Pacific Shores Properties, LLC v. City of Newport Beach

FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

PACIFIC SHORES PROPERTIES, LLC, a No. 11-55460
California limited liability company;
ALICE CONNER; SEAN WISEMAN; D.C. No.
TERRI BRIDGEMAN, 8:08-cv-00457-
Plaintiffs-Appellants, JVS-RNB

ANDREW BLAIR,
Plaintiff,

v.

CITY OF NEWPORT BEACH, a
California municipal corporation,
Defendant-Appellee.

NEWPORT COAST RECOVERY LLC, a No. 11-55461
California Limited Liability
Company; YELLOWSTONE WOMEN’S D.C. No.
FIRST STEP HOUSE, INC., 8:09-cv-00701-
Plaintiffs-Appellants, JVS-RNB

v.
OPINION
CITY OF NEWPORT BEACH, a
California municipal corporation,
Defendant-Appellee.
2 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH

Appeal from the United States District Court
for the Central District of California
James V. Selna, District Judge, Presiding

Argued and Submitted
November 6, 2012—Pasadena, California

Filed September 20, 2013

Before: Alex Kozinski, Chief Judge, Stephen Reinhardt,
and Sidney R. Thomas, Circuit Judges.

Opinion by Judge Reinhardt

SUMMARY*

Housing Discrimination

The panel reversed the district court’s orders granting
summary judgment in favor of the City of Newport on claims
that a City ordinance violated the Fair Housing Act, the
Americans with Disabilities Act, the California Fair
Employment and Housing Act, and the Equal Protection
Clause by having the practical effect of prohibiting new
group homes for recovering alcoholics and drug users from
opening in most residential zones.

The panel held that the district court erred in disregarding
the evidence that the City’s sole objective in enacting and

*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH 3

enforcing its ordinance was to discriminate against persons
deemed to be disabled under state and federal housing
discrimination laws. The panel held that the plaintiffs were
not required to identify similarly situated individuals who
were treated better than themselves in order to survive
summary judgment. It held that where there is direct or
circumstantial evidence that the defendant has acted with a
discriminatory purpose and has caused harm to members of
a protected class, such evidence is sufficient to permit the
protected individuals to proceed to trial under a disparate
treatment theory.

The panel also held that the district court erred in
concluding that the plaintiffs failed to create a triable issue of
fact as to whether the losses that their businesses suffered
were caused by the enactment and enforcement of the
ordinance when the plaintiffs presented evidence that they
experienced a significant decline in business after the
ordinance’s enactment, that the publicity surrounding the
ordinance greatly reduced referrals, and that current and
prospective residents expressed concern about whether the
group-home plaintiffs would close. In addition, the panel
held that the costs borne by the plaintiffs to present their
permit applications and the costs spent assuring the public
that they were still operating despite the City’s efforts to
close them were compensable. Finally, the panel held that the
district court erred in dismissing one plaintiff’s claim for
emotional distress, but correctly dismissed another plaintiff’s
similar claim.
4 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH

COUNSEL

Elizabeth Brancart (argued) and Christopher Brancart,
Brancart & Brancart, Pescadero, California; and Steven G.
Polin, Law Offices of Steven G. Polin, Washington, D.C.; for
Plaintiffs-Appellants.

T. Peter Pierce (argued), Saskia T. Asamura, and Toussaint S.
Bailey, Richards Watson & Gershon, P.C., Los Angeles,
California; and Aaron Harp, City Attorney of Newport Beach,
Newport Beach, California; for Defendant-Appellee.

Thomas E. Perez, Assistant Attorney General, Dennis J.
Dimsey, Teresa Kwong (argued), United States Department
of Justice, Civil Rights Division, Appellate Section,
Washington, D.C., for Amicus Curiae United States.

Chris M. Amantea and Alexandrea H. Young, Hunton &
Williams LLP, Los Angeles, California; and Paula D.
Pearlman, Shawna L. Parks, and Umbreen Bhatti, Disability
Rights Legal Center, Los Angeles, California, for Amici
Curiae Disability Rights Legal Center, Disability Rights
California, Western Center on Law and Poverty, and
Disability Rights Education & Defense Fund.

Kira L. Klatchko and Jeffrey V. Dunn, Best Best & Krieger
LLP, Indian Wells, California, for Amicus Curiae League of
California Cities.
 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH 5

OPINION

REINHARDT, Circuit Judge:

Prior to 2008, “group homes”—i.e., homes in which
recovering alcoholics and drug users live communally and
mutually support each other’s recovery—were generally
permitted to locate in residential zones in the City of Newport
Beach (“the City”) and they did so freely.1 By 2008, a
number of residents of the City launched a campaign to
restrict or eliminate group homes in their neighborhoods.
After enacting several moratoria, the City enacted an
Ordinance (“the Ordinance”) which had the practical effect of
prohibiting new group homes from opening in most
residential zones. Even in the few areas where they were
permitted to open, new group homes were required to submit
to a permit process. Existing group homes also had to
undergo the same permit process in order to continue their
operations. Among the factors to be considered when
granting or denying a permit to any group home was the
number of other such facilities in the neighborhood.

On its face, the Ordinance did not single out group
homes; persons recovering from addiction are protected from
housing discrimination under state and federal anti-
discrimination laws. Instead, the Ordinance facially imposed
restrictions on some other types of group living arrangements
as well. At the same time, the City did not impose similar

1
We follow the parties’ convention in referring to addiction recovery
facilities as “group homes.” The term “group homes” is not defined in the
Ordinance or in any relevant statute, however. As used by the parties and
in this opinion, the term refers only to addiction recovery facilities and not
to any other sort of communal living arrangement.
6 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH

regulations on properties rented by homeowners to
vacationing tourists, despite the fact that such rental
properties may cause similar social problems as group homes.
On advice of counsel, the City had initially planned to
regulate such rental properties in order to avoid the
appearance of discriminating against group homes, but it
backed down from doing so in the face of opposition from a
number of City residents.

Taken in the light most favorable to the non-moving
party, Plaintiffs’ evidence shows that the City’s purpose in
enacting the Ordinance was to exclude group homes from
most residential districts and to bring about the closure of
existing group homes in those areas. The evidence also
shows that the Ordinance regulated other types of group
residential arrangements primarily for the purpose of
maintaining a veneer of neutrality. Several existing group
homes, which, as a result of the Ordinance, were required to
apply for a use permit in order to continue operating in
residential areas, sued the City, alleging that the Ordinance
discriminated against them as facilities that provide housing
opportunities for disabled individuals recovering from
addiction. The district court acknowledged the evidence that
the City acted with a discriminatory motive but found that
evidence “irrelevant” because, it stated, the City had not
treated group homes any worse than certain other group
living arrangements.

We reverse and hold that the district court erred in
disregarding the evidence that the City’s sole objective in
enacting and enforcing its Ordinance was to discriminate
against persons deemed to be disabled under state and federal
housing discrimination laws. Although plaintiffs in an anti-
discrimination lawsuit may survive summary judgment by
 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH 7

identifying similarly situated individuals who were treated
better than themselves, this is not the only way to
demonstrate that intentional discrimination has occurred.
Where, as here, there is direct or circumstantial evidence that
the defendant has acted with a discriminatory purpose and has
caused harm to members of a protected class, such evidence
is sufficient to permit the protected individuals to proceed to
trial under a disparate treatment theory. This is no less true
where, as here, the defendant is willing to harm certain
similarly-situated individuals who are not members of the
disfavored group in order to accomplish a discriminatory
objective, while preserving the appearance of neutrality.

We also hold that the district court erred in concluding
that the Plaintiffs failed to create a triable issue of fact as to
whether the losses that their businesses suffered were caused
by the enactment and enforcement of the Ordinance. The
Plaintiffs presented evidence that they experienced a
significant decline in business after the Ordinance’s
enactment, that the publicity surrounding the Ordinance
greatly reduced referrals, and that current and prospective
residents expressed concern about whether the group home
Plaintiffs would close. By requiring the Plaintiffs to prove
more, the district court failed to draw all reasonable
inferences in their favor, as it was required to do at summary
judgment. In addition, we hold that the costs borne by the
Plaintiffs to present their permit applications and the costs
spent assuring the public that they were still operating despite
the City’s efforts to close them are compensable. Finally, we
hold that the district court erred in dismissing Plaintiff
Wiseman’s claim for emotional distress, but correctly
dismissed Plaintiff Bridgeman’s similar claim.
8 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH

FACTUAL BACKGROUND

I

Newport Beach (“the City”) is a Southern California
beachfront community with about 80,000 residents and is one
of the wealthiest cities in the United States.2 In the late 1990s
“group homes” began opening in increasing numbers in the
City, particularly in the beachfront neighborhoods of West
Newport and Balboa Park. Group homes are residential
facilities in which individuals recovering from drug and
alcohol addiction temporarily reside. They provide a
communal living environment in which residents help each
other to recover from their addictions. In order to preserve a
substance-free environment, group homes limit occupancy to
persons who are sober; a resident who uses drugs or alcohol
is immediately evicted. Because individuals recovering from
addiction need to stay for varying lengths of time, they do not
typically sign written leases. Typically, group home
operators meet with and screen potential residents in advance
to ensure that they are serious about pursuing a sober
lifestyle.

By April 2007, the City contained 73 group homes, 48 of
which were licensed treatment facilities and 25 of which were
unlicensed sober houses.3 At that time the City also had 801

2
It is also the setting for the popular television show The O.C., now
playing on secondary runs. Also currently showing on Netflix is Arrested
Development.
3
There are two types of group homes. Unlicensed “sober houses,” also
known as “sober living homes,” are group homes occupied by persons in
recovery with no formal substance abuse treatment program. Licensed
 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH 9

outstanding short-term lodging permits, which were issued to
owners of properties that were regularly offered for rental for
short periods of time. These homes are usually rented for
profit for a period of 30 days or fewer to tourists who elect
Newport Beach as a beach vacation destination. Like group
homes, short-term lodgings cater to a revolving clientele that
can cause strains on neighborhood resources. In Newport
Beach, “short term lodgings” are generally referred to as
“vacation homes,” and we use the terms interchangeably.

