Ashtabula County, Ohio. In 2008 Helen Grybosky was a 77 year-old widow who lived in Northeast Ohio, using her Social Security benefits, rental from a building in Parma, and a dwindling savings. Previously she also received income from a three-unit rental home in Conneaut, Ohio. When the units became vacant, she tried to sell the home for a few years to be free from the stress and responsibilities as a landlord, but received no offers. Without options, in 2008 she decided to rent the units again and ran an ad which included a “no pets” restriction which caught the eye of the Fair Housing Resource Center, Inc. (FHRC) in Painesville, Ohio.
FHRC is partially funded by grants from the U.S. Department of Housing and Urban Development, commonly referred to as HUD. According to its website at the time, FHRC conducted “outreach and education activities,” and activities to “promote and enforce the understanding of compliance with Federal and State fair housing laws.” One technique FHRC used to “enforce compliance” was “testing” landlords to look for potential housing discrimination. The U.S. Department of Justice website offers the following description of testing: “Testing refers to the use of individuals who, without any bonafide intent to rent or purchase a home, apartment, or other dwelling, pose as prospective buyers or renters of real estate for the purpose of gathering information, which may indicate whether a housing provider is complying with fair housing laws. The primary focus of the Section’s Fair Housing Testing Program has been to identify unlawful housing discrimination based on race, national origin, disability, or familial status.” These test calls were funded by HUD. The landlords chosen for these test calls may have done nothing wrong and no one has accused them of discrimination. However, when FHRC catches a landlord making a potentially discriminatory comment during one of these tests, instead of educating the landlord, FHRC files a claim with HUD and makes a demand for a monetary payment. In the past few years, FHRC has purportedly obtained tens of thousands of dollars from these “settlements.”
Based on Mrs. Grybosky’s ad, FHRC called and scheduled a showing of the Conneaut property. The tester who met with Mrs. Grybosky stated he had a “therapy dog” prescribed by a physician to “help him sleep,” but did not have any documentation with him. Mrs. Grybosky reminded him of the “no pets” policy, but remained open-minded. After further discussions, Mrs. Grybosky consented to allow the dog for an extra $100 deposit which would be returned if the animal did not cause any damage.
Following this initial test in January of 2008, Mrs. Grybosky was subjected to ongoing testing through the summer of 2008 – 2 tests each in January, February, April and July. This was due in part because she was not able to rent the units and kept running the advertisement. In one of these tests she was asked to accommodate a service animal, a Seeing Eye dog for a prospective tenant, which she agreed to do without any additional deposit. FHRC finally claims that in July 2008 a tester called Mrs. Grybosky to inquire about allowing a “therapy animal” needed to help the prospective tenant sleep due to anxiety and Mrs. Grybosky reportedly stated that she does not allow any animals.
Despite its concern that Mrs. Grybosky’s request for a $100 deposit to accommodate the potential “therapy dog” during the initial test in January constituted housing discrimination, FHRC did not make any effort to educate Mrs. Grybosky about the issues or reach out to her to prevent potential discrimination to actual applicants. Instead FHRC engaged in several months of additional testing through the spring and summer.
Finally, in September 2008, FHRC filed two claims of housing discrimination against Mrs. Grybosky with HUD based on the testing. The first claim asserted “disability discrimination” based on the initial test in January where Mrs. Grybosky asked for the $100 deposit and the follow up test in which it asserted that she stated she would “not allow kids or pets.” The second claim asserted discrimination based on not allowing children in the upstairs unit and vaguely alluded to “statements regarding children during disability test audits.” In addition, because the Ashtabula County Auditor listed Helen’s son Gary as an owner of the property, Gary Grybosky was also named as a respondent party potentially responsible for the discriminatory practices. Why FHRC did not search the title to the property at the Ashtabula County Recorder’s office, where such records are officially kept is unknown and perhaps negligent. Had it done so, it would have found that Gary Grybosky has a remainder interest in the property subject to his mother’s life estate, i.e. Gary had no present possession or control of the property which was held by his mother.
