Mountain Side Mobile Estates Partnership v. Secretary of Housing Intervenors' Petition for and Suggestion for Rehearing In Banc

    In the
UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT

No. 94-9509

MOUNTAIN SIDE MOBILE ESTATES PARTNERSHIP, et al.,

Petitioners,

v.

SECRETARY OF HOUSING AND URBAN DEVELOPMENT, et al,

Respondents,

JACQUELINE VAN LOOZENOORD, et al.,

Intervenors.

On Petition for Review from the 
Department of Housing and Urban Development

INTERVENORS’ PETITION FOR REHEARING and 
SUGGESTION FOR REHEARING IN BANC

ELAINE R. JONES 
Director-Counsel

THEODORE M. SHAW 
NORMAN J. CHACHKIN 
DAVID T. GOLDBERG 
NAACP Legal Defense and 

Educational Fund, Inc. 
99 Hudson Street, 16th floor 
New York, New York 10013 
(212) 219-1900

PENDA D. HAIR 
NAACP Legal Defense and 

Educational Fund, Inc. 
1275 K Street, N.W., Suite 301 
Washington, D.C. 10005 

(202) 682-1300

Attorneys for Intervenors



Table of Authorities...........................................................................................................ii

Statement required by 10th Cir. R. 35.2.2.......................................................................1

Introduction ...................................................................................................................... 2

REASONS FOR GRANTING REHEARING OR REHEARING IN B A N C ................. 5

I. The Panel Should Have Given Appropriate Deference to the 
Secretary’s Interpretation of the "Business Necessity"
Defense Available in Disparate Impact Cases Under Title
VIII.................................................................................................................5

II. The Formulation of the "Business Necessity" Defense 
Adopted by the Panel Majority Conflicts with the Standards 
Employed by this Circuit in title VII Cases, from which the 
Panel Majority Acknowledges that the "Business Necessity"
Defense Is Borrowed, and with the Civil Rights Act of
1991................................................................................................................ 8

III. The Panel Majority Erred by Failing to Apply the Well- 
Established Principle that the "Business Necessity" Defense 
Is Unavailing Where an Alternative Practice or Policy Exists 
that Has Less of a Discriminatory Impact while Still Meeting
a Defendant’s Compelling Business Needs................................................... 10

IV. The Use of National Statistics to Prove Discriminatory 
Impact Was proper in the Absence of a Showing by 
Mountain Side that Different Statistics Were Available and
Would Produce a Different Result in this Case........................................ 14

Conclusion.........................................................................................................................15

Certificate of Service

Attachment: Panel and Dissenting Opinions

Table o f Contents
Page

l



Cases:

Arco Oil & Gas Co. v. EPA, 14 F.3d 1431 (10th Cir. 1993) .................................. 1, 6

Arthur v. City of Toledo, 782 F.2d 565 (6th Cir. 1986)...............................................5

Bazemore v. Friday, 478 U.S. 385 (1986) ..................................................................  15

Betsey v. Turtle Creek Assoc., 736 F.2d 983 (4th Cir. 1984) .................................. 8, 9

Bradley v. Pizzaco of Nebraska, Inc., 7 F.3d 795
(8th Cir. 1993).........................................................................................................8

Chevron, U.S.A., Inc. v. NRDC, Inc., 467 U.S. 837 (1984) .................................... 1, 7

Continental Air Lines, Inc. v. DOT, 843 F.2d 1444 (D.C.
Cir. 1988) ............................................................................................................... 7

Diaz v. Pan American World Airways, Inc., 442 F.2d
385 (5th Cir.), cert, denied, 404 U.S. 950 (1971)............................................. 12

Dothard v. Rawlinson, 433 U.S. 321 (1977) .................................................... 1, 12, 14

Griggs v. Duke Power Co., 401 U.S. 424 (1971).......................................................... 9

Gutierrez v. Municipal Court, 838 F.2d 1031 (9th 
Cir. 1988), vacated as moot, 490 U.S. 1016
(1989) ....................................................................................................................  8

Housing Auth. of Kaw Tribe v. City of Ponca City,
952 F.2d 1183 (10th Cir. 1991), cert, denied,
504 U.S. 912 (1992)................................................................................................6

Huntington Branch, NAACP v. Town of Huntington,
844 F.2d 926 (2d Cir.), review declined in part
and judgment affd, 488 U.S. 15 (1988) ..........................................................  11

Jackson v. Seaboard Coastline R.R., 678 F.2d
992 (11th Cir. 1982)................................................................................................8

ii

Table o f Authorities
Page



Cases (continued):

National Fuel Gas Supply Corp. v. FERC, 811
F.2d 11563 (D.C. Cir. 1987)....................................................................................7

New Mexico Dept, of Human Serv. v. Department of Health
& Human Serv., 4 F.3d 882 (10th Cir. 1993) ...............................................  1, 6

Robinson v. Lorillard Corp., 444 F.2d 791 (4th Cir.),
cert, dismissed, 404 U.S. 1006 (1971) ...................................................................... 8

Rowe v. Cleveland Pneumatic Co., 690 F.2d 88
(6th Cir. 1982).........................................................................................................8

Smith v. Town of Clarkton, 682 F.2d 1055 (4th
Cir. 1982) ............................................................................................................... 9

Texas Gas Transmission Corp. v. Shell Oil Co., 363
U.S. 263 (1960) ...................................................................................................... 7

Thomas v. Metroflight, Inc., 814 F.2d 1506
(10th Cir. 1987)...................................................................................................... 8

United States v. City of Black Jack, 508 F.2d 1179 
(8th Cir. 1974), cert, denied, 422 U.S. 1042
(1975) ....................................................................................................................  8

Vermont Dept, of Public Serv. v. FERC, 817 F.2d 127 (D.C.
Cir. 1987) ............................................................................................................... 7

Wards Cove Packing Co. v. Atonio, 490 U.S. 642 (1989) ........................................  10

Watson v. Fort Worth Bank & Trust, 487 U.S. 977 (1988)......................................  11

Williams v. Colorado Springs School Dist., 641 F.2d
835 (10th Cir. 1981).....................................................................................1, 3, 8

Williams Natural Gas Co. v. FERC, 3 F.3d 1544 (D.C.
Cir. 1993) ............................................................................................................... 7

Table o f Authorities (continued)
Page

iii



Statutes:

28 U.S.C. § 2342(6).........................................................................................................9

42 U.S.C. § 2000e(m).....................................................................................................10

42 U.S.C. § 2000e-2(k)(l)(A)(i) ....................................................................................10

42 U.S.C. § 2000e-2(k)(a)(A)(ii).................................................................................... 11

42 U.S.C. § 2000e-2(k)(l)(C)........................................................................................ 11

42 U.S.C. § 3602(k)..........................................................................................................3

42 U.S.C. § 3604(a)-(e) ................................................................................................... 4

42 U.S.C. § 3604(b).......................................................................................................... 7

42 U.S.C. § 3612 ...............................................................................................................4

Rules:

10th Cir. R. 35 .2 .2 ........................................................................................................... 1

Table o f Authorities (continued)
Page

IV



Intervenors Jacqueline VanLoozenoord et al. [hereinafter "complainants"] 

respectfully pray that this Court grant rehearing of the May 30, 1995 decision of the 

panel in this matter, or alternatively suggest the appropriateness of rehearing in banc, 

and further pray that upon such rehearing, the panel or the Court in banc sustain the 

Order of the Department of Housing and Urban Development in favor of complainants.

