Court of Appeals reduces HUD ALJ award

In a case decided in March 1992, the Sixth Circuit Court of Appeals cut back an award by a HUD Administrative Law Judge for compensatory damages because of sex discrimination. While affirming the ALJ determination of liability the Court agreed that "...the total amount of the award of compensatory damages was unsupported and unreasonable."

In Baumgardner v. HUD Secretary on behalf of Holley, the three judge panel reduced from $5,000 to $3,000 the damages payable "... to Complainant to compensate him for the losses that resulted from respondents discriminatory activity. The ALJ award of $2,000 to Holley for "his economic losses, including inconvenience," was cut to $1,000. The Court affirmed $500 for emotional distress. They reduced the ALJ award of $2,500 for loss of civil rights to $1,500 saying, "We have presumed some damages for intangible dignitary interests of Holley, and have allowed for his inconvenience, emotional distress, hurt, and mental anguish in the total amount of $1500 for compensatory damages.

The Sixth Circuit was troubled by several procedural errors by HUD which Baumgardner said deprived him of due process and entitled him to a dismissal including:

  • HUD contacted Baumgardner about April 3, 1989 and "sent him in error a housing discrimination complaint" about a house in East Chicago, Indiana. The correct copy came six months later.
  • HUD failed to send a copy of the complaint within 10 days.
  • HUD did not commence the investigation until August 1989, beyond 100 days.

The Court said, "Furthermore, the ALJ found with a substantial basis in the record, that the delayed issuance of the final investigative report was due to `HUD's  procrastination and mismanagement of the complaint.'"

The Court concluded, "...these deficiencies do have an adverse effect with regard to ascertaining fair and reasonable damages as a consequence of this single episode of  gender discrimination." The Sixth Circuit reduced the award of damages to the complainant but not the $4,000 civil penalty payable to the HUD Secretary.

Complainant had called owner Baumgardner in response to a rental sign advertising a four-bedroom home. The ALJ determined that Holley called January 19, 1989 and was told "that he did not want to rent to males because his experience was that they did not keep a clean house." House Opportunity Made Equal (HOME) of Cincinnati conducted testing which confirmed sex discrimination. In March, Baumgardner rented the house to a woman with children.