StateGoneCrazy

14Aug/140

The Mother of All Frivolous Discrimination Lawsuits

State and Fair Housing Council of Orange County Shakedown
Newport Property Owner

OCR Editorial:
"Tyranny of the Bias Bloodhounds"
"State and Fair Housing Council Shakedown Newport Property Owner"

4 - 1- 08

A chronological history on this bizarre case as reported in the LA Times and OC Register

OC Register: May-3-2009 Profiting from Persecution (editorial)
OC Register: April -29-2009 State Dismisses Lawsuit on Eve of Trial
OC Register:  April-01-08 Tyranny of the Bias Bloodhounds (editorial)
OC Register:  Mar-28-08 Unfair Fight?
LA Times:      Nov-06-07 Landlord Rents Trouble When He Posts an Ad
LA  Times:     June-21-07 Rental Ad Twisted into Battle over Bias

BLOGS:
Red County: OC BLOG, The State Gone Crazy
One Citizen Speaking: Fair Housing Groups, Legalized Extortionists?

RADIO:

John & Ken Radio Show (KFI AM 640) 4-1-08
johnandkenshow radio interview

NPR Radio Interview 12-21-07 AS_IT_HAPPENS
Interview begins @ Part One, Clip Position - 17:11 - on your Real Player bar

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Case synopsis:

In November 2006, the State of California hand served me with a formal "Accusation" of  housing discrimination after receiving a complaint from the Fair Housing Corporation of Orange County (FHCOC) in July, 2006. The FHCOC claimed that their corporation had been damaged when it read, "well suited for 1 or 2 professional adults..." in the body of an 'Apt For Rent' Craigslist ad that I had posted. My rental ad was for an attached 450 sq. ft. mother in law unit located in the back of my 1,150 sq ft home in Newport Beach. No potential renter complained and the FHCOC did not issue any advance warning to me even though my telephone number was listed right in the ad.

In an interview with the LA Times, the FHCOC's director of training, Joel Ibanez, claimed that -in his opinion- my ad "... sort of implied..." an intent to discriminate against families with children and... "it leaned in that direction".

The FHCOC's CEO and chief counsel, D. Elizabeth Pierson, esq. (AKA Elizabeth Martin, esq), claimed that my advertisement caused the FHCOC 'frustration of mission' and  demanded I pay them $4,000 plus agree to take 5 years of continuing education  through the FHCOC's own landlord training facilities at $250 per class.  They also demanded that I admit that my ad was discriminatory and sign a 'confidentiality agreement' and just regard the payment as a 'donation' so I could write it off my taxes.

The State of California's, Department of Fair Employment & Housing, conducted a full investigation on me. After conducting several telephone interviews with my former tenants and neighbors, Lillianita Brumsfeld, Administrator for the DFEH, formally determined that there was no evidence of a 'history or practice of discrimination' by me, but claimed that my ad was still discriminatory 'on it's face' and that my true intention did not matter.

When I refused to pay up, sign a confidentiality agreement, and agree that my payment would be a 'donation' to the Fair Housing Council, the Chief Counsel for the DFEH, Paul Ramsey, esq. and State staff attorney, Ralph Tsong, esq., filed a formal civil discrimination lawsuit against me on behalf of the FHCOC  in Orange County Superior Court seeking 'Unlimited Damages'. One year later in November, 2009, and just prior to the scheduled 5 day jury trial scheduled for January 2009, Ralph Tsong, esq., suddenly dismissed the lawsuit.

In the final hearing, Mr. Tsong, argued to the Judge not to award me any reimbursement for either the ten's of thousands of dollars I spent defending myself or for the 2 1/2 years of harassment I was subjected to by the State Department of Fair Employment & Housing.

At that hearing, the Judge told Mr. Tsong that he (Judge Andrew Banks) could literally read the phrase in question at least 3 different ways. Mr. Tsong said he could only read it one way and told the Judge that the fact that I did not ultimately rent the apartment to a family must have meant that my intention was to discriminate.

In March 2009, the OC Superior Court Judge denied me any reimbursement for my costs in defending myself and issued no legal analysis or reasoning in his Minute Order only to say that my Motion for reasonable attorney's fees and costs was "Denied".  The investigative reporter for the OC Register called the Judge to ask why he had not rewarded me my attorney's fees? The judge refused to speak about the case.

This most frivolous lawsuit waged by a couple of naive and unethical State employed attorney's - who had absolutely nothing to lose - not only cost me my business; $10's of thousands of dollars in fees and costs, and upended my personal life for nearly 3 1/2 years.

BACKGROUND:

My name is Daniel Bader. I am a 56 year old homeowner and have been living in Newport Beach, California for 19 years. I hold an MBA in International Marketing from the University of Puget Sound, Tacoma, Washington and have over 30 years of experience in the computer/software/internet industries. I also have a real estate license  have been working as a commercial broker focusing exclusively on the restaurant, bar and cafe markets in Orange County.