Undersigned counsel expresses a belief,1 based on a reasoned and studied 

professional judgment, that the panel decision is contrary to the following decisions of 

the Supreme Court or of the United States Court of Appeals for the Tenth Circuit, and 

consideration by the full court is necessary to secure and maintain uniformity of 

decisions in this court: Chevron, U.S.A., Inc. v. NRDC, Inc., 467 U.S. 837 (1984);

Dothard v. Rawlinson, 433 U.S. 321 (1977); Area Oil & Gas Co. v. EPA, 14 F.3d 1431 

(10th Cir. 1993); New Mexico Dept, of Human Serv. v. Department of Health & Human 

Serv., 4 F.3d 882 (10th Cir. 1993); and Williams v. Colorado Springs School Dist., 641 

F.2d 835 (10th Cir. 1981).

Undersigned counsel further expresses a belief, based upon a reasoned and 

studied professional judgment, that this appeal involves one or more questions of 

exceptional importance:

(a) In reviewing adjudicative orders of the Department of HUD issued pursuant 

to the Fair Housing Act Amendments of 1988, should this Court give deference to the

INTERVENORS’ PETITION FOR REHEARING and
SUGGESTION FOR REHEARING IN  BANC

'See 10th Cir. R. 35.2.2.



Secretary’s interpretation of the law where the statute does not directly and 

unambiguously express the intent of Congress on the precise question at issue, and the 

Secretary’s view is a permissible construction of the statute?

(b) Does the "business necessity" defense available in "disparate impact" claims 

under Title VIII of the Civil Rights Act of 1968 (the Fair Housing Act) require, 

similarly to the "business necessity" defense in claims under Title VII of the 1964 Civil 

Rights Act, that the party charged with discriminatory conduct establish that it has a 

"compelling need or necessity" to maintain the practice in its business?

(c) Is the "business necessity" defense to "disparate impact" claims under Title 

VIII defeated by uncontradicted evidence of record demonstrating the availability of an 

alternative policy having a lesser discriminatory impact but still meeting the business 

need articulated by the party charged with unlawful conduct? and

(d) Where national statistics on family composition demonstrate a disparate 

impact upon a class of individuals protected under Title VIII, may a party charged with 

discrimination rebut the prima facie case thus established merely by suggesting, without 

introducing any supporting evidence of its own, that family composition in the local area 

may differ from the national figures?

Introduction

Complainants filed an administrative complaint with HUD in 1992 alleging that 

Mountain Side Mobile Estates Partnership ("Mountain Side"), which operates a mobile 

home park in Jefferson County, Colorado, had denied them housing because of a three-

2



person-per-trailer occupancy limit which, they alleged, violated the Fair Housing Act 

by discriminating against families with children. Following extended proceedings, 

including two remands by the Secretary, the Administrative Law Judge issued a final 

order in favor of the complainants, finding that Mountain Side’s occupancy limitation 

had an adverse impact upon families with children that had not been demonstrated to 

be necessary to meet its legitimate business needs. On May 30, 1995 a panel of this 

Court (one judge dissenting) set aside that determination, holding2 that the Secretary 

of HUD erred in defining the showing necessary to establish the "business necessity" 

defense available in disparate impact claims under the Fair Housing Act.

Mountain Side maintained a policy barring children from its mobile home park, 

but otherwise imposing no occupancy limitation, for nearly two decades, until just prior 

to the effective date of the 1988 amendments to the Fair Housing Act providing 

protection against discrimination on the basis of "familial status," 42 U.S.C. §§ 3602(k),

2With respect, we observe that it is somewhat difficult to separate dictum from the 
panel majority’s holding. In several instances, the opinion quotes what we believe are 
the correct formulations of the legal standards applicable in administrative adjudications 
under the Fair Housing Act, but then departs from those standards in disposing of this 
case. For example, early in its opinion (slip op. at 7-8) the panel refers to the principle 
of deference to an agency’s interpretation of the statute that it administers, in both 
rulemaking and adjudicatory proceedings. However, in its dispositive holding the panel 
gave no such deference to the Secretary’s views, concluding that "the Secretary went 
beyond the business necessity test that the Supreme Court has enunciated in Title VII 
cases and incorrectly required that Mountain Side demonstrate a ‘compelling need or 
necessity’" (slip op. at 23), notwithstanding this Circuit’s settled policy in Title VII suits 
that "in a disparate impact case, . . . [t]he practice must be essential, the purpose 
compelling," Williams v. Colorado Springs School Dist., 641 F.2d at 842. We have limited 
our request for rehearing to those issues which appear to have had dispositive 
significance.

3



3604(a)-(e).3 At that time, aware that -  as its Property Manager testified -  "it just 

stood to reason" that the number of residents would increase if families with children 

were allowed (Tr., Vol. I, at 236), Mountain Side adopted a maximum occupancy limit 

of three persons per trailer. Complainants, two adults and three children, purchased 

a three-bedroom trailer in the park from prior owners who did not inform them of 

Mountain Side’s policy. After they moved in, Mountain Side commenced a state court 

eviction action against them, and complainants filed charges of unlawful discrimination 

with HUD, leading to the present proceedings.4

Approximately two years after adopting the three-person occupancy limit, 

Mountain Side commissioned a consulting firm to conduct an evaluation of the policy. 

That firm estimated the maximum population that could be serviced by the park’s 

existing sewer system and recommended a two-person-per-bedroom occupancy limit. 

Had such an occupancy limit been in place in late 1991 and early 1992, complainants’ 

residence in the trailer that they purchased would not have violated it. However, 

Mountain Side declined to adopt the recommendation of the consultants and adhered 

to its three-person-per-trailer maximum.

3Unless otherwise indicated, the facts asserted in the remainder of this section are 
those found by the Department and accepted by the panel majority in its opinion.

428 U.S.C. § 2342(6) provides for proceedings in the Courts of Appeals by way of 
petition for review from final agency orders under the Fair Housing Act, 42 U.S.C. § 
3612.

4



REASONS FOR GRANTING REHEARING OR REHEARING IN  BANC

We respectfully submit that the panel majority made significant legal errors in 

applying the relevant principles to the facts of record in the proceedings before an 

administrative law judge in the Department of HUD. The most fundamental of those 

errors concern the content of the "business necessity" defense in disparate impact claims 

under Title VIII.5 We also believe that the panel erred in its discussion of national 

statistics as a part of the proof of complainants’ prima facie case.

I. The Panel Should Have Given Appropriate Deference to the Secretary’s 
Interpretation of the "Business Necessity" Defense Available in Disparate Impact 
Cases Under Title VIII.

In considering Mountain Side’s first argument, that the Secretary misconstrued 

the scope of his authority to review decisions of administrative law judges in Title VIII

5The panel majority reached the "business necessity" defense issue in somewhat 
roundabout fashion. For example, although there is considerable discussion of the issue 
in the opinion, see, e.g., slip op. at 23-28, proof of "business necessity" is not identified 
as one of the contentions set forth in Mountain Side’s petition for review, see id. at 5-6. 
Instead, the panel majority appears to have reached "business necessity" in considering 
(and rejecting) Mountain Side’s argument that "disparate impact" claims are not 
available under the Fair Housing Act against private landlords. See id. at 6 n.3 (not 
necessary to reach Mountain Side’s fifth, sixth or seventh claims in light of dispositive 
nature of first four claims; but first three claims decided adversely to Mountain Side by 
majority).

