No. 20-_______

IN THE UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________________
JOHN GRAHAM,

Petitioner

v.

THE SECRETARY, UNITED STATES DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT, ON BEHALF OF SHON’TONETTE LEARY AND
KERRY STEVENSON,

Respondent
___________________
THE SECRETARY’S CROSS-APPLICATION FOR
ENFORCEMENT OF THE FINAL AGENCY ORDER
___________________
ERIC S. DREIBAND
Assistant Attorney General

ALEXANDER V. MAUGERI
Deputy Assistant Attorney General

TOVAH R. CALDERON
KATHERINE E. LAMM
Attorneys
Department of Justice
Civil Rights Division
Appellate Section
Ben Franklin Stn., P.O. Box 14403
Washington, D.C. 20044-4403
(202) 616-2810

 

IN THE UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________________
No. 20-______

JOHN GRAHAM,

Petitioner

v.

THE SECRETARY, UNITED STATES DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT, ON BEHALF OF SHON’TONETTE LEARY AND
KERRY STEVENSON,

Respondent
___________________
THE SECRETARY’S CROSS-APPLICATION FOR
ENFORCEMENT OF THE FINAL AGENCY ORDER
___________________

Respondent, the Secretary of the United States Department of Housing and
Urban Development (HUD), pursuant to Section 812(j) of the Fair Housing Act, 42
U.S.C. 3612(j), and Rule 15(b)(1) of the Federal Rules of Appellate Procedure,
files in response to the Petition for Review this Cross-Application for Enforcement
of the Final Agency Order entered on February 5, 2020.¹ The final agency order,
which is attached to this cross-application, requires petitioner John Graham to pay
$60,000 to Shon’tonette Leary, $10,000 to her son Kerry Stevenson, and $19,787

__________

¹ The Petition for Review, filed on March 6, 2020, is docketed in this Court
as No. 20-1511.

 

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in civil penalties for engaging in what the Secretary determined to be “highly
egregious” discriminatory conduct in the process of renting an apartment. See
Order on Secretarial Review (Feb. 5, 2020) (Secretarial Order), Att. A, at 7, 10.
As of the date of this cross-application, Graham has not paid the awarded damages
or civil penalty.

This Court has jurisdiction over this cross-application under 42 U.S.C.
3612(j)(1), which provides that the Secretary may petition for enforcement of an
order of an administrative law judge in “any United States court of appeals for the
circuit in which the discriminatory housing practice is alleged to have occurred or
in which any respondent resides or transacts business.” The discriminatory
housing practice in this case took place in this circuit, in Paramus, New Jersey.
Secretarial Order 2. Graham owned the subject property in Paramus during the
time in question. Secretarial Order 2.

Federal Rule of Appellate Procedure 15(b)(1) also provides that “[i]f a
petition is filed to review an agency order that the court may enforce, a party
opposing the petition may file a cross-application for enforcement.”

PROCEEDINGS

On October 17, 2018, HUD filed a Charge of Discrimination on behalf of
Shon’tonette Leary against John Graham, alleging violations of the Fair Housing
Act. Secretarial Order 2. Leary’s son, Kerry Stevenson, was later added as a

 

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second complainant. Secretarial Order 2. Specifically, the Charge alleged that
Graham discriminated against Leary and Stevenson by: (1) refusing to negotiate
for the rental of a dwelling on the basis of race or color, in violation of 42 U.S.C.
3604(a); (2) making discriminatory statements to Leary with respect to the rental
of the dwelling, in violation of 42 U.S.C. 3604(c); (3) falsely representing to Leary
because of her race or color that the dwelling was unavailable, in violation of 42
U.S.C. 3604(d); and (4) coercing, intimidating, threatening, or interfering with
Leary in the exercise or enjoyment of her rights under the Act, in violation of 42
U.S.C. 3617. Secretarial Order 2.