The three group home Plaintiffs, Pacific Shores Properties
LLC (“Pacific Shores”), Newport Coast Recovery LLC
(“NCR”), and Yellowstone Women’s First Step House, Inc.
(“Yellowstone”) (collectively, “the Group Homes”) were part
of the influx of group homes into Newport Beach during the
mid-to-late 1990s and the early 2000s. The individual
Plaintiffs are, respectively, one of the owners and two former
residents of Pacific Shores. Pacific Shores and Yellowstone
operate unlicensed sober houses, while NCR is a state-
licensed facility. Each Group Home spent hundreds of
thousands of dollars purchasing and renovating the homes it
operates.

The increasing number of group homes in Newport Beach
generated escalating hostility on the part of some City
residents who, in a series of public meetings, repeatedly
described the persons in recovery as “not true handicapped,”
“criminals,” “gang members,” and “druggies,” among other

California Alcohol and Drug Program (“ADP”) facilities, by contrast,
provide substance abuse treatment on site.
10 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH

derogatory terms.4 In response to these concerns, the City
passed a series of moratoria in 2007—Ordinances 2007-8,
2007-10, and 2007-16 (collectively, the “Moratoria”)—
followed by a new permanent zoning Ordinance 2008-5 (“the
Ordinance”). Because the City’s intent in passing these
measures is central to this appeal, we recount their history in
detail.

II

The City’s attempts to formally address group homes
began at a City Council meeting on January 23, 2007. At that
meeting, members of the public expressed their displeasure
with group homes and submitted a petition signed by 88
residents asking the City Council to address the issue.
Shortly before that meeting, in an email to a concerned
citizen, then-Mayor Rosansky wrote, “I suspect that these
[group home] facilities do nothing to really solve the problem
but only serve as wherehouses [sic] for alcoholics and drug
addicts until they really hit bottom.”

The City Council decided to form an Intense Residential
Occupancy Committee (“IROC”) “to review and understand
the state and federal laws and regulations that limit [the]
City’s ability to regulate” and “to research and identify
solutions to the problems and make . . . recommendations to
the [C]ity [C]ouncil for changes to regulations applicable to
all residential uses in a manner that preserves the residential

4
One City resident described the attitude in Newport Beach towards
group homes in particularly stark terms: “the idea of the guys with torches
and pitchforks coming off the bridge is much closer to the sentiment [in
one neighborhood] than the oh, ho-hum we want to help some poor
druggy for the tenth time go through the system.”
 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH 11

character of our neighborhoods.” Eight members were
appointed to the IROC, including then-Mayor Rosansky,
another council member, and Planning Commissioner
Michael Toerge, as well as several private citizens.

The IROC’s work culminated in a proposed ordinance
that imposed a moratorium on establishing or operating any
new “transitory uses” in a residential district for a period of
45 days, including group homes and short term lodgings.
Angry citizens protested the freeze on the latter category, i.e.,
vacation homes. Craig Batley, a realtor and a member of the
IROC, e-mailed City Council members to express the view
that “the focus needs to be on Group Homes and only Group
Homes.” At a City Council meeting on April 24, 2007,
citizens submitted a 400-signature petition against including
short term lodgings in the moratorium. The City nevertheless
enacted the moratorium as drafted. In a newspaper article
published shortly thereafter, the City Attorney expressed the
view that regulating only group homes would be
discriminatory absent a showing that they caused different
social problems than short-term lodgings.

In order to demonstrate that group homes did cause
different social problems than vacation homes, the City
conducted a citizen survey on the respective impacts of each
type of housing. The City had never conducted a survey in
connection with legislation before. The survey was
distributed to four neighborhoods, three of which were the
“[n]eighborhoods that seemed to generate the most
complaints about [group homes].” One citizen opposed to
group homes had one hundred surveys left on her doorstep to
personally distribute.
12 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH

The City Attorney prepared a report summarizing the 47
survey responses the City received and recommending that
the City Council lift the moratorium with respect to vacation
homes. The City Attorney’s report also suggested amending
the City Code to separately address problems caused by
short-term lodgings, although the proposed amendments were
never enacted. On May 30, 2007, the City Council passed
Ordinance 2007-10 (“the revised Moratorium”), which
followed the report’s recommendation to lift the freeze on
short-term lodging permits, but continued to prohibit new
group homes. The revised Moratorium was renewed for an
additional year on October 30, 2007. The district court found
that the revised Moratorium was facially discriminatory
because it singled out group homes for adverse treatment.

Around spring or fall of 2007, the City created an
“Interdepartmental Group Homes Task Force,” headed by
Assistant City Manager David Kiff to “verify” the number
and location of group homes in the City, and to enforce code
violations against them, including violations of the then-
applicable moratorium. The City hired James Sinasek to
work with Kiff. During the second half of 2007, Sinasek
investigated group homes by searching the internet to locate
them and posing as a potential client. He visited suspected
group home sites, observed the properties, and photographed
residents, vehicles, and license plates at or around the
properties. Both Kiff and Sinasek attended meetings at the
homes of members of the Concerned Citizens of Newport
Beach (“CCNB”), a citizen advocacy group opposed to group
homes, at which CCNB members provided lists of additional
suspected group home sites for Kiff and Sinasek to
 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH 13

investigate.5 As a result of this investigation, three group
homes, including Pacific Shores, were cited for violating the
revised Moratorium.

Meanwhile, City officials worked to amend the City’s
municipal zoning code. At a Planning Commission meeting
on June 21, 2007, the City Planner and outside counsel,
Goldfarb & Lipman (“Goldfarb”) presented a draft ordinance
to the Commission. The draft regulated both group homes
and short-term lodgings because Goldfarb advised that doing
so was necessary to avoid enacting an unlawful
discriminatory ordinance. Commissioner Toerge, a member
of the IROC, argued that the City needed to “be more
aggressive” because it was “inundated” with group homes; he
endorsed an alternate draft prepared by attorneys employed
by the CCNB. Goldfarb subsequently prepared a
memorandum explaining why the CCNB’s proposed
ordinance would be discriminatory.

Nonetheless, the City Planner prepared a revised
ordinance that did not regulate short-term lodgings. On
September 20, 2007, an attorney from Goldfarb testified to
the City Council that not regulating vacation homes might
raise concerns about discrimination, and stated that “[t]here
are still other non-conforming uses that are not necessarily
residential care facilities [i.e., group homes]. We seem to not
know exactly how many of those there are . . . but I think you
grasp the situation that it does—it does change the overall
impression.” Most public comments from City residents
expressed frustration that the Commission had rejected as
facially discriminatory the CCNB’s more aggressive

5
These lists included the meeting sites for members of Alcoholics
Anonymous and Narcotics Anonymous.
14 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH

ordinance. Commissioner Toerge suggested that the
Commission should not be considering legal discrimination
concerns: “I mean save that for the courtroom.” The
Planning Commission approved the revised draft.

While the Planning Commission was considering drafts
of the Ordinance, the City Council formed an Ad Hoc
Committee on Group Residential Legal Review whose sole
purpose was to replace Goldfarb, the firm advising the City
that failure to regulate short-term lodgings would be
discriminatory, with new special counsel. This Committee’s
work resulted in the city hiring new counsel, Richards,
Watson, & Gershon PC, the firm that represents the City in
this appeal.

On October 9, 2007, the City Council formed an
additional Ad Hoc Committee on Group Residential Uses to
work with new counsel on revising the draft ordinance that
had been recommended by the Planning Commission. The
committee was chaired by Council Member Henn and
included two other council members. No such Committee
had ever been formed by the city before and its meetings
were not open to the public.

On January 8, 2008, the Committee proposed another
draft ordinance to the City Council. Unlike the draft
approved by the Planning Commission, this one provided that
hearing officers who were to adjudicate group homes’ use
permit applications were to consider as a factor the
concentration of group homes in the neighborhood. Council
Member Henn defended the Ordinance against residents who
wanted to limit the density of group homes even more
explicitly. He explained that the Ordinance had four
objectives. The first was to ensure that no new group homes
 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH 15

would open in Newport Beach: “Do you get my drift? No
new ones anywhere unless an applicant can somehow prove
a need for special accommodation under federal law.” The
second objective was to “assure that those homes that do
operate in [the] community must meet the requirements of the
stringent process and agree to strict operational guidelines or
their permit will be revoked.” Third, the City would “assure
that there will be strict enforcement of the new ordinances
going forward.” The fourth objective was “to substantially
relieve the existing overconcentration of group homes and
their adverse impacts.”

Henn continued: “We have carefully evaluated the idea of
simply banning all unlicensed [group] homes in all but the
multifamily areas of the Peninsula. The siren song of that
solution was carefully evaluated, and unfortunately, as in so
many facets of life, our ideal must be tempered by reality.”
He explained that “to do so would risk an immediately
successful court challenge that would immediately enjoin the
City from executing the ordinance . . . while we fight it in
court.” He concluded saying, “I believe that taken together
these findings and requirements will, in fact, result in a
substantial reduction in the number of group homes on the
Peninsula. . . . I ask you judge us by our actual results.”6

On January 22, 2008, the City Council met to approve the
Ordinance and yet again confronted citizens who felt that the
Ordinance should be even stricter and expressly regulate the
concentration of group homes. Outside counsel explained
that the approach adopted by the Ordinance—case-by-case

6
Although Henn at one point stated that the City wished to ban
unlicensed homes, the larger context of his remarks suggests that the City
preferred to ban all group homes, both licensed and unlicensed.
16 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH

analysis of each facility by a Hearing Officer—was harder to
challenge in court than a strict limit on the density of group
homes. Counsel assured the public that the Ordinance
allowed “plenty of . . . hooks and standards for a [H]earing
[O]fficer to apply [to deny a permit application].” Council
Member Henn described the use permit process imposed by
the Ordinance as “a very substantive attack” on the “issue of
overconcentration [of group homes.]” Henn also pointed out
that he was “not aware of any other city in the State of
California that has adopted an ordinance that’s as aggressive
as [the City’s] in terms of the location of new [group
homes].” Then, immediately after Henn’s comments, the
City Council approved the Ordinance, which prohibits new
group homes in most residential areas, requires existing group
homes in those areas to submit to a burdensome permit
process, and subjects those seeking to establish group homes
in the limited areas in which they are still permitted to operate
to the same onerous permit process.

