
fundamentally altering the balance that the parties have 
fashioned.

Paragraph 31 plays a salutary role in two principal 
respects. It is far from "meaningless surplusage."

First, the provision announces to all interested 
persons that the integrated character of Starrett City will 
not change as a consequence of the settlement. This point 
is of enormous significance for the current residents at 
Starrett City, for applicants now waiting for apartments 
there, for potential reisdents who have not yet filed appli­
cations, and for the surrounding East New York and Canarsie 
communities. For all of these groups, Paragraph 31 provides 
needed reassurance that this extended and well-publicized 
litigation will not produce any departure from Starrett 
City's longstanding commitment to integrated housing.

This kind of public reassurance is critical to 
the continued ability of Starrett City to attract a racially 
and ethnically mixed applicant pool. Public perception is a 
key factor in the resolution of housing discrimination cases



c ?6

and in the housing market generally. The prevailing per­
ception of the character and desirability of housing in a 
particular development often serves as a self-fulfilling 
prophecy, causing the development actually to take on the 
character that was earlier only perceived. Expert witnesses 
in this litigation have recognized and commented on this 
phenomenon.—^ The continued viability of Starrett City as 
a stable, integrated community thus depends in large part on 
the perception of tenants, applicants, potential applicants, 
and the surrounding area. Paragraph 31 is intended to and 
will ensure that the public continues to perceive Starrett 
City as a highly desirable, stably integrated community.

Second, Paragraph 31 is useful for didactic purposes. 
It provides a valuable lesson for other potential litigants or 
counsel who might consider similar legal action against 
Starrett City. It teaches such persons that the rental 
practies employed at Starrett City are employed for a readily 
defensible reason and that, even after several years of

*j "The perceptions and images that potential tenants as 
— well as tenants have of a residential unit are important 

factors affecting the racial composition and the racial 
stability of the unit." Dr. Kenneth B. Clark, Starrett 
City, A Study of Ways of Maintaining An Integrated 
Residential Community at page 34. See also Id. at page 24.

"Among the factors affecting racial transition, impor­
tance is given to residents' anticipation of change as 
itself being a harbinger of change —  the self-fulfilling 
prophecy." Oscar Newman, Integration=Intervention, The 
Use of Occupancy Controls at Starrett City at page 205.



litigation, experienced counsel for the plaintiff class 
concluded that the best compromise through which this contro­
versy could be resolved would include the continuation of 
controlled tenant selection based on race at Starrett 
City.

Contrary to the government's submission, the 
discouragement of future repetitive litigation is a legiti­
mate goal of any settlement agreement. After a dispute .has 
been fully aired in highly adversarial proceedings, there is 
every reason to try to avoid unnecessary duplication of that 
process. It is typical of the government's disregard for 
judicial economy and the virtues of repose that it would 
challenge a settlement agreement on the ground that it might 
actually lay the controversy to rest. That, we submit, is 
exactly what settlement agreements are supposed to do.

Nor is the government on any firmer ground when 
it argues that Paragraph 31 constitutes an improper advisory 
opinion. The consent decree is an agreement among the partie 
to settle plaintiffs' claims in a manner that the parties 
believe reasonable and fair. The consent decree does not 
purport to be anything more than this. It thus is difficult 
to understand what the United States means when it states 
that Paragraph 31 "could be interpreted as an advisory 
opinion" (Comments, at 2). Paragraph 31 is no more an



18

advisory opinion than any other provision in this or any 
other consent decree.

Notably, the United States has not pointed to a 
single case in which a court has refused to approve a proposed 
settlement on the ground that it would constitute an advisory 
opinion. The weakness of the government's argument is further 
underscored by the government's filing of its own lawsuit 
against Starrett City. The government's own action thus 
demonstrates that at least one prospective litigant does not 
believe that the consent decree adjudicates the legality of 
Starrett City's practices.

