HUD v. Castillo Condominium , 821 F.3d 92 ( 2016 )

United States Court of Appeals
For the First Circuit
No. 14-2139
CASTILLO CONDOMINIUM ASSOCIATION,
Petitioner,
v.
UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT,
OFFICE OF THE SECRETARY, ON BEHALF OF CARLO GIMÉNEZ BIANCO,
Respondent.
____________________
PETITION FOR REVIEW OF A FINAL ORDER OF THE
SECRETARY OF THE UNITED STATES DEPARTMENT OF
HOUSING AND URBAN DEVELOPMENT
No. 15-1223
UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT,
OFFICE OF THE SECRETARY, ON BEHALF OF CARLO GIMÉNEZ BIANCO,
Petitioner,
v.
CASTILLO CONDOMINIUM ASSOCIATION,
Respondent.
____________________
CROSS-PETITION FOR ENFORCEMENT OF A FINAL ORDER OF THE
SECRETARY OF THE UNITED STATES DEPARTMENT OF
HOUSING AND URBAN DEVELOPMENT
Before
Howard, Chief Judge,
Torruella and Selya, Circuit Judges.
Sigfredo A. Irizarry-Semidei for Castillo Condominium
Association.
Christopher Chen-Hsin Wang, Attorney, United States
Department of Justice, Civil Rights Division, with whom Vanita
Gupta, Principal Deputy Assistant Attorney General, and Sharon M.
McGowan, Attorney, were on brief, for Secretary of the United
States Department of Housing and Urban Development.
May 2, 2016
SELYA, Circuit Judge. This case involves a man, his
dog, and a condominium association's "no pets" rule. Like so many
cases, it turns chiefly on the standard of review. After
delineating that standard (a matter of first impression in this
circuit), inspecting the record through that lens, and applying
the applicable law, we deny the condominium association's petition
for judicial review of a final order of the Secretary of the United
States Department of Housing and Urban Development (HUD). We
simultaneously grant the Secretary's cross-petition for
enforcement of his order.
I. THE STATUTORY SCHEME
This case rests on a statutory foundation: the Fair
Housing Act (the Act), 42 U.S.C. §§ 3601-3619. As relevant here,
the Act proscribes discrimination in housing and housing-related
matters based on a person's disability.1 See id. § 3604(f). Under
the Act, a cognizable disability is "(1) a physical or mental
impairment which substantially limits one or more of [a] person's
major life activities, (2) a record of having such an impairment,
or (3) being regarded as having such an impairment." Id.
§ 3602(h).
1Although the Act uses the term "[h]andicap" rather than
"disability," see 42 U.S.C. § 3602(h), we follow the parties' lead
and employ the term "disability" throughout.
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Pertinently, the Act outlaws discrimination in
connection with the terms, conditions, or privileges of housing.
See id. § 3604(f)(2). Discrimination includes, among other things,
the "refusal to make reasonable accommodations in rules, policies,
practices, or services, when such accommodations may be necessary
to afford such person equal opportunity to use and enjoy a
dwelling." Id. § 3604(f)(3)(B).
II. PRIOR PROCEEDINGS
In 2010, the Castillo Condominium Association (the
Association) learned that Carlo Giménez Bianco (Giménez), a
condominium resident, was keeping a dog on the premises and warned
him by letter that it would fine him unless he removed the dog
from his unit. In response, Giménez, an individual who suffers
from anxiety and depression, promptly advised the board of
directors, in writing, that he planned to keep his emotional
support dog in his condominium unit and that he was entitled to do
so under federal law. Although Giménez accompanied this letter
with a note from his treating psychiatrist, the Association did
not relax its "no pets" bylaw. As a result of the conflict (as
the Secretary found), Giménez was eventually forced to vacate and
sell the unit that had been his home for some 15 years.
Giménez lodged a complaint of disability discrimination
with HUD. Following an investigation and an agency determination
of reasonable cause, HUD filed a charge of discrimination against
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the Association.2 See id. § 3610(a)(1)(B)(iv), (g)(1)-(2). The
charge alleged that the Association had unlawfully discriminated
against Giménez, a disabled person, by denying him a reasonable
accommodation and thus making housing unavailable to him. See id.