On January 6, 2020, an administrative law judge (ALJ) issued an Initial
Decision and Order finding that Graham violated 42 U.S.C. 3604(c) by making
discriminatory statements to Leary with respect to the rental of a dwelling, and that
he violated 42 U.S.C. 3617 by engaging in conduct intended to deter Leary from
enjoying her rights under the Act. Secretarial Order 2. At the same time, the ALJ
held that HUD failed to prove by a preponderance of the evidence that Graham had
the requisite discriminatory intent to commit violations of 42 U.S.C. 3604(a) or
(d). Secretarial Order 2. As to these claims, the ALJ also held that the “Mrs.
Murphy” exemption of 42 U.S.C. 3603(b)(2)—which applies when the owner of a
unit for rent “actually maintains and occupies” one of the other living quarters
within a dwelling that houses no more than four families—excused Graham from

 

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liability. Secretarial Order 2. The ALJ ordered Graham to pay $15,000 to Leary
and $6000 to Stevenson in emotional distress damages, as well as a $5000 civil
penalty. Secretarial Order 3.

HUD sought review of the Initial Decision under 24 C.F.R. 180.675.²
Secretarial Order 3. On February 5, 2020, the Secretary issued an Order on
Secretarial Review. Secretarial Order 1-12. In light of the application of the “Mrs.
Murphy” exception, the Secretary struck the portions of the Initial Decision
discussing HUD’s failure to prove by a preponderance of the evidence violations
of 42 U.S.C. 3604(a) and (d). Secretarial Order 3-4. Nevertheless, the Secretary
also concluded that the ALJ erred in finding that text messages that Graham sent to
Leary—which included language such as “nigger free zone,” “white power,” and
“K k k”—were not direct evidence of discriminatory intent under Sections 3604(a)
and (d). Secretarial Order 4.

The Secretarial Order also increased the damages awards to $60,000 for
Leary and to $10,000 for Stevenson, finding that the ALJ erred by: (1) improperly
discounting the damages amounts due to the lack of expert medical evidence; (2)

_________

² Graham submitted a statement in opposition, construed in part as a “Cross-
Petition,” which requested as relief the elimination of any damages to Stevenson.
Secretarial Order 9. The Secretarial Order dismissed the “Cross-Petition” as
untimely because Graham submitted it more than 15 days after the issuance of the
Initial Decision. Secretarial Order 9; see also 24 C.F.R. 180.675(d) (providing 15
days after the issuance of an initial decision for a party to seek secretarial review).

 

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failing to account for the egregiousness of Graham’s conduct; and (3) deviating
from precedent on emotional distress damages. Secretarial Order 5-9. Finally, the
Secretarial Order increased the civil penalty to the maximum amount of $19,787 in
light of the egregious nature and circumstances of Graham’s violation and the goal
of deterrence—two of the factors that an ALJ must consider under 24 C.F.R.
180.671(c). Secretarial Order 9-11. The Secretary also noted that Graham
presented no evidence or argument regarding his ability to pay a civil penalty.
Secretarial Order 9.

On March 6, 2020, Graham petitioned this Court for review of the
Secretarial Order.

FACTS UPON WHICH VENUE IS BASED

John Graham is the owner and landlord of the subject property, a residence
located at 18 South Farview Avenue in Paramus, New Jersey. Initial Decision and
Order (Jan. 6, 2020) (Initial Decision), Att. B, at 4. The residence has two rental
units as well as a basement unit that is not legally rentable. Initial Decision 4.
Graham posted an online advertisement offering one of the units for rent in
February 2017. Initial Decision 4. At that time, Graham was living temporarily in
the basement unit during divorce proceedings with his then-wife, who still lived in
their shared residence. Initial Decision 4-5.

