In This Issue

• PHAs Are Subject to Federal WARN Act
• Lead-Based Paint Claims Continue
• Employment Termination for Failure to Follow Directions
• Tenant Harassment of Other Tenants

PHAs Are Subject to Federal WARN Act

Lawrence F.
Feheley

The Worker Adjustment and Retraining Notification Act ("WARN") is a federal law that requires employers to provide sixty-day advance notice, under specific circumstances, to employees who will be adversely affected by a business closing or mass layoff. Given the idiosyncratic nature of PHAs under state laws, the question has arisen whether PHAs are employers subject to the WARN Act requirements.

The U.S. Court of Appeals for the Seventh Circuit recently considered this issue and ruled that a PHA is an "employer" under the WARN Act and therefore must comply with that law. Castro v. Chicago Housing Authority, 360 F.3d 721 (7th Cir. 2004). The appeals court noted that the WARN Act regulations include "quasi-public entities" as a covered employer. In this case, the facts that the PHA controlled its own daily operations and budget, and that it engaged in leasing, residential, and development activities similar to commercial businesses, led the court to conclude that the PHA was subject to the WARN Act.

In general terms, an employer that is subject to the WARN Act must provide sixty days advance written notice if: (a) a closing or shutdown at a single site of employment results in an employment loss of at least fifty employees; or, (b) a reduction in force or layoff at a single site of employment results in an employment loss of 50 or more employees (if they equal 33% of the employees at the site) or 500 employees (regardless of the overall number of employees at the site).

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Lead-Based Paint Claims Continue

In the latest of a series of claims concerning lead-based paint, a jury in Kentucky recently awarded $3.5 million in favor of a twelve-year old child against the Housing Authority of Lexington.

The child lived in a lead-free building. However, one of the adjacent buildings was an old, wooden three-story apartment building which had lead paint that flaked on to the ground. The claim was that the boy was contaminated by the lead in the soil where he played, and that the Housing Authority knew of the contamination but did not act to protect the child. When the boy developed mental retardation, the lead-based soil was blamed. The Housing Authority argued that the retardation was genetic, but the jury determined that it was caused by the lead exposure.

The jury awarded $500,000 to compensate for the child's impaired earning power, and $3,000,000 in punitive damages, to "send a message" to the Housing Authority.

[Source: Lawyers Weekly USA; August 4, 2003; 2003 LWUSA 526 (2003)].

Lead-based paint also was at the heart of a lawsuit in Pennsylvania. In this case, a class action suit was filed against the Philadelphia Housing Authority. The suit alleged that the Housing Authority did not comply with federal regulations designed to protect children living in subsidized housing from the dangers of lead. [Paige v. Philadelphia Housing Authority, 2003 WL 22134961 (E.D.Pa. 2003)].

The plaintiff in this case attempted to maintain the suit as a class action, seeking recovery on behalf of four separate classes of claimants: (a) residents with children under the age of six; (b) two classes involving sequential stages of medical monitoring for children; and (c) children who tested positive for elevated blood levels. The federal district court denied class certification, on complicated procedural grounds. Although the court ruled that in this particular case class certification would not be appropriate because the classes did not have appropriate representative plaintiffs, and because too many individualized issues were involved, the court did not rule that these types of claims were generally unsuitable for class action treatment.

[Source: Housing and Development Reporter, Current Developments, March 29, 2004 issue.]

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Employment Termination for Failure to Follow Directions

Brenda Goins worked as a housing services eligibility manager for the Cleveland Metropolitan Housing Authority. She claimed that she was directed to perform acts that she felt violated HUD Regulations (such as housing applicants out of turn, improperly verifying applicant information, housing applicants without criminal background checks, etc.). Ms. Goins' performance was evaluated during her probationary period, and she was rated as an "unsatisfactory" performer. Ms. Goins objected to the evaluation and claimed that it was in retaliation for her complaints about being directed to act contrary to HUD Regulations. The Housing Authority responded that her complaints were unjustified, and shortly thereafter her employment was terminated. Ms. Goins filed suit, alleging wrongful discharge in violation of public policy and intentional infliction of emotional distress.

The court rejected her arguments and upheld her dismissal. On the wrongful discharge claim, the court ruled that the HUD Regulations she cited did not require that the Housing Authority act other than it had. The court also ruled that there is no public policy which protects an employee's view that a job should be done differently than his or her supervisor's directions:

"Perhaps the public policy that Goins believes exists is one that allows subordinates to question and challenge the directives of their supervisors. It is unlikely, however, that Goins' continued insubordination and refusal to carry out directives of her supervisors … is a fundamental or clear public policy."

Goins v. Cuyahoga Metropolitan Housing Authority, 2004-Ohio-139 (Cuy. Co. 2004).

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Tenant Harassment of Other Tenants

The Fair Housing Act ("FHA") and the Rehabilitation Act prohibit discrimination on the basis of disability by agencies that receive federal funds. But what if the discrimination or harassment that a tenant experiences is at the hands of other tenants, not employees of the PHA or recipient of the federal funds?

In Neudecker v. Boisclair Corp., 351 F.3d 361 (8th Cir. 2003), the tenant suffered from a mental defect. He alleged that the manager of the apartment building told other tenants about his mental condition, with the result that the tenants began to harass him and eventually forced him to move out of his unit.

The appeals court noted that no case has yet approved such a claim in a housing context, but that similar disability claims have been allowed to proceed in employment situations. The court therefore allowed the tenant's suit to go forward:

"[W]e conclude that disability harassment in the housing context is actionable under the FHA and the Rehabilitation Act, and that [the plaintiff's] allegations state such a claim. He alleged below that he suffers from Obsessive Compulsive Disorder ("OCD"), that [the apartment owner], a recipient of federal funding, subjected him to unwelcome harassment based on his OCD, and that this unwelcome harassment was sufficiently severe to deprive him of his right to enjoy his home, as evidenced by his physical problems and ultimate decision to move out."

[Source: Lawyers Weekly USA; January 5, 2004; 2004 LWUSA 7].

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