Moody v. The Related Companies, L.P.

Background

New York’s 421-a tax-incentive program encourages developers to include affordable housing in market-rate developments. Plaintiffs Chanel Moody, Ayanda Carmichael, and Ronnie Clark were selected by lottery for affordable rental units in 15 Hudson Yards, a mixed-use building developed and operated by The Related Companies, L.P. and ERY South Residential Tower LLC.

Plaintiffs alleged that affordable-housing tenants were separated from luxury condominium owners, had to use a separate entrance sometimes called a “poor door,” and lacked access to certain amenities available to condominium owners, including a swimming pool, playroom, and fitness center. They also alleged differences in floor location, elevators, lobby size, and in-unit laundry. After learning about these differences, each plaintiff decided not to rent an apartment in the building.

Plaintiffs asserted disparate-treatment and disparate-impact claims under the Fair Housing Act, a federal law prohibiting certain housing discrimination based on race, color, and national origin. They also asserted claims under New York State and New York City law. The defendants moved to dismiss the amended complaint for failure to state a legally sufficient claim.

Fair Housing Act claims

The court dismissed both federal theories under Rule 12(b)(6), the procedural rule allowing dismissal when a complaint does not plausibly state a claim for relief.

For disparate treatment, plaintiffs had to allege that they were treated differently from similarly situated people because of race, color, or national origin. The court held that luxury condominium owners were not similarly situated to affordable-housing tenants. The complaint therefore did not provide a proper comparison from which racial discrimination could be inferred. The court also stated that plaintiffs had not alleged facts supporting an inference of discriminatory intent, although it said the lack of a proper comparator was independently enough to defeat the claim.

For disparate impact, plaintiffs had to allege that a facially neutral policy caused a significant and disproportionate adverse effect on a protected group and that the policy was directly connected to that effect. The court held that the complaint’s allegations that the policies disproportionately affected Black and Hispanic people were conclusory. Plaintiffs did not allege facts comparing Black and Hispanic affordable-housing residents with non-Black and non-Hispanic affordable-housing residents, or facts showing that the building’s design actually segregated racial groups. They also did not allege facts showing that non-Black and non-Hispanic applicants accepted the apartments at higher rates or that Black and Hispanic applicants rejected them at higher rates.

The court emphasized that the Fair Housing Act does not prohibit differences based only on economic status, even when economic status overlaps substantially with race. Plaintiffs therefore needed to allege racial harm beyond the effects of income differences, which the court found they had not done.

State and local claims and disposition

After dismissing the federal claims, the court declined to exercise supplemental jurisdiction, meaning its authority to hear related state-law claims, over the New York State and New York City claims. The court granted defendants’ motion to dismiss and dismissed the case. It directed the Clerk of Court to terminate open motions and close the case.

Judge

Judge Valerie Caproni issued the memorandum opinion and order on August 10, 2022.