§ 3604(f)(1), (f)(2), and (f)(3)(B).
A four-day evidentiary hearing ensued before an
administrative law judge (ALJ). Giménez, his treating
psychiatrist (Dr. Pedro Fernández), and his primary-care physician
(Dr. Roberto Unda Gómez) all testified that Giménez suffered from
a disability — an anxiety disorder and chronic depression — and
that his symptoms were ameliorated by the presence of an emotional
support dog. The Association presented both lay and expert
evidence in opposition. On July 17, 2014, the ALJ issued a
recommended decision concluding that the Association had not
violated the Act because Giménez had failed to prove by a
preponderance of the evidence that he had a mental impairment
warranting a reasonable accommodation in the form of a companion
animal.
Under the regulatory regime, the ALJ's recommended
decision could be appealed to the Secretary. See id. § 3612(h).
2 The charge originally named Carlos Toro Vizcarrondo, the
president of the Association's board of directors, as a co-
respondent. Because the Association is the only party against
which relief has been ordered, we treat the matter as if the
Association has been the sole respondent all along.
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That happened here. On further review, the Secretary set aside
the ALJ's recommended decision. The Secretary explained that the
ALJ had erred both in discounting Giménez's testimony about his
lengthy history of anxiety and depression and in declining to
credit the testimony of Dr. Fernández and Dr. Unda. In the end,
the Secretary found that Giménez suffered from a cognizable
disability, that the Association knew or should have known that
Giménez had such a disability, that Giménez had informed the
Association of his need for a reasonable accommodation in the form
of an emotional support dog, that the Association had improvidently
denied the accommodation, and that the Association had failed to
engage in the required interactive process.3
Having found the Association liable for discrimination,
the Secretary remanded the case to the ALJ for an initial
determination of damages and civil penalties. See id.
§ 3612(g)(3); 24 C.F.R. § 180.675(a), (b)(3). In due course, the
ALJ issued another recommended decision; this decision proposed to
award Giménez $3,000 in emotional distress damages and to assess
a $2,000 civil penalty against the Association. The ALJ noted,
3
The HUD guidelines contemplate that parties will engage in
an interactive process to discuss the need for a requested
accommodation and possible alternatives when the housing provider
refuses to grant that accommodation on the ground that it is not
reasonable. See, e.g., Astralis Condo. Ass'n v. Sec'y of HUD, 620
F.3d 62, 68 & n.3 (1st Cir. 2010); Jankowski Lee & Assocs. v.
Cisneros, 91 F.3d 891, 895 (7th Cir. 1996).
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inter alia, that since the Association's culpable acts and
omissions apparently "were fueled by ignorance of the law," those
acts and omissions did not amount to "willful, malicious conduct
that demands a maximum penalty." Additionally, the ALJ recommended
ancillary relief, including fair housing training for the
Association's officers and the implementation by the Association
of a reasonable accommodation policy.
This second recommended decision met the same fate as
the first: it inspired another petition for Secretarial review.
The Secretary concluded that the ALJ had undervalued the emotional
distress that Giménez had experienced and, therefore, increased
the proposed award of emotional distress damages to $20,000.
Similarly, the Secretary concluded that the ALJ had underestimated
the Association's blameworthiness for its "egregious and
intentional" conduct. Unlike the ALJ, the Secretary counted the
Association's ignorance of the law as an aggravating factor, not
a mitigating factor, and upped the civil penalty to $16,000 (the
maximum available penalty amount). Finally, the Secretary
reworked and strengthened the ALJ's proposals for ancillary
relief.
Displeased by virtually every aspect of the Secretary's
final order, the Association filed a timely petition for judicial
review. See 42 U.S.C. § 3612(i)(1). The Secretary countered by
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cross-petitioning for enforcement of his order. We consolidated
these petitions for briefing and oral argument.