III

The Ordinance is codified as part of Title 20 of the City
of Newport Beach Municipal Code (“NBMC”). Prior to the
Ordinance’s enactment, the City treated group homes as
“single housekeeping units.” “Single housekeeping units” are
generally permitted to locate in all residential zones without
any special permit. The Ordinance’s key innovation was to
amend the definition of “single housekeeping unit” to exclude
group homes. This was accomplished in two critical ways:
the amended definition added the requirements that (1) a
single housekeeping unit have a single, written lease and (2)
the residents themselves must decide who will be a member
of the household. As a result of these amendments, group
homes no longer qualify as “single housekeeping units”
 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH 17

because the residents do not sign written leases and are
chosen by staff (instead of by each other) to ensure the
maintenance of a sober environment.7

Instead, under the Ordinance, group homes are now
regulated as “residential care facilities”—i.e., facilities in
which disabled individuals reside together but not as a “single
housekeeping unit.”8 NBMC § 20.05.030(H)-(J). As
“residential care facilities,” group homes now face significant
restrictions on location, and otherwise, to which they were
not subject prior to the Ordinance’s enactment when they
typically qualified as “single housekeeping units” and were
able to operate freely in all residential areas. Under the
Ordinance, as “residential care facilities,” new group homes
may not locate in most residential zones under any
circumstances, although they may locate in “multi-family”
residential zones if they obtain a special use permit. NBMC
§ 20.10.020. Group homes that already existed in any

7
A very small number of facilities are run by the residents alone,
without the supervision of an operator, and thus may still qualify as
“single housekeeping units.” Those few facilities might therefore remain
unregulated by the Ordinance. None of the Group Home Plaintiffs here
fall in that category.
8
The NBMC distinguishes between “general” residential care facilities
(those with more than six residents) and “small” residential care facilities
(those with six or fewer residents), although the difference is not relevant
here. California law requires that licensed facilities with six residents or
fewer be treated as single-family dwellings for zoning purposes by all
municipalities. As a result such facilities are classified as “small licensed
residential care facilities” under the NBMC and treated the same as single
family homes. All unlicensed residential care facilities, on the other hand,
are “general residential care facilities” subject to the Ordinance, regardless
of size. Similarly, all licensed facilities with more than six residents are
“general residential care facilities.”
18 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH

residential zone when the Ordinance was enacted and which
were rendered nonconforming by the Ordinance, were
required to apply for a special use permit within 90 days of its
enactment in order to continue operating. NBMC
§§ 20.62.080(A)(4), 20.62.090, 20.91A.020. Thus, the
practical result of the Ordinance is that group homes are
treated far less favorably than they were prior to the
Ordinance’s enactment.9

The extensive conditions and findings that a hearing
office must make in order to issue a special use permit in a
residential zone are set forth in NBMC § 20.91A. Among
other factors, the hearing officer must consider whether
granting a permit to a particular residential care facility would
be “compatible with the character of the surrounding
neighborhood” and whether granting the use permit will
result in a concentration of more than roughly 1–2 such

9
As we explain in more detail, infra, the district court mistakenly relied
on the fact that the Ordinance imposes even more restrictive regulations
on other types of “group residential” living arrangements. “Group
residential” living arrangements, a classification that was newly
introduced by the Ordinance, are “[s]hared living quarters, occupied by
two or more persons not living together as a single housekeeping unit” and
“include[], without limitation, boarding or rooming houses, dormitories,
fraternities, sororities, and private residential clubs.” NBMC
§ 20.05.030(C). Such living arrangements, whether new or pre-existing,
are flatly prohibited from existing in any residential zone. There is no
evidence, however, that more than a minimal number of “group
residential” living arrangements existed in residential zones at the time
that the Ordinance was enacted. NBMC §§ 20.05.030(C), 20.10.020. In
any event, it seems unlikely that any significant number of such
establishments would have existed in the residential areas of Newport
Beach.
 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH 19

facilities per block.10 NBMC § 20.91A.060(D). Use permit
denials may be appealed to the City Council under a
substantial evidence standard of review. NBMC
§ 20.91A.040.

Finally, the Ordinance also provides that the rules
described above can be waived if a residential care facility
can demonstrate that such waiver is a necessary “reasonable
accommodation” for the disabled under federal or state fair
housing laws. NBMC, Chapter 20.98. As with use permits,
the Ordinance requires the hearing officer to consider whether
the requested accommodation would “alter the character of
the neighborhood,” and the concentration of facilities in the
neighborhood in question and the City as a whole. NBMC
§ 20.98.025(C)–(D)

IV

Council Member Henn had encouraged the public to
judge the city by its results, and the results were significant.
On May 23, 2008, three days after the 90-day deadline for
pre-existing group homes to file a use permit application, the
City served “abatement notifications” on every group home
in the City that had not yet applied, including Pacific Shores.
No abatement notices were sent to any other non-conforming
business or individual although the City was aware of certain

10
Because the Plaintiffs do not directly challenge the legality of
permitting the hearing officer to consider the concentration of such
facilities when granting or denying permits, we do not address that
question. But see, e.g., Larkin v. State of Mich. Dep’t of Social Servs.,
89 F.3d 285, 289–90 (6th Cir. 1996) (invalidating a spacing requirement
for housing for the disabled); Children’s Alliance v. City of Bellevue,
950 F. Supp. 1491, 1499 (W.D. Wash. 1997) (similar).
20 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH

non-conforming commercial entities located in residential
areas.11

Because they each had more than six residents, Pacific
Shores, NCR, and Yellowstone were all classified by the City
as “residential care facilities, general,” and were therefore
required to obtain a use permit or a reasonable
accommodation in order to continue operating in residential
zones. NBMC § 20.91A.020. The managers of all three
facilities testified that the permit application process was
burdensome, time-consuming, and costly, requiring hundreds
of hours of staff time as well as tens of thousands of dollars
in legal assistance to prepare and present the permit
applications. The public hearings held regarding the Group
Homes’ permit applications were attended by City residents
who repeated the same slurs and stereotypes about persons in
recovery that had been common during prior public
gatherings and yelled at the Group Homes’ managers and
attorneys.

On April 14, 2009, after two public hearings, the hearing
officer denied Yellowstone’s use permit and reasonable
accommodation applications in their entirety, finding that
Yellowstone was not qualified for a special use permit
because it had not fully complied with zoning laws when it
was first opened; the City Council affirmed that denial.
NCR’s applications for a use permit and reasonable
accommodation were denied on September 17, 2009, in part
because of its proximity to another group home, as well as a

11
The City did serve abatement notices on some of these commercial
entities on July 12, 2010, shortly after the Plaintiffs relied on the City’s
failure to enforce the Ordinance against these entities in their opposition
to the City’s summary judgment motion.
 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH 21

school, a day care facility, and a liquor store. NCR appealed
to the City Council, obtained a remand, was denied again, and
then appealed a second time, but was forced by economic
pressures to close prior to having its second appeal heard.

On September 23, 2008, Pacific Shores submitted a
reasonable accommodation application for 18 beds at each of
its facilities, but did not apply for a use permit. The
application was denied, and before its appeal could be heard,
Pacific Shores submitted an amended reasonable
accommodation request seeking to be allowed to continue
operations at two of its three houses with a maximum of 12
residents per facility, instead of 18. That request was granted.

The Ordinance shut down other group homes. On July
30, 2008, Kiff gave a public presentation defending the
Ordinance’s efficacy. Kiff explained that the Ordinance had
forced group homes “to fight, stay, or leave,” and noted that
of just over 600 group home beds in the City prior to the
Ordinance, 220 were at facilities that would soon be required
to close. According to Kiff, housing opportunities in group
homes were set to decline by 40% citywide “with all of the
use permit hearings yet to come.” He commented that Pacific
Shores was the City’s “most aggressive challenger” and that
“they [we]re not going quietly.” Kiff ended his presentation
stating that anti-discrimination laws “make[] me mad, too”
but that “as long as I’m here, you have my commitment—and
I know you do of the City Council—to trying to bring owner-
occupied back to West Newport.”

As Kiff predicted, by February 2009, more than 25 Group
Homes—about one third of the number of Group Homes that
had existed in 2007—had either closed or were pending
closure. By March 2010, only four group homes had been
22 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH

granted use permits; five others had obtained reasonable
accommodations, including the two granted to Pacific Shores.
No new group homes had opened since the Ordinance’s
enactment.12

The City’s enforcement of the Ordinance against group
homes was widely publicized in the press, on the internet, via
a public letter from the City to residents, and on the City’s
website. The City’s actions were particularly well known
within the community of providers and therapists in Orange
County and Southern California, and the City acknowledged
as much in its communications with citizens. The managers
and staff at the Group Homes spent substantial portions of
their time contacting referral sources to assure them that,
despite negative publicity, the Group Homes were not
closing. Both Pacific Shores and NCR hired web consultants
to improve their web ranking so that their webpages
“appeared above web pages about the City’s actions to close”
them.

Each of the Group Homes experienced a dramatic decline
in revenues of between 40% and 50% in the two years after
the Ordinance’s enactment. NCR closed in 2009 as a result
of its declining business. In addition, as the City
acknowledged at oral argument, prior to reducing its
reasonable accommodation request to only 12 beds per
homes, Pacific Shores had a higher occupancy rate at both of
the two homes for which its request was granted, so it lost
substantial revenue as a result of the new 12 bed limitation.

12
Doing so would have been difficult. Under the limitations imposed
by the Ordinance, only 33 out of 16,811 residential parcels in the City are
possible sites for a new group home.
 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH 23

PROCEDURAL HISTORY

This is a consolidated appeal of two separate lawsuits
resulting from the Ordinance’s enactment and enforcement.
Pacific Shores, its owner Alice Connor, and two Pacific
Shores residents sued the City alleging discrimination under
the federal Fair Housing Act (“FHA”), the Americans with
Disabilities Act (“ADA”), California Fair Employment and
Housing Act (“FEHA”), and the Equal Protection Clause, as
well as assorted other state and federal statutory and
constitutional claims not at issue here. NCR and Yellowstone
filed a separate suit alleging nearly identical claims. All of
the Plaintiffs sought damages as well as declaratory and
injunctive relief. The district court disposed of most of the
Plaintiffs’ claims in two separate summary judgment rulings.

