Orange County jury rejects discrimination claims in sober-living home trial

SANTA ANA -- In one of the first major battles over a growing municipal controversy, a federal jury rejected discrimination claims against an Orange County city's ordinance regulating sober-living homes.

The full defense verdict for the city of Costa Mesa comes as other cities seek to address an increase in homes that serve people recovering from drug addiction and the neighborhood opposition that comes with them.

"It certainly shows other cities around the nation dealing with challenges or potential challenges that a jury is going to be very receptive to the need for some sort of regulation for previously unregulated sober-living homes," Jennifer L. Keller, who represented Costa Mesa with partner Chase A. Scolnick, said Monday.

The Costa Mesa City Council hired the veteran trial lawyer's firm Keller/Anderle in March to defend before a jury an ordinance that implemented a permit process for sober-living homes, prohibited them from being within 650 feet of one another and restricted the number of residents to six.

Plaintiffs' attorneys Christopher A. Brancart and Steven G. Polin, veterans of housing discrimination lawsuits nationwide, sued shortly after the ordinance was enacted in 2014 because it targets sober-living homes with regulations that don't apply to other homes.

Under federal housing laws, people with drug addictions are a protected disabled class, and no restrictions can be placed on their housing.

Brancart, of Brancart & Brancart in Pescadero, and Polin, a Washington D.C. sole practitioner who also is general counsel for The Oxford House Inc., enlisted Isaac R. Zfaty of Zfaty Burns as their trial manager.

Zfaty called Costa Mesa's ordinance "discrimination at its finest" in his closing argument last Thursday and emphasized that the city had no data about incidents specific to sober-living homes but targeted them anyway.

"That's a hunt, that's, 'I'm going out to find people who are part of this group. They weren't discovered because neighbors complained or people were jumping off roofs or any of these other manner of complaints," Zfaty said. "No one's saying they can't regulate; they just can't do it in a discriminatory fashion, and the intent here was discriminatory."

However, discrimination laws don't protect the homes' operators, and Keller's case focused on the litany of problems some of the operators brought to the city, and the neighbors who demanded the City Council take action.

City officials enacted a law that targeted not drug addicts but the public health and nuisance problems sober-living homes brought to family neighborhoods, Keller argued. The problems put the homes' residents at risk, so the ordinance didn't hurt people with drug addiction. Rather, it helped them by enacting needed restrictions and safety measures, she said.

"These are people who had formerly lovely, tranquil neighborhoods, and they suddenly found themselves under siege. They found their neighborhoods changing very rapidly," Keller told jurors in her closing argument. "According to the plaintiffs, the City Council had to answer, 'Nope, sorry, we can't do anything. We can't help you, and we can't help these young addicts who are in recovery.'"

Zfaty, who split his argument with Brancart, compared the city's case to that of a 7-year-old who "makes a mistake, denies ever having done it, and then blames someone else for it."

"That's the kind where we have to send a message," he said. He showed jurors a chart with more than $1 million in lost revenue for Yellowstone Womens First Step House Inc., which he said would go to scholarships, but also told jurors they could award nominal damages of $1. Keller urged them to award nothing because to do so, they'd have to find that the city did something wrong.

After four weeks of testimony, the jury of five men and three women deliberated about five hours on Friday before siding with Keller and concluding Costa Mesa didn't discriminate against the three plaintiffs, Yellowstone, California Womens Recovery Inc. and Sober Living Network, Inc.

"The jurors did not buy the argument that being categorized as handicapped under the [Americans with Disabilities Act and Fair Housing Act] can be a sword and a shield," Keller said on Monday. "Judging from the nodding heads in the box as I argued, I thought they were very persuaded by the argument that residents of the sober-living homes themselves had to have some sort of protection from the city."

Zfaty said Monday that the verdict was disappointing but unsurprising given U.S. District Judge James V. Selna's previous ruling that the ordinance wasn't discriminatory. Jurors were told that during instructions, and the plaintiffs had to show the ordinance was instead enacted with discriminatory intent.

"When you're faced with that, you're really quite hamstrung in trying to prove discrimination," said Zfaty, who is working with Brancart and Polin on other sober-living homes cases. "There are clearly legal concepts here that will be reviewed on the de novo standard" by the 9th U.S. Circuit Court of Appeals. Yellowstone Womens First Step House Inc et al. v. City of Costa Mesa, 14-1401852 (C.D. Cal., filed Nov. 20, 2014).

John B. Stephens, a partner at Stephens Friedland LLP who is Costa Mesa's mayor pro tem, said the verdict makes similar ordinances in other cities more likely. City officials likely are likely considering whether the problems there are large enough "that they're willing to take the risk of adopting an ordinance when they would still be potentially facing a legal challenge."

"The risk of that is diminished somewhat by this ruling, for sure," Stephens said.

Keller said she's heard from other cities that wanted to enact similar ordinances but feared a lawsuit. Friday's verdict has prompted them to reconsider, she said.

"This is affecting cities all over the country," Keller said.

She and Scolnick's witnesses included Costa Mesa resident Charles Hults, a homeowner who described how four sober-living homes opened on his cul-de-sac within a few years, with people coming and going in the middle of the night, men ogling his young daughter and trash and hypodermic needles littering sidewalks and lawns.

Hults was among neighbors who demanded City Council action, and he said in response to questions from Keller that the ordinance helped greatly.

"From my point of view, the fact that we're even here debating this is craziness, because we're not disturbing them," Hults told jurors. "They're encroaching on our rights, and they're acting like we're taking theirs."