Katz v. New York City Housing Preservation & Development

Background

Chaim Katz and Chana Katz are described as a married Orthodox Jewish couple with children. They alleged that their religious beliefs require them to have a large family. They applied for affordable housing through New York City’s Housing Connect lottery system twice. Their applications were denied because their household sizes exceeded the applicable maximum occupancy limits.

For the Essex Crossing Lottery, the Katzes applied for a three-bedroom apartment while their household had seven people, although they alleged that one child planned to live elsewhere. The application was initially selected, but the application and later appeal were denied because no available unit could accommodate the household size. The Katzes later applied for a three-bedroom apartment in the Orchard Lottery while their household had eight people, again with one child allegedly planning to live elsewhere. That application and their appeal were also denied based on the maximum household size.

The Katzes sued the New York City Housing Preservation and Development, the New York City Housing Development Corporation, Site 5 Residential Owner LLC, C&C Apartment Management LLC, and NRT New York LLC. They alleged violations of the First Amendment’s protection for religious exercise, the Fair Housing Act, the New York State Human Rights Law, and the New York City Human Rights Law. The defendants separately moved to dismiss the complaint.

First Amendment claim

The Katzes conceded that the occupancy policies were generally applicable and did not allege religious hostility or intentional discrimination. They therefore asked the court to apply rational-basis review, a deferential test asking whether the policy is reasonably related to a legitimate government interest.

Judge Cronan held that preventing overcrowding in subsidized apartments was a legitimate government interest and that limiting occupancy to two people per bedroom was rationally related to that interest. The court rejected the argument that the City might have drawn the occupancy line differently, explaining that rational-basis review does not require the policy to be narrowly tailored. The court therefore ruled that the Katzes had not adequately pleaded a violation of the Free Exercise Clause. Because it rejected the claim on that ground, the court did not decide whether NRT or the Site 5 defendants were state actors.

Fair Housing Act claims

The Katzes proceeded under a disparate-impact theory. That theory challenges a neutral policy that allegedly produces a significantly disproportionate effect on a protected group, without requiring proof of discriminatory intent.

The court held that the complaint did not plausibly allege a disparate impact on Orthodox Jews. The complaint cited nationwide statistics about Orthodox Jewish families but did not allege the household sizes of Orthodox Jews applying for affordable housing in New York City, compare them with similarly situated applicants, or provide facts showing that Orthodox Jews were or predictably would be underrepresented in the city’s affordable housing.

The court also held that the familial-status theory was inadequately pleaded. It recognized that families with children are protected by the Fair Housing Act, while family size itself is not a protected status. But the complaint did not allege the average size of families with children, compare families with children to families without children, or provide facts showing that the occupancy policy caused or predictably would cause underrepresentation of families with children.

The court dismissed the Fair Housing Act claim because the Katzes failed to adequately plead disparate impact. It did not decide defendants’ arguments concerning the Fair Housing Act’s occupancy-limit exemption or the statute of limitations.

State and city claims

After dismissing the federal claims, the court declined to exercise supplemental jurisdiction, meaning authority to hear related state-law claims, over the Katzes’ claims under New York State and New York City human-rights laws.

Disposition

Judge Cronan granted defendants’ motions to dismiss. The court allowed the Katzes to file a First Amended Complaint within 30 days to try to cure the pleading deficiencies. The order states that if they do not file an amended complaint within that period, and lack good cause for the failure, their claims will be dismissed with prejudice.