The two charges were filed with HUD and then submitted to the Ohio Civil Rights Commission for prosecution following established protocols. After receiving copies of the charges by separate letters dated September 17, 2008, Mrs. Grybosky recalls settlement discussions initiated by OCRC in which Mrs. Grybosky was to pay several thousand dollars – $3000 to $5000 – to resolve the charges before a formal investigation was conducted by OCRC. Because she did not understand how the alleged comments constituted discrimination, could not recall any of the details, and because she did not refuse housing to anyone, Mrs. Grybosky refused the settlement offer. Because the parties did not agree to a resolution at the initial stage of discussions, the OCRC conducted an investigation and somehow concluded that there was “probable cause” that the alleged statements constituted actionable housing discrimination although it provided no explanation for its conclusions. Importantly, the OCRC made no effort to explain how the alleged statements made to testers for FHRC based on hypothetical fact patterns constituted actionable discrimination on behalf of FHRC.
It appeared and later confirmed that the OCRC and FHRC were operating on an unwritten and unsubstantiated assumption that a housing agency is entitled to special treatment for housing discrimination testing. The OCRC and FHRC assert that a housing agency can conduct random testing against landlords who have no prior allegation of discrimination, using hypothetical fact patterns, and if the landlord makes statements to the testers which could be considered discriminatory if they had been made to actual (bona fide) applicants, FHRC claims standing not only to bring claims against landlords, but to recover thousands of dollars. They claim that the alleged statements cause “frustration of mission” and “diversion of resources” injuries to FHRC even though the initial testing is paid for by a grant from HUD and their decision to conduct the testing is completely voluntary and not based on any prior conduct by the landlords.
The Ohio statute under which Mrs. Grybosky was charged requires that landlords make “reasonable accommodations” for the disabled in housing. To determine what is reasonable depends upon the surrounding circumstances including the need for the accommodation balanced against the costs to the landlord, which regularly involves a case by case analysis. However, the statute prohibits a landlord from asking applicants if they have a disability or the “nature and extent” of the disability. Under this system an applicant can assert that they need a “therapy animal” (i.e. dog, monkey, pig, miniature horse, goat, etc.) and the landlord must walk a tightrope to attempt a reasonable accommodation without inquiry into a protected area for which they could face severe consequences. It would appear to be virtually impossible for a landlord to make a “reasonable accommodation” in response to request for a “therapy animal” without written documentation of the nature and extent of the disability and balancing that with the needs of other tenants or the nature of the property. And by walking a tightrope, it does not simply mean that a landlord must “follow the law,” the fact is that “the law” concerning these issues has not been clearly established. Just this April the Department of Justice and HUD released memos that seem, at face value, contradictory on the matter of service animals. Thus the landlord must predict the law or attempt to predict how the law would be applied in the endless hypothetical fact patterns that a housing agency could create.
As explained previously, after the charge is filed with HUD and then forwarded to the Ohio Civil Rights Commission (“OCRC”) for handling, OCRC conducts an initial investigation of the charge and if determines that there is “probable cause” that discrimination has occurred, OCRC demands that the accused pay money damages to FHRC to avoid further prosecution. The amount demanded is the amount requested by FHRC without any review or determination by OCRC. If the accused refuses FHRC’s settlement presented by the OCRC, then the matter is sent to the Ohio Attorney General to prosecute the charge before an administrative judge — an attorney employed by the OCRC.
The Ohio Attorney General prosecutes the claim without monetary charge to FHRC, and continues to demand settlement based in part on terms and conditions dictated by FHRC, i.e. the amount of money to be paid. Neither the Commission nor the Attorney General imposes any limits on FHRC’s demand. However, both remind the accused that if they refuse FHRC’s settlement, the case goes to a hearing before the OCRC’s administrative judge and, under Ohio law, if any discrimination is found (not limited to the charge in the complaint or even to FHRC), the accused must pay attorney fees for the prosecution. The attorney fees include “attorney fees” calculated by the Ohio Attorney General and also private counsel retained by FHRC. On the other hand, if the Judge does not find any discrimination, the accused has no recourse to recoup their attorney fees for the expenses incurred in defending the action.
