NOW WHERE HAS THE LAW BEEN RUNNING TOO IN THE PAST TWO YEARS?

     In Meyer v. Holley, 537 U.S. 280, 123 S.Ct. 824, 154 L.Ed.2d 753 (2003), the U.S. Supreme Court held that the FHA is governed by traditional vicarious liability rules and tort principles and that the FHA did not create a non-delegable duty not to discriminate based on race. Although the Supreme Court found the "right to control" by the designated officer/ broker insufficient by itself under traditional agency principles to establish a principal/agent relationship, it left the application of traditional vicarious liability rules to be considered by the lower court:

The Ninth Circuit did not decide whether other aspects of the California broker relationship, when added to the "right to control," would, under traditional legal principles and consistent with "the general common law of agency," establish the necessary relationship. But in the absence of consideration of that matter by the Court of Appeals, we shall not consider it. Meyer, 537 U.S. at 291, 123 S.Ct. 824 (citation omitted) . The Supreme Court also declined to consider whether traditional corporate-veil piercing principles should apply Id. at 292, 123 S.Ct. 824 (citations omitted).

Meyer v. Holley, 537 U.S. 280, 123 S.Ct. 824, 154 L.Ed.2d 753 (2003) on remand , 386 F.3d 1248 (9th Cir.2004).

     In several parts of the Supreme Court opinion it cites with approval to the Restatement (Third) Of Agency ' 7.03 Principal's Liability. This treatise has a number of examples, therefore, a review of these examples can be persuasive to the lower courts. Here is one example given by the Restatement of a situation permitting holding a principal liable for its agents actions and conduct including an award of punitive damages:

P, a landlord, employs A Ejectment Co. to dispossess a tenant. P knows that A Ejectment Co. has a reputation for using undue force in dealing with tenants. E, an employee of A Ejectment Co., in accordance with its usual methods, commits an unprovoked battery on T, a tenant, in order to induce T to leave. In an action by T against P, punitive damages can properly be awarded. 

     Although there is no rigid test to determine whether an agent is a "managerial agent" for purposes of Restatement Second, Torts ' 909, the determination should focus on the agent's discretion to make decisions that would have prevented the injury to the plaintiff or that determine policies of the organization relevant to the risk that resulted in the injury. The title that an agent holds is not dispositive, nor is the fact that the agent is not among the highest in an organization's hierarchy. If an agent in fact manages a business or enterprise, the agent is a "managerial agent" of the principal on whose behalf it manages, although the agent is external to the principal's own organizational structure.  A statute may authorize the award of punitive damages or may provide for a penalty, such as treble damages, that may be awarded to a plaintiff injured by a defendant's violation of the statute. When a defendant is not itself the actor who committed the conduct violative of the statute, the court must then determine whether the actor's conduct should be attributed to the defendant. Unless the language of the statute itself resolves the question, the determination should reflect the purpose of the statute Restatement (Third) Of Agency ' 7.03 Principal's Liability B In General (T.D. No. 5, 2004).

     This illustration of agency liability is not unique in the law. The courts have rejected arguments from real estate brokers that they should not be held liable for the discriminatory acts of their independent agents. Marr v. Rife, 503 F.2d 735 (6th Cir. 1974); Green v. Century 21, 740 F.2d 460, 465 (6th Cir. 1984) ("Under federal housing law a principal cannot free himself of liability by delegating a duty not to discriminate to an agent.") Furthermore, using the analogy to the Fair Housing Act, the courts have found that finance companies have a  non delegable duty to not discriminate under the Equal Credit Opportunity Act which cannot be avoid by delegating aspects of the financing transaction to third parties. Emigrant Sav. Bank v. Elan Management Corp., 668 F.2d 671, 673 (2d Cir. 1982); United States v. Beneficial Corp., 492 F. Supp. 682, 686 (D.N.J. 1980), aff'd, 673 F.2d 1302 (3d Cir. 1981);  Shuman v. Standard Oil Co., 453 F. Supp. 1150, 1153 54 (N.D. Cal. 1978).
 
     Now apply this illustration and the above case law to financial institutions which refuse to monitor their relationship to mortgage and real estate brokers. These lenders can be subjected to substantial damage awards.  Playing an ostrich and hiding their heads in the sand will not insulate them from any illegal actions of  their mortgage brokers and real estate agents with whom they deal. If there can be shown a pattern and practice, then they do have control.  They have the right to say yes or no. They have a right to monitor and determine whether or not these independent actors are breaking the law.  If they knew or should have known, they can be held liable.