I currently own a 1938, 1,150 total square foot cottage which includes an adjoining 480 sq. ft. mother-in-law unit located over the one car garage in the back. I purchased the property in 1999 and have been living in the approximately 720 sq. ft. front unit full time. The rental unit is bordered on both sides by alleyways and leases for $1,950/month. Both units are directly connected via a doorway with only a false wall dividing one from the other.

Moreover, there is no storage or parking for the unit and the monthly gas, electric and cable bills are split evenly between the tenants and myself. We share the same mailbox and address as well as the laundry facilities located in my garage. The building has been periodically used as both a single-family and duplex residence over the years and the City of Newport classifies it as a ‘legal, non-conforming duplex’.

In June 2006, I posted a couple of rental ads on Craigslist.com which contained the phrase ‘well suited for 1 or 2 professional adults’ in the body of the ad. (www.Craigslist.com)

After viewing my post on 5 separate occasions, the FHCOC filed a formal complaint against me with the State of California DFEH. The FHCOC demanded $4,000 in monetary damages and 5 years of continuing landlord education from me to be taken at the FHCOC training facilities at an additional expense. There was no potential renter or individual who complained about my post. And, obviously, the FHCOC had no interest in renting the unit for itself.

On October 20, 2006, I was served with the Notice of Filing of a Discrimination Complaint. Apparently, the State of California felt that the alleged violation was serious enough to dispatch a State employee, Yvette Salmon, down from Los Angeles to my home in Newport Beach to personally hand-serve the Complaint on me .  On its face, the appearance of the Complaint looked just like a lawsuit, but I was assured it was not a suit, but only an administrative action.

There was no formal demand attached to the Complaint and I was urgently requested to immediately respond to schedule a ‘conciliation conference’ to be held at the DFEH office in downtown Los Angeles. Prior to the scheduled conference, at the behest of the DFEH, I submitted a formal affidavit  on 5-12-07 and the contact information of several witnesses and personal references for their investigation.

STATE OF CALIFORNIA, DEPARTMENT OF FAIR EMPLOYMENT & HOUSING CONCILIATION CONFERENCE. JUNE 5, 2007

THE SHAKEDOWN

At the behest of Belinda Brown, State Administrator for the DFEH, I drove to Los Angeles to attend what the DFEH refers to as a "Conciliation Conference". These little known, private conferences are held in a small office room at the DFEH. There is no court reporter or recording device of any kind in the room.  The so-called 'conference' is intended to 'settle' the complaint that was filed against the landlord.  Both administrators sit at a long, rectangular collapsible conference table, across from the accused.

Only the two administrators and myself were at the conference.

At that conference, I was escorted into a small conference room by the two DFEH administrators, Lillianita Brumfeld & Belinda Brown.

Once the proceeding began, the lead administrator, Ms. Belinda Brown, read the Complaint made against me and the Government Code Section 12955 (c) that I had allegedly violated.

Anti-Discriminatory Advertising Government Code Section 12955 (c) states;

“It shall be unlawful for any person to make, print, or publish, or cause to be made, printed, or published any notice, statement, or advertisement, with respect to the sale or rental of a housing accommodation that indicates any preference, limitation, or discrimination based on race, color, religion, sex, sexual orientation, marital status, national origin, ancestry, familial status, source of income, or disability…”

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(Unknown to me at the time, Ms. Brown stopped reading after this first clause of the Code and did not read the following second clause attached to the Section which I discovered existed several months later. This second clause of the Code actually goes on to state)

“…or an intention to make that preference, limitation, or discrimination.”

(Note: This highly relevant omission infers that there must be situations where the ‘intent’ of a violator is relevant. Therefore, the Legislature must have attached this ‘intent’ phrase to address ambiguous cases - like mine - so as not to prosecute unintended violations that may be unwittingly posted by naive advertisers. Otherwise, what could possibly be the reason for the Legislative body attaching this second clause to the Government Code 12955?)

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After reading the Complaint and Statute to me,  I was told that they (the two State administrators) had already predetermined that the 8 word phrase I used in the body of my ad ("Well suited for 1 or 2 professional adults") was a violation of the Statute even though Ms. Brumfeld had conducted a telephonic interview with a former tenant of mine, Darla Walters, who had a 16 year old daughter living with her in my mother-in-law unit. The Administrator had even interviewed a witness who happened to be renting the unit at the same time my Craigslist ad was running and who had 2 children under the age of 12 staying in the unit.   She also told me that she found no evidence of a history or practice of discrimination.

DFEH Investigation Evidence-Summary

Regardless of the fact that I had no history of discrimination, I was told by Ms. Brown that the evidence

"might’ mitigate the damages, but would not vindicate me."

I then asked, “so, what does the Fair Housing Council want from me?”

I was then told that the FHCOC was demanding $4,000  to cover the ‘out-of-pocket’ expenses that they had purportedly spent conducting an online investigation on me and in mailing out (90) Fair Housing flyers into the community:

FHCOC's 3-fold Xerox flyer
(clearly intended to bring in more discrimination business and not to educate the community)

I was also told that the FHCOC was demanding 5 years of continuing landlord education to be taken through their training facilities and at $250 per class additional cost to me.

