Va. court throws out historic verdict

Jan. 15, 2000
by Tracey McCartney
National Fair Housing Advocate Online

(RICHMOND, Va., Jan. 15, 2000) -- A split Virginia Supreme Court Friday overturned a historic judgment against an insurer sued by a private fair housing group for discriminating against African-American neighborhoods in Richmond.

Still, the director of the group said Friday, "we would do the whole thing again in a heartbeat."

In its opinion, the court said that Housing Opportunities Made Equal (HOME), lacked the legal right to bring the suit against Nationwide Mutual Insurance Company because it was not able to show that it was injured by the company's conduct. The court was split 4-3.

"With due respect for HOME's worthy mission of providing equal housing opportunities in the metropolitan Richmond area, we conclude nonetheless that HOME lacks standing to maintain its action against Nationwide," the majority opinion said. The order nullifies the trial court decision and renders a decision in favor of the insurer.

"We're obviously pleased by the decision," Nationwide spokesman John Millen told The Associated Press Friday.

The lawsuit alleged that Nationwide tried to avoid doing business in African-American neighborhoods, a practice known as "redlining." The suit also alleged that when Nationwide did sell policies to homeowners in those neighborhoods, it charged more than it did in white neighborhoods and provided inferior policies.

After a trial in October 1998, the jury awarded HOME $500,000 in compensatory damages and $100 million to punish Nationwide for its conduct. The award is the largest in a housing discrimination case. Nationwide has been sued more than any other insurer for housing discrimination.

At a news conference Friday, HOME director Constance Chamberlain called the court's reasoning for throwing out the verdict a "technicality" and stressed that the court did not question the evidence the jury heard during the trial.

At trial, HOME's attorneys - one of whom is Richmond Mayor Tim Kaine - presented the results of paired undercover tests HOME had conducted of Nationwide agents. In 13 of 15 tests, African-American testers inquiring about insuring homes in African-American neighborhoods were treated less favorably than white testers asking about homes in white neighborhoods.

HOME also presented Nationwide's own marketing materials, which indicated that the company sought to characterize zip codes within Virginia based on, among other factors, their racial makeup. The zip codes labeled "Remaining Diverse" were considered undesirable markets for selling homeowner's insurance.

Nationwide also encouraged agents to move out of Richmond as its black population grew and cut off agents who refused, according to witnesses for HOME.

However, none of HOME's evidence mattered to the majority of the court because standing is a "jurisdictional issue having no relation to the substantive merits of an action," according to the opinion.

"We are disappointed because some people will think it means that Nationwide did not do what was proven at trial," Chamberlain said. "We are disappointed because it means that Nationwide will not have to make reparations to the neighborhood and the city it treated so badly.

"And we are disappointed because we believe it may send a message to other housing providers that it's okay to discriminate."

While the court's decision was disheartening, the suit and resulting publicity brought badly needed changes to Richmond, Chamberlain said. Nationwide is now selling homeowners insurance in Richmond and has begun providing down payment assistance to homebuyers through a housing counseling program as part of a "massive public relations campaign to persuade the public that they are not a racist company," she said.

She called the measures "a start."