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Media Alerts - United States v. Westchester County, New York - Second Circuit
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April 6, 2013
  United States v. Westchester County, New York - Second Circuit
Headline: Second Circuit Finds Westchester County Violated Consent Decree Stipulating Duty to Promote Source-of-Income Legislation

Area of Law: False Claims Act; Housing and Urban Development

Issue(s) Presented: Whether Westchester County violated the terms of a consent decree entered with the United States to resolve qui tam action initially brought by relator, Anti-Discrimination Center of New York, Inc., and whether the district court had jurisdiction to review the decision of the reviewing magistrate judge under the consent decree.

Brief Summary: The Anti-Discrimination Center of New York brought an action as a relator and the United States intervened in a suit against Westchester County ("the County") in the United States District Court for the Southern District of New York, alleging that the County presented false claims to the United States Department of Housing and Urban Development ("HUD") in order to obtain federal grants for fair housing. Following the parties' entry to a consent decree resolving the claims, a Monitor appointed to oversee the County's compliance found that the County was not in compliance with the decree's requirement to promote the ban of source-of-income discrimination in housing. The County sought review of the Monitor's findings from a Magistrate Judge for the Southern District of New York. The Magistrate Judge found that the County was in compliance with the consent decree and the United States filed an objection in the United States District Court for the Southern District of New York. The District Court found that the County had violated the terms of duty of the consent decree. The Second Circuit held that the District Court did have jurisdiction to review the Magistrate Judge's opinion and affirmed the District Court's finding that the County violated terms of the consent decree.

To read the full opinion, please go to: http://www.ca2.uscourts.gov/de...bcbbd599d82/2/hilite/

Extended Summary:
The Anti-Discrimination Center of New York, Inc. ("ADC") brought a qui tam action against Westchester County ("the County") relating to millions of dollars in funds that the County obtained from 2000 to 2006 that were to be used to "affirmatively further fair housing" under Housing and Urban Development ("HUD") regulations. The ADC charged under the False Claims Act that the County's claims for the funds were falsified and that the County had falsely certified to HUD its compliance with grant requirements including that it consider the existence and impact of racial discrimination. The United States intervened and presented the Federal District Court for the Southern District of New York with a consent decree for all parties.

The consent decree obliged the County to pay the United States $30 million, of which $21.6 million would be credited to the County's HUD account to fund fair housing, and to pay $2.5 million to the ADC as relator. It also contained a clause requiring the County to "promote, through the County Executive, legislation currently before the Board of Legislators to ban 'source-of-income' discrimination in housing." Source-of-income legislation bans housing discrimination stemming from a person's source of income, for example, income in the form of Social Security benefits or state or federal public assistance. Following its commitment to the consent decree, the County and its representatives sent letters to advocacy organizations and the Board of Legislators encouraging the enactment and implementation of the source-of-income legislation. Approximately one year after these actions, however, a newly elected County Executive vetoed the source-of-income legislation.
Before the veto, the district court had appointed a Monitor to review the County's actions and compliance with the consent decree. The Monitor found that the County was in violation of the consent decree in that the County no longer promoted the source-of-income legislation in furtherance of fair housing. The County challenged the Monitor's determination and sought review from the Magistrate Judge. The Magistrate Judge sustained the County's objection and concluded that the County did not violate its duty to promote source-of-income legislation. The United States filed an objection with the district court seeking review of the Magistrate's opinion regarding the source-of-income violation. The district court found that, under the terms of the consent decree, it did have jurisdiction to review the Magistrate Judge's opinion and that the County did violate its duty to promote the source-of-income legislation.

The County appealed, arguing that the consent decree authorized the Magistrate Judge to make binding decisions and that the district court did not have jurisdiction to review the Magistrate Judge's decision. Reviewing the consent decree de novo, the Second Circuit determined that the decree that the decree would clearly invoke federal rules of civil procedure. Specifically, the Court found that Federal Rule of Civil Procedure 72(b)(3) explicitly allows a district court to review a magistrate's decision. The Second Circuit further found that the County did violate its duty to "promote, through the County Executive, legislation currently before the Board of Legislators to ban 'source-of-income' legislation." The Second Circuit first considered the meaning of the phrase "to promote" and found that the County did not take action or took action to detract from the furtherance of the goal to ban source-of-income legislation. The Court then found that the term "currently" in the consent decree stipulation did not limit the time for promoting the legislation. Rather, the term referred only to the legislation pending before the Board when the parties agreed to the consent decree and was not temporally limited to the legislative session. Finally, the Court found that the County breached its duty because it took only two actions to promote the legislation. The County acted only by sending a single letter to the Board of Supervisors and five identical letters to community organizations thanking them for their advocacy efforts, and then vetoing the source-of-income legislation passed by the board. The Court found that the County Executive's action to veto the legislation was "wholly inconsistent" with the duty to promote.

The Second Circuit was not persuaded by the County's argument that the County Executive and members of the Board are subject to term limits and thus do not bind their successors to consent decrees unpersuasive. The Court reasoned that consent decrees are binding on elected officials and that a local government would not be relieved of a consent decree agreed upon by a previous administration simply because new officials take office.

To read the full opinion, please go to: http://www.ca2.uscourts.gov/de...bcbbd599d82/2/hilite/

Panel: Circuit Judges Pooler, Hall, and Chin.

Argument (if known): 12/12/2012

Date of Issued Opinion: 04/05/2013
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Docket Number: 12-2047-cv

Decided: Affirmed

Case Alert Author: Sarah Wegmueller

Counsel : ROBERT F. MEEHAN, Westchester County Attorney (Linda M. Trentacoste, Associate County Attorney, Adam Rodriguez, Senior Assistant County Attorney, Justin R. Adin, Assistant County Attorney, on the brief), White Plains, NY, for Defendant- Appellant; DAVID J. KENNEDY, Assistant United States Attorney, Southern District of New York (Preet Bharara, United States Attorney, Sarah S. Normand, Benjamin H. Torrance, Assistant United States Attorneys, on the brief), New York, NY, for Plaintiff-Appellee.
Martin Sander Kaufman, Atlantic Legal Foundation, Larchmont, NY, for Amicus Curiae Building & Realty Institute of Westchester County, in support of Defendant-Appellant.

Author of Opinion: Judge Pooler.

Supervisor: Professor Elyse Diamond Moskowitz

    Posted By: Elyse Diamond @ 04/06/2013 12:13 PM     2nd Circuit  

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