First, the district court granted summary judgment to the
City “with respect to [all of the] Plaintiffs’ disparate
treatment and selective enforcement claims brought under the
FHA, ADA, FEHA, and the Equal Protection Clause,”
because the Plaintiffs failed to show that they were “treated
differently than similarly situated non-disabled individuals in
the enforcement of Ordinance 2008-5.” In so doing, the court
acknowledged “the large amount of evidence . . . regarding
Newport Beach’s allegedly discriminatory intent,” but
concluded that it was “irrelevant.” However, the district
court denied the City summary judgment as to Pacific Shores’
claim that the Revised Moratorium was discriminatory,
holding that it was facially discriminatory against group
homes.13

13
Pacific Shores was the only plaintiff to challenge the enforcement of
the Revised Moratorium because it was the only plaintiff against whom it
was enforced.
24 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH

In a second summary judgment order, the district court
dismissed all of the Group Homes’ remaining claims for
damages, determining that none of the Group Homes had
demonstrated that any of the harm they suffered was caused
by the Revised Moratorium or the Ordinance as opposed to
other causes for which the City was not responsible, such as
the downturn in the economy or hostility of City residents
towards group homes. The district court also dismissed the
two individual residents’ damages claims, concluding that
neither produced any evidence of having suffered
compensable emotional distress.

In order to obtain a final judgment, the Plaintiffs
voluntarily dismissed their remaining claims with prejudice,
including their claims to injunctive relief under a disparate
impact theory and their challenges to the City’s adjudication
of each Group Home’s particular use permit and reasonable
accommodation applications. The district court entered final
judgment in favor of the City on March 14, 2011.

The Plaintiffs timely appealed for review of two issues:
(1) “whether the district court erred in granting summary
judgment against plaintiffs on their intentional discrimination
claims despite substantial evidence that the City enacted a
zoning ordinance for the purpose of discriminating against
housing for disabled persons and enforced that ordinance to
effect its discriminatory purpose” and (2) “whether the
district court erred in granting summary judgment against
plaintiffs, who were the targets of the discriminatory
ordinance enacted and enforced by the City, on the grounds
that plaintiffs could not show that the City was the cause of
any of their injuries.” We have jurisdiction pursuant to
28 U.S.C. § 1291.
 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH 25

STANDARD OF REVIEW

A district court’s grant of summary judgment is reviewed
de novo. Balvage v. Ryderwood Improvement and Serv.
Ass’n, Inc., 642 F.3d 765, 775 (9th Cir. 2011). We must
determine, viewing the evidence in the light most favorable
to the nonmoving party, whether there are any genuine issues
of material fact and whether the district court correctly
applied the relevant substantive law. Olsen v. Idaho State Bd.
of Med., 363 F.3d 916, 922 (9th Cir. 2004). When plaintiffs
allege intentional discrimination under the ADA, FHA, or
FEHA,14 “any indication of discriminatory motive may
suffice to raise a question that can only be resolved by a fact-
finder.” McGinest v. GTE Serv. Corp., 360 F.3d 1103, 1124
(9th Cir. 2004) (internal quotations marks and ellipses
omitted).

ANALYSIS

I

A

The Fair Housing Act renders it unlawful “[t]o
discriminate in the sale or rental, or to otherwise make
unavailable or deny, a dwelling to any buyer or renter

14
We do not separately discuss the Plaintiffs’ state law fair housing
claims from this point on because we “apply the same standards to FHA
and FEHA claims.” Walker v. City of Lakewood, 272 F.3d 1114, 1131 n.8
(9th Cir. 2001).
26 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH

because of a handicap[.]”15 42 U.S.C. § 3604(f)(1). It is well
established that persons recovering from drug and/or alcohol
addiction are disabled under the FHA and therefore protected
from housing discrimination. City of Edmonds v. Washington
State Bldg. Code Council, 18 F.3d 802, 803, 804 (9th Cir.
1994); see 42 U.S.C. § 3602(h). It is equally well established
that zoning practices that discriminate against disabled
individuals can be discriminatory, and therefore violate
§ 3604, if they contribute to “mak[ing] unavailable or
deny[ing]” housing to those persons. See id. at 805; see also
Casa Marie, Inc. v. Superior Court of Puerto Rico, 988 F.2d
252, 257 n.6 (1st Cir. 1993) (collecting cases and discussing
legislative history); H.R. Rep. No. 100-711, at 24 (1988)
(stating that amendments to the FHA to include protections
against disability discrimination “also apply to state or local
land use or health and safety laws, regulations, practices, or
decisions which discriminate against individuals with
handicaps”). Finally, group homes such as the ones at issue
here are “dwellings” under 42 U.S.C. § 3602(b), and
therefore the FHA prohibits discriminatory actions that
adversely affect the availability of such group homes. See,
e.g., Schwarz v. City of Treasure Island, 544 F.3d 1202,
1213–16 (11th Cir. 2008); Lakeside Resort Enters., LP v. Bd.
of Superiors of Palmyra Twp., 455 F.3d 154, 160 (3d Cir.
2006); Larkin, 89 F.3d at 289.16

15
Although the FHA refers to “handicap,” hereinafter “we use the
preferred term, ‘disabled,’ except when referring to the statutory
language.” Budnick v. Town of Carefree, 518 F.3d 1109, 1114 n.5 (9th
Cir. 2008).
16
The Group Homes have a cause of action, even though they are not
themselves disabled individuals, because the FHA permits suit by anyone
“aggrieved” by housing discrimination against the disabled. See San
 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH 27

The Americans with Disabilities Act provides that “no
qualified individual with a disability shall, by reason of such
disability, be excluded from participation in or be denied the
benefits of the services, programs, or activities of a public
entity, or be subjected to discrimination by any such entity.”
42 U.S.C. § 12132. Like the FHA, this provision prohibits
governmental entities from discriminating against disabled
persons through zoning. See Bay Area Addiction Research &
Treatment, Inc. v. City of Antioch, 179 F.3d 725, 730–32 (9th
Cir. 1999). Also like the FHA, the ADA’s protections extend
to persons recovering from drug or alcohol addiction.17
Hernandez v. Hughes Missile Systems Co., 362 F.3d 564, 568
(9th Cir. 2004). The standards regarding disparate treatment
claims under the ADA are typically identical, and courts
accordingly “interpret them in tandem,” as we do here.
Tsombanidis v. West Haven Fire Dep’t., 352 F.3d 565, 573
n.4 (2d Cir. 2003).18

Pedro Hotel Co. v. City of Los Angeles, 159 F.3d 470, 475 (9th Cir. 1998);
42 U.S.C. § 3613 (same).
17
The ADA provides the Group Homes with a cause of action, even
though they are not themselves disabled. See, e.g., MX Grp., Inc. v. City
of Covington, 293 F.3d 326, 334 (6th Cir. 2002); 42 U.S.C. § 12133
(extending a cause of action to “any person alleging discrimination on the
basis of disability”).
18
In addition to prohibiting intentional discrimination, both the FHA and
the ADA also require public entities to grant such “reasonable
accommodations” as are necessary to provide equal housing opportunities
to disabled individuals. See, e.g., id. at 573; McGary v. City of Portland,
386 F.3d 1259, 1261–62 (FHA), 1269 (ADA) (9th Cir. 2004). On appeal,
presumably because they challenge the Ordinance as a whole rather than
the City’s failure to grant their individual reasonable accommodation
requests, the Plaintiffs have proceeded primarily based upon a disparate
treatment theory.
28 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH

Quite properly, the City does not challenge any of these
foundational principles. Instead, the primary liability-phase
question presented here is whether the district court properly
dismissed the Plaintiffs’ disparate treatment claims for failure
to demonstrate that any similarly situated entity was treated
worse than the Plaintiffs under the Ordinance. The Plaintiffs
argue that it was error to disregard the large amount of
evidence in the record suggesting that the Ordinance was
enacted for the discriminatory purpose of harming group
homes and thereby limiting the housing opportunities
available to individuals recovering from addiction. We now
turn to that question.

B

Our cases clearly establish that plaintiffs who allege
disparate treatment under statutory anti-discrimination laws
need not demonstrate the existence of a similarly situated
entity who or which was treated better than the plaintiffs in
order to prevail. See, e.g., Budnick, 518 F.3d at 1114;
McGinest v. GTE Serv. Corp., 360 F.3d 1103, 1122 (9th Cir.
2004) (same in Title VII context).19 Proving the existence of
a similarly situated entity is only one way to survive
summary judgment on a disparate treatment claim. See

19
The standards of proof required for the Plaintiffs’ FHA, ADA, and
FEHA disparate treatment claims are identical, and are all drawn largely
from Title VII cases. See Budnick, 518 F.3d at 1114 (Title VII standards
apply to FHA claims); Walker, 272 F.3d at 1131 n.8 (FHA standards apply
to FEHA claims); Hernandez, 362 F.3d at 568 (Title VII standards apply
to ADA claims).
 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH 29

McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973).20
A plaintiff does not, however, have to rely on the McDonnell
Douglas approach to create a triable issue of fact regarding
discriminatory intent in a disparate treatment case. See Costa
v. Desert Palace, Inc., 299 F.3d 838, 855 (9th Cir. 2002) (en
banc), aff’d, 539 U.S. 90 (2003). Instead, he may “simply
produce direct or circumstantial evidence demonstrating that
a discriminatory reason more likely than not motivated” the
defendant and that the defendant’s actions adversely affected
the plaintiff in some way. McGinest, 360 F.3d at 1122; see
also Trans World Airlines, Inc. v. Thurston, 469 U.S. 111,
121 (1985) (“[T]he McDonnell Douglas test is inapplicable
where the plaintiff presents direct evidence of
discrimination.”); Lowe v. City of Monrovia, 775 F.2d 998,
1006–07 (9th Cir. 1985), amended on other grounds,
784 F.2d 1407 (9th Cir. 1986).

When plaintiffs rely on the “direct or circumstantial
evidence” approach, instead of McDonnell Douglas, to
survive summary judgment, we turn to the “sensitive” multi-
factor inquiry articulated by the Supreme Court in Arlington
Heights v. Metropolitan Housing Corp., 429 U.S. 252, 266
(1977), to determine whether the plaintiffs have created a
triable issue of fact that the defendant’s actions were
motivated by discriminatory intent. See Gay v. Waiters’ &

20
In McDonnell Douglas, the Supreme Court set forth a burden shifting
mechanism explaining how a plaintiff could survive summary judgment
based on the treatment of a similarly situated entity. Under McDonnell
Douglas, a plaintiff establishes a prima facie case of discrimination by
showing that he was treated worse than such an entity. Id. at 1824. The
burden then shifts to the defendant to present a legitimate reason for the
allegedly discriminatory action. Id. Finally, the plaintiff bears the
ultimate burden of demonstrating the explanation is pretextual. Id. at
1824–25.
30 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH

Dairy Lunchmen’s Union, 694 F.2d 531, 550 (9th Cir. 1982)
(applying Arlington Heights).21 Under Arlington Heights, a
court analyzes whether the defendant’s actions were
motivated by a discriminatory purpose by examining (1)
statistics demonstrating a “clear pattern unexplainable on
grounds other than” discriminatory ones, (2) “[t]he historical
background of the decision,” (3) “[t]he specific sequence of
events leading up to the challenged decision,” (4) the
defendant’s departures from its normal procedures or
substantive conclusions, and (5) relevant “legislative or
administrative history.” 429 U.S. at 266–68; see Comm.
Concerning Cmty. Improvement v. City of Modesto, 583 F.3d
690, 703 (9th Cir. 2009) (applying the Arlington Heights
factors). These factors are non-exhaustive. Arlington
Heights, 429 U.S. at 268. When a plaintiff opts to rely on the
Arlington Heights factors to demonstrate discriminatory
intent through direct or circumstantial evidence, the plaintiff
need provide “very little such evidence . . . to raise a genuine
issue of fact . . . ; any indication of discriminatory motive . . .
may suffice to raise a question that can only be resolved by a
fact-finder.” Schnidrig v. Columbia Mach, Inc., 80 F.3d
1406, 1409 (9th Cir. 1996) (quoting Lowe, 775 F.2d at 1009).