     Financial institutions insurance companies and mortgage brokers should also follow another example of the real estate industry.  The larger real estate firms have their own in house Fair Housing Program to train their staff.   Large companies such as Realty One, have their own programs because they want to make sure that their real estate agents are aware of what the law is and what the policies of the company are.  They want these policies implemented.  All employees and independent contractors must know what the law is, know what the company's policies are, and that fair housing and fair lending laws will be obeyed by everyone. 

     In Pacific Mut. Life Ins. Co. v. Haslip, the Court held that the Constitution's due-process clause is not violated by a punitive-damages award based solely on respondeat superior, with no fault on the part of the principal. See 499 U.S. 1, 14-15 (1991).For a recent statement that punitive damages may be awarded on the basis of vicarious liability, see, e.g., Shiner v. Moriarty, 706 A.2d 1228, 1240 (Pa.1998) (no requirement that agent commit act at principal's direction or that principal ratify act; spouse did not act as other spouse's agent in pursuing litigation because he "engaged in the objectionable portions of this litigation unilaterally, through attorneys of his employ, and in the exercise of his own independent judgment" and no evidence demonstrated other spouse's ability to direct details of litigation).

INSURANCE AND CREDIT SCORING

     Insurance companies have always used a number of factors to assess risk when setting homeowner insurance rates.  Typically, insurance companies review such factors as previous homeowner claims, minimum coverage, location of the home,  marital status, and employment stability.  Within the last decade, and more prominently in the last few years, insurance companies have begun to use an insurance credit score, which is based on information obtained from consumer credit reports. 

     Under the Fair Credit Reporting Act 42 USC §1681, insurance companies are permitted to review credit reports as a measure for assessing risk.  While the use of credit information is explicitly authorized for use in insurance underwriting, it must be applied within the context of the Fair Housing Act (FHA).

     Over 90% of insurance companies use credit information to make decisions regarding consumer eligibility, premium rates, deductibles, recovery for claims, payment plan eligibility, marketing and service.  Credit Scoring in the Insurance Industry: Discrimination or Good Business.15 Loy. Consumer Law Rev. 315 (2003).  The information is obtained from a consumer's credit report and evaluated by the insurance company.  Information such as credit activity, payment history, account credit limit, late payments, delinquencies, defaults, and bankruptcies are several of the factors considered.  Each element of the credit report that is of interest is assigned a numerical value, to which a mathematical model is then applied and an insurance credit score is generated.  While insurance companies defend the policy of using credit scores as predictive of insurance claims, this correlation is not supported by concrete evidence  Id. at 323.

     A number of states have also launched investigations, including Oregon, Washington, Nevada, Montana, Indiana, and Missouri.  A majority of states have taken regulatory measures regarding disclosure of the use of information.  Several states have enacted legislation that restricts use to certain types of insurance or to limit it as a sole factor in underwriting.  A few states, including Maryland, Utah, and Washington have prohibited the use of credit scores entirely. 

     The belief that credit information has a discriminatory effect on minority groups is supported by several recent studies. For example,  Insurers Use of Credit Scoring for Homeowners Insurance in Ohio, A Report to the Civil Rights Commission, Birnbaum (2003), available at www.cjeonline.org (Insurers Use of Credit Scoring report). According to the report a majority of Ohio's insurance companies use credit scoring for rating and eligibility. Review of the filings with the Department of Insurance show up to a 4:1 difference in rates between best and worst credit scores.   This evidence strongly implicates the possibility of discriminatory treatment of minorities Insurers Use of Credit Scoring report at 11.  The study points out that low credit scores can result from information which is not included in a consumer credit report, because some financial institutions typically those used by low-income groups such as pay day loan, check cashing and rent to own organizations fail to report information to credit bureaus.  Therefore, those who use these services do not have the opportunity to build strong credit reports.  This lack of information combined with a low-income status will likely result in a low credit score, which will lead to discriminatory treatment by insurers. 

     There's also another relevant study issued in 2004 in the homeowner insurance context out of Missouri's Department of Insurance, available at http://insurance.mo.gov/consumer/faq/creditScoring.htm. The study concludes that there is a definite correlation, without exception, between lower credit scores and the racial make up of a neighborhood even controlling for a wide variety of socioeconomic characteristics.