This means that regardless of the ambiguity or merits of the charge or the terms of the demand, if Ms. Grybosky refuses to pay FHRC the amount it demands and wants the claims presented to the administrative judge (her day in court), she faces the prospect of paying attorney fees for the prosecution in addition to any damages. Even if Mrs. Grybosky just wanted the administrative judge to determine a fair amount for the alleged damages (if any), she faces the consequence of being forced to pay the attorney fees for the entire case. Thus, the only way to avoid the imposition of mandatory attorney fees is to resolve the charges before the administrative hearing, and the only way to resolve the charges before the hearing – according to the practices of the OCRC and the Ohio Attorney General – is to pay FHRC the money it demands. Landlords in Ohio are accustomed to paying fines of $10,000 at a minimum if the case makes it to be heard by the OCRC.
In Helen’s case, after the initial monetary demand was refused and following the determination of “probable cause” by OCRC, OCRC demanded payment of $4,500 to FHRC to resolve the charges. When that offer was refused and the Ohio Attorney General filed formal complaints, the Ohio Attorney General demanded payment of $6,500 to FHRC on behalf of the OCRC as a condition to resolve the charges. The settlement offers included the threat that, in similar cases there have been awards of damages of tens of thousands of dollars and with equal amounts for attorney fees. Keep in mind that before this testing, Ms. Grybosky had never been charged or accused of any housing discrimination. The only conduct by Ms. Grybosky which presumably led to the initial test was her rental ad with “no pets,” a legally permitted and enforceable housing restriction (under the law “service animals” are not considered pets).
Despite the threatened sanctions and her limited income, Mrs. Grybosky took a stand and refused to give up. To fight what she felt was oppressive government prosecution and exploitation of landlords based on a vague and ambiguous statute, and a statutory scheme which was being used to extort settlements in lieu of a fair hearing by the use of mandatory attorney fees, Mrs. Grybosky retained counsel to defend her. To challenge the constitutionality of the statute without the delay and expense of the administrative proceeding, Mrs. Grybosky’s counsel filed suit in Ashtabula County Common Pleas Court in October 2009 asking that the Court stop the administrative hearing and find that the Ohio statute under which the charges were filed are unconstitutional. The case was summarily dismissed by the County Judge under a claim of immunity by the Ohio Attorney General.
While the civil case was working its way through the Court of Appeals, the administrative hearing was conducted over three days in May 2010. A transcript was prepared and the parties briefed the issues in December 2010. It is important to understand that the Administrative Judge, who is hired and paid by the OCRC does not make a final decision in the case but merely makes recommendations to the OCRC based on the evidence and it is the OCRC itself which makes the final decision. After OCRC’s final decision the parties have the right to seek judicial review in the Common Pleas Court in the county where the conduct occurred.
While waiting for the Administrative judge to make her recommendations to the OCRC based on the hearing, in late December 2011 the Court of Appeals ruled in the civil action that immunity did not apply to the OCRC and that Mrs. Grybosky’s claims for damages based on the prosecution of the charges could proceed without awaiting a final decision in the administrative action. This decision was upheld upon an En Banc review by all members of the Court in August 2012, however the Court of Appeals suggested that the trial court may wait for the administrative case is resolved before proceeding.
Following the Court of Appeals En Banc decision the administrative judge issued the first part of her recommendation in October 2012 – 2 1/2 years after the hearing. In her “Conclusions of law and Discussion” the ALJ held that:
“10. Respondent Helen Grybosky made statements to potential applicants that she was reluctant to waive her “no pet policy”, required additional security deposits, and also placed a limitation on which apartment families with children could rent.
11. Respondents have engaged in illegal conduct and Complainant FHRC is, therefore, entitled to relief.
ALJ Recommendation October 17, 2012, page 13.