III. STANDARD OF REVIEW
Under the Administrative Procedure Act (APA), a
reviewing court may set aside a final agency order if it is
"arbitrary, capricious, an abuse of discretion, or otherwise not
in accordance with law." 5 U.S.C. § 706(2)(A). In line with this
statutory imperative, a reviewing court is bound by an agency's
factual findings "as long as they are supported by substantial
evidence in the record as a whole." Astralis Condo. Ass'n v. Sec'y
of HUD, 620 F.3d 62, 66 (1st Cir. 2010).
"Substantial evidence 'is more than a mere scintilla.
It means such relevant evidence as a reasonable mind might accept
as adequate to support a conclusion.'" Id. (quoting Universal
Camera Corp. v. NLRB, 340 U.S. 474, 477 (1951)). Of course,
substantial evidence does not mean either uncontradicted evidence
or overwhelming evidence. Rather, this benchmark may be met "even
if the record arguably could justify a different conclusion."
Rodriguez Pagan v. Sec'y of HHS, 819 F.2d 1, 3 (1st Cir. 1987)
(per curiam); see also Felisky v. Bowen, 35 F.3d 1027, 1035 (6th
Cir. 1994) ("The Secretary's findings are not subject to reversal
merely because substantial evidence exists in the record to support
a different conclusion.").
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This familiar standard has a twist, however, in cases in
which the hearing officer and the ultimate decisionmaker have
differing views of the material facts. This case is emblematic of
such a situation: though the ALJ was the initial decisionmaker and
the one who actually saw and heard the witnesses, the Secretary is
the ultimate decisionmaker. As such, the Secretary is empowered
to "affirm, modify or set aside, in whole or in part, the initial
decision, or remand the initial decision for further proceedings."
24 C.F.R. § 180.675(a); see 42 U.S.C. § 3612(h), 24 C.F.R.
§ 180.675(b). But common sense suggests that, in such
circumstances, some weight should be given to the ALJ's factual
findings.
Although this court has not had occasion to speak to the
ramifications of such a paradigm, the case law elsewhere indicates
that a more granular level of scrutiny should apply. We agree
that such a nuanced approach is desirable — and we adopt it.
We hold that where, as here, the Secretary rejects the
factual findings of an ALJ, a reviewing court must first make
certain that the Secretary has adequately articulated his reasons
for overturning the ALJ's findings. See Aylett v. Sec'y of HUD,
54 F.3d 1560, 1561, 1567 (10th Cir. 1995). The court must then
proceed to ask whether those articulated reasons derive adequate
support from the administrative record. See id. at 1561. Although
this heightened level of scrutiny does not alter the substantial
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evidence standard of review in any fundamental respect, it requires
us to apply that standard with special rigor, particularly with
regard to credibility determinations. See Garcia v. Sec'y of
Labor, 10 F.3d 276, 280 (5th Cir. 1993); see also Earle Indus.,
Inc. v. NLRB, 75 F.3d 400, 404 (8th Cir. 1996) (noting that a
reviewing court "examine[s] the [Secretary's] findings more
critically" when the Secretary and ALJ disagree). It is with this
nuanced standard of review in mind that we turn to the
Association's asseverational array.
IV. DISCUSSION
We divide our analysis into three segments. First, we
confront the Association's claims that the Secretary's final order
is not supported by substantial evidence in the record. Second,
we explore the Association's assertion that the charging party's
complaint is barred by res judicata. Third, we address the
Association's plaint that the Secretary's final order is tainted
by procedural error.4
A. The Merits.
This case is fact-intensive, and it would serve no useful
purpose for us to chronicle every piece of evidence. For present
purposes, it suffices to say that we have examined the record with
4
We note that the Association has advanced a host of other
contentions (including contentions as to the amount of damages and
the size of the penalty imposed). Having examined all of these
contentions, we reject them out of hand.
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care and have given especially exacting scrutiny to the issue of
disability (the principal issue on which the Secretary and the ALJ
diverged).
The Secretary's decision ultimately rests on his
determination that the Association violated the Act. Though the
proof is conflicted at several points, we conclude that substantial
evidence supports the Secretary's finding that the Association's
refusal to allow Giménez to keep an emotional support dog in his
condominium unit as a reasonable accommodation for his disability
was unlawful. That refusal made Giménez's home unavailable to him
as a practical matter and, thus, violated the Act. See 42 U.S.C.