     In December of 2003, as part of the Fair and Accurate Credit Transaction Act, Congress mandated a study of the effects of the use of credit scores and insurance based credit scores on property and casualty insurance.  (PL 108-159, 2003 HR 2622).  Specifically, the report should show the statistical relationship between the risk and actual loss.  Additionally the study will include information as to the extent the use of credit scores impact availability and affordability of credit and insurance by geography, income, ethnicity, race, color, religion, national origin, age, sex, marital status, and creed, and result in negative or differential treatment of protected classes under the Equal Credit Opportunity Act.

     Effective as of September of 2003, Ohio enacted a rule stating that credit cannot be used as the sole underwriting or rating factor for homeowners insurance.  The rule regulates reporting requirements and addresses actions to be taken in the event an insurer receives incorrect credit information. Ohio Admin. Code § 3901-1-55 While this is clearly an area of the law currently under significant scrutiny, litigation to this point is minimal.  Cases are generally being pursued in federal rather than state courts.  Causes of action are typically brought under the Fair Credit Reporting Act or the Fair Housing Act.  Those claims that fall under the Fair Credit Reporting Act implicate the disclosure provisions mandated by the FCRA.  In Braxton v. Farmer's Insurance Group, 209 F.R.D. 651, 54 Fed.R.Serv.3d 28 (2002), the insurer failed to include the required contemporaneous notice when it raised premiums for existing clients by 50%, based on credit scores.  Claims brought under the Fair Housing Act (FHA) have only reached the preliminary stages.  In Dehoyos v. Allstate Corporation, 345 F.3d 290 (5th Cir. 2003) cert denied 124 S.Ct. 2074( 2004), six non-Caucasian policyholders alleged racial discrimination based on the use of a credit scoring system.  The defendant attempted to have the complaint dismissed based on a theory of reverse preemption.  However, the court ruled that preemption did not apply because the FHA does not impair state law, and therefore does not  effect the prohibitions aginst federal regulation of insurance companies.

FAIR HOUSING RECENT CASE LAW

1. Vaciliki NICOLAS;  Stratus C. Nicolas, as the Natural Guardian Ad Litem for Vaciliki Nicolas;  Stratus C. Nicolas, in his own right, v.OCEAN PLAZA CONDOMINIUM ASSOCIATION, INC(Cite as: 73 Fed.Appx. 537,  2003 WL 22018888 (3rd Cir.(N.J.)):

     Tenant brought action on behalf of himself and as guardian ad litem for his mother, a co tenant, alleging that condominium association denied her a reasonable accommodation in violation of the Fair Housing Amendments Act (FHAA) and New Jersey's Law Against Discrimination (LAD), and retaliated against him for asserting his mother's rights. The United States District Court for the District of New Jersey, William H. Walls, J., granted summary judgment in favor of association, finding that both claims were time barred. Tenant appealed. The Court of Appeals, Barry, Circuit Judge, held that: (1) claims of tenant and co  tenant were untimely under the FHAA, and were not tolled under continuing violation theory or alleged senile dementia of co tenant; (2) LAD claim was subject to tolling due to co tenant's alleged insanity under New Jersey law; and (3) genuine issue of material fact as to whether co tenant's senile dementia rendered her insane so as to toll statute of limitation precluded summary judgment as to co tenant's LAD claim.  Affirmed in part, reversed in part, and remanded.

2. SILVER SAGE PARTNERS, LTD. v. CITY OF DESERT HOT SPRINGS; (Cite as: 81 Fed.Appx. 121,  2003 WL 22682467 (9th Cir.(Cal.)):

     Developer of low income housing project brought suit alleging violation of Fair Housing Act in city's refusal to approve project, as required to obtain state financial assistance from California Housing Department (CHD). After jury returned verdict awarding developer damages, the District Court granted city new trial on damages because of developer's refusal to accept remittitur. After second trial resulted in award of nominal damages only and developer was denied injunctive relief restraining city from violating Fair Housing Act in future, developer appealed. The Court of Appeals, 251 F.3d 814, reversed and remanded. On remand, the United States District Court for the Central District of California, Consuelo B. Marshall, Chief Judge, reinstated damages award, denied prejudgment interest, and stayed enforcement of judgment against city's insurer. Developer appealed, and insurer cross appealed. The Court of Appeals held that district court did not violate law of the case doctrine when it denied prejudgment interest.  Affirmed in part, and remanded in part.