I then asked the Administrator if I could have the FHCOC’s demand in writing and if I could see how they calculated their purported $4,000 in ‘out of pocket’ expenses.

I was told, “no, Mr. Bader, you can’t”.

I then asked why the aggrieved Complainant (The FHCOC) wasn’t present at the conference and was informed by Ms. Brown that, ‘they don’t have to attend’.

At that time, Ms. Brown asked me if I, “wanted to make a settlement offer?”

I replied,  “what will happen if I choose not to make an offer?”

Ms. Brown explained, “then we will have to send the Complaint to Legal”.

Utterly confused I responded, “but I don’t discriminate and never have.”

Ms. Brown said, "it doesn't matter, your ad is a violation on it’s face."

Looking at Ms. Brown, I asked, "are you an attorney?"

She replied, "no, I am not.".

I then turned toward Ms. Brumfield and asked her if she was an attorney?

Like Ms. Brown, Ms. Brumfield replied, "no, I'm not."

Logically, I asked; well then, how is it that you two make the determination that my phrase is discriminatory?

Ms. Brown replied, "that's our responsibility, and we've determined the phrase you used violates the statute."

Then I asked; “well then, why did you ask me to produce documents and witnesses for my defense if you had already pre-determined that I was guilty?”

Ms. Brown replied; “We are required by Government Code to conduct the investigation.

Ms. Brown then added;Mr. Bader, it could get very costly for you as you’ll probably have to hire an attorney and may have to make several time consuming trips up to Los Angeles for hearings.

I then asked her; “well, can I at least have a look through the file? I’d like to see the Craigslist ad that I had placed several months ago?

“No, you may not, she answered, …that’s confidential.”

Holding back my frustration, I then said to the Administrator, “OK, I’ll offer one training class.”

With a surprised look on her face, Ms. Brown said, ‘that’s it…no money?” “No money," I echoed.

At that time, both Administrators picked up their files, asked me if I’d like a cup of coffee and left me alone in the room while they purportedly went to telephone the FHCOC with my offer.

Several minutes later they both returned.  Before they had a chance to sit down I preempted them with the question, “well, do we have a deal?”

Ms. Brown appeared impatient with me and said, “no Mr. Bader, we don’t.

So, I asked; what's their counter? Ms. Brown explained; "there is no counter."

"No counter", I asked? "They don't have to counter," she answered.

Then she asked me; "would you like to up your offer?”

"Well then, I asked, I guess that means money?

She replied, “well, that’s typically what they want and would probably satisfy them.”

After a few more minutes of what I could only describe as a shakedown, I stood up and excused myself from the meeting.

As I was leaving I concluded with, “Thank you ladies, but I don’t think we’ll be doing a deal today.”

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How the Fair Housing Shakedown Racket Works:

1. With No Warning; The Fair Housing Council Corporation of Orange County (FHCOC) files a discrimination complaint with the State of California,
Department of Fair Employment & Housing (DFEH) after conducting a secret, online investigation into the background of the alleged violator of discriminatory advertising laws.

2. The DFEH serves the complaint on the accused violator which instructs the accused to urgently contact the DFEH informing them that they have been accused of very serious violations of Federal and State discrimination laws.

3. A DFEH State administrator then demands that the accused submits discovery including: the names of witnesses and contact numbers, affidavits, neighbor's, current and former tenants, rental records, etc. and then conducts an investigation.

4. Once the investigation is concluded, a DFEH State administrator then demands that the accused attend a confidential conciliation meeting or threatens to send the complaint to the DFEH's legal department.

5. At the conciliation meeting, the accused is taken into a private conference room at the DFEH. There is no court reporter present or any transcript of the meeting. All communications are regarded as highly confidential. A State Administrator makes the decision whether or not there is a violation (she is not a lawyer). She then demands a monetary settlement from the accused and threatens to send the complaint to Legal if they do not pay the monetary demand that the accuser (FHCOC) wants. (In my case, the demand was for $4,000 plus 5 years of continuing education to be taken through the FHCOC at an additional expense to me). The accuser (FHCOC) does not have to be present at the meeting, nor does the accuser (FHCOC) have to negotiate directly with the accused. Nor does the accuser have to provide any justification for their/its demand/s. The State tells the accused that all settlement negotiations are considered confidential and inadmissible should the case go to court.

6. The DFEH explains to the accused that it has complete immunityfrom counter prosecution for its actions, intentional or not intentional. DFEH lawyers (Ralph Tsong, Esq., Paul Ramsey, esq) also explains to the accused that they won't be able to get their attorney's fee's if they decide to take the case to court and win. The accused is urged by DFEH lawyers to make settlement offers to the accuser (FHCOC) explaining that if they don't pay up it will be a very costly and time consuming process to the accused. The DFEH lawyers also explain to the accused that the accuser (FHCOC) does not have to make a counter offer.

5. Once the accused agrees to the monetary and punitive penalties demanded by the FHCOC, the accused must sign a confidentiality contract.

There is no public record of any kind and the complaint and the confidential settlement agreement are kept permanently secret.