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Damages and Arbitration Provisions in Proposed Amendments to the Fair Housing Act

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Certain proposed amendments to the Fair Housing Act would provide that parties may voluntarily submit their dispute to an arbitrator empowered to impose compensatory and punitive damages (as opposed to equitable relief or restitution). These amendments would be permissible under the Seventh Amendment because they amount to a waiver of a right, that would otherwise obtain, to a jury trial on compensatory and punitive damages. The amendments also comport with the strictures of Article III. The Supreme Court has held that Article III strictures cannot be waived, but the Court also has found that purely voluntary procedures severely minimize any Article III concerns.

Other aspects of the proposed amendments to the Fair Housing Act, which authorize mandatory proceedings before an arbitrator or administrative law judge with the power to award compensatory and punitive damages, would likely not survive scrutiny under the Seventh Amendment and Article III. The cause of action created by the Fair Housing Act appears to be derived from a common law action that is historically within the exclusive preserve of Article III courts operating with a jury. Furthermore, the right at issue is private in nature, in that it is intended to determine the liability of one individual to another. In addition, the housing market is not a specialized area of administrative regulation by the Federal Government.

Finally, the Fair Housing Act setting does not seem to involve an imperative necessity for Congress to choose an administrative remedy, as demonstrated by the fact that judicial proceedings would remain available to plaintiffs and there would be only minimal differences in the relief available in the administrative and judicial forums. Under the Supreme Court’s admittedly confusing and inconsistent precedents, these factors suggest that the proposed mandatory administrative proceedings would not comport with Article III or the Seventh Amendment.

Updated July 9, 2014