With regard to “actual damages,” the Judge identified the applicable standard but refused to apply it. The Judge explained that the purpose of actual damages “is to put the plaintiff in the same position, so far as money can do it, as (…) [ the plaintiff ] would have been, had there been no injury or breach of duty…” Lee v. Sounthern Home Sites Corp., 429 F.2d 290, 293 (5th Cir. 1970)(citations omitted) However, in this case there was no injury or breach of duty; Mrs. Grybosky did not owe any duty to the tester from FHRC and FHRC was in the same position it was in before the testing. What FHRC was seeking to do, and what OCRC was seeking to do for FHRC, was to allow FHRC to profit from the alleged conduct, and that is what the judge recommended. The judge’s recommendation was a finding of $12,000 in actual damages, $10,000 in punitive damages, plus attorney’s fees mandated by statute. Most shocking was that the Judge assessed Gary with $7,000 of the punitive damages when he had absolutely no contact with any of the testers. Even if one considered the out of pocket expenses which FHRC expended to create the testing as actual damages, the evidence presented by FHRC was that was only $2,513.40 ($1,410.35 & $1,103.05). After briefing by the parties concerning the attorney fees, the ALJ issued her recommendation for attorney fees on March 12, 2013 – $47,375 for the Commission (Ohio Attorney General) and $39,848 for the Complainant. Therefore total damages were over $100,000!
Four months after the Judge’s final recommendation, the board for the OCRC issued it final decision on July 18, 2013. Its decision was $100 in actual damages and attorney fees of $4,933 to the Ohio Attorney General, and attorney fees of $4,185 to counsel for FHRC. The board found no basis for the award of punitive damages. While the decision appears to be a step in the right direction, it still fails to acknowledge that there are no actual damages in the case. It appears the commission was finding that the request for a $100 deposit was the discriminatory act, but ignored that fact that the $100 was never paid. In other words, if one were to conclude that a landlord is not permitted to collect an extra $100 deposit for a “therapy dog” prescribed for a person with “anxiety” to “help them sleep,” the damages would only be sustained had the person paid it. But since the whole situation was hypothetical and the deposit was not paid, this supports Mrs. Grybosky’s position that there are no actual damages.
While the board’s effort may have been in the right direction, its final decision was still a continuation of unfounded charges. Because the decision failed to dismiss the charges completely and because the only opportunity to challenge the constitutionality of the statute is on appeal, Mrs. Grybosky’s counsel filed a petition to appeal the OCRC’s decision to the common pleas court. The petition was filed on the last day allowed by statute, August 26, 2013. Because the Court is 4 hours from his home location, counsel did not receive his mail on August 26, 2013. Upon returning to his home office on August 27th counsel found in his mail a letter from the OCRC dated August 22, 2013 which announced that “On August 15, 2013, …the [OCRC] on its own motion set aside the final order” issued in July. It further stated that the “reconsideration was based on discovery that the prior damages award was inadvertent and erroneous.”
At this point there are many more questions than answers with respect to how the OCRC is processing these “testing” cases, who is influencing its decisions, and how much money has been taken from landlords who were not able to fight these practices. In addition there are serious questions about how and why HUD is funding these secret testing cases which are profiting private special interests groups.
“When thousands of dollars in Federal and State monies are being used to prosecute Mrs. Grybosky, the public needs to know how their tax money is being spent. Just like the ACORN scandal a few years ago, without proper oversight and some common sense, even well intentioned programs and statutes can become wasteful and oppressive,” said Attorney Tarin S. Hale, Mrs. Grybosky’s counsel. “They are treating Mrs. Grybosky, who has never even received a parking ticket, with less respect than a common criminal. Exploiting ignorance, when no one was injured or harmed, is not what our government should be focused on. An Ohio citizen, being prosecuted by the state of Ohio, for violating an Ohio statute, should at least have the opportunity to have the charges heard before an impartial judge without threat of incurring tens of thousands of dollars in sanctions. The state is seeking to punish landlords under the guise of an administrative proceeding, for the purpose of profiting special interest groups, all without constitutional protections. How can it be that criminals are treated better by our government that landlords who pay millions in property taxes each year and provide housing to those who cannot afford to buy their own home?” Hale added. “There needs to be accountability for what has happened in this case. People need to lose their jobs and the statutes need to be changed. People need to have confidence that the government is operating in a fair and balanced manner. With regard to fair housing cases that confidence has been shattered.”