21
The Arlington Heights test was developed to detect discriminatory
animus in the context of a Fourteenth Amendment equal protection claim.
However, it is well established that the Arlington Heights factors also
provide one way for a plaintiff who alleges statutory discrimination to
establish discriminatory intent. See id.; accord Gallagher v. Magner,
619 F.3d 823, 833 (8th Cir. 2010) (applying the Arlington Heights factors
to discern whether a county acted with discriminatory intent in the FHA
context); Hallmark Developers, Inc. v. Fulton Cty., Ga., 466 F.3d 1276,
1283–84 (11th Cir. 2006) (same); Tsombanidis, 352 F.3d at 579 (same in
FHA and ADA contexts).
 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH 31

The district court nonetheless refused to consider the
“large amount of evidence submitted by Plaintiffs regarding
Newport Beach’s allegedly discriminatory intent.” Although
it purported to acknowledge that plaintiffs in an anti-
discrimination lawsuit need not demonstrate the existence of
a similarly situated entity, we see no way of interpreting the
district court’s position as anything other than a suggestion
that a plaintiff can establish a prima facie case of intentional
discrimination only by using the McDonnell-Douglas burden
shifting construct. As described above, we have
unambiguously rejected this position previously, and we do
so again now. McDonnell-Douglas simply permits a plaintiff
to raise an inference of discrimination by identifying a
similarly situated entity who was treated more favorably. It
is not a straightjacket requiring the plaintiff to demonstrate
that such similarly situated entities exist.

This case demonstrates why requiring anti-discrimination
plaintiffs to prove the existence of a better-treated entity
would lead to unacceptable results. According to the district
court’s theory, Plaintiffs in anti-discrimination suits would be
unable to demonstrate the discriminatory intent of a
defendant that openly admitted its intent to discriminate, so
long as the defendant (a) relies on a facially neutral law or
policy and (b) is willing to “overdiscriminate” by enforcing
the facially neutral law or policy even against similarly-
situated individuals who are not members of the disfavored
group. Such a rule presents the “grotesque scenario where a[]
[defendant] can effectively immunize itself from suit if it is
so thorough in its discrimination that all similarly situated
32 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH

[entities] are victimized.”22 Abdu-Brisson v. Delta Air Lines,
Inc., 239 F.3d 456, 468 (2d Cir. 2001).

This “grotesque scenario” is not the law. Id. A
willingness to inflict collateral damage by harming some, or
even all, individuals from a favored group in order to
successfully harm members of a disfavored class does not
cleanse the taint of discrimination; it simply underscores the
depth of the defendant’s animus. See, e.g., Griffin v. Cnty.
Sch. Bd. of Prince Edward Cnty., 377 U.S. 218, 231 (1964)
(holding that although a county has the legal power to close
all of its public schools, it could not do so for the purpose of
preventing children from attending desegregated schools). As
one district court observed in a case quite similar to this one,
“that an ordinance also discriminates against individuals
unprotected by the FHA does not eliminate a FHA violation.”
Children’s Alliance, 950 F. Supp. at 1496 n.8.23

22
Another possibility where no similarly situated entity will be available
is where the nature of the defendant’s discrimination is such that no such
entity could exist. For example, in Pyke v. Cuomo, 258 F.3d 107, 109 (2d
Cir. 2001), Native Americans alleging that state police officials
deliberately provided reduced police services on reservations were not
required to show that similarly situated groups were better treated because
it would be impossible to identify any other group “whose situation is
similar to Native Americans living on a reservation and exercising a
substantial measure of self-government independent of New York State.”
23
Children’s Alliance involved the use of a “proxy classification,” a
variation on the overdiscrimination theme. Proxy discrimination is a form
of facial discrimination. It arises when the defendant enacts a law or
policy that treats individuals differently on the basis of seemingly neutral
criteria that are so closely associated with the disfavored group that
discrimination on the basis of such criteria is, constructively, facial
discrimination against the disfavored group. For example, discriminating
against individuals with gray hair is a proxy for age discrimination
because “the ‘fit’ between age and gray hair is sufficiently close.”
 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH 33

The principle that overdiscrimination is prohibited
undergirds all of constitutional and statutory anti-
discrimination law, although it often goes unsaid precisely
because it is so foundational. Discriminatory laws, policies,
or actions will often have negative effects (whether intended
or not) on individuals who do not belong to the disfavored
group. This does not, however, change the fact that such
laws, policies, or actions are discriminatory when they are
undertaken for the purpose of harming protected individuals.

Arlington Heights itself relies on the assumption that
overdiscrimination is illegal. The issue in Arlington Heights
was whether a Chicago suburb’s denial of a rezoning
application for construction of an affordable housing complex
was racially motivated. Arlington Heights, 429 U.S. at 259.
Although on the facts of the case the Court held that the
evidence did not support the Plaintiffs’ allegations that a
discriminatory motive was at work, the Court’s analysis
presumed that the Plaintiffs would have prevailed if they had
demonstrated that Arlington Heights denied the rezoning
application in order to limit housing opportunities for
minorities. See id. at 270. This would have been so even
though the racial minorities who were denied housing
opportunities would not have been treated any worse than the

McWright v. Alexander, 982 F.2d 222, 228 (7th Cir. 1992). The
difference between proxy discrimination and facially neutral
overdiscrimination is merely one of degree. In a case of proxy
discrimination the defendant discriminates against individuals on the basis
of criteria that are almost exclusively indicators of membership in the
disfavored group. By contrast, facially neutral overdiscrimination arises
when the defendant exhibits a willingness to distinguish amongst
individuals on the basis of facially neutral criteria, knowing (but
accepting) that some individuals who are not members of the disfavored
group will suffer alongside the targeted individuals.
34 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH

low-income white individuals who would also have been
deprived of the same housing opportunities.

Similarly, in Hunter v. Underwood, 471 U.S. 222 (1985),
the Supreme Court unanimously struck down a provision of
the Alabama constitution that disenfranchised individuals
convicted of crimes involving moral turpitude. The provision
was facially neutral because it applied to persons of all races.
Id. at 227. However, there was compelling evidence that the
provision was adopted at the turn of the 20th century for the
purpose of disenfranchising black voters who were convicted
of such crimes at a far higher rate than white voters.
Assuming, arguendo, that the disenfranchisement provision
would be constitutional if it were passed in modern times
without the intent to discriminate against racial minorities, the
Court nonetheless held that because it had been enacted for a
discriminatory purpose it “violates equal protection under
Arlington Heights.” Id. at 233. The 1903 Alabama
legislature’s willingness (or intent) to also disenfranchise
white individuals convicted of crimes of moral turpitude was
irrelevant; all that mattered was that the act “would not have
been adopted . . . in the absence of the racially discriminatory
motivation.”24 Id. at 231.

24
The City’s and its amicus’ reliance on United States v. O’Brien,
391 U.S. 367 (1968), for the proposition that courts may not invalidate a
law that was motivated by animus purely on the basis of the legislature’s
intent is therefore misplaced. O’Brien does not apply to equal protection
cases or cases involving statutory anti-discrimination law where the very
nature of the legal inquiry is whether an action taken by the legislature
was motivated by animus. See City of Columbia v. Omni Outdoor
Advertising, Inc., 499 U.S. 365, 377 n.6 (1991) (making this point and
citing Arlington Heights); see also Church of the Lukumi Babalu Aye, Inc.
 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH 35

More recently, in City of Modesto, this court held that
several unincorporated majority-Latino neighborhoods had
created a triable issue of fact that they had been victims of
disparate treatment on account of their racial composition.
The communities had not been included in a tax sharing
agreement between the county in which they were located
and the City of Modesto while communities with a majority-
white populations were included in the agreement. City of
Modesto, 583 F.3d at 697. Neighborhoods party to the
agreement were more likely to be annexed by Modesto at
some point in the future. Id. at 703–04. Modesto argued that
the excluded neighborhoods could not maintain an intentional
discrimination claim because the excluded communities had
significant white populations, and those white residents
would also suffer as a result of the alleged discrimination.
We rejected that argument, concluding that the relevant
question was whether the excluded neighborhoods were
treated differently because of their overall racial composition,
not whether Modesto’s discriminatory actions would affect
only racial minorities. See id. at 704. In other words,
Modesto’s willingness to discriminate against both minorities
and white citizens living in majority-minority communities
did not cleanse it of any discriminatory intent that it may have
harbored.

Other Circuits have similarly condemned instances of
overdiscrimination. For example, in Town of Clarkton v.
NAACP, 682 F.2d 1055 (4th Cir. 1982), the Fourth Circuit
held that Clarkton had intentionally discriminated against
African Americans when it withdrew from a multi-county

v. City of Hialeah, 508 U.S. 520, 535 (1993) (subjecting to heightened
scrutiny a law whose “object” was to discriminate on the basis of
religion).
36 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH

affordable housing project in response to white residents’
racially driven hostility to the project. This analysis was not
changed by the fact that the abandonment of the project had
“an effect touching upon all citizens” of the county. Id. at
1066. Rather, because “it is the black population that will
suffer . . . in a disproportionate manner,” the town’s actions
were still discriminatory. Id. at 1066 (emphasis added).
Similarly, in Abdu-Brisson, the Second Circuit held that an
airline could be guilty of age discrimination if it intentionally
imposed unfavorable employment conditions upon all of the
employees it inherited after its purchase of a competitor
airline in order to discriminate against the portion of the
inherited employees who were elderly. 239 F.3d at 467–68.