3. Daniel MAGEE, Plaintiff Appellant,v.BOSTON LAND COMPANY MANAGEMENT SERVICES, INC., Defendant Appellee(Cite as: 90 Fed.Appx. 560,  2004 WL 189878 (2nd Cir.(N.Y.)):

     Tenant brought action against his landlord, alleging that landlord discriminated against him in violation of the Fair Housing Act. The United States District Court for the Southern District of New York, Charles L. Brieant, J., granted summary judgment in favor of landlord, and tenant appealed.   Holdings:  The Court of Appeals held that:   (1) tenant failed to submit any medical or other trustworthy documentation establishing that his condition required him to use apartment building's back entrance, such as would support discrimination claim under Fair Housing Act based on landlord's denial of his requests for a key to the back door of building and a parking space in the lot behind building, and (2) evidence that, despite tenant's request that papers not be slipped under his door, a flier was slipped under tenant's door notifying him of landlord's plan to replace his windows, was insufficient to demonstrate that landlord's accommodation of tenant's disability was inadequate under the Fair Housing Act. Affirmed.

4. DARST WEBBE TENANT ASSOCIATION BOARD v.ST. LOUIS HOUSING AUTHORITY, (Cite as: 339 F.3d 702):

     Housing associations and nonprofit corporation sued Department of Housing and Urban Development (HUD) and public housing agency pursuant to 19 count complaint, asserting claims arising from implementation of revitalization plans for two public housing complexes. Following grant of summary judgment for HUD on one count, and bench trial, the United States District Court for the Eastern District of Missouri, Stephen Nathaniel Limbaugh, J., 202 F.Supp.2d 938, ruled in plaintiffs' favor on two counts and in favor of HUD and agency on remaining counts. Plaintiffs appealed. The Court of Appeals, Melloy, Circuit Judge, held that: (1) HUD did not act arbitrarily and capriciously when it accepted city's certifications in connection with city's application for loan guarantee related to agency's revitalization plans; (2) remand for more thorough explanation for rejection of discrimination claims against agency was required; (3) district court failed to make sufficient findings as to HUD's compliance with duty to affirmatively further fair housing; (4) district court had authority to enjoin use of grant funds and loan guarantee upon determining that HUD did not fulfill its statutory duty to affirmatively further fair housing; and (5) agency was not required, under federal grant program, to provide housing for all low income housing tenants displaced by revitalization plan. Affirmed in part and remanded in part.

5. Lisa LINCOLN v.Walter R. CASE(Cite as: 340 F.3d 283):

     Prospective tenant sued landlord under Fair Housing Act (FHA). Following jury trial, the United States District Court for the Eastern District of Louisiana, Helen Ginger Berrigan, Chief Judge, entered judgment for prospective tenant. Landlord appealed. The Court of Appeals, Carl E. Stewart, Circuit Judge, held that: (1) fourplex was not "single family house" subject to FHA exemption for single family houses sold or rented by owners that meet certain requirements; (2) fact that denial of apartment's availability was made to prospective tenant's girlfriend rather than to prospective tenant did not deprive prospective tenant of standing to sue; (3) decision to award punitive damages was supported by sufficient evidence; and (4) punitive damages award of $100,000 would be remitted to $55,000 to comport with due process. Affirmed in part, reversed in part, and remitted.

6. OTI KAGA, INC.v. SOUTH DAKOTA HOUSING DEVELOPMENT AUTHORITY(Cite as: 342 F.3d 871):

     Non profit housing corporation established and operated by Native Americans brought action against state housing authority and members of its board, alleging racial discrimination, in connection with rejection of its applications for tax credits and state funding. The United States District Court for the District of South Dakota, Charles B. Kornmann, J., 188 F.Supp.2d 1148, granted summary judgment in favor of defendants. Non profit corporation appealed. The Court of Appeals, Bye, Circuit Judge, held that: (1) corporation had Article III standing to assert discrimination action in connection with denial of application for tax credits; (2) corporation had prudential standing to assert racial discrimination claim, under the Fair Housing Act (FHA); (3) corporation failed to establish prima facie claim of disparate treatment based upon race, in connection with denial of funding; and (4) corporation's disparate impact claim was barred, under FHA. Affirmed.