§ 3604(f)(1). So, too, we conclude that substantial evidence
supports the Secretary's finding that the Association's failure to
provide a reasonable accommodation constituted discrimination
against Giménez in the terms and conditions of housing due to his
disability and, thus, violated yet another provision of the Act.
See id. § 3604(f)(2). We explain briefly.
To make out a prima facie case for failure to provide a
reasonable accommodation, the charging party (here, Giménez) had
to show that he was a person with a disability, that the
Association knew or should have known that he was a person with a
disability, that his emotional support dog was reasonable and
necessary to afford him an equal opportunity to use and enjoy his
dwelling, and that the Association nonetheless refused to provide
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a reasonable accommodation. See Astralis Condo. Ass'n, 620 F.3d
at 67. Here, ample evidence demonstrates these four key showings.
First, Giménez's own testimony, substantiated by the testimony of
Dr. Fernández and Dr. Unda, warranted a finding that Giménez, who
suffered from anxiety and chronic depression, was a person with a
disability within the purview of the Act. Second, the evidence is
virtually incontrovertible that the Association knew (or at least
had notice) that Giménez suffered from a disability. Third,
substantial evidence supports a finding that Giménez told the
Association that he would need a reasonable accommodation (an
exception to the "no pets" bylaw so that he could keep a dog in
his condominium unit) in order to allow him an equal opportunity
to use and enjoy his abode. Fourth, the record makes manifest
that the Association informed Giménez that he could not keep his
dog in his unit. No more was exigible: based on these supportable
findings, the Secretary acted well within the scope of his
authority both in concluding that the Association's refusal to
grant an accommodation made Giménez's home unavailable to him
(thus, compelling him to move out in order to keep his emotional
support dog) and in concluding that these actions constituted
unlawful discrimination.5
5 The Association makes much of the undisputed fact that, when
forced to leave the condominium, Giménez sold his unit at a
considerable profit. But this circumstance does not excuse the
Association's failure to comply with the Act.
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To be sure, the Secretary reached these conclusions only
after rejecting the ALJ's central factual finding: that Giménez
did not suffer from a disability. But the Secretary did not reject
that finding lightly. To the contrary, he gave specific and
plausible reasons for declining to follow the ALJ — reasons that
find adequate purchase in the record. See Aylett, 54 F.3d at 1561,
1567.
In setting aside the ALJ's finding that Giménez did not
suffer from a disability, the Secretary noted that the ALJ had
discounted the testimony of Giménez, his treating psychiatrist
(Dr. Fernández), and his primary-care physician (Dr. Unda). The
Secretary concluded that the ALJ lacked any sound basis for the
wholesale abrogation of this testimony.
To begin, the ALJ discounted Giménez's own testimony,
apparently because he concluded that an individual cannot supply
key testimony verifying his own disability status. Yet, our
research suggests the opposite. See U.S. Dep't of Justice & U.S.
Dep't of Hous. & Urban Dev., Reasonable Accommodations Under the
Fair Housing Act, at 13 (May 17, 2004);6 see also Olsen v. Stark
6 We agree with the Eleventh Circuit that even "[t]hough the
Joint Statement is a policy statement, rather than an authoritative
interpretation of FHA and therefore does 'not warrant Chevron-
style deference,' it is nonetheless 'entitled to respect' to the
extent it has the 'power to persuade.'" Bhogaita v. Altamonte
Heights Condo. Ass'n, Inc., 765 F.3d 1277, 1286 n.3 (11th Cir.
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Homes, Inc., 759 F.3d 140, 148, 157 (2d Cir. 2014) (explaining
that individual's testimony about his depression was competent to
put his disability status in issue).
Next, the Secretary disagreed with the ALJ's assessment
of Dr. Fernández's testimony. Dr. Fernández is a practicing
psychiatrist who had treated Giménez for years and who strongly
confirmed the existence of the claimed disability. The ALJ seems
to have given no weight to the doctor's testimony for two primary
reasons: first, the ALJ cited the personal friendship between
Giménez and Dr. Fernández; and second, the ALJ was skeptical of
the fact that Dr. Fernández had not charged Giménez for treatment.
