State A.G. Can Investigate Discrimination Complaints Against City

Facts: The City of Tempe, Ariz., challenged the authority of the Arizona Attorney General (AAG) to investigate a complaint alleging discriminatory housing practices against a municipal corporation. The City of Tempe is organized as a municipal corporation that operates Tempe Housing Services (THS), a public housing agency. THS administers the Section 8 Housing Choice Voucher program through which HUD provides rental subsidies to eligible families and individuals living in approved housing units. As required by federal statute, Tempe adopted a plan for administering the voucher program, which provides that THS shall “comply fully with all Federal, State, and local nondiscrimination laws . . . from the time a prospective tenant first applies [to the voucher program] through a voucher being given.”

The Arizona legislature adopted the Arizona Fair Housing Act (AFHA) in 1991 and tasked the AAG with investigating and enforcing complaints brought under the act. Additionally, through a Memorandum of Understanding, HUD declared the AFHA to be “substantially equivalent” to the federal Fair Housing Act (FHA). As a result, HUD may refer local FHA complaints to the AAG for investigation.

In June 2012, an applicant filed a fair housing complaint against Tempe with the AAG; Tempe then dual-filed the complaint with HUD. Pursuant to the Memorandum of Understanding, HUD referred the complaint under the FHA to the AAG for investigation. The applicant later amended his complaint to provide additional details in support of his allegation that his application for a housing voucher was denied based upon an alleged disability.

Upon receiving the complaint, the AAG sent Tempe a “Notice of Charge of Discrimination” and asked Tempe to respond. Tempe resisted the investigation and ultimately filed a complaint in superior court seeking declaratory and special action relief, asserting the AFHA didn’t authorize the AAG to investigate a complaint made against a municipal corporation. Tempe also asked the court to prohibit the AAG from issuing subpoenas to Tempe and its employees for documents and testimony.

The trial court found: (1) municipal corporations are subject to the requirements of the AFHA; (2) Tempe, a municipal corporation, engages in conduct regulated by the AFHA; and (3) the AAG didn’t abuse its discretion or act arbitrarily and capriciously by declining to dismiss the applicant’s complaint without an investigation. The trial court dismissed the city’s complaint, and Tempe appealed.

Ruling: An Arizona appeals court upheld the lower court’s decision.

Reasoning: The court ruled that because a municipal corporation is a “person” subject to the AFHA, the AAG can investigate a complaint against Tempe alleging housing discrimination. The AFHA expressly defines “person” to include “corporations.” And, according to the court, although a municipal corporation isn’t specifically included as a “person,” the term “corporation” is commonly understood to include municipal corporations. Therefore, the plain language of the statute includes Tempe as a “person” intended to be regulated under the AFHA. The court was further persuaded by federal law indicating a corporation is a “person” within the meaning of the AFHA.

• City of Tempe v. State of Arizona, June 2015