Landmark $1,187,500 Settlement Reached in Criminal Records Case

The Fortune Society, represented by Relman, Dane & Colfax, has resolved its Fair Housing Act lawsuit against the owners and operators of the Sandcastle, an apartment complex in Queens, New York, with over 900 units. The settlement is one of the largest in a case challenging a ban on renting to people with criminal records, if not the very largest.  Fortune provides housing and other services to formerly incarcerated individuals. It alleged that when it tried to rent apartments for its clients at Sandcastle in 2013 and 2014, defendants refused because of their policy of prohibiting anyone with a criminal record from living there. 

Fortune alleged that the policy unlawfully discriminates because it disproportionately bars African Americans and Latinos from housing without considering each potential tenant’s individual history and circumstances. 

As one of the first cases in the country challenging a blanket ban on renting to people with criminal records as discriminatory, the lawsuit has been closely watched in the advocacy community, industry and government. After the case was filed, the U.S. Department of Housing and Urban Development issued Guidance endorsing Fortune’s legal theory. 

Sandcastle will pay Fortune $1,187,500. This will send a powerful message to other landlords that they must evaluate each applicant as an individual instead of automatically rejecting those with a criminal history. This is critical because obtaining affordable housing is central to successful reintegration for the hundreds of thousands of Americans – disproportionately people of color – released from confinement every year. 

The settlement follows the Court’s July decision denying defendants’ motion for summary judgment and allowing the case to proceed to trial. The decision rejected defendants’ argument that Fortune itself was not harmed by the policy and so did not have standing to pursue the case. By paving the way for other advocacy organizations that work on criminal justice and housing issues to challenge blanket bans in their communities, this will open the door to safe and affordable housing for people across the country. 

The decision also provides a valuable roadmap for how to prove that a blanket ban exists and that it is discriminatory. It shows how evidence from tenant files, marketing, emails, and phone calls can establish a blanket policy. It also shows how to successfully identify and analyze local demographic data for a qualified applicant pool, and use that data to prove that a blanket ban disparately impacts people of color. The owners of Sandcastle when the lawsuit was filed have sold the building and do not currently own or rent real estate.

The litigation was led by John Relman, Glenn Schlactus and Jia Cobb of Relman, Dane & Colfax.