Finally, there is a substantial question whether 
the government as amicus curiae has standing to challenge 
independently a provision that all the parties themselves 
find reasonable. See Bing v. Roadway Express, Inc., 485 F.2d 
441, 452 (5th Cir. 1973) ("As amicus curiae the Government 
cannot control the course of this litigation to the extent of 
requesting individual relief not requested by anyone else");
1B Moore's Federal Practice % 0.411 [6] , at 442 ( 2d ed. 19 83) . 
Under the circumstances, the government should concentrate on 
its own case and should leave the settlement of this case to 
the parties and the Court.



Conclusion

f

For the foregoing reasons, the Court should 
reject the comments of the United States and approve the 
proposed consent decree in the form agreed upon by the 
parties to this action.

Dated: New York, New York
July 13, 1984

Respectfully submitted,
PAUL, WEISS, RIFKIND, WHARTON & GARRISON 
A partnership including professional 

corporatiory

Michael G. Carey 
345 Park Avenue >New York, New York 10154 

644-ftnOO

Attorneys for Defendants Starrett City 
Associates, Starrett City, Inc. and 
Delmar Management Company

Morris B. Abram 
Peter Buscemi 
Michael G. Carey 
Andrew J. Frackman

Of Counsel



UNITED STATES DISTRICT COURT 
EASTERN DISTRICT OF NEW YORK

x
MARIO ARTHUR, HAROLD DEPASS,
ANN LONG, and JOSEPH PERCIVAL, 
individually and on behalf of all 
others similarly situated,

Plaintiffs,
DIANE HERNDON, individually and
on behalf of all others similarly :
situated,

Plaintiff-Intervenor, 79 Civ. 3096 (ERN)
-against-

•

STARRETT CITY ASSOCIATES, STARRETT 
CITY, INC., DELMAR MANAGEMENT COMPANY, : 
and YVONNE SCRUGGS-LEFTWICH, Com­
missioner, State of New York, Divi- :
sion of Housing and Community Renewal,

Defendants.

MEMORANDUM OF THE STARRETT DEFENDANTS 
IN SUPPORT OF THE SETTLEMENT AGREEMENT AND IN 
RESPONSE TO THE COMMENTS OF THE UNITED STATES

PAUL. WEISS. RIFKIND, WHARTON ft CARRISON
A R A R T N C R ftH IR  IN C L U D IN G  R R O 'C S t lO N A l  C O R P O R A T IO N *

A t t o r n e y s  a t  L aw

3 4 5  Pa r k  A v e n u e . N e w  Y o r k . N Y. 10154



UNITED STATES DISTRICT COURT 
EASTERN DISTRICT OF NEW YORK

X

MARIO ARTHUR, HAROLD DEPASS,
ANN LONG, and JOSEPH PERCIVAL, 
individually and on behalf of all 
others similarly situated,

Plaintiffs,
DIANE HERNDON, individually and 
on behalf of all others similarly situated,

Plaintiff-Intervenor, 
-against-

. STARRETT CITY ASSOCIATES, STARRETT 
CITY, INC., DELMAR MANAGEMENT COMPANY, 
and YVONNE SCRUGGS-LEFTWICH, Com­
missioner, State of New York, Divi­
sion of Housing and Community Renewal,

Defendants.
----------------------------- x

79 Civ. 3096 (ERN)

MEMORANDUM OF THE STARRETT DEFENDANTS 
IN SUPPORT OF THE SETTLEMENT AGREEMENT AND IN 
RESPONSE TO THE COMMENTS OF THE UNITED STATES

PRELIMINARY STATEMENT

On April 30, 1984, after four and a half years of 
litigation and months of intensive settlement negotiations, 
the parties to this action entered into a detailed Stipulation 
of Settlement and Consent Decree. The parties submitted the 
settlement agreement to the Court for its approval, and the



investigated. The parties reached their agreement only after 
careful consideration of all available options, including the 
potential costs and benefits of further litigation.