The panel majority adopted the standards of Arthur v. City of Toledo, 782 F.2d 
565, 575 (6th Cir. 1986) to analyze disparate impact claims in Title VIII cases, see slip 
op. at 18. That decision enunciated three factors for consideration, including: "(3) what 
is the defendant’s interest in taking the action complained of." The panel’s discussion 
of the "business necessity" defense appears to relate to that factor, although the exact 
relationship remains unclear. See, e.g., id. at 28 ("Mountain Side overcame 
Complainant’s prima facie case by evidence of legitimate, non-pretextual justifications 
for its occupancy limitations").

5



proceedings, the panel recognized that courts should defer to an agency s construction 

of the statute it administers in both rulemaking and adjudication proceedings unless 

"inconsistent with the legislative intent reflected in the language and structure of the 

statute or if there are other compelling indications that it is wrong." Slip op. at 8, citing 

New Mexico Department of Human Serv., 4 F.3d at 885 and Arco Oil & Gas, 14 F.3d at 

1433. See, e.g. Housing Auth. of Kaw Tribe v. City of Ponca City, 952 F.2d 1183, 1195 

(10th Cir. 1991) ("When faced with a problem of statutory construction, an 

interpretation by the agency in charge of enforcing the statute is accorded great 

deference"), cert, denied, 504 U.S. 912 (1992). Such deference was, however, strikingly 

absent from the panel majority’s discussion of the requirements of the "business 

necessity" defense, slip op. at 22-28. This was clear error which should be corrected by 

the panel or the in banc Court. There is no less reason to defer to the Secretary’s 

interpretation of the scope of defenses that will defeat an otherwise adequate showing 

of "discrimination" prohibited by the statute, than there is to defer to the Secretary’s 

interpretation of the scope of the "review" of ALJ decisions that he is authorized to 

make by the statute .

In Chevron, U.S A., Inc. v. NRDC, Inc., 467 U.S. at 842-44, the Supreme Court 

established that on issues of legal interpretation, when "Congress has not directly 

addressed the precise question at issue," a reviewing court must give an agency’s 

reasonable legal conclusions "controlling weight" unless arbitrary, capricious or

6



manifestly contrary to the statute.6 The terms of the Fair Housing Act, which speaks 

only of "discrimination] . . . because of . . . familial status," 42 U.S.C. § 3604(b), do not 

squarely address the "precise question" of how unlawful discrimination shall be proved 

or disproved. Therefore, the panel majority should have given deference to the 

Secretary’s interpretation of the requirements of the "business necessity" defense in Title 

VIII cases, just as it did with respect to the Secretary’s interpretation of his authority 

to review A U  decisions in Title VIII cases.

6The Court of Appeals for the D.C. Circuit, which probably handles more petitions 
for review of agency decisions than any other, has repeatedly recognized the controlling 
nature of the Chevron decision, for example describing it as M‘compel[ling] a court to 
give deference to the agency’s conclusions even on "pure" questions of law’ . . . .  
National Fuel, at 1569-70 (citing Chevron, 467 U.S. at 843-44, 104 S. Ct. at 2781-83)." 
Vermont Dept, of Public Serv. v. FERC, 817 F.2d 127, 135 (D.C. Cir. 1987). Under 
Chevron, "[w]hen Congress leaves gaps in the program, either explicitly by authorizing 
the agency to adopt implementing regulations, or implicitly by enacting an ambiguously 
worded provision that the agency must interpret, it has explicitly or implicitly delegated 
to the agency the power to fill those gaps. That delegation requires the courts to defer 
to an agency’s decision about how to exercise its power." National Fuel Gas Supply 
Corp. v. FERC, 811 F.2d 1563, 1569 (D.C. Cir. 1987).

One former view, that only agency interpretations not based on 'specialized 
knowledge gained from experience in the regulation of the" subject matter, Texas Gas 
Transmission Corp. v. Shell Oil Co., 363 U.S. 263, 268 (1960), simply "d[id] not survive 
the Supreme Court’s Chevron decision." Williams Natural Gas Co. v. FERC, 3 F.3d 
1544, 1549 (D.C. Cir. 1993). Accord, e.g., Continental Air Lines, Inc. v. DOT, 843 F.2d 
1444, 1451, 1453 (D.C. Cir. 1988) (Starr, J.) ("[I]t is elementary in administrative law 
that, at least where Congress’ intent is unknown, an agency’s interpretation (if 
reasonable) is entitled to deference from the Article III branch").

7



II. The Formulation of the "Business Necessity" Defense Adopted by the Panel 
Majority Conflicts with the Standards Employed by this Circuit in Title VII 
Cases, from which the Panel Majority Acknowledges that the "Business 
Necessity" Defense Is Borrowed, and with the Civil Rights Act of 1991.

In a critical portion of its opinion, the panel majority ruled that "[t]he Secretary

correctly determined that the business necessity standard in Title VIII cases is imported

from employment discrimination case law under Title VII," slip op. at 23. Inexplicably,

the panel then departed from the established Title VII law in this Circuit to hold that

the Secretary "incorrectly required that Mountain Side demonstrate a ‘compelling need

or necessity’" for its three-person occupancy limit.

In Williams v. Colorado Springs School Dist., 641 F.2d at 842, this Court adopted

the view that "in a disparate impact case, unlike a disparate treatment case, a rational

or legitimate, nondiscriminatory reason is insufficient. The practice must be essential,

the purpose compelling." Accord, e.g., Bradley v. Pizzaco of Nebraska, Inc., 7 F.3d 795,

797 (8th Cir. 1993); Gutierrez v. Municipal Court, 838 F.2d 1031, 1041 (9th Cir. 1988),

vacated as moot, 490 U.S. 1016 (1989); Thomas v. Metroflight, Inc., 814 F.2d 1506, 1509

(10th Cir. 1987); Rowe v. Cleveland Pneumatic Co., 690 F.2d 88, 93-94 (6th Cir. 1982);

Jackson v. Seaboard Coastline R.R., 678 F.2d 992, 1016-17 (11th Cir. 1982); Robinson v.

Lorillard Corp., 444 F.2d 791, 798 (4th Cir.) ("the business purpose must be sufficiently

compelling to override any racial impact"), cert, dismissed, 404 U.S. 1006 (1971). Other

courts have carried this formulation of the "business necessity" standard over to Title

VIII cases. See Betsey v. Turtle Creek Assoc., 736 F.2d 983, 988 (4th Cir. 1984); United

States v. City of Black Jack, 508 F.2d 1179, 1185 (8th Cir. 1974), cert, denied, 422 U.S.

8



1042 (1975).7 Far from setting a standard "almost impossible to satisfy," slip op. at 24, 

the requirement that a party which maintains a practice with a disproportionate impact 

upon members of a statutorily protected group make a compelling showing that the 

practice is necessary to its business operations gives meaningful content to the concept 

of "business necessity."

Although the panel adumbrates the "manifest relationship" requirement of Griggs 

v. Duke Power Co., 401 U.S. 424 (1971), its rejection of the "compelling interest" 

articulation of business necessity eviscerates the requirement that the Supreme Court 

intended to impose in Griggs. This is most tellingly indicated in the penultimate section 

of the panel majority’s opinion. After reciting the findings of the Administrative Law 

Judge with respect to Mountain Side’s prior "no children" policy, its adoption of the 

three-person limit, its adherence to that limit even after the different recommendation 

of its own consultant, and its concern that the "quality of life" in the park would be 

adversely affected if total occupancy were to rise to the maximum of 916 calculated by 

the consultant -- a number which would not nearly be approached were complainants

’Although the panel majority recognized the applicability of the "business necessity" 
defense, it also appears to have utilized an alternative analytic approach that has been 
adopted by three Circuits in cases involving challenges to state or local governmental 
actions that were alleged to have violated the Fair Housing Act by impeding the 
construction of assisted housing likely to be inhabited by members of minority groups. 
See slip op. at 18. We submit that these cases involve a special rule applicable to cases 
involving governmental defendants, public referenda, etc., in which the courts are 
confronted with considerations of federalism and relative institutional competence that 
are absent from suits against private entities. See Betsey, 736 F.2d at 988 n.5 (limiting 
approach of Smith v. Town of Clarkton, 682 F.2d 1055 (4th Cir. 1982) to governmental 
defendants).

