## Facts

- Sherry Soules, a single mother living with her 12-year-old daughter, sought to rent an apartment in Buffalo, New York.
- The apartment was listed and managed by Mary Jean Downs, a real estate broker who owned and operated Professional Realty Services, Inc. (PRS).
- PRS used a lease application that asked for the number and ages of children who would occupy the unit, in part due to a New York health regulation requiring separate bedrooms for opposite-sex children over age five.
- Soules contacted Downs by phone about the vacancy; Downs asked questions about Soules’s child, including age.
- Downs declined to rent to Soules; the unit was later offered to another applicant who also had a child under 18.
- Soules and Housing Opportunities Made Equal, Inc. (HOME) filed a HUD administrative complaint alleging familial-status discrimination under the Fair Housing Act (FHA), 42 U.S.C. § 3601 et seq., claiming violations of §§ 3604(a) and 3604(c).
- After a hearing, a HUD Administrative Law Judge (ALJ) dismissed both claims; the ALJ’s order became HUD’s final order.
- Soules and HOME petitioned the Second Circuit for review, challenging the evidentiary support for the ALJ’s findings and arguing that the ALJ improperly considered intent under § 3604(c).

## Issues

1. Whether substantial evidence supported HUD’s finding that Downs did not refuse to rent or otherwise make housing unavailable “because of” familial status in violation of FHA § 3604(a).
2. Whether HUD applied the correct standard under FHA § 3604(c), including whether intent may be considered, and whether substantial evidence supported the finding that Downs’s statements did not indicate a familial-status-based preference, limitation, or discrimination.

## Decision

- The Second Circuit denied the petition for review and left HUD’s dismissal in place.
- The court held substantial evidence supported the ALJ’s conclusion that Soules was not rejected because of familial status under § 3604(a).
- The court held the ALJ did not commit legal error by considering intent and context in evaluating an alleged § 3604(c) violation.
- The court held substantial evidence supported the finding that Downs’s questions and remarks, viewed in context (including health-code compliance and rental to another tenant with a child), did not violate § 3604(c).

## Legal Principles

- On review of a HUD final order, the court applies a substantial-evidence standard and will not reweigh the record where a reasonable factfinder could reach the agency’s conclusion.
- FHA § 3604(a) disparate-treatment claims require proof that the challenged housing decision was made “because of” protected status; such proof may be direct or circumstantial.
- FHA § 3604(c) is evaluated under an “ordinary listener” approach: whether a statement would convey a discriminatory preference, limitation, or discrimination to an ordinary person.
- Although § 3604(c) does not require discriminatory motive as an element in the same way as § 3604(a), intent and surrounding circumstances may be considered to interpret ambiguous statements and to distinguish legitimate inquiries (e.g., occupancy or health-code compliance) from discriminatory communications.
- Questions about children are not automatically unlawful; liability turns on whether, in context, the statements communicate or implement discrimination against families with children.

## Conclusion

The Second Circuit upheld HUD’s determination that the broker’s questions about a child and the decision not to rent to the applicant were supported by non-discriminatory explanations and did not, on this record, amount to familial-status discrimination under FHA §§ 3604(a) or 3604(c).


Soules v. U.S. Dep't of Hous. & Urb. Dev., 967 F.2d 817 (2d Cir. 1992)