The settlement as it stands is a unified whole.
The individual provisions and the relationship among the 
various portions of the agreement are the result of a finely 
balanced compromise in which all aspects of the settlement 
are interdependent. The New York State defendant's agreement 
to increase minority access to other state-supervised housing 
developments in New York City, the Starrett defendants' agree­
ment to increase the number of apartments rented to blacks and 
Hispanics at Starrett, and the plaintiffs' agreement that 
controlled tenant selection on the basis of race can continue 
to be used at Starrett to maintain integration are all critical 
components of the settlement. None of the parties, working 
alone, would have produced the agreement that now exists; all 
of the parties, working together, have concluded that the 
present agreement is the best way of resolving this lawsuit.

There is only one fly in the ointment, and a most 
unwelcome fly it is. On June 28, 1984, the final day of the 
comment period, the federal government submitted comments 
urging this Court to delete a single provision —  Paragraph 
31 of the settlement agreement and to insist that the 
parties adhere to the agreement as modified. The government 
did not choose to address "the question of whether the



4

proposed settlement is fair, reasonable or adequate" (Comments, 
at 5). Instead, the government used sniper tactics, asking 
the Court to remove two sentences of a 30-page agreement, on the 
ground that the government considers them mere surplusage.
This is officious intermeddling of the most egregious kind.

To compound the problem, the government did not 
limit itself to an attempted interference with a carefully 
negotiated settlement. Simultaneously with the filing of its 
comments, the government filed its own lawsuit challenging 
the rental practices of Starrett City. Thus, on the very eve 
of the satisfactory conclusion of a lawsuit that has occupied 
the time and attention of the parties and the Court for four 
and a half years, the government has sought to start the 
process all over again. The government has purportedly taken 
this step to advance the interests of black applicants for 
housing at Starrett City. But those are the very persons on 
whose behalf the present action has been litigated and 
settled. Their interests have already been protected.

Moreover, and most appalling, the government's 
current interference comes against a background of adamant 
and persistent government refusals to become involved in this 
case in any way whatsoever. The government's brazenness in 
reversing its prior position, and its blatant disrespect for 
the parties and the Court, who have struggled with this 
litigation for several years, are truly unconscionable.



5

Almost four years ago, in the early stages of this 
litigation, defendants moved to dismiss plaintiffs' complaint 
for failure to join the United States Department of Housing 
and Urban Development as an indispensable party. The Starrett 
defendants argued that in the absence of the federal govern­
ment, the controversy could not be completely resolved and 
the Starrett defendants would be exposed to the risk of 
inconsistent obligations to this Court and to HUD. See Fed.
R. Civ. P. 19(a). The government scoffed at this argument 
and opposed joinder.* See the March 31, 1980 and February 
24, 1981 letters from the U.S. Attorney to this Court. Even 
when the Court offered the government a choice between 
participating as a plaintiff or a defendant, the government 
insisted that it did not need or want to be involved in the 
case in any way. The Court therefore denied defendants' 
motion, and the action has proceeded without any contribution 
from the government.

The defendants' worst fears have now been realized. 
After the parties have settled the case, the government has 
changed its mind. The present administration in Washington 
—  an administration that has been roundly and repeatedly 
criticized for its neglect of civil rights enforcement —  has

* The United States was granted leave to appear and 
present its position on the motion.



8

agreement. The government is mistaken. Piecemeal interven­
tion of the kind sought by the government is not authorized 
in the Second Circuit. The leading recent case is Plummer 
v* Chemical Bank, supra, in which the Court of Appeals 
expressly stated: "The district court judge should not take 
it upon himself to modify the terms of the proposed settle­
ment decree, nor should he participate in any bargaining for 
better terms."* 668 F.2d at 655 n.1.