9



permitted to remain at the park -  the panel applies its less stringent standard as follows 

(slip op. at 28):

Based on the foregoing findings, Mountain Side demonstrated that the 
three person occupancy limit has a manifest relationship to housing in the 
Park.

Our analysis . . . leads us to conclude that the Complainants failed to 
establish a violation of the FHA. Mountain Side overcame Complainants’ 
prima facie case by evidence of legitimate, non-pretextual justifications for 
its occupancy limitations.

Thus, in the majority’s view, "business necessity" reduces itself to nothing more than a 

requirement of showing "legitimate, non-pretextual justifications" for maintaining a 

challenged policy with discriminatory impact. In Title VII cases, such a standard 

exhumes the "legitimate business reasons" defense announced by the Supreme Court in 

Wards Cove Packing Co. v. Atonio, 490 U.S. 642, 659 (1989), and explicitly overturned 

by Congress in the Civil Rights Act of 1991, Pub. L. No. 102-166, codified at 42 U.S.C. 

§§ 2000e(m), 2000e-2(k)(l)(A)(i). A failure by the panel or the in banc Court to 

correct the majority’s error will therefore not only set the wrong course in this Circuit 

in fair housing cases, but it will also result in confusion and likely lead to inconsistent 

rulings in the lower courts in Title VII suits as well.

III. The Panel Majority Erred by Failing to Apply the Well-Established Principle 
that the "Business Necessity" Defense Is Unavailing Where an Alternative 
Practice or Policy Exists that Has Less of a Discriminatory Impact while Still 
Meeting a Defendant’s Compelling Business Needs.

Early in its discussion of the merits, the panel majority adverts to the prong of 

the "business necessity" inquiry that concerns the availability of less discriminatory

10



alternatives (slip op. at 22-23):

Mountain Side contends that even assuming that disparate impact was 
proven, it was established that the three person per lot occupancy limit 
was required by a business necessity and that Complainants failed to 
demonstrate any feasible alternatives that would be less discriminatory.

”[W]hen a plaintiff has made out a prima facie case of disparate impact, 
and when the defendant has met its burden of producing evidence that its 
[housing] practices are based on legitimate business reasons, the plaintiff 
must ‘show that other [policies], without a similarly undesirable .. . effect, 
would also serve the [defendant’s] legitimate interest." Watson [v. Fort 
Worth Bank & Trust], 487 U.S. [977,] 988 [(1988)] (citing Albemarle Paper 
Co. v. Moody, 422 U.S. 405, 425 (1975) (citations omitted)).

In its subsequent discussion of the record evidence and findings of the ALJ, however,

the panel majority completely failed to give any application to this part of the "business

necessity" test, now codified in Title VII at 42 U.S.C. §§ 2000e-2(k)(l)(A)(ii),

-2(k)(l)(C).8 The majority opinion’s only reference to potential alternatives to the

three-person occupancy limitation concerns the reasons offered by Mountain Side for

rejecting the recommendation of its consulting firm that a two-person-per-bedroom

limitation be adopted: "Because of the parking problems, density of the homes, and

overall size of the Park, [Mountain Side] decided that the quality of life at the Park

8Under the 1991 amendments to the statute, and as described in the panel majority’s 
quotation from Watson, in Title VII cases it is the complaining party’s burden to 
establish the existence of less discriminatory alternatives. Even if that were also true 
under Title VIII, which it is not ~ see, e.g., Huntington Branch, NAACP v. Town of 
Huntington, 844 F.2d 926, 936 (2d Cir.), review declined in part and judgment ajfd, 488 
U.S. 15 (1988) -  that would not affect the instant matter. The allocation of the 
burdens of production and persuasion are not at issue here. The matter was fully tried 
and the agency found for the complainants. This Court must, therefore, determine 
whether on the record as a whole, that ruling is justified.

11



would be severely diminished if the Park had a maximum of 916 residents. 

Furthermore, if the Park reached maximum capacity, it could not accommodate guests, 

including visiting children." (Slip op. at 27.)

A business owner’s self-serving estimate of the impact, upon the quality of life 

on his property, that would result from abandoning practices having a disparate impact 

upon protected groups is far too subjective and elastic a justification to satisfy the 

"business necessity" test.9 If such "evidence" were accepted by a court as adequate to 

demonstrate that a less discriminatory alternative will not meet a business’ compelling 

needs, the bedrock principle of anti-discrimination law that even justifiable policies must 

be abandoned when their business objectives could be achieved as readily by practices 

that less unfairly burden a statutorily protected class would be fatally eroded. See 

Dothard v. Rawlinson, 433 U.S. 321, 331-32 (1977) (although height and weight 

requirements may have relationship to strength required to perform job of prison guard, 

they may not be utilized where they have a discriminatory impact on women applicants 

and individual strength testing is practicable and would equally well serve employer s 

interest in capable workforce).

In this case, the record clearly shows that less discriminatory alternatives that 

would serve the commercial interests of Mountain Side were readily available. First, 

Mountain Side’s own consultants found that a 2-person-per-bedroom occupancy

9Cf, e.g., Diaz v. Pan American World Airways, Inc., 442 F.2d 385, 388-89 (5th Cir.) 
(rejecting BFOQ defense of "customer preference" as justifying policy of hiring only 
female stewardesses and emphasizing that test is "a business necessity test, not a business 
convenience test" [emphasis in original]), cert, denied, 404 U.S. 950 (1971).

12



limitation would protect the park’s sewage system and assure the necessary "human 

comfort," given the small lot size, without disqualifying the complainants from continued 

residence. See slip op. at 26-27 ITU 22, 26; id., opinion of Henry, J., dissenting at 5.

Second, it would be equally feasible to adopt a more flexible policy on occupancy 

limitations. At the time complainants purchased a mobile home in 1991, a total of only 

341 persons resided within the park, spread among its 229 lots (Tr., Vol. Ill, at 164).10 

Mountain Side’s concerns, as found by the A U  and relied upon by the panel majority 

(slip op. at 26-27 1111 22, 27) were that its sewer system could not accommodate more 

than 916 residents and "that the quality of life at the Park would be severely diminished 

if the Park had a maximum of 916 residents" (id. at 27 11 27). However, as Mountain 

Side itself observes, "[mjobile home populations are small, the average occupancy being 

2.4 persons living in each mobile home . . .  [and Mountain Side introduced n]o evidence 

at trial suggesting] that larger families with minor children desire to live in the Park" 

(Petitioners’ Opening Brief, at 10). Under these circumstances, the imposition of a 

three-person-per-lot occupancy restriction, disproportionately excluding from the park 

those families with children who do wish to reside there, in order to prevent the total 

population from nearly tripling, simply cannot be accepted as a "business necessity" 

without stripping the concept of all meaning ~ even assuming arguendo that subjective 

"quality of life" concerns could amount to a compelling business need. Mountain Side’s 

three-person lot limit disproportionately excludes families with children from all lots

10In October, 1988, 318 persons occupied 218 of the park’s 229 lots (see slip op. at 
25 11 12). Many homes thus were occupied by only one person in both 1988 and 1991.

