United States v. Pfeiffer

Background

The United States brought this Fair Housing Act case against Reese Pfeiffer, Jeanne Pfeiffer, Michael Fruen, Jeremy Martineau, Fruen & Pfeiffer, LLP, and M. Fruen Properties, LLC. The complaint alleges that Reese Pfeiffer, who managed rental properties owned or co-owned by defendants, repeatedly sexually harassed multiple female tenants from 2014 through 2019. The alleged conduct included requesting or pressuring tenants to exchange sex for housing benefits, making sexual comments and advances, unwanted sexual contact, and evicting a tenant after she rejected requests for sexual intercourse.

The motion was filed by Michael Fruen and M. Fruen Properties, LLC, referred to as the Fruen Defendants. They asked the court to dismiss the claims for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) and for failure to state a claim under Rule 12(b)(6). Alternatively, they sought a more definite statement under Rule 12(e). They also sought judgment as a matter of law concerning two alleged victims who had previously brought similar allegations in another case.

Subject-Matter Jurisdiction

The Fair Housing Act allows the Attorney General to bring a civil action when there is reasonable cause to believe that a person or group is engaged in a pattern or practice of housing discrimination, or when discrimination against a group raises an issue of general public importance.

The Fruen Defendants argued that the complaint alleged only three incidents over six years and therefore did not adequately plead a pattern or practice. The court rejected that characterization. It explained that each of the three alleged incidents involved repeated harassment over lengthy tenancies, and that the complaint described those incidents as representative examples rather than the full extent of the alleged conduct. The court also held that the Fair Housing Act does not require a minimum number of victims or statistical evidence to plead a pattern or practice.

The court concluded that the complaint plausibly alleged both that the Attorney General could reasonably believe Reese Pfeiffer engaged in a pattern or practice of discrimination and that the alleged conduct raised an issue of general public importance. The court therefore held that it had subject-matter jurisdiction and denied the motion to dismiss on that ground.

Vicarious Liability

Vicarious liability means that one party may be legally responsible for discriminatory conduct by its agent or employee under agency-law principles. The court held that the Fair Housing Act provides for such liability, even when the principal or employer did not authorize or know about the conduct, if the agent acted within the scope of authority or employment.

The complaint alleged that Reese Pfeiffer acted as an agent for the Fruen Defendants and had authority to receive rental applications, accept or reject tenants, sign leases, enter tenants’ homes, collect rent and fees, make repairs, adjust rent and deposits, and enforce lease provisions. The court held that these allegations plausibly supported vicarious liability for the alleged harassment occurring on the Fruen Defendants’ properties.

The court also rejected the argument that Michael Fruen could not remain potentially liable after conveying the Nicollet Avenue Property to M. Fruen Properties, LLC. The complaint plausibly alleged that Fruen was Pfeiffer’s principal while Fruen owned the property and that M. Fruen Properties, LLC was Pfeiffer’s principal after the property was conveyed. The court therefore denied the motion to dismiss for failure to state a claim.

The court further concluded that deciding responsibility for money damages was premature because discovery had not established when the Attorney General could reasonably have known the material facts. It noted that the United States could seek injunctive and declaratory relief without a time limit under the court’s analysis, while money damages were subject to a three-year limitations period. The court concluded that the allegations, which ranged from 2014 through 2020, were not barred at this stage.

Request for Judgment as a Matter of Law

The Fruen Defendants sought judgment as a matter of law regarding two alleged victims involved in an earlier related case. Because considering matters outside the pleadings would have required treating the motion as one for summary judgment, the court explained that the United States had to receive a reasonable opportunity to present relevant evidence and arguments.

The United States had not yet conducted discovery or had an opportunity to substantiate its allegations. The court also noted that the two women were not parties to this case and that their alleged harassment was relevant to the pattern-or-practice allegations. The court declined to convert the motion into a summary-judgment motion and denied the Fruen Defendants’ request.

More Definite Statement

A motion for a more definite statement is available when a pleading is so vague or ambiguous that the opposing party cannot reasonably prepare a response. The Fruen Defendants argued that the complaint was unclear about which conduct and legal theories applied to them.

The court held that the complaint identified the properties owned by the Fruen Defendants and described the harassment allegations asserted against them. The court concluded that the Fruen Defendants were seeking clarification of the United States’ legal theories, rather than correction of an unintelligible complaint. Because Rule 12(e) may not be used simply to force a party to choose a particular legal theory at the pleading stage, the court denied the request for a more definite statement.

Disposition

The court ordered that the Fruen Defendants’ motion to dismiss and for a more definite statement, docketed as Docket 24, was DENIED.