But the Secretary gave cogent reasons for disagreeing with the
ALJ's assessment. As for the friendship between Giménez and Dr.
Fernández, the Secretary explained that HUD and DOJ have made
pellucid that verification of a person's disability can come from
any reliable third party who is in a position to know about the
individual's disability — a category into which Dr. Fernández
surely fit. See U.S. Dep't of Justice & U.S. Dep't of Hous. &
Urban Dev., Reasonable Accommodations Under the Fair Housing Act,
at 13-14 (May 17, 2004). The Secretary also explained that
ignoring a doctor's testimony simply because he treated a patient
pro bono would lead to the nonsensical conclusion that a physician
2014) (internal citation omitted) (quoting Christensen v. Harris
County, 529 U.S. 576, 587 (2000)).
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who does not charge for his services could never testify. Carried
to its logical extreme, the ALJ's view might even mean that a
person who receives all of his medical treatment for free could
never establish a disability. In the end, it is the overall
quality of the proffered testimony that determines its probative
value. Recognizing as much, the Secretary warrantably found that
Dr. Fernández's testimony was probative of Giménez's disability.
Finally, the Secretary credited the testimony of Dr.
Unda — a witness whom the ALJ had disregarded altogether. Dr.
Unda's testimony confirmed both Giménez's autobiographical account
of his struggles with anxiety and depression and Dr. Fernández's
diagnosis. That Dr. Unda is not himself a psychiatrist does not,
as the ALJ intimated, preclude reliance on his testimony about his
patient's mental state. See, e.g., Sprague v. Bowen, 812 F.2d
1226, 1231-32 (9th Cir. 1987); Alvarado v. Weinberger, 511 F.2d
1046, 1049 (1st Cir. 1975) (per curiam).
Based on his evaluation of the testimony, the Secretary
concluded that Giménez had what amounted to a lifelong history of
depression. Each of the physicians had treated Giménez for years,
and each doctor's opinion corroborated both Giménez's account of
his mental impairment and the other doctor's opinions. The
Secretary was well within his purview to credit this testimony
fully and to make the ultimate determination that Giménez was
disabled, that is, that Giménez suffered from a mental impairment
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that substantially limited one or more of his major life
activities. Even under the heightened scrutiny demanded by the
applicable standard of review, the Secretary's decision passes
muster because the record, viewed critically, clearly supports his
position.
To say more on this point would be supererogatory. We
hold both that the Secretary adequately articulated his reasons
for scrapping the ALJ's "no disability" finding and that his
conclusion that the Association had violated the Act is supported
by substantial evidence in the record as a whole.7
B. Res Judicata.
The Association argues that, regardless of the merits,
the charge against it ought to have been dismissed on the ground
of res judicata. Some additional background is helpful in order
to put this argument in perspective.
Prior to filing his complaint with HUD, Giménez
protested the "no pets" bylaw to the Puerto Rico Department of
Consumer Affairs (familiarly known by its Spanish acronym, DACO).
That protest went nowhere: DACO upheld the Association's right to
include a "no pets" provision in its bylaws and to enforce such a
7
In fashioning his final order, the Secretary also rejected
the ALJ's conclusions as to the appropriate size of the damages
award and the penalty amount. But these were judgment calls, well
within the Secretary's ken; and we find his revised awards to be
adequately supported by substantial evidence in the record.
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provision. The Association says that DACO's dismissal of the
plaintiff's complaint should be given preclusive effect. Both the
ALJ and the Secretary disagreed. So do we.
In Puerto Rico, the doctrine of res judicata is codified
by statute. Under that statute, "it is necessary that, between
the case decided by the sentence and that in which the same is
invoked, there be the most perfect identity between the things,
causes, and persons of the litigants, and their capacity as such."
P.R. Laws Ann. tit. 31, § 3343. This definition encompasses, inter
alia, the doctrine of claim preclusion. See Medina-Padilla v.