13



within the park and has kept its total population not only well below the maximum that 

Mountain Side espouses, but virtually static.11 Permitting some proportion of the lots 

to be occupied by a larger number of individuals — consistent, for example, with the 

consultants’ recommendation of a two-per-bedroom limit -- would achieve the overall 

population limitation sought by Mountain Side without placing the burden of occupancy 

restrictions so disproportionately upon families with children.

Because the panel majority nowhere applies the "less discriminatory alternative" 

prong of "business necessity" nor declares that no such alternative was shown on this 

record, rehearing or rehearing in banc should be granted.

IV. The Use of National Statistics to Prove Discriminatory Impact Was Proper in 
the Absence of a Showing by Mountain Side that Different Statistics Were 
Available and Would Produce a Different Result in this Case.

The panel majority expressed considerable concern about the Secretary’s reliance

upon national statistics to establish that Mountain Side’s occupancy restriction will have

a differential impact upon families with children, see slip op. at 15-17, 19-20. While

ultimately the panel "assume[d]" the propriety of such proof to make out a prima facie

case, later in its opinion the majority’s doubts about the validity of the statistical

presentation led it to give the evidence "little weight," id. at 20.

Here, as in Dothard, 433 U.S. at 330, however, no reason was advanced by

Mountain Side "to suppose that [family size and composition in Jefferson County,

Colorado] differ markedly from those of the national population." Moreover,

nSee supra note 10 and accompanying text.

14



Mountain Side’s expectation that admitting families with children would cause an 

increase in the park’s population (see supra p. 4) in fact suggests the opposite.

Lacking any support in the record for an inference to the contrary, the panel 

majority erred in heavily discounting the probative value of the Secretary’s nationwide 

figures. As the Supreme Court subsequently suggested in Bazemore v. Friday, 478 U.S. 

385, 403 n.14 (1986), defendants in discrimination cases should produce their own 

studies showing different conclusions rather than simply criticize plaintiffs’ formulas and 

methodologies.12 See dissenting opinion of Henry, J., at 3. Rehearing should be 

granted to modify this aspect of the panel majority’s opinion as well.

Conclusion

For the foregoing reasons, rehearing or rehearing in banc should be granted.

Respectfully submitted,

ELAINE R. JONES 
Director-Counsel

THEODORE M. SHAW 
NORMAN J. CHACHKIN 
DAVID T. GOLDBERG 
NAACP Legal Defense and 

Educational Fund, Inc. 
99 Hudson Street, 16th floor 
New York, New York 10013 
(212) 219-1900

(rejudxi).
PENDA D. HAIR 
NAACP Legal Defense and 

Educational Fund, Inc. 
1275 K Street, N.W., Suite 301 
Washington, D.C. 10005 
(202) 682-1300

Attorneys for Intervenors

nBazemore held that courts may not ignore statistical evidence from which 
discrimination may be inferred simply because they believe a different analytic format 
or formula would be superior. 478 U.S. at 400-01. In this case the panel majority gave 
the Secretary’s statistics so "little weight" as to make them virtually disappear.

15



ATTACHMENT



PUBLISH
UNITED STATES COURT OF

F I L E D  ,
APPEALS®*^ States Court of Appeals 

Tenth Circuit
TENTH CIRCUIT MAY 3 o 1995

PATRICK FISHERMOUNTAIN SIDE MOBILE ESTATES ) Clerk
PARTNERSHIP, ROBERT DALKE, MARILYN )
DALKE, J

)
Petitioners, )

)v ) No. 94-9509
)

SECRETARY OF HOUSING AND URBAN )
DEVELOPMENT, on behalf of Jacqueline, )
Jaime, Michael and Shena )
VanLoozenoord, and on behalf of )
Michael Brace, )

)
Respondents, )

________________________ _______ )
)

JACQUELINE VANLOOZENOORD; JAMES )
VANLOOZENOORD; MICHAEL VANLOOZENOORD; )
SHENA VANLOOZENOORD; MICHAEL BRACE, )

)
Intervenors. )

APPEAL FROM DEPARTMENT OF HOUSING 
AND URBAN DEVELOPMENT 
(No. HUDALJ-08-92-0010)

Don D. Jacobson (Stephen E. Kapnik with him on the brief) of Lohf, 
Shaiman & Jacobs, P.C., Denver, Colorado, for petitioners.
Gregory B. Friel (Deval L. Patrick, Assistant Attorney General, 
Jessica Dunsay Silver, with him on the brief), Department of 
Justice, Washington, D.C., for respondents.
Penda D. Hair (Elaine R. Jones, Director-Counsel and Theodore M. 
Shaw, NAACP Legal Defense and Educational Fund, Inc., New York, 
New York, with her on the brief), NAACP Legal Defense and Edu­
cational Fund, Inc., Washington, D.C., for intervenors.
Joseph L. Coppola of Rice, Coppola & Hamrick, P.C., Englewood, 
Colorado, and Christopher B. Hanback of Jackson & Campbell, P.C. 
Washington, D.C., for Amici Curiae.



Prior to March, 1989, Che park was an aduics-oniy park; 
MounCain Side prohibiced any person under 21 years of age from 
living in Che park. AfCer Che 1988 amendmenCs Co Che FHA, ef­
fective March 12, 1989, Mountain Side instituted a new occupancy
policy of no more than three persons per mobile home. The FHA 
amendments prohibit discrimination on the basis of familial status 
unless a housing provider can meet a narrow exemption for "housing 
for older persons." Mountain Side determined that it could not 
meet the exception. Since March, 1989, it has accepted all 
residents, including families with minor children, subject to its 
occupancy policy.

In September, 1991, Jacqueline VanLoozenoord (VanLoozenoord), 
her three minor children, and her "roommate and companion," 
Michael Brace (Brace), moved into a mobile home in the park.1 
Neither VanLoozenoord nor Brace contacted the park management or 
submitted an application for tenancy prior to their occupancy. 
They purchased the mobile home in place. The sellers did not ad­
vise them that the park had a three person occupancy limit.

Shortly after they moved in, Robert Dalke inquired of Brace 
as to the number of residents in the mobile home. When Brace 
informed him that five people were living there2 , Dalke informed 
him of the park's three person per lot occupancy limit and told 
him they would have to move. Subsequently, Mountain Side served

1 Brace testified that he and VanLoozenoord were not legally 
married but that he considered her his wife for "all intents and 
purposes." (Tr. I at 66, 122-124).
2 Brace's son Myron subsequently moved into the mobile home in 
the summer of 1992 but was not living there when this dispute 
arose.

-3-



March 22, 1993, dismissing the charges of discrimination. In that 
order, the ALJ set forth in detail 47 findings of fact which will 
be reviewed infra. On April 26, 1993, the Secretary of HUD re­
manded the case for reconsideration. The ALJ issued an Initial 
Decision on Remand and Order again rejecting HUD's claims on June 
18, 1993. The Secretary again remanded the case to the ALJ who 
issued his Second Initial Decision on Remand and Order on Sep­
tember 20, 1993, again dismissing the charges. On October 20, 
1993, the Secretary overturned the ALJ's decision, entered judg­
ment for HUD, and remanded the case for further proceedings con­
sistent therewith. On December 17, 1993, the ALJ issued his Third
Decision on Remand and Order, granting injunctive relief and 
awarding damages to Complainants. The decision became final on 
January 18, 1994, after the expiration of the Secretary's 30-day 
review period.