Here, the district court relied on Gamble v. City of
Escondido, 104 F.3d 300 (9th Cir. 1997); Schwarz v. City of
Treasure Island, 544 F.3d 1201 (11th Cir. 2008); and Oxford
House-C v. City of St. Louis, 77 F.3d 249 (8th Cir. 1996), in
concluding that plaintiffs in disparate treatment suits must
identify a similarly situated entity. None of these cases
supports such a proposition. In Gamble, we relied in part on
the absence of a similarly situated entity to dismiss a case
proceeding under a McDonnell Douglas theory. 104 F.3d at
305. Gamble therefore has no application here. As to
Schwarz and Oxford House, both cases, unlike this one,
involved the enforcement of pre-existing, facially neutral
zoning laws against group homes, and neither case involved
any suggestion that the zoning laws in question had been
enacted with a discriminatory purpose. Schwarz, 544 F.3d at
1206–11, 1216; Oxford House-C, 77 F.3d at 252.
Accordingly, again, neither case is relevant here.
 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH 37

In fact, Schwarz expressly acknowledged that its “analysis
might have been different if [the group home] claimed that
the City enacted the [zoning law] in order to discriminate
against people with disabilities.” Id. at 1217. This precise
situation arose shortly thereafter. In Caron Found. of Florida
Inc. v. City of Delray Beach, 879 F.Supp. 2d 1353 (S.D. Fla.
2012), a district court confronted exactly the circumstances
foreseen in Schwarz. In Caron, the City of Delray enacted a
zoning ordinance much like the one in Schwarz, but there was
evidence that Delray’s ordinance was enacted in reaction to
an increase in group homes and with the intent to discriminate
against them. Caron, 879 F.Supp. 2d at 1361–63, 1367–70.
Applying Schwarz, the district court in Caron correctly, in
our view, determined that the zoning laws in question were
discriminatory in light of their apparent discriminatory
purpose. The circumstances in Caron are nearly identical to
the ones alleged in this case. See also Nevada Fair Housing
Ctr. v. Clark Cnty., 565 F. Supp. 2d 1178 (D. Nev. 2008).

C

Had the district court applied the proper analysis under
Arlington Heights, it would have necessarily concluded that
the Plaintiffs’ claims survive summary judgment. Taken in
the light most favorable to the non-moving party, the
legislative history indicates that the Ordinance was enacted
for the purpose of eliminating or reducing the number of
group homes throughout the City. The Plaintiffs have come
forward with statistics, provided by the City, that the
Ordinance had the effect of reducing group home beds by
40%. The Plaintiffs also provided evidence that group homes
were specifically targeted for enforcement. The City created
a task force to locate group homes, undertake surveillance of
them, and enforce the zoning code strictly against them.
38 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH

After the Ordinance was enacted, every nonconforming group
home in the City that did not apply for a use permit was
served with an abatement notice within three days of the 90-
day use permit application deadline, whereas no abatement
notices were sent to any other entities engaged in a
nonconforming use until the Plaintiffs pointed out those
entities during the litigation.

All of the circumstances surrounding the enactment of the
Ordinance compel the conclusion that the Plaintiffs have
raised a triable issue of fact as to whether the Ordinance was
motivated by the desire to discriminate against the disabled.
The Ordinance was designed to replace the amended
Moratorium, which the district court held to be facially
discriminatory because it expressly treated group homes
worse than short-term lodgings. Although the Ordinance,
unlike the amended Moratorium, was facially neutral, the
Plaintiffs have provided evidence that it had (and, according
to Council Member Henn, was designed to have) the same
effect on group homes as the Moratorium: It ensured as a
practical matter that no new group homes opened in Newport
Beach.

Council Member Henn also promised that the Ordinance
would reduce the number of pre-existing group homes. At
the same meeting, Council Member Henn explained that the
drafters of the Ordinance would have preferred to simply ban
all group homes, but that only a facially neutral Ordinance
stood any hope of surviving the anticipated legal challenge.
In response to criticism from residents that the Ordinance was
not a blunt enough instrument to rapidly expel group homes
from the City, Henn urged the critics to “judge us by our
actual results.” Nonetheless, because of pressure from
citizens who owned short-term lodgings, the City Council
 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH 39

made the ordinance narrower than outside counsel, Goldfarb,
had initially advised. Goldfarb was fired, and the final
Ordinance was drafted with the assistance of new counsel
who consulted with the CCNB to develop an Ordinance that
applied to a much narrower selection of facilities. Cf. Church
of the Lukumi Babulu Aye, Inc. v. City of Hialea, 508 U.S.
508, 538–41 (1993) (describing as a “religious gerrymander”
a city’s enactment of facially neutral regulations regarding
animal slaughter that had the (intended) effect of prohibiting
Santeria worship, while simultaneously permitting exceptions
that allowed other types of animal slaughter carried out by
more favored groups).25 In short, a jury could find, based on
the record before us, that the primary purpose of the
Ordinance was to shut down group homes and prevent new
ones from opening in Newport Beach, but to do so in facially
neutral terms to avoid invalidation by a court.26

25
Although Lukumi Babulu was a Free Exercise case, rather than a
statutory discrimination challenge under the FHA, the Court’s analysis of
discriminatory intent in Lukumi Babulu was guided in part by the
Arlington Heights factors. Lukumi Babalu, 508 U.S. at 540.
26
The foregoing account of the City’s legislative motive does not
examine the role that City residents’ animus played in bringing about the
Ordinance. Every public meeting leading up to the City Council’s
ultimate enactment of the Ordinance was marked by angry comments from
citizens who referred to the disabled residents of the group homes as
“criminals,” “gang members,” “druggies,” “not true handicapped” and
other derogatory terms. The record suggests that City Council members
were responsive to the public’s views.

It is beyond dispute that legislatures may not “defer[] to the
[discriminatory] wishes or objections of some fraction of the body
politic.” City of Cleburne, Texas v. Cleburne Living Ctr., 473 U.S. 432,
448 (1985). A jury could certainly infer from this record that private
citizens’ “hostility motivated the City in initiating and continuing its
enforcement efforts.” Tsombanidis, 352 F.3d at 580; see also Metoyer v.
40 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH

A jury could also conclude that the Ordinance was
designed to eliminate group homes rather than to serve as a
neutral amendment to the City’s zoning laws. The Ordinance
amended the definition of “single housekeeping unit” to
exclude living arrangements in which residents (1) are not all
signatories to a single written lease and (2) do not choose
their own housemates. NBMC § 20.03.030. These
characteristics subject group homes, but not vacation homes,
to a more restrictive zoning regime. To be sure, the
Ordinance affects adversely some other facilities that are not
group homes. “Group residential” arrangements such as
“boarding or rooming houses, dormitories, fraternities,
sororities, and private residential clubs” are now completely
prohibited in residential zones. NBMC § 20.05.030(C). The
record, however, includes evidence that this aspect of the
Ordinance has been enforced against few, if any, facilities.
Therefore it appears either to be the case that very few “group
residential” facilities that were not group homes existed when
the Ordinance was enacted, or if such facilities existed, the
City did not enforce the Ordinance against them. In either
case, all group homes were ultimately affected by the
Ordinance and few other facilities were.

Finally, the City engaged in three notable procedural
irregularities leading up to the enactment of the Ordinance.
First, it created an ad hoc committee that met privately and
off the record, something the City had never done before, to

Chasman, 504 F.3d 919, 938 (9th Cir. 2007) (noting that discrimination
arises in the Title VII context when a third-party’s animus “affected” the
decisionmaker).
 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH 41

work with new counsel to draft the Ordinance.27 Second, the
City conducted a survey that was distributed primarily to
individuals opposed to group homes, to justify regulating
group homes differently from short-term lodgings.28 Third,
even prior to the Ordinance’s enactment, a City task force
was formed to work with City residents to strictly enforce the
zoning code against group homes.

In short, applying the Arlington Heights factors to the
evidence in this record, it is clear that the Plaintiffs have met
their burden to create a triable issue of fact as to whether the
Ordinance was enacted with a discriminatory purpose of
harming group homes and, therefore limiting the housing

27
The Plaintiffs suggest that having committee meetings in private
violated California’s open meeting law, Cal. Gov’t Code § 54952.2. This
appears to be incorrect. Section 54952.2 prohibits private meetings of a
“majority of members of a legislative body.” Id. The ad hoc committee
had three members, whereas the Newport Beach City Council appears to
have seven members (one of whom serves as Mayor). See
http://www.newportbeachca.gov/index.aspx?page=74 (last visited Oct. 27,
2012).
28
The City did not rely on objective measures, such as the number of
formal police complaints about activities at group homes, as a basis for
enacting the Ordinance. In fact, a memo from Goldfarb states that
vacation homes generate more calls to the police than group homes, and
a letter submitted to the City by a group home that is not a plaintiff here
provided statistics showing that its facility had generated fewer calls for
service than other residential units on the same block and fewer calls for
service than had been the case at the same property prior to the opening
of the group home.
42 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH

options available to disabled individuals recovering from
addiction.29

D

The City argues that the Plaintiffs cannot show that they
suffered any adverse effects as a result of its actions, even if
those actions were motivated by discriminatory intent,
because, on appeal, the Group Homes have not challenged the
City’s denial of their individual permit applications. The City
fails to appreciate that it was the imposition of the Ordinance
itself that triggered the Plaintiffs’ alleged injuries. We have
recognized that it is unlawful discrimination to subject
individuals to “the rigors of the governmental or
administrative process . . . with an intent to burden, hinder, or
punish them by reason of their [membership in a protected
class.]” Flores v. Pierce, 617 F.2d 1396, 1391 (9th Cir.
1980) (Kennedy, J.), cert. denied, 449 U.S. 875 (1980).

That is what is alleged to have happened here. Prior to
the Ordinance, group homes were classified as single
housekeeping units and therefore were able to operate freely
in residential zones, subject only to the restrictions that
governed other residences. After the Ordinance’s enactment,
however, every group home was required to submit a detailed
application for a special use permit and/or reasonable
accommodation in order to continue operating and to attend

29
For similar reasons, we also agree with the Plaintiffs that they created
a triable issue of fact with respect to their discriminatory enforcement
claims. The evidence that the Ordinance was enacted with discriminatory
intent also provides support for the Plaintiffs’ claim that the City’s
enforcement strategy was similarly calculated to accomplish a
discriminatory goal, as does the City’s actual enforcement strategy.
 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH 43

public hearings at which those applications were subjected to
public comment.30 Subjecting an entity protected by anti-
discrimination laws to a permit or registration requirement,
when the requirement is imposed for a discriminatory
purpose, has obvious adverse impacts upon that entity, and
being forced to submit to such a regime is sufficient to
establish injury in a disparate treatment claim. See Flores,
617 F.2d at 1391. This would be true even if such permits
were granted freely, which is decidedly not the case here.