7. GIEBELER v. M & B ASSOCIATES(Cite as: 343 F.3d 1143):

     The United States District Court for the Northern District of California, Ronald M. Whyte, J., granted summary judgment in favor of landlord on disabled tenant's Fair Housing Amendments Act (FHAA) reasonable accommodation claim, and tenant appealed. The Court of Appeals, Berzon, Circuit Judge, held that FHAA required apartment owners to reasonably accommodate tenant's disability, which rendered him unemployable and therefore with insufficient income to qualify for the apartment, by assessing individually the risk of nonpayment created by his specific proposed financial arrangement that apartment be rented by his financially qualified mother, rather than inflexibly applying a rental policy that forbid cosigners. Reversed and remanded.

8. DEHOYOS v. Allstate Insurance Company(Cite as: 345 F.3d 290):

     Non Caucasian policyholders brought civil rights action against their insurers, on theory that credit scoring system utilized by their insurers had resulted in more expensive insurance policies being sold to non Caucasians. The United States District Court for the Western District of Texas, Samuel Fred Biery, Jr., J., 2002 WL 1491650, denied insurers' motion to dismiss plaintiffs' claims as reverse preempted under the McCarran Ferguson Act, and insurers pursued interlocutory appeal. The Court of Appeals, Benavides, Circuit Judge, held that federal civil rights statutes, as invoked by non Caucasian insureds to challenge credit scoring system utilized by their insurers, did not interfere with any identified state insurance statute or regulatory goal, and were not reverse preempted. Affirmed

9. Mitchell v.SHANE(Cite as: 350 F.3d 39):

     African American couple who had unsuccessfully attempted to purchase house sued vendors, real estate agency, and listing agent, alleging housing discrimination under Fair Housing Act and state statute. The United States District Court for the Eastern District of New York, 233 F.Supp.2d 445, Platt, J., granted summary judgment for defendants, and prospective purchasers appealed. The Court of Appeals, Calabresi, Circuit Judge, held that: (1) prospective purchasers stated "qualified" and "remained available" elements of prima facie discrimination claim; (2) lack of evidence that vendors had any knowledge of prospective purchasers' racial background until after they signed contract with white purchaser precluded claim against them; but (3) fact issues existed as to whether local custom dictated that real estate broker must disclose existence of competing offer to bidders, and if so, as to whether listing agent had violated that custom.  Affirmed in part and vacated and remanded in part.
 
10. GODWIN v.SECRETARY OF HOUSING AND URBAN DEVELOPMENT(Cite as: 356 F.3d 310):

     Tenant petitioned for review of order of the Secretary of Housing and Urban Development (HUD) dismissing her housing discrimination complaint. Holdings:  The Court of Appeals held that: (1) section of the Fair Housing Act (FHA) confers no right of judicial review when the Secretary declines to issue a housing discrimination charge, and (2) private action against landlord authorized by section of the Fair Housing Act (FHA) constituted an adequate alternative remedy for tenant who alleged she was evicted in retaliation for filing housing discrimination grievance against landlord, precluding judicial review under the Administrative Procedure Act (APA). Petition dismissed

11. EDWARDS v.MARIN PARK, INC.(Cite as: 356 F.3d 1058):

     Mobile home park resident brought claims against mobile home park alleging violations of the Fair Housing Act (FHA) and Racketeer Influenced and Corrupt Organizations Act (RICO). The United States District Court for the Northern District of California, Saundra Brown Armstrong, J., dismissed claims, and resident appealed. Holdings:  The Court of Appeals, Berzon, Circuit Judge, held that: (1) resident stated a claim of retaliation under the FHA; (2) resident's decision to forego amending RICO claim was not improper, and thus the RICO claim was not subject to dismissal as a sanction for disobedience; (3) resident failed to state a claim under RICO; and (4) mobile home park's alleged conduct was not sufficiently outrageous to support claim of intentional infliction of emotional distress. Affirmed in part, reversed in part, and remanded.

12. SMITH v. PACIFIC PROPERTIES AND DEVELOPMENT CORPORATION(Cite as: 358 F.3d 1097):

     Nonprofit civil rights organization sued real estate developer alleging disability discrimination in housing design and construction, in violation of Fair Housing Amendments Act (FHAA). The United States District Court for the District of Nevada, George, J., granted developer's motion to dismiss, and organization appealed. Holdings:  The Court of Appeals, Michael Daly Hawkins, Circuit Judge, held that: (1) as a matter of first impression, "testers" have standing to sue under FHAA;    2) organization had direct standing to sue under FHAA; but (3) remedy of disgorgement was unavailable. Affirmed in part and reversed and remanded in part.

