Four Republicans on the U.S. House Judiciary Committee accused the city of St. Paul yesterday of taking part in a “dubious bargain” with the U.S. Dept. of Justice to drop a case before the U.S. Supreme Court in exchange for the DOJ not joining two fraud lawsuits against the city.
In a letter signed by Republicans Lamar Smith, Darrell Issa, Charles Grassley and Patrick McHenry, the lawmakers said the arrangement raises significant legal ethical questions and asked U.S. Attorney General Eric Holder to provide legal ethics opinions on the arrangement and make high ranking officials including B. Todd Jones, the U.S. Attorney for Minnesota and the Acting Director of the Bureau of Alcohol Tobacco and Firearms, available for interviews.
The first case in question is Magner vs. Gallagher. In that case a group of landlords sued the city of St. Paul arguing the city’s aggressive housing code enforcement disproportionately affected landlords who rented to low income minorities and reduced the number of affordable homes in the city. The case was poised to be decided by the U.S. Supreme Court but last winter St. Paul removed the case. At the time the city said it was fearful of the impact the Supreme Court decision could have on the disparate impact theory.
The suit was brought under the Fair Housing Act which makes it illegal to refuse to sell or rent to any person on the basis of race, color, religion, sex or nationality. It was the first case that the justices would decide if plaintiffs could bring a claim for “disparate impact” discrimination under the legislation. The question had been decided differently in the various federal court circuits and the Supreme Court decision was being watched for precedent by many low income housing advocates. To prove disparate impact, the plaintiffs don’t have to show that there was intent to discriminate but only that discrimination was the result of a “neutral policy.”
City Attorney Sara Grewing said the primary reason the case was dismissed was to “preserve 40 years of civil rights law under statutes such as the Fair Housing Act and the Equal Credit Opportunity Act. “
If the court sided with the city, and said disparate impact claims could not be brought under the Fair Housing Act, that decision could impact the ability of future plaintiffs who were rightly discriminated against to make a similar argument, Grewing said.
The federal government had been using the disparate impact argument to pursue mortgage lenders whose base loans had disproportionately affected minorities in the wake of the housing bubble crash.
The Republican legislators are now saying the city agreed to drop its case at the Supreme Court in order to avoid attention from the federal government for another matter.
In 2008, a St. Paul contractor filed a lawsuit under the False Claim Act accusing the city of violating requirements of a federal grant. Yesterday’s letter says that $200 million in taxpayer money is “at risk.” In the letter the four legislators say the DOJ should have tried harder to get the grant money back from the city and joined the lawsuit. That case was dismissed in federal court and is on appeal.
Grewing released a statement yesterday on the letter and the city’s position on the allegations from the four Republican lawmakers:
As the City stated in its press release of February 10, 2012, the primary reason the City of Saint Paul dismissed its petition to the United States Supreme Court in Magner v. Gallagher was to preserve forty years of civil rights law under statutes such as the Fair Housing Act and the Equal Credit Opportunity Act.
At the time of the press release, because of Court orders then in effect, the City could not mention its secondary reason: to avoid conflict with the federal government in two pending lawsuits against the City (then under seal) that the City considered to be without merit. When the City dismissed the Magner petition, the Department of Justice declined to intervene — and thus not oppose the City — in those two lawsuits.
The Department’s decision not to intervene did not end the two lawsuits, which have now been unsealed. On July 20, in one of the lawsuits, a federal judge granted the City’s motion to dismiss it with prejudice. That decision is now on appeal. Should the other lawsuit be pursued, the City expects it to be dismissed, as well. In the meantime, the City is defending the Magner case on remand, and fully expects to win that case at trial.
The City believes strongly that it was not liable to the federal government (or anyone else) regarding its applications for, and spending of, HUD grants. All of the City’s litigation decisions, and its ongoing relationship with HUD, are part of the City’s strong commitment to civil rights and economic justice, including safe, sanitary rental housing.