U.S. Aviation Underwriters, Inc., 815 F.3d 83, 86 (1st Cir. 2016);
R.G. Fin. Corp. v. Vergara-Nuñez, 446 F.3d 178, 183 (1st Cir.
2006).
"A party asserting claim preclusion under Puerto Rico
law must establish that: (i) there exists a prior judgment on the
merits that is 'final and unappealable'; (ii) the prior and current
actions share a perfect identity of both 'thing' and 'cause'; and
(iii) the prior and current actions share a perfect identity of
the parties and the capacities in which they acted." García-
Monagas v. De Arellano, 674 F.3d 45, 51 (1st Cir. 2012). The
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second of those elements is not satisfied here8 and, accordingly,
res judicata does not apply.
The Puerto Rico Condominium Act sets out an
administrative process, available to DACO, that is confined to the
promulgation of condominium rules and enforcement of those rules.
See P.R. Laws Ann. tit. 31, § 1293f. The Condominium Act does not
in any way address (or give DACO the power to address) housing
discrimination. Nor does any other part of DACO's organic statute
authorize the exercise of such authority. Consistent with this
limited grant of authority, DACO determined in this instance only
that the Association had adhered to proper drafting and voting
protocols in adopting the "no pets" bylaw and, therefore, the bylaw
was valid and binding on all owners. It follows inexorably that
the DACO proceeding and the HUD proceeding do not — and, indeed,
could not — share a perfect identity of both thing and cause.
Thus, the ALJ did not err in refusing to apply res judicata to
pretermit Giménez's HUD charge.
C. Motion in Limine.
The Association also challenges a pretrial ruling of the
ALJ (implicitly upheld by the Secretary). This ruling denied the
Association's motion to exclude the expert testimony and written
8 It is not necessary for us to consider whether the first and
third elements are satisfied, and we take no view of those
questions.
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report of Giménez's treating psychiatrist, Dr. Fernández. This
challenge is futile.
To begin, the Association has waived this challenge by
failing to develop it in this court. Before us, the Association
merely mentioned the argument in the most skeletal terms. This
constituted a waiver: it is a "settled appellate rule that issues
adverted to in a perfunctory manner, unaccompanied by some effort
at developed argumentation, are deemed waived." United States v.
Zannino, 895 F.2d 1, 17 (1st Cir. 1990).
Nor does the Association's bare reference to pages in
the appendix cure this omission. A party cannot force an appellate
court to rummage through papers filed below in order to ascertain
the structure and substance of that party's arguments. See
Giragosian v. Bettencourt, 614 F.3d 25, 30 (1st Cir. 2010) (deeming
impuissant party's attempt to rely on arguments made only in
district court filings).
In all events, the Association's claim has little force.
Dr. Fernández's expert testimony rests on a solid foundation: he
is a practicing psychiatrist who has treated Giménez since 1997.
Furthermore, his testimony is highly relevant: it goes directly to
the pivotal issues in the proceeding (Giménez's claimed disability
and his need for an emotional support dog). An agency has wide
discretion in determining what individuals are competent to
testify as experts in an administrative proceeding and what expert
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opinion testimony is admissible in such a proceeding. See SeaWorld
of Fla., LLC v. Perez, 748 F.3d 1202, 1214 (D.C. Cir. 2014); cf.
Diefenbach v. Sheridan Transp., 229 F.3d 27, 30 (1st Cir. 2000)
(discussing trial judge's broad discretionary power in determining
admissibility of expert testimony). The record in this case,
fairly read, offers no reason to think that this wide discretion
was somehow exceeded.
V. CONCLUSION
We need go no further.9 For the reasons elucidated
above, we deny the Association's petition for review and grant the
Secretary's cross-petition for enforcement of his order. Costs
shall be taxed in favor of the Secretary.
So Ordered.
9On November 12, 2014, HUD issued a press release touting the
Secretary's final order in this case. The Association calls this
press release to our attention, see Fed. R. App. 28(j), and
attaches sinister implications to it. But we think it unremarkable
that an agency may seek to deter future acts of discrimination by
publicizing its success in charging and penalizing past violators.
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