Plaintiffs have introduced evidence that the Ordinance
had at least two kinds of adverse effects upon them, either of
which would be sufficient to allow them to maintain an action
under the FHA or ADA. First, the unrebutted evidence shows
that the Group Homes expended substantial time, effort, and
resources applying for special use permits and reasonable
accommodations, none of which would have been necessary
had the Ordinance not been enacted. See, e.g., Walker,
272 F.3d at 1124–25 (staff time spent responding to
intentionally discriminatory actions by a municipality is an
injury sufficient to confer standing under the FHA and
FEHA). Second, Plaintiffs have produced evidence that the
Ordinance led to the closure of approximately one third of the
City’s Group Homes and barred new group homes from being
established in all but multi-family residential zones. This
resulted in a reduced diversity of housing options for the
disabled individuals served by group homes. See Olmstead

30
Although the reasonable accommodation process ostensibly allowed
exceptions to the City’s zoning policy that would be consistent with state
and federal anti-discrimination laws, it was as complex, time-consuming,
and restrictive as the special use permit process. Compare NBMC
Chapter 20.91A (use permit application process), with NBMC Chapter
20.98 (reasonable accommodation application process).
44 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH

v. L.C. ex re. Zimring, 527 U.S. 581, 599–600 (1999)
(recognizing that segregation of the disabled is an injury
protected by the ADA). For these reasons, the City’s waiver
argument based upon the fact that the Group Homes no
longer challenge the City’s denial of their permit applications
is irrelevant. The Plaintiffs show they were harmed by the
imposition of the discriminatory permit regime, and this is
more than sufficient for them to maintain a claim for
disparate treatment based upon the imposition of the permit
requirement itself.31

The City’s argument that the Plaintiffs cannot use
statistical evidence to demonstrate that the Ordinance
discriminated against them simply because they voluntarily
dismissed their disparate impact claims is also unavailing.
First, the City misdescribes the posture of this case. The
Plaintiffs voluntarily dismissed their claim to injunctive relief
under a disparate impact theory, but did not dismiss their
claims to damages under that theory. Those damages claims
were dismissed by the district court in the second summary
judgment order relating to damages, and the Plaintiffs have
appealed that ruling. Second, even if the Plaintiffs had
waived their disparate impact claims in their entirety, the City

31
The City’s argument as to Pacific Shores is slightly different, but
equally without merit. According to the City, Pacific Shores did not suffer
any adverse effects as a result of the Ordinance because it was granted a
reasonable accommodation for twelve beds. This argument suffers from
the same defect: the very requirement to apply for a reasonable
accommodation adversely affected Pacific Shores. Just as plaintiffs in a
discrimination action need not have applied for a permit in order to allege
that a permit requirement is discriminatory, see City of Modesto, 583 F.3d
at 705 n.7, so too may plaintiffs challenge a discriminatory permit regime
even if they begrudgingly apply for a permit in order to minimize the harm
they suffer under that regime.
 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH 45

is plainly wrong that their waiver of those claims would
prevent them from using statistical evidence that also would
have been helpful to prove disparate impact to demonstrate
discriminatory intent. See Arlington Heights, 429 U.S. at 265
(noting that disparate impact “is not irrelevant” to proving
intentional discrimination); Metoyer v. Chassman, 504 F.3d
919, 937 (9th Cir. 2007) (discriminatory acts towards third
parties may be used to show actions taken against the plaintiff
were motivated by discrimination); Lowe, 775 F.2d at 1008
(9th Cir. 1985) (statistical evidence can be used to show
disparate treatment); Costa, 299 F.3d at 860 (noting that
motive can “in some situations be inferred from the mere fact
of differences in treatment” (internal quotation marks
omitted)). A single piece of evidence can support multiple
theories of liability. Thus, all of the City’s waiver arguments
fail.

II

Finally, we turn to the district court’s second summary
judgment order, in which it dismissed all of the Plaintiffs’
claims for damages on the ground that they “cannot establish
that any action taken by the City was the actual and
proximate cause” of any economic harm suffered by the
Plaintiffs. The Group Homes argue that they submitted
sufficient evidence to survive summary judgment with
respect to whether the City caused them to incur three
separate categories of damages: (1) costs of complying with
the Ordinance, i.e., diverted staff time and legal expenses; (2)
lost income as a result of the business climate resulting from
the Ordinance; and (3) costs associated with counteracting the
impression that the Group Homes were being shut down by
the City. In addition, the individual Plaintiffs argue that they
created a triable issue of fact as to whether they suffered
46 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH

compensable emotion distress. Because most of the Plaintiffs
created a triable issue of fact regarding each type of damage,
we reverse, except with respect to the district court’s
determination that Bridgeman failed to create a triable issue
of fact as to whether she suffered compensable emotional
distress.

A

The Group Homes’ respective managers provided sworn
declarations indicating that hundreds of hours of their own
time and their staffs’ time was diverted to preparing the
complex applications necessary to request a use permit and/or
reasonable accommodation. Each of the Group Homes also
expended significant legal fees preparing its applications and
challenging the denials of those applications to the City
Council. These expenditures were plainly caused by the
enactment and enforcement of the Ordinance, and they are
recoverable.

Diverted staff time is a compensable injury. See Walker,
272 F.3d at 1124–25; see also Convoy Co. v. Sperry Rand
Corp., 672 F.2d 781, 785–86 (9th Cir. 1982); cf. Fair
Housing of Marin v. Combs, 285 F.3d 899, 903–04 (9th Cir.
2002) (holding that an organizational plaintiff suffered injury
sufficient to confer Article III standing where it diverted staff
resources to combating FHA violations). As we explained in
Convoy Company, “[t]he issue is not whether [the Plaintiffs]
would have paid the [employees’] salaries” absent the
defendant’s wrongdoing, but, rather, whether the Plaintiffs
were “deprived of the services [they] paid for” because of the
need for the employees to divert their attention to minimize
the damage from the defendant’s misconduct. 672 F.2d at
785. The staff time spent preparing and presenting permit
 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH 47

applications under the Ordinance would have otherwise been
spent promoting the Group Homes’ business and serving their
residents. This diversion of time therefore represents a loss
for which the Group Homes may recover. Walker, 272 F.3d
at 1124–25.

The Group Homes may also recover the legal costs they
spent preparing their permit and reasonable use applications
and presenting those applications before City hearing officers
and the City Council. The district court’s conclusion that
such costs were “better resolved” through an application for
attorney’s fees was, therefore, erroneous. We have held that
attorney’s fees may be recovered as damages in a civil rights
action where the fees were necessary to obtain a permit in a
proceeding that only occurred as a result of city officials’
discriminatory animus. See Flores, 617 F.2d at 1392 (9th Cir.
1980); accord Sherwin Manor Nursing Ctr. v. McAuliffe,
37 F.3d 1216, 1221–22 (7th Cir. 1994). In Flores, Judge
(now Justice) Kennedy upheld an award of attorney’s fees, as
damages, to § 1983 plaintiffs for the legal services necessary
to combat the city’s challenge to the plaintiffs’ liquor license
application where city officials had deliberately delayed the
application because of racial animus. 617 F.2d at 1388, 1392;
see also Barlow v. Ground, 943 F.2d 1132, 1136 (9th Cir.
1991) (holding that a § 1983 plaintiff could recover attorney’s
fees as damages where those fees were incurred defending
against criminal charges that directly resulted from the
defendant police officer’s wrongful arrest of the plaintiff).
Just as the plaintiffs in Flores and Barlow were entitled to
attorneys fees spent combating wrongfully instituted legal
proceedings, so too may the Group Homes here recover the
attorney’s fees necessary to comply with the use permit
requirement that the City imposed for an allegedly
discriminatory reason.
48 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH

B

The district court acknowledged that the Group Homes
experienced a dramatic decline in business shortly after the
enactment of the Ordinance. It found, however, that the
Plaintiffs did not adequately raise a triable issue of fact as to
whether the City’s actions caused these business losses. In
reaching this determination, the district court misapplied
well-established principles of causation and failed to draw
every inference in the Group Homes’ favor, as it was required
to do at the summary judgment stage.

We begin with the principle that a “damages action under
the FHA sounds basically in tort—the statute merely defines
a new legal duty, and authorizes the courts to compensate a
plaintiff for the injury caused by the defendant’s wrongful
breach.” Garcia v. Brockway, 526 F.3d 456, 464 (9th Cir.
2008) (en banc) (brackets omitted) (quoting Curtis v. Loether,
415 U.S. 189, 195 (1974)); see also Henrietta D v.
Bloomberg, 331 F.3d 261, 278–79 (2d Cir. 2003) (applying
common law tort principles of causation to the ADA).
Accordingly, general tort principles of causation usually
govern statutory discrimination cases except when there is a
statutory command to the contrary. See, e.g., Silver Sage
Partners v. City of Desert Hot Springs, 251 F.3d 814, 819–21,
824–25 (9th Cir. 2001) (applying general tort principles to the
calculation of damages under the FHA); Samaritan Inns, Inc.
v. District of Columbia, 114 F.3d 1227, 1234–35 (D.C. Cir.
1997) (same).

At tort, plaintiffs bear the burden of demonstrating that
the defendant’s conduct caused some harm suffered by the
plaintiffs. However, the plaintiffs are “not required to
eliminate entirely all possibility that the defendant’s conduct
 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH 49

was not a cause. It is enough that [they] introduce[] evidence
from which reasonable men may conclude that it is more
probable that the event was caused by the defendant than that
it is not.” Restatement (Second) of Torts § 433B, cmt. b
(1965) (hereinafter “Restatement”). Moreover, “[t]he
plaintiff doesn’t have to prove a series of negatives; he
doesn’t have to ‘offer evidence which positively excludes[s]
every other possible cause of the accident.’” BCS Servs., Inc.
v. Heartwood 88, LLC, 637 F.3d 750, 757 (7th Cir. 2011)
(quoting Carlson v. Chisholm-Moore Hoist Corp., 281 F.2d
766, 770 (2d Cir. 1960) (Friendly, J.)), cert. denied,
132 S. Ct. 253 (2011). Rather, plaintiffs can demonstrate
causation by proving that the defendant’s wrongful conduct
was a “substantial factor” in bringing about the harm in
question. Restatement § 431(a); see also Benefiel v. Exxon
Corp., 959 F.2d 805, 807 (9th Cir. 1992) (describing the
“substantial factor” test as a “uniformly accepted principle[]
of tort law”). The doctrine of proximate cause serves merely
to protect defendants from unforeseeable results of their
negligence when “too many unexpected things [have]
happen[ed] between the defendant’s wrongdoing and the
plaintiff’s injury.”32 BCS Services, 637 F.3d at 754.