Issues
On appeal, Mountain Side contends that: (1) the ALJ's Initial

Decision and Order became final upon the failure of the Secretary 
to complete a review within 30 days; (2) the Complainants lack 
standing to bring the charges under the FHA; (3) due to Com­
plainants' refusal to participate in conciliation required by the 
FHA, the charges should be dismissed or at least no damages 
awarded; (4) discrimination in violation of the FHA familial 
status amendments by a private housing provider is not proven by 
disparate impact alone; (5) the Secretary's three remands were 
arbitrary and capricious and violated Mountain Side's right to due

-5-



the ALJ and that the Secretary's April 21, 1993, order did nei­
ther. Therefore, according to Mountain Side, all subsequent or­
ders entered by the Secretary were beyond HUD's jurisdiction and
are void.

HUD asserts that Congress has expressly delegated to the 
Secretary the power to promulgate regulations implementing the 
FHA, 42 U.S.C. § 3614a, and that any regulation interpreting the 
Secretary's power of review must be upheld if it is reasonable and 
not in conflict with the plain language of the statute.

The FHA provides:
(h) Review by Secretary; service of final order

(1) The Secretary may review any finding, con­
clusion or order issued under subsection (g). Such 
review shall be completed not later than 30 days after 
the finding, conclusion, or order is so issued; other­
wise the finding, conclusion or order becomes final.

42 U.S.C. § 3612(h)(1).
HUD regulations interpret this provision to permit the Sec­

retary to "affirm, modify or set aside, in whole or in part, the 
initial decision or remand the initial decision for further pro­
ceedings. " 24 C.F.R. § 104.930(a).

When, as in the FHA § 3614a,4 "Congress explicitly delegates 
to an agency the authority to elucidate a specific statutory 
provision, the agency's interpretation is given controlling weight 
unless arbitrary, capricious, or manifestly contrary to the

4 42 U.S.C. § 3614a provides: "The Secretary may make rules
(including rules for the collection, maintenance, and analysis of 
appropriate data) to carry out this subchapter [FHA § 3604 et 
seq.]."

-7-



II.
Mountain Side contends that based on the definition of fa­

milial status the Complainants lack standing to bring these 
charges since the group which moved into and lived in the park is 
not a "family" entitled to the protections of the FHA. Mountain 
Side argues that even if part of the group would be entitled to 
protection if it were a separate unit, the presence of unrelated 
persons cannot entitle the group as a whole to familial status. 
Therefore, since the only group which ever sought housing con­
sisted of a parent, her three children, and another unrelated 
adult, the group is not entitled to protection under the FHA.

HUD asserts that the VanLoozenoord-Brace household fell 
within the definition of a "family" because the household con­
tained minor children living with their mother and that the 
presence of unrelated persons does not destroy their familial 
status. In addition, HUD contends that Brace has standing under 
the FHA even if he is not the father or legal custodian of 
VanLoozenoord's minor children since he is an "aggrieved person."

Standing is a question of law subject to de novo review. 
Hackford v. Babbitt. 14 F.3d 1457, 1465 (10th Cir. 1994).

The FHA defines familial status as:
(k) "Familial status" means one or more indi­

viduals (who have not attained the age of 18 years) 
being domiciled with - -(1) a parent or another person having legal 

custody of such individual or individuals; or
(2) the designee of such parent or other 

person having such custody, with the written 
permission of such parent or other person.

42 U.S.C. § 3602(k).

-9-



Ill.
Mountain Side argues that Complainants' participation in the 

mandatory conciliation process is "a condition precedent and is 
jurisdictional." Whether failure to attend a conciliation meeting 
is a jurisdictional defect requiring dismissal of the complaints 
is a legal question subject to de novo review. FDIC_„ y Hulsey, 22 
F .3d 1472, 1479 (10th Cir. 1994).

The FHA requires that "the Secretary shall, to the extent 
feasible, engage in conciliation . . ." 42 U.S.C. § 3610(b)(1). 
This has been interpreted to require that the Secretary undertake
conciliation in "good faith." See Morgan v . Secretary_of__Ho\isjng
and Urban Dev.. 985 F.2d 1451, 1456 (10th Cir. 1993). However, 
"[w]hether the Secretary conducted conciliation in good faith is 
not jurisdictional; rather it goes to whether a court should stay 
proceedings pending further conciliation efforts or entertain the 
matter immediately." Id. (citations omitted). In determining 
whether the Secretary has conducted conciliation in good faith, we 
do not become embroiled in the details of the offers and coun­
teroffers, but determine whether the agency provided a "fair op­
portunity" for settlement. Id.

The record demonstrates that HUD met its obligations under 
the FHA. HUD arranged a conciliation meeting between the parties 
and was prepared to conciliate if Complainants had attended. The 
fact that Complainants refused to attend the meeting or engage in 
any other form of settlement negotiations cannot be attributed to 
HUD absent extreme circumstances not found in this case.

-11-



When we review an agency's decision under the arbitrary, 
capricious or abuse of discretion standard, "[o]ur review is 
narrow and deferential; we must uphold the agency's action if it 
has articulated a rational basis for the decision and has con­
sidered relevant factors." Colorado Dep't of Social__Servs .__v .
United States Dep't of Health & Human Serv., 29 F.3d 519, 522 
(10th Cir. 1994). However, these limitations do not apply to 
questions of law. "The '[f]ailure to apply the correct legal 
standard or to provide this court with a sufficient basis to de­
termine that appropriate legal principles have been followed is 
grounds for reversal.'" Nielson v. Sullivan, 992 F.2d 1118, 1119- 
20 (10th Cir. 1993) (quoting Byron v. Heckler, 742 F.2d 1232, 1235 
(10th Cir. 1984) (citations omitted)).

Mountain Side contends that discrimination in violation of 
the FHA familial status amendments by a private housing provider 
is not proven by disparate impact alone. In the alternative, 
Mountain Side asserts that "even assuming that the disparate im­
pact of a neutral policy can prove unlawful discrimination under 
Title VIII, no disparate impact was proven" because there was no 
evidence of the local population statistics nor any evidence re­
garding the qualified population. (Petitioner's Opening Brief at 
17-26).

HUD argues that the disparate impact theory applies to FHA 
claims against private housing providers. HUD claims that a prima 
facie case of disparate impact is shown when a facially neutral 
rule disproportionately excludes a member of a protected group. 
HUD claims that it met this burden by showing that Mountain Side's

-13-



solely on a statistical showing of disparate effect to establish a 
prima facie case of disparate impact. However, this circuit has 
not decided whether discriminatory effect alone is sufficient to 
establish a prima facie case of disparate impact in Title VIII
housing discrimination cases.

Here, the Secretary relied on national statistics to 
establish a case of disparate effect. The Secretary presented 
national statistics showing that "at least 71.2% of all U.S. 
households with four or more persons contain one or more children 
under the age of 18 years; that at least 50.5% of U.S. families 
with minor children have four or more individuals; and that at 
most 11.7% of households without minor children have four or more 
persons" to determine that the plaintiffs had proven 
discriminatory effect. (Secretary's Second Remand at 7).