The government asks this Court to depart from 
controlling precedent in the Second Circuit for no reason 
other than to accommodate the government's distaste for a 
single paragraph in a settlement agreement to which the 
government is not, even a party. Not surprisingly, the govern­
ment has failed to cite any case in which a court has deleted 
an operative provision of a proposed consent decree against 
the wishes of the parties and has nevertheless required the 
parties to adhere to the remainder of the decree. The one 
case on which the government relies, Liddell v. Board of 
Education, 677 F.2d 626 (8th Cir.), cert, denied, 459 U.S. 877 
(1982), does not support the government's position. The 
district court in Liddell adopted the parties' proposed

The rule makes eminent sense. Settlement of civil riqhts 
actions is preferred to litigation because it promotes 
voluntary compliance, increases judicial efficiency, and re uces the cost of litigation. See Kirkland v. N.Y.

Dept* Correctional Services, 711 F.2d 11T77“ 1128 (2d Cir. 1983), cert. denied, ____ u.S. , 104 S. Ct.
bv?nof9?4!’ / ° UrtS ?hould encourage voluntary settlement y not interfering with the terms agreed upon by the parties themselves.



Id . atconsent decree "without significant modification."
634. The only changes made by the court were matters of form, 
not substance. For example, the court added quotations from 
prior court opinions and supplemented the parties' description 
of the procedural history of the case. The court did not 
delete any provision of the operative section of the decree.

As we demonstrate below, Paragraph 31 is a central 
feature of the settlement agreement. It is far from "meaning­
less surplusage." In the absence of any suggestion that 
the settlement is unfair or unreasonable to the plaintiff 
class, the only legitimate basis on which this Court could 
object to Paragraph 31 is if it were plainly unlawful.
Berkman v. City of New York, 705 F.2d 584, 597 (2d Cir. 1983) 
On the contrary, however, Paragraph 31 is fully consistent 
with the governing law.

II
STARRETT CITY'S RENTAL PRACTICES ARE LAWFUL

Presumably in recognition of the relevant Second 
Circuit precedents, the government does not even try to 
maintain that Paragraph 31 is plainly unlawful. The most the 
government can say is that it has challenged Starrett City's 
rental practices in an independent lawsuit. But, the mere 
fact that such a lawsuit has been filed cannot justify 
disapproval of the settlement agreement.



I u

Where the alleged illegality of a settlement agree­
ment is not clear —  i. e. , where the challenged practices 
have not already been held to be illegal —  an uncontroverted 
settlement should be approved. See Robertson v. National 
Basketball Ass'n, 556 F.2d 682, 686 (2d Cir. 1977). Moreover, 
as the Starrett defendants have argued in their pretrial 
brief, and as we now show, the challenged tenant selection 
practices of Starrett City are entirely lawful.

In the first place, it is perfectly clear that not 
all race-conscious action under government auspices is 
impermissible. That much has been established at least since 
the Supreme Court's school desegregation cases. Court-ordered 
remedies for past discrimination, virtually by definition, 
use race as a factor in apportioning public benefits. Yet no 
one would seriously suggest that court-ordered busing is 
unlawful simply because it takes race into account.

The Supreme Court has expressly held that racial 
quotas may be temporarily imposed, as a remedial measure, to 
promote racial balance in public schools. Swann v. Charlotte- 
Mecklenberg Board of Education, 402 U.S. 1 (1971). By itself, 
therefore, reliance on race is not sufficient to establish a 
constitutional or statutory violation.

Nevertheless, it could be argued, the state should 
not be permitted to use race as a factor in allocating scarce 
public goods, i.e. , benefits that are sufficiently limited in
quantity or sufficiently expensive that the state cannot (or



13

the principal sponsor of Title VIII. In floor debate on the 
bill, Senator Mondale stated that the new.law was "designed to 
replace the ghettos 'by truly integrated and balanced living 
patterns.'" Ibid., quoting 114 Cong. Rec. 3422 (1968).