National REIA was informed of the case and is supporting the effort to have the Ohio law reviewed. We believe that the way the law is written eliminates Due Process. This is very disconcerting as we agree with Attorney Hale. Even the worst of criminals get the right to Due Process. How do we as housing providers not have that right? It is our position that when a landlord is required to pay all attorney’s fees, even if they are found to be not guilty, this eliminates the essence of Due Process. We are concerned about the elderly or disabled individuals throughout our nation that although they have an asset, such as a rental property, they have no liquid assets and often are living on a strict monthly budget. They feel they cannot defend themselves against claims without potentially losing property, often held in their families for generations, without having to potentially sell that same property to pay the attorney’s fees even if found to be innocent of all claims in the end.
National REIA is also concerned about the practice of random testing for the purpose of amassing funds for the agencies themselves. Public tax dollars are already supporting the actions of these agencies. We understand the premise of the testing activities and support the underlying concept. We agree with the sentiment stated by the National Association of Realtors at the outset of this activity. William D. North, NAR’s executive vice president in the late ’80s and former general counsel said this when opposing the Act that established funding for testing in 1985, “It wasn’t that we were afraid of testing, but we were concerned that it be done in a proper fashion and fairly.”
That is still our position today. We absolutely believe in the practice of Fair Housing. We fight to defend housing opportunities for all. However, it is our concern that much more time and money is being spent to penalize housing providers than to educate them. We try to reach all housing providers to offer information and education on Fair Housing practices but we are not always able to locate and educate. It would be our hope that HUD, and the agencies funded by HUD, would take a stance to educate first. If the housing provider has been made aware of errors, and they continue to ignore the right way to operate, we have no problem with them being prosecuted. We would absolutely support that action. We have a problem with tactics used to extort money from landlords, who are ill informed, only to continue to grow the coffers of the non-profit agencies endowed with the responsibility to both find discrimination AND to educate housing providers so that it can be stopped. In this case NO attempt was made at education, even after the conclusion was made that there was a problem. It was even stated in one proceeding that “…landlords cannot be educated, they must be penalized.” Therein lays our concern.
We are also concerned that although lots of attention is given to random testing many other HUD resources have been removed. The HUD offices in the state of Ohio have all been closed. In the past, one could contact the local HUD office for information, education, and advice on these issues. Community contacts within the HUD office would engage in conversations and give direction in many local matters. Those days are gone as HUD has removed resources from communities but continues to fund these sorts of programs. Many of these programs were previously funded through Community Development Block Grants, (CDBG Funds). Tax dollars were allocated for implementation of both these programs and other very good and supportive community programs. The great community programs that REIAs and Apartment Associations participated in are all but a distant memory. However, tax funds in the millions are still allocated to the non-profit testing agencies. We are concerned that instead of allocating those dollars to education, as is generally dictated in the terms of the grant, the agencies are using the funds for testing only to ensure more money for the gain of their own agencies.
National REIA is working to find a solution to this dilemma. We must always support the concept of Fair Housing and the efforts to educate and enforce this essential part of our industry. However, we cannot accept that common sense and individual rights should be trampled while doing so. We agree completely with the National Apartment Association and the National Multi-Housing Council that “To better identify, correct and prevent housing discrimination, existing testing programs need additional resources and uniformity, as well as more emphasis on educational opportunities. In FY 2012, FHIP had $42.5 million to fund three programs providing assistance for private enforcement, education and outreach and fair housing organizations.”
We believe, jointly as an industry, that fair housing testing programs and practices can be unreliable measures of compliance in the rental real estate industry. In many cases, they are ineffective, inefficient and unfair to the property owner and housing provider. In an effort to root out discrimination, testing programs can be more effective if they’re limited to complaint-based targets and more emphasis is placed on education.
Stay tuned for updates in this specific legal battle and National REIA’s progress in finding solutions to this major challenge for housing providers.
