## Facts

- A certified class of Black purchasers bought newly constructed Chicago-area homes from defendants under land-installment contracts between 1958 and 1968.
- Plaintiffs alleged that pervasive racial discrimination created separate housing markets for whites and Blacks, with Black buyers confined to a limited central-city area and facing scarcity of available housing.
- Plaintiffs claimed defendants capitalized on this segregation by building in or near Black neighborhoods and selling to Black purchasers at inflated prices and on harsher terms than those available to white buyers for comparable homes in the broader market.
- Plaintiffs’ evidence included expert testimony supporting the existence of dual, racially segregated housing markets and proof that Black purchasers paid roughly 20.6% to 34.5% more than whites for similar homes.
- Plaintiffs also offered evidence that deed-and-mortgage financing commonly available to white buyers was effectively unavailable to them, and that defendants instead offered high-down-payment land-installment contracts.
- Plaintiffs sued under 42 U.S.C. § 1982 and constitutional provisions, asserting that discriminatory exploitation impaired their equal right to purchase and hold property.
- After plaintiffs’ case-in-chief at a jury trial, the district court granted a directed verdict for defendants, reasoning that plaintiffs failed to show discrimination because defendants did not sell comparable homes to white buyers on better terms.

## Issues

1. Whether 42 U.S.C. § 1982 reaches a seller’s knowing exploitation of a racially segregated housing market through higher prices and harsher terms imposed on Black purchasers, even if the seller does not sell to whites.
2. Whether proof of a § 1982 violation may be based on evidence of market-wide racial disparities and discriminatory economic burdens, rather than side-by-side comparisons to the same seller’s transactions with white buyers.
3. Whether the evidence presented was sufficient to require submission to the jury, making a directed verdict improper.

## Decision

- The Seventh Circuit reversed the directed verdict for defendants and remanded for further proceedings.
- The court held that plaintiffs’ “exploitation” theory is cognizable under § 1982 and is not defeated by the absence of proof that defendants sold comparable homes to whites on better terms.
- The court concluded that plaintiffs’ evidence, if credited, could permit a jury to find that defendants imposed discriminatory prices and terms by taking advantage of a racially segregated market.

## Legal Principles

- 42 U.S.C. § 1982 protects against racially motivated impairments of the equal right to purchase and hold property, including discriminatory pricing and transaction terms, not only outright refusals to sell.
- A seller may violate § 1982 by knowingly exploiting a racially segregated housing market—created and maintained by discrimination—by charging Black buyers substantially more or imposing materially harsher terms than those available to white buyers in the broader market.
- The relevant comparison under § 1982 is whether Black citizens receive the “same right” as white citizens with respect to property transactions; liability does not require proof of the defendant’s own sales to whites on better terms.
- When plaintiffs present evidence supporting discriminatory exploitation and resulting unequal property rights, disputed factual questions concerning discrimination and injury are for the jury, and a directed verdict is improper.

## Conclusion

The Seventh Circuit held that § 1982 permits claims based on discriminatory exploitation of a segregated housing market through inflated prices and onerous terms imposed on Black buyers, and it reversed the directed verdict because the plaintiffs’ evidence was sufficient to allow a jury to decide whether defendants denied them the same property rights enjoyed by white citizens.


Clark v. Universal Builders, Inc., 501 F.2d 324 (7th Cir. 1974)