Pacific Shores Properties v. City of Newport Beach: Ninth Circuit Reverses Summary Judgment in Action Alleging Discrimination Against Sober Living Group Homes

This is an interesting case on discrimination in the housing context. In Pacific Shores Properties, LLC v. City of Newport Beach (9th Cir. 9/20/13), the Ninth Circuit reversed an order granting summary judgment in a case alleging that a City ordinance violated the Fair Housing Act, the Americans with Disabilities Act, the California Fair Employment and Housing Act, and the Equal Protection Clause by having the practical effect of prohibiting new group homes for recovering alcoholics and drug users from opening in most residential zones and requiring existing group homes to undergo a permitting process.  

The Ninth Circuit held that the district court erred in disregarding evidence that the City’s sole objective was to discriminate against persons deemed to be disabled under state and federal housing discrimination laws. The plaintiffs, who were operators and residents of sober living homes,  were not required to identify similarly situated individuals who were treated better than themselves in order to survive summary judgment. Where there is direct or circumstantial evidence that the defendant has acted with a discriminatory purpose and has caused harm to members of a protected class, such evidence is sufficient to permit the protected individuals to proceed to trial under a disparate treatment theory.

The district court erred in concluding that the plaintiffs failed to create a triable issue of fact as to whether the losses that their businesses suffered were caused by the enactment and enforcement of the ordinance when the plaintiffs presented evidence that they experienced a significant decline in business after the ordinance’s enactment, that the publicity surrounding the ordinance reduced referrals, and that current and prospective residents expressed concern about whether the homes would close. In addition, costs borne by the plaintiffs to present their permit applications and to assure the public that they were still operating despite the City’s efforts to close them were compensable. 

The opinion is available here.