## Facts

- A community services board operated a two-phase drug and alcohol rehabilitation program.
- In phase I, clients lived at the facility and received treatment and drug testing.
- In phase II, clients who had been drug-free for at least a year lived in community apartments leased by the board, remained under program supervision, and were regularly drug tested.
- Clients who relapsed or violated program rules were discharged and evicted.
- A property management company managed an apartment complex in northern Virginia.
- Program staff contacted the company about leasing units for phase-II clients, but no units were leased.
- The United States sued under the Fair Housing Act (FHA), alleging the refusal to rent constituted discrimination based on handicap (recovering drug addiction).

## Issues

1. Whether phase-II clients—recovering drug addicts who had been drug-free for at least a year and were in supervised treatment—qualified as “handicapped” under the FHA or were excluded as persons engaged in “current, illegal use of or addiction to a controlled substance.”
2. Whether monetary remedies (compensatory damages, punitive damages, and civil penalties) were proper for conduct occurring shortly after the 1988 FHA amendments added handicap protections and the “current illegal use” exclusion.

## Decision

- The court held the phase-II clients qualified as “handicapped” under the FHA and were not excluded as “current” illegal drug users.
- The court affirmed injunctive relief requiring future compliance with the FHA.
- The court vacated compensatory damages, punitive damages, and the civil penalty because the statutory exclusion’s scope was ambiguous at the time of the challenged conduct.

## Legal Principles

- Under the FHA, recovering drug addicts may be “handicapped” if their impairment substantially limits major life activities, including obtaining housing.
- The FHA exclusion for “current, illegal use of or addiction to a controlled substance” is temporal and does not automatically cover individuals who have stopped illegal use and are participating in rehabilitation with monitoring and testing.
- Courts may grant prospective injunctive relief to enforce clarified FHA obligations while withholding monetary sanctions where regulated parties lacked fair notice due to new and unsettled statutory language.

## Conclusion

The court determined that supervised, drug-free participants in a rehabilitation program were protected by the FHA’s handicap provisions and upheld an injunction against future discrimination, but it set aside damages and penalties because liability for monetary sanctions was unfair given the early uncertainty over the “current illegal use” exclusion.


United States v. S. Mgmt. Corp., 955 F.2d 914 (4th Cir. 1992)