Given this legal background, the Court of Appeals 
decided that the affirmative duty to integrate imposed by 
Title VIII is a sufficiently important governmental objective 
to justify disadvantaging some minority persons if necessary. 
Referring to the Housing Authority's duty to integrate, the 
Court stated:

We do not view that duty as a "one-way street" limited 
to introduction of non-white persons into a predominantly 
white community. The Authority is obligated to take 
affirmative steps to promote racial integration even 
though this may in sorrte instances not operate to the 
immediate advantage of some non-white persons.

Id. at 1125 (emphasis added). The Court echoed the same
theme later in its opinion.

Congress' desire in providing fair housing through­
out the United States was to stem the spread of 
urban ghettos and to promote open, integrated housing, 
even though the effect in some instances might be to 
prevent some members of a racial minority from residing 
in publicly assisted housing in a particular location.
The affirmative duty to consider the impact of publicly 
assisted housing programs on racial concentration and to 
act affirmatively to promote the policy of fair, inte­
grated housing is not to be put aside whenever racial 
minorities are willing to accept segregated housing.

Id. at 1134 (emphasis added).
Otero thus establishes that race-based governmental 

action that burdens minorities is permissible if such steps 
are necessary to achieve and maintain integration. Following



will not) make them available to everyone. Although it may 
be permissible to consider race when moving students from one 
public school to another —  so the argument would run —  the 
state does not enjoy the same leeway when it distributes 
to some a benefit that it denies to others. Admissions to 
schools of higher education and employment opportunities 
could fall in this category.

The position may have some intuitive appeal, but 
it too has been rejected by the Supreme Court. In three 
recent decisions, the Court has held that race may be taken 
into account in appropriate circumstances to increase minority 
access to scarce goods and thereby ameliorate the effects of 
past discrimination. Fullilove v. Klutznick, 448 U.S. 448 
(1980) (sustaining federal statute that required 10% of appro­
priated funds to be used for supplies or services provided by 
minority business enterprises); United Steelworkers v. Weber, 
443 U.S, 193 (1979) (Title VII case upholding voluntary 
private quota reserving for blacks 50% of openings in a craft 
training program); Regents of the University of California v. 
Bakke, 438 U.S. 265 (1978) (state may take race into account 
in admitting students to medical school).

Third and finally, one might argue that even if it 
may be permissible to use race-conscious selection methods to 
ensure that some portion of a scarce benefit is distributed
to minorities, such methods may not be used under any circum-



12

stances if to do so would impose an additional burden on 
minorities. One might say, in other words, that governmental 
intervention based on race may be lawful if minorities are 
advantaged but not if they are disadvantaged. The theory 
would be that, if minorities are disadvantaged, neither the 
furtherance of integration nor any other public purpose can 
be sufficiently significant to justify differing treatment 
based on race.

This approach, however, has been emphatically 
rejected by the Second Circuit in Otero v. New York City 
Housing Authority, 484 F.2d 1122, 1125, 1134 (2d Cir. 1973). 
The Court of Appeals there held that if a race-conscious 
tenant selection program is necessary to achieve integration 
in a public housing project, the program may lawfully be 
implemented, even if it imposes additional burdens on some 
minority group members. The Court ruled that Title VIII of 
the Civil Rights Act of 1968 , 42 U.S.C. 3601 e_t seq. , also 
known as the Fair Housing Act, imposes an affirmative duty to 
further the goal of integrated housing. "Action must be 
taken to fulfill, as much as possible, the goal of open, 
integrated residential housing patterns and to prevent the 
increase of segregation, in ghettos, of racial groups whose 
lack of opportunities the Act was designed to combat." 484 
F.2d at 1134. In reaching this conclusion, the Court of 
Appeals relied heavily on the remarks of Senator Mondale,



13

the principal sponsor of Title VIII. In floor debate on the 
bill, Senator Mondale stated that the new.law was "designed to 
replace the ghettos 'by truly integrated and balanced living 
patterns.'" Ibid., quoting 114 Cong. Rec. 3422 (1968).

