Blog LenderLaw Watch July 28, 2020

Federal Court Refuses to Vacate Ruling Precluding Fair Housing Act Damages

On July 17, 2020, a federal judge in Guam refused to vacate her ruling in U.S. v. Government of Guam, et al., Case No. 1:17-00113, which held that sovereign immunity prevented the U.S. government from seeking damages under the Fair Housing Act (FHA) for Guam’s alleged violations of housing rights for the island’s indigenous Chamorro people.

U.S. v. Government of Guam, et al. was filed by the Department of Justice (DOJ) in September 2017, against the government of Guam and its Chamorro Land Trust Commission (CLTC), claiming that the CLTC’s program granting residential leases to the Chamorro, who are the indigenous people of the Pacific island territory, violated the Fair Housing Act.  The Chamorro Land Trust Act of 1975 (CLTA) provided leases to those people — mostly Chamorros — who became U.S. citizens when Guam became a U.S. territory in 1950.  The DOJ claimed that the CLTA “discriminated against non-Chamorros on the basis of race and national origin in the allocation of Government of Guam land.”

In April 2019, U.S. District Judge Susan Oki Mollway ruled that the U.S. government may not pursue damages for individuals claiming to have been victims of housing discrimination by the Territory of Guam pursuant to 42 U.S.C. § 3614 of the FHA.  Further, the Court ruled that the United States could not recover damages on behalf of those individuals who themselves would have been barred by Guam’s sovereign immunity from suing Guam directly.  After this ruling, in June 2020, the U.S. government reached a settlement with Guam.  Under the terms of the settlement, Guam and the CLTC agreed not to discriminate “because of race or national origin,” while continuing to deny that they violated the FHA.

In light of the settlement, in June 2020, the DOJ moved to vacate Judge Molloway’s damages ruling.  The DOJ expressed concern that Judge Molloway’s order would be cited in other FHA disputes.  In its memorandum, the DOJ wrote:  “If adopted by other courts, this decision would prohibit the United States from seeking damages for discrimination victims from any defendant that demonstrates that it could have successfully asserted a claim of … sovereign immunity had the FHA case been brought by the victims themselves.”  To the DOJ, “[t]his includes not just states themselves, but also state housing authorities and housing finance agencies.”

Judge Molloway was not persuaded by the DOJ’s arguments.  “This court’s ruling belongs to the public, not just the parties in this case,” she wrote.  The Court held that its ruling that Guam has sovereign immunity against damages is of use to the legal community at large and should not be vacated simply because the U.S. government does not want it raised in future litigation.  The Court noted that the damages decision passes an “equitable balancing test,” and declining to vacate the decision does not create a significant hardship for the federal government.  “The decision does not bind anyone in any other case, and others are free to adopt or reject its reasoning,” the Court concluded.

The Court’s decision denying vacatur noted that there is a “dearth” of reported cases involving FHA claims brought by the federal government against U.S. states or territories, or against a territorial or state agency.  The Court stated that this suggests that there may be few instances in which the United States may have to address the Court’s sovereign immunity reasoning in a future actions.   And, the Court added, if another court adopts similar reasoning in another FHA case, the federal government could appeal that decision.

It remains to be seen whether sovereign immunity will bar the Unites States from seeking damages in other, similar housing discrimination cases brought in the future and whether the federal government will have other opportunities to appeal such a ruling.