In his Initial Decision and Order, the ALJ found that there 
ii, . is no evidence that statistics which establish the 
percentage of families with minor children nationwide are the same 
in Jefferson County or even the Denver metropolitan area. Mr.
Coil attempted to address this deficiency by pointing out that the 
percentage of households with four or more individuals that are 
families in Jefferson County (for which statistics are available) 
is almost identical to the nationwide percentage . . .  I am 
unwilling to speculate that the same correlation exists as to the 
percentage of households with minor children. Accordingly, the 
Charging Party has failed to establish a prima facie case of 
disparate impact." (Initial Decision and Order, p. 25). Even so, 
the ALJ reasoned that "Even if these statistics established a

-15-



with children in Los Angeles); Resident Advisory Bd. v. Rizzo, 564 
F . 2d 126, 149 (3rd Cir. 1977), c e r t d e n i e d , 435 U.S. 908 (1978)
(court focused on racial discrimination in Philadelphia and in the 
PHA system).

In the Title VII context, we have held that a defendant's 
justification for the challenged action should not be considered 
in assessing the establishment of a prima facie case. See 
Kpnworthv v. Conoco. Inc.. (10th Cir. 1992); MacDonald v. Eastern 
Wyoming Mental Health Center, 941 F.2d 1115, 1119-21 (10th Cir. 
1991). For purposes of this opinion, we shall assume, just as the 
ALJ did, that a Title VIII plaintiff may establish a prima facie 
case of discriminatory impact by proof of national statistics 
relative to U.S. households as presented here. Thus, a Title VIII 
prima facie case, once established, as here, could alone suffice 
to prove a Title VIII violation unless the defendants justify the
discriminatory effect which has resulted from their challenged

actions. Rizzo, 564 F . 2d at 146 (unrebutted proof of

discriminatory effect alone may justify a federal equitable

response).

V.
The Merits

The record reveals that Mountain Side presented evidence 
relative to legitimate, non-pretextual reasons for its occupancy 
limitations: (1) sewer systems limitations, and (2) concern over
the quality of park life.

-17-



adopted without a discriminatory motive but which are function­
ally equivalent to intentional discrimination. See Watson. 487 
U.S. at 987.

The three factors we will consider in determining whether a 
plaintiff's prima facie case of disparate impact makes out a 
violation of Title VIII are: (1) the strength of the plaintiff's
showing of discriminatory effect; (2) the defendant's interest in 
taking the action complained of; and (3) whether the plaintiff 
seeks to compel the defendant affirmatively to provide housing for 
members of a protected class or merely to restrain the defendant 
from interfering with individual property owners who wish to 
provide such housing. In applying these factors, we are mindful 
of the Seventh Circuit admonition that "we must decide close cases 
in favor of integrated housing." Arlington Heights— II, 558 F.2d 
at 1294 ("close" case although only two of four factors present).

1. Strength of Plaintiff's Showing 
of Discriminatory Effect

The Secretary relied on national statistics that "at least 
71.2% of all U.S. households with four or more persons contain one 
or more children under the age of 18 years; that at least 50.5% of 
U.S. families with minor children have four or more individuals; 
and that at most 11.7% of households without minor children have 
four or more persons" to determine that the plaintiffs had proven 
discriminatory effect. (Secretary's Second Remand at 7). 
Although discriminatory effect is generally shown by statistical 
evidence, any statistical analysis must involve the appropriate

-19-



defendant is a private individual or a group of private 
individuals seeking to protect private rights, the courts cannot 
be overly solicitous when the effect is to perpetuate segregated 
housing." 558 F.2d at 1293. On the other hand, when a defendant 
can present valid non-pretextual reasons for the challenged prac­
tices, the courts should not be overzealous to find discrimina­
tion .

Mountain Side presented two legitimate, non-pretextual 
reasons for its occupancy limit: (1) sewer systems limitations, 
and (2) concern over the quality of park life. These overcame 
plaintiffs' prima facie case, as more fully hereafter discussed.

3. Nature of Relief Sought
The final factor we consider hinges on the nature of the 

relief which the Complainants seek. In Arlington Heights II, the 
court concluded that "courts ought to be more reluctant to grant 
relief when the plaintiff seeks to compel the defendant to 
construct integrated housing or take affirmative steps to ensure 
that integrated housing is built than when the plaintiff is 
attempting to build integrated housing on his own land and merely 
seeks to enjoin the defendant from interfering with that 
construction." 558 F.2d at 1293.

In Casa Marie. Inc, v. Supreme Court. 988 F.2d 252, 269 n. 
20, the court, in an elderly and handicapped Title VIII 
discrimination action, concluded that "Where plaintiff seeks a 
judgment which would require defendant to take affirmative action 
to correct a Title VIII violation, plaintiff must make a greater

-21-



Court has repeatedly stated that the "ultimate burden of proving 
that discrimination against a protected group has been caused by a 
specific . . . practice remains with the plaintiff at all times." 
Watson. 487 U.S. at 997. "Thus, when a plaintiff has made out a 
prima facie case of disparate impact, and when the defendant has 
met its burden of producing evidence that its [housing] practices 
are based on legitimate business reasons, the plaintiff must 'show 
that other [policies], without a similarly undesirable . . . ef­
fect, would also serve the [defendant's] legitimate interest." 
Watson. 487 U.S. at 998 (citing Albemarle Paper Co. v. Moody. 422 
U.S. 405, 425 (1975) (citations omitted)).

The Secretary correctly determined that the business neces­
sity standard in Title VIII cases is imported from employment 
discrimination case law under Title VII. However, the Secretary 
went beyond the business necessity test that the Supreme Court has 
enunciated in Title VII cases and incorrectly required that 
Mountain Side demonstrate a "compelling need or necessity." 
(Secretary's Third Remand at 10).

When Congress amended Title VII in 1991 one of the purposes 
of the act was "to codify the concepts of 'business necessity' and 
'job related' enunciated by the Supreme Court in Griggs— y_.— Duke 
Power Co.. 401 U.S. 424 (1971) and in other Supreme Court 
decisions prior to Wards Cove Packing Co. v. Atonio, 490 U.S. 642 
(1989)." Civil Rights Act of 1991, Pub. L. No. 102-166, § 3(2), 
105 Stat. 1071 (hereinafter "the Act"). The Act placed the burden 
on the defendant to rebut a showing of disparate impact by dem­
onstrating "that the challenged practice is job related for the

-23-



3. [Mountain Side] employs Prime Management ("Prime") 
to manage the Park. Edward H. Brooks is Prime's 
President. The Brooks-Tolz family has built and de­
veloped mobile home parks since 1955. Mr. Brooks has 
been involved in the mobile home industry in various 
capacities since 1970.
4. Michael Noakes, a Prime employee, has been the 
property manager for the Park since before March of 
1989. Mr. Noakes also manages eight other mobile home 
parks for Prime.

In his Findings of Fact, the Secretary found:9

11. By March of 1989, [Mountain Side] became aware of 
the addition of families with children to the classes 
protected by the [FHA], and that it must decide whether 
the Park should remain an adult park or whether resi­
dency should be thrown open to families with children. 
At the time, there were many Park vacancies because of 
the limited market for an adult mobile home community. 
Accordingly, [Mountain Side] decided that the option of 
becoming a family park was a more "viable opportunity." 
However, the elimination of the adult restriction meant 
that there would be an increase in Park population. 
Therefore, [Mountain Side], with assistance from Prime, 
examined instituting occupancy limits.
12. An October 15, 1988, survey of the Park population 
was used to establish the new policy. According to the 
study, 318 people resided on 213 lots. Each occupied 
unit had one or two residents. Mr. Brooks and Mr. 
Noakes opined that the condition and age of the utili­
ties, the density of homes, and the overall size of the 
Park would not support more than a three-person per lot 
limit without negatively affecting the quality of life 
at the Park. Accordingly, [Mountain Side] determined 
that a limit of three residents per unit, resulting in a 
total of 687 residents, was the maximum number that the 
Park could reasonably accommodate.