Given this legal background, the Court of Appeals 
decided that the affirmative duty to integrate imposed by 
Title VIII is a sufficiently important governmental objective 
to justify disadvantaging some minority persons if necessary. 
Referring to the Housing Authority's duty to integrate, the 
Court stated:

We do not view that duty as a "one-way street" limited 
to introduction of non-white persons into a predominantly 
white community. The Authority is obligated to take 
affirmative steps to promote racial integration even 
though this may in some instances not operate to the 
immediate advantage of some non-white persons.

Id. at 1125 (emphasis added). The Court echoed the same
theme later in its opinion.

Congress' desire in providing fair housing through­
out the United States was to stem the spread of 
urban ghettos and to promote open, integrated housing, 
even though the effect in some instances might be to 
prevent some members of a racial minority from residing 
in publicly assisted housing in a particular location.
The affirmative duty to consider the impact of publicly 
assisted housing programs on racial concentration and to 
act affirmatively to promote the policy of fair, inte­
grated housing is not to be put aside whenever racial 
minorities are willing to accept segregated housing.

Id. at 1134 (emphasis added).
Otero thus establishes that race-based governmental 

action that burdens minorities is permissible if such steps 
are necessary to achieve and maintain integration. Following



14

the decision in Bakke, the holding of Otero was reaffirmed by 
the Second Circuit in Parent Association of Andrew Jackson 
High School v. Ambach, 598 F.2d 705, 719-720 (1979).

The Starrett defendants maintain, and have argued 
since the inception of this litigation, that their practices 
are "essential to promote a racially balanced community and to 
avoid . . .  a segregated community." Otero, supra, 484 F.2d 
at 1140. Contrary to the government’s suggestion, the Starrett 
City practices are not plainly unlawful.

Ill
PARAGRAPH 31 IS NEITHER AN ADVISORY 
OPINION NOR MEANINGLESS SURPLUSAGE

Paragraph 31 of the settlement agreement has been 
accepted not only by the Starrett defendants but also by the 
Attorney General of the State of New York, the Commissioner of 
the New York State Division of Housing and Community Renewal, 
and experienced plaintiffs' counsel, who are or were affiliated 
with the NAACP, the Open Housing Center, and the Fair Housing 
Clinic of the Columbia University School of Law. The para­
graph was not adopted lightly. It is an integral part of the 
settlement agreement. It was intended to reflect the consen­
sus of all parties that one result of the settlement of this 
case should be the continued maintenance of integration at 
Starrett City through the use of controlled tenant selection 
based on race. In the same way, all parties agreed that the



1 0

number of apartments rented to blacks and Hispanics at 
Starrett City should be increased, that minority access to 
other state-supervised housing developments in New York City 
should be improved, and that ultimately Starrett City should 
be maintained as an integrated community without resort to 
controlled tenanting. All of these provisions are important 
to the settlement agreement; none can be removed without 
fundamentally altering the balance that the parties have 
fashioned.

Paragraph 31 plays a salutary role in two principal 
respects. It is far from "meaningless surplusage."

First, the provision announces to all interested 
persons that the integrated character of Starrett City will 
not change as a consequence of the settlement. This point 
is of enormous significance for the current residents at 
Starrett City, for applicants now waiting for apartments 
there, for potential reisdents who have not yet filed appli­
cations, and for the surrounding East New York and Canarsie 
communities. For all of these groups, Paragraph 31 provides 
needed reassurance that this extended and well-publicized 
litigation will not produce any departure from Starrett 
City's longstanding commitment to integrated housing.

This kind of public reassurance is critical to 
the continued ability of Starrett City to attract a racially 
and ethnically mixed applicant pool. Public perception is a 
key factor in the resolution of housing discrimination cases



■ 16

and in the housing market generally. The prevailing per­
ception of the character and desirability of housing in a 
particular development often serves as a self-fulfilling 
prophecy, causing the development actually to take on the 
character that was earlier only perceived. Expert witnesses 
in this litigation have recognized and commented on this 
phenomenon.—^ The continued viability of Starrett City as 
a stable, integrated community thus depends in large part on 
the perception of tenants, applicants, potential applicants, 
and the surrounding area. Paragraph 31 is intended to and 
will ensure that the public continues to perceive Starrett 
City as a highly desirable, stably integrated community.