 

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Shon’tonette Leary, who is African-American, and her son, Kerry
Stevenson, lived in an apartment in Hackensack, New Jersey, that had insufficient
heat and sometimes lost power due to the use of space heaters. Initial Decision 5.
Leary saw Graham’s advertisement and called him on Thursday, February 2, 2017.
Initial Decision 5. Leary and Graham had a brief conversation, during which
Graham inquired about Leary’s employment and who lived with her. Initial
Decision 5. Graham asked Leary to come see the apartment immediately, but she
said that she could not come until Saturday. Initial Decision 5. Then, the line went
dead. Initial Decision 5. Leary unsuccessfully tried to call Graham back. Initial
Decision 5. Leary then texted Graham. Initial Decision 5. They had the following
exchange via text message:

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Initial Decision 5 (alteration omitted). Within a few days, Graham agreed to rent
the apartment to another woman (who Graham claimed is a member of a racial
minority group), and who later moved in with her mother and son. Initial Decision
6, 14.

Graham’s messages made Leary angry, upset, and confused, and his
reference to the “KKK” also made her fearful. Initial Decision 21. The exchange
was on her mind constantly and left her depressed, embarrassed, and scared. Initial
Decision 21. She refrained from continuing to search for a new apartment because
she did not want to encounter such discrimination again, and she did not move
from her Hackensack apartment until more than a year later. Initial Decision 7, 21.
Several months later, in October 2017, Leary had a mental health episode that
resulted in her involuntary commitment to a medical facility for three days. Initial
Decision 21. During that period of commitment, Leary revealed to medical
providers that the incident with Graham contributed to her breakdown. Initial
Decision 21. After her discharge, Leary saw a psychiatrist, who prescribed her
medications to assist her with sleeplessness and anxiety, and also attended therapy
sessions with a licensed clinical social worker. Initial Decision 21. Stevenson also
testified that his relationship with his mother changed after the incident with
Graham, and that it adversely impacted his emotional health as well. Initial
Decision 21.

 

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RELIEF REQUESTED

The Court should enforce the February 5, 2020, final agency order.

Respectfully submitted,

ERIC S. DREIBAND
Assistant Attorney General

ALEXANDER V. MAUGERI
Deputy Assistant Attorney General

s/ Katherine E. Lamm
TOVAH R. CALDERON
KATHERINE E. LAMM
Attorneys
Department of Justice
Civil Rights Division
Appellate Section
Ben Franklin Stn., P.O. Box 14403
Washington, D.C. 20044-4403
(202) 616-2810

 

CERTIFICATE OF COMPLIANCE

I certify that the attached THE SECRETARY’S CROSS-APPLICATION
FOR ENFORCEMENT OF THE FINAL AGENCY ORDER:

(1) complies with the typeface requirements of Federal Rule of Appellate
Procedure 32(a)(5) and the type-style requirements of Federal Rule of Appellate
Procedure 32(a)(6) because it has been prepared in a proportionally spaced
typeface using Word 2019, in 14-point Times New Roman font; and

(2) complies with the requirements of Local Rule 31.1(c) that the text of the
electronic cross-application is identical to the text in any paper copies of this crossapplication
that are submitted to the Court, and that the electronic version of this
cross-application, prepared for submission via ECF, has been scanned with the
most recent version of Windows Defender (Version 1.2.3412.0) and is virus-free
according to that program.

 

s/ Katherine E. Lamm
KATHERINE E. LAMM
Attorney

Date: May 21, 2020

 

CERTIFICATE OF SERVICE

I certify that on May 21, 2020, I filed by email the foregoing THE
SECRETARY’S CROSS-APPLICATION FOR ENFORCEMENT OF THE
FINAL AGENCY ORDER with the Clerk of the Court for the United States Court
of Appeals for the Third Circuit, in accordance with this Court’s amended General
Order dated April 13, 2020.

Pursuant to Federal Rules of Appellate Procedure 3(d) and 15(c), below is a
list of individuals upon whom the circuit clerk may serve the Cross-Application:

John Graham
148 Washington Avenue
River Edge, NJ 07661

Robert J. Stack, Esq.
11 Kiel Avenue, Suite C-3
Kinnelon, NJ 07405

 

s/ Katherine E. Lamm
KATHERINE E. LAMM
Attorney

 

[Attachments omitted]