9 In his Third Initial Decision on Remand and Order, the ALJ 
adopted the Findings of Fact from his Initial Decision and Order 
(Third Initial Decision on Remand and Order at 3 n. 2). The Sec 
retary adopted these findings when the ALJ's Third Initial Deci­
sion on Remand and Order became final upon expiration of the 
Secretary's 30 day review period.

-25-



sewer system at its capacity. . . . "  Because the 916 
population limit is a recommended maximum, Mr. Walker 
opined that if an additional 30 guests are at the Park 
at peak time, "some portion of the [sewer] system will 
be overloaded."
23. Mr. Walker described his figure of 916 as a "brick 
wall," or an absolute maximum. If the Park had 916 
residents, he asserted that the sewer system would not 
be able to accommodate additional visitors. The Park is 
located in a resort area near the Rocky Mountains. 
Accordingly, Park residents have numerous seasonal 
visitors that increase the population during the summer 
and holiday seasons.
24. Because the recommendation that the Park be limited 
to 916 individuals was based on interviews with Park 
personnel rather than actual excavation and examination 
of the sewerage system, the Study further recommended 
that the Park conduct a "survey of field conditions" 
which would cost approximately $4,000. [Mountain Side] 
did not perform this survey.

26. The QCI Study also made recommendations based on 
its evaluation of the Park in terms of human comfort.
Mr. Walker opined that the Park has "very small lots . .

[and is] crowded." Based on the assumption that most 
of the homes currently in the Park have two bedrooms, 
the Study recommends a populations limit of two people 
per bedroom in addition to the previously discussed 
absolute maximum population of 916. The QCI Study also 
recommended a limit of two vehicles per trailer for 
traffic flow and pedestrian safety.
27. Notwithstanding Mr. Walker's recommendation of a 
maximum of 916 residents, or four residents per home,
[Mountain Side] has continued to maintain the limit of 
three, rather than four, residents per unit. Because of 
the parking problems, density of the homes, and overall 
size of the Park, [Mountain Side] decided that the 
quality of life at the Park would be severely diminished 
if the Park had a maximum of 916 residents. Further­
more, if the Park reached maximum capacity, it could not 
accommodate guests, including visiting children.

(Initial Decision and Order at 2-8) (footnotes omitted) (citations
to original hearing transcript omitted).

-27-



94-9509, Mountain Side Mobile Estates v. Secretary of HUD 
HENRY, Circuit Judge, dissenting

The majority holds it arbitrary and capricious for the 
Secretary of Housing and Urban Development to conclude that 
Mountain Side's policy had a discriminatory effect upon families 
with children and that Mountain Side did not meet the business 
necessity" exception to the Fair Housing Act (FHA). I must 
respectfully dissent for three reasons. First, substantial 
evidence existed for the Secretary to find that Mountain Side s 
policy had a discriminatory effect upon families with children. 
Second, substantial evidence supports the Secretary's finding that 
the engineering study was a post-hoc justification for a 
discriminatory policy that actually does not support Mountain 
Side's position because it proposed a solution that would have 
allowed the family at issue to continue living in the park.
Third, I believe that Congress has already determined the balance 
between the rights of children and others and that it is not the 
role of this court to determine whether prohibiting discrimination 
against children may negatively affect the quality of life in 
multifamily housing.

Before explaining my dissent, I note that the majority 
assumes in part IV of its opinion what I believe it should 
acknowledge: Policies that create a disparate impact upon
families with children are prima facie discriminatory. §££_,— 5»3 1 , 
rasa Marie. Inc, v. Superior Court, 988 F.2d 252, 269 (1st Cir. 
1993) (collecting cases); Huntington Branchs— NAAgP v.— TQwn pf



the national average, it seems clear that its rule limiting 
occupancy to three-people-per-unit has a disparate impact upon 
families with minor children.

However, the majority holds that the Secretary must provide a 
statistical analysis of Jefferson County, Colorado, in order to 
rely upon disparate impact. I can find no authority for the 
proposition that the Secretary must explicitly focus upon the 
county housing market and family statistics when evaluating a 
housing discrimination claim. In my view, such a position is 
inconsistent with Congress's grant of authority to the Secretary, 
our standard of review, and the approach other courts have taken 
in the discrimination context. In Dothard v_,— Rawlinson, 433 U.S. 
321, 330 (1977), the Supreme Court held that when "there was no 
reason to suppose" a difference between local and national 
statistics, the district court did not err in using national 
statistics. In addition, the Ninth Circuit has held that if a 
plaintiff produces statistical evidence in a Title VII action, 
"the burden of proof shifts to the employer to prove either that 
the plaintiff's statistics are inaccurate and no disparity exists 
or that the practice is necessary to the efficient operation of 
the business." Hung Pina Wang v . Hoffman, 694 F.2d 1146, 1148 
(9th Cir. 1982) (citing Dothard. 433 U.S. at 338-39 (Rehnquist, 
j., concurring) (other citations omitted)).

Without convincing evidence defining Mountain Side's market 
and conclusively showing how that market differs materially from 
national statistics, I do not believe we are in a position to 
conclude that the Secretary erred by relying upon census data.

-3-



retained a consultant and initiated its study. Rec. vol. Ill, at 
2 3 4 -3 5 . The study concluded that the existing sewage system could 
support 916 residents . 2 In 1991, however, the park had only 341 
residents. In addition to being well below the limit its expert 
concluded the infrastructure can support, Mountain Side failed to 
follow its own expert's advice. The expert suggested a policy 
that limited occupancy to two-people-per-bedroom in each unit. 
Under this policy, the family in this case would have been 
permitted to live in their three-bedroom unit. Mountain Side 
itself, moreover, argues that larger families do not usually want 
to live in mobile home parks, thus suggesting that rapid growth is 
unlikely. Given the timing of the policy change from adults-only 
to a three-person-per-unit limit, the timing and substance of the 
sewer study, Mountain Side's failure to accept its consultant s 
recommendation on limiting park population, the fact that the 
population was well below half of the maximum suggested by the 
consultant in the study upon which Mountain Side relies, and the 
lack of evidence of a population explosion, I cannot agree that 
the Secretary erred by rejecting Mountain Side's business 
necessity defense to the occupancy restriction.

Finally, I believe that the majority's consideration of 
quality of life at the park is misplaced. Some would argue that 
the FHA makes an explicit trade-off between the quality of life 
for children and other citizens. One commentator, for example, 
suggests that landlords prefer not to provide housing for

2 There is no allegation that the occupancy at issue violates 
any local ordinance.

-5-



Certificate of Service

I certify that a copy of the foregoing Intervenors’ Petition for Rehearing and 

Suggestion for Rehearing In Banc was served on this 13th day of July, 1995, by first- 

class U.S. mail, postage prepaid, addressed as follows:

Gregory B. Friel, Esq.
Civil Rights Division 
U.S. Department of Justice 
P. O. Box 66078 
Washington, D.C. 20035-6078

Stephen E. Kapnik, Esq.
Don D. Jacobson, Esq.
Lohf, Shaiman & Jacobs, P.C. 
950 South Cherry Street, #900 
Denver, CO 80222

Penda D. Hair