Second, Paragraph 31 is useful for didactic purposes. 
It provides a valuable lesson for other potential litigants or 
counsel who might consider similar legal action against 
Starrett City. It teaches such persons that the rental 
practies employed at Starrett City are employed for a readily 
defensible reason and that, even after several years of

*/ "The perceptions and images that potential tenants as 
well as tenants have of a residential unit are important 
factors affecting the racial composition and the racial 
stability of the unit." Dr. Kenneth B. Clark, Starrett 
City, A Study of Ways of Maintaining An Integrated 
Residential Community at page 34. See also Id. at page 24.

"Among the factors affecting racial transition, impor­
tance is given to residents' anticipation of change as 
itself being a harbinger of change —  the self-fulfilling 
prophecy." Oscar Newman, Integration=Intervention, The 
Use of Occupancy Controls at Starrett City at page 205.



litigation, experienced counsel for the plaintiff class 
concluded that the best compromise through which this contro­
versy could be resolved would include the continuation of 
controlled tenant selection based on race at Starrett 
City.

Contrary to the government's submission, the 
discouragement of future repetitive litigation is a legiti­
mate goal of any settlement agreement. After a dispute .has 
been fully aired in highly adversarial proceedings, there is 
every reason to try to avoid unnecessary duplication of that 
process. It is typical of the government's disregard for 
judicial economy and the virtues of repose that it would 
challenge a settlement agreement on the ground that it might 
actually lay the controversy to rest. That, we submit, is 
exactly what settlement agreements are supposed to do.

Nor is the government on any firmer ground when 
it argues that Paragraph 31 constitutes an improper advisory 
opinion. The consent decree is an agreement among the parties 
to settle plaintiffs' claims in a manner that the parties 
believe reasonable and fair. The consent decree does not 
purport to be anything more than this. It thus is difficult 
to understand what the United States means when it states 
that Paragraph 31 "could be interpreted as an advisory 
opinion" (Comments, at 2). Paragraph 31 is no more an



18

advisory opinion than any other provision in this or any 
other consent decree.

Notably, the United States has not pointed to a 
single case in which a court has refused to approve a proposed 
settlement on the ground that it would constitute an advisory 
opinion. The weakness of the government's argument is further 
underscored by the government's filing of its own lawsuit 
against Starrett City. The government's own action thus 
demonstrates that at least one prospective litigant does not 
believe that the consent decree adjudicates the legality of 
Starrett City's practices.

Finally, there is a substantial question whether 
the government as amicus curiae has standing to challenge 
independently a provision that all the parties themselves 
find reasonable. See Bing v. Roadway Express, Inc., 485 F.2d 
441, 452 (5th Cir. 1973) ("As amicus curiae the Government 
cannot control the course of this litigation to the extent of 
requesting individual relief not requested by anyone else");
1B Moore's Federal Practice t 0.41.1 [6] , at 442 ( 2d ed. 19 83) . 
Under the circumstances, the government should concentrate on 
its own case and should leave the settlement of this case to 
the parties and the Court.



19

Conclusion
For the foregoing reasons, the Court should 

reject the comments of the United States and approve the 
proposed consent decree in the form agreed upon by the 
parties to this action.

Dated: New York, New York
July 13, 1984

Respectfully submitted,
PAUL, WEISS, RIFKIND, WHARTON & GARRISON 
A partnership including professional 

corporation^

Michael G. Carey 
34 5 Park Avenue <■'New York, New York 10154 
(212) 644-8000

Attorneys for Defendants Starrett City 
Associates, Starrett City, Inc. and 
Delmar Management Company

Morris B. Abram 
Peter Buscemi 
Michael G. Carey 
Andrew J. Frackman

Of Counsel