13. U.S.A.v CITY OF JACKSON, MISSISSIPPI(Cite as: 359 F.3d 727):

     United States sought to have city held in contempt for violating consent decree, which compelled city to amend its zoning ordinance to permit group homes for disabled persons in certain residential districts, and prohibited city from engaging in specified discriminatory housing practices in violation of the Fair Housing Amendments Act (FHAA). The United States District Court for the Southern District of Mississippi, Henry T. Wingate, Chief Judge, entered order holding city in contempt and awarding government damages, expenses and attorney fees. Appeal was taken. Holdings:  The Court of Appeals, Wiener, Circuit Judge, held that: (1) District Court had authority under consent decree to award costs and attorney fees to federal government; (2) hourly rate of $125 was reasonable fee for federal government attorney; and (3) District Court had authority under FHAA to award expenses, costs, and attorney fees to organization denied special use permit for abused children's shelter, though organization never intervened.  Affirmed.

14. U.S. v. Old Kent Financial Corp., 2004 WL 1157779 (E.D.Mich.2004):

     This is a discussion by the district court on a settlement agreement entered between the U.S. Department of Justice and Fifth Third Bank which had merged with Old Kent Financial Corp. The United States had alleged that the Bank denied equal credit opportunity to persons and businesses in predominately African-American neighborhoods in the City of Detroit, primarily by avoiding and declining to provide loan services based upon the racial identity of the geographic area they were located in, a practice commonly referred to as redlining. This gives a good overview of the type of relief being demand by the federal government when suing based on such allegations .

15. Munoz v. International Home Capital Corp., 2004 WL 3086907 (N.D.Cal 2004):

     The Plaintiffs, who are Hispanic, are predominantly Spanish speakers and generally do not read or write in English. Plaintiffs allege that the defendants represented to them, in Spanish, that based on their individual incomes, plaintiffs could afford to buy their respective homes and assured them that their mortgage payments would not exceed a certain amount. According to the complaint, they were rushed into signing their loan documents and the loan transaction as a whole. As a result, plaintiffs allege that defendants "baited and switched" them into loans that contained higher principal loan amounts and interest rates than the plaintiff borrowers originally wanted or were able to repay. Specifically, the complaint alleged that the  defendants 1) engaged in a practice of predatory and racially discriminatory lending by issuing "split loans" to Hispanic borrowers; 2) misrepresented actual loan terms and engaged in unfair business practices; 3) failed to translate the necessary writings from English to Spanish; 4) failed to explain, until the time of closing escrow, that their loanshad much higher repayment terms than was previously represented; and, 5) made little or no effort to ascertain or verify plaintiffs' ability to repay their loans. Consequently, plaintiffs aver that defendants' issuance of predatory loans were ultimately designed to fail and inevitably triggered foreclosure proceedings causing all but one of the plaintiffs to lose their homes. The court held that the federal claims for relief under the Fair Housing Act, Equal Credit Opportunity Act, and Real Estate Settlement Procedures Act stated a claim and the motions to dismiss were denied.

16. Gardner v. First American Title Ins. Co.296 F.Supp.2d 1011 (D.Minn., 2003):

     Purchasers filed putative class action alleging that settlement service providers violated Real Estate Settlement Procedures Act's (RESPA) prohibition against kickbacks and referral fees. On cross-motions for summary judgment, the court held that (1) the real estate agents did not have affiliated business arrangements with title companies, and thus Real Estate Settlement Procedures Act (RESPA) did not require disclosure of relationships to purchasers, even though agents were limited partners in settlement service providers that referred transactions to title companies, where agents had neither affiliate relationships with nor ownership interests in title companies, and payments to title companies had reasonable relation to market value of services provided:  and (2) fact issues remained as to remaining elements of purchasers' RESPA claims and class action allegations

17. Jones v. Household Realty Corp.2003 WL 23750601 (S.D.Ohio, 2003):

     Defendant Household Realty Corporation and Household International, Inc moved the Court to dismiss or stay all proceedings pending arbitration of the disputes and issues raised in the complaint. The court held because the cost-splitting fee in the arbitration agreement between the two parties was unconscionable, it will not be enforced. Because the cost-splitting arrangement is severable from the remainder of the agreement, the remainder was enforceable. Since Household made a stipulated offer to bear the costs of arbitration, the Court granted the stay pending arbitration condition on Household  paying the entire cost of arbitration, and Household required to advise the Court.