32
The fact that FHA plaintiffs’ injuries must be proximately caused by
the defendant’s discriminatory acts does not, of course, mean that
defendants are not liable for foreseeable, but indirect, effects of
discrimination. For example, in Silver Sage we held that a city that
wrongfully withheld its approval of a fair housing project could be held
liable not just to the developers of the project for their lost profits, but also
to a real estate broker and a businessman who, respectively, did not
receive broker’s fees and syndication fees that would have been paid had
the project gone forward. 251 F.3d at 822–23; see also San Pedro Hotel
Co., 159 F.3d at 475.
50 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH

Causation is an intensely factual question that should
typically be resolved by a jury. See, e.g., White v. Roper,
901 F.2d 1501, 1505–06 (9th Cir. 1990) (citing W. Prosser &
W. Keeton, The Law of Torts, §§ 41, 42, 45 (5th ed. 1984));
Restatement § 434(2). Juries are expected to rely on their
common sense in resolving questions of causation. Indeed,
it is jurors’ “common experience of living on a populated
planet” that renders them at least as reliable, if not more so,
than a single judge at assessing issues of causation. David W.
Robertson, The Common Sense of Cause In Fact, 75 Tex. L.
Rev. 1765, 1769 (1997). As the Seventh Circuit has
recognized, “[o]nce a plaintiff presents evidence that he
suffered the sort of injury that would be the expected
consequence of the defendant’s wrongful conduct, he has
done enough to withstand summary judgment on the ground
of absence of causation.” BCS Services, 637 F.3d at 758.
Contrary to the Plaintiffs’ suggestion, these principles are not
a matter of burden-shifting—plaintiffs always bear the burden
of proving that the defendant’s actions caused their
injuries—but rather a simple recognition that making
reasonable inferences about causation is one of the things that
juries do best.

We applied these principles in Mead v. Retail Clerks Int’l
Assoc., Local Union No. 839, 523 F.2d 1371 (9th Cir. 1975),
when we held that a trier of fact could infer that a union’s
illegal strike had “materially contributed” to the employer’s
lost sales (and therefore was a substantial factor in bringing
the loss about) because the “injury alleged . . . was precisely
the type of loss that the claimed violations . . . would be likely
to cause.” Id. at 1378 (quoting Zenith Radio Corp. v.
Hazeltine Research, Inc., 395 U.S. 100, 125 (1969)). This
was so even though the union, much like the City in this case,
argued that it was equally likely that the lost sales were
 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH 51

attributable to adverse business conditions and negative
publicity regarding the employer’s labor practices. Id. at
1376.

Although Mead drew this principle from cases arising in
the anti-trust context, we recognized that these anti-trust cases
merely “incorporat[e] common law principles of causation,”
albeit with appropriate modifications. Id. Further, just as in
Mead, here, there is “an exact parallel between the problem
faced by a plaintiff attempting to show that lost profits
resulted from anti-competitive activity rather than from other
factors affecting the business,” and the problem faced by the
Group homes in attempting to prove that their losses were
caused by the defendant’s alleged intentional discrimination.
Id. at 1378. In both kinds of cases, “damage issues . . . are
rarely susceptible of the kind of concrete, detailed proof of
injury which is available in other contexts.” Id. at 1377
(quoting Zenith Radio Corp., 395 U.S. at 123.)

Here, as in Mead, we ask not whether the Group Homes
have proven that all of their business losses were attributable
to the Ordinance’s enactment and enforcement, but rather, we
examine whether they created a triable issue of fact that the
City’s actions “materially contributed” to these losses.
Although the City and the district court are correct that the
Group Homes did not submit declarations from particular
residents stating that they left because of the City’s actions,
there was no requirement that they do so. Drawing all
inferences in the Group Homes’ favor as we are required to
do, we conclude that they submitted ample evidence that the
City contributed to their losses.

Just like the employer in Mead, the Group Homes
submitted evidence that their business declined and that the
52 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH

resulting losses were both a predictable, and desired, result of
the City’s actions. The Group Homes’ managers stated that
they attract new residents primarily through referrals from
care providers and their websites. There was evidence that
both referral sources were affected by the Ordinance. The
City’s enforcement of the Ordinance was widely publicized
in the care provider community and “[f]ew counselors and
therapists wanted to refer their clients to [the Group Homes]
because of the City’s actions” as a result. NCR’s manager
described its referrals as “dr[ying] up completely” after the
City’s second denial of its permit application. The managers
also explained that “our internet presence was drowned out
by other web pages concerning the City’s actions.” In
addition, current and prospective residents expressed concern
to the managers about whether the Group Homes would
close. A jury could infer from these facts that prospective
residents were not referred to or deliberately stayed away
from the Group Homes, and opted to reside elsewhere, as a
result of the Ordinance’s enactment and enforcement, without
hearing any particular individual testify that he did so.

Indeed, prior to taking the opposite stance in litigation,
city officials themselves credited the Ordinance with harming
group homes. At a public meeting, Kiff stated that the
Ordinance had been responsible for a reduction in bed counts
of as much as 40% and described it as a key step to
“bring[ing] owner-occupied back.” In enacting the
Ordinance, Council Member Henn promised City residents
that it would “result in a substantial reduction in the
number of group homes on the Peninsula” and asked to be
“judge[d] . . . by our actual results.”

Each of the Group Homes presented evidence that it
experienced a precipitous decline in business after the
 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH 53

passage of the Ordinance. Yellowstone’s revenues declined
over 50% between 2007 and 2009. NCR’s dropped over 40%
between 2007 and 2008; it closed in 2009 due to insufficient
business.33 Pacific Shores’ business also declined nearly 50%
in 2008. Furthermore, it served fewer residents than it
otherwise would have due to the 12-bed occupancy limitation
it accepted in order to secure approval of its reasonable
accommodation application.34

In sum, a jury could easily infer that the City’s actions
materially contributed to the Group Homes’ losses. The
managers all stated that the Ordinance’s enactment and
enforcement led to reduced referrals, evidence showed that
closing group homes was one of the Ordinance’s primary
goals, and the Group Homes’ revenues plummeted in the
immediate aftermath of the Ordinance’s enactment.

This conclusion is not altered by the fact that some of the
negative publicity about the Group Homes, which may have
contributed to their business losses, was generated by the
CCNB and other third-party sources. At least some of the
negative publicity that allegedly harmed the Group Homes’

33
The City also argues that because NCR’s permit application was not
finally denied until January 2009, it could not have suffered any losses
prior to that time. This argument is simply wrong. A jury could certainly
conclude that the threat of eventual closure contributed to NCR’s decline
in business even prior to the final denial of its permit application.
34
There is no merit to the City’s contention that these losses are not
recoverable because Pacific Shores itself requested the 12-bed limitation.
This argument disregards the fact that Pacific Shores’ request for a 12-bed
limitation was a result of the Hearing Officer’s two prior denials of its
request for an 18-bed reasonable accommodation. In any event, as we
have already explained, no such limitation would have applied if the City
had not adopted the Ordinance in the first place.
54 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH

businesses was generated by the City itself, including on its
own website and in a letter circulated to all residents of
Newport Beach. In addition, the press coverage from third-
party sources was a foreseeable result of the enactment and
enforcement of the Ordinance, and therefore a jury could find
that it was proximately caused by the City. See Restatement
§§ 431, 440, 441, 442A; see also Farr v. NC Mach. Co.,
186 F.3d 1165, 1169–70 (9th Cir. 1999) (applying the
Restatement); Johnson v. Duffy, 588 F.2d 740, 743–44 (9th
Cir. 1978). In other words, the Group Homes have produced
sufficient evidence that “the [discriminatory] policy at issue
and the particular injury alleged are not only closely related,
they are cause and effect.” Harper v. City of Los Angeles,
533 F.3d 1010, 1027 (9th Cir. 2008) (internal quotation marks
and citation omitted).

Given that a jury could conclude that the City materially
contributed to the Group Homes’ decline in business, the
Group Homes were not obligated to prove their losses with
precision. As the Supreme Court has explained:

Where the tort itself is of such a nature as to
preclude the ascertainment of the amount of
damages with certainty it would be a
perversion of fundamental principles of
justice to deny all relief to the injured person,
and thereby relieve the wrongdoer from
making any amend for his acts. In such case,
while the damages may not be determined by
mere speculation or guess, it will be enough if
the evidence show the extent of the damages
as a matter of just and reasonable inference,
although the result be only approximate.
 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH 55

Story Parchment Co. v. Paterson Parchment Paper Co.,
282 U.S. 555, 563 (1931); see BCS Services, 637 F.3d at 759.
The City argues that this principle is confined to the anti-trust
context, but this view is undermined by cases from this court
and others. The D.C. Circuit has described Story Parchment
as a “seminal” case that “states the American rule on
damages,” Hill v. Iraq, 328 F.3d 680, 684 (D.C. Cir. 2003),
and it has been relied on to lower plaintiffs’ burden of proof
regarding the quantum of damages in FHA cases, see Silver
Sage, 251 F.3d at 820 n.6; Samaritan, 114 F.3d at 1235, and
in countless other statutory tort-like contexts. See, e.g., Hill,
328 F.3d at 684 (Foreign Sovereign Immunities Act); Fidelity
Interior Const., Inc. v. S.E. Carpenters Reg’l Council of
United Bhd. of Carpenters and Joiners, 675 F.3d 1250,
1264–65 (11th Cir. 2012) (Labor Management Relations
Act); Comcast of Illinois X v. Multi-Vision Elec., Inc.,
491 F.3d 938, 947 (8th Cir. 2007) (Cable Communications
Policy Act); Yonkers Branch-N.A.A.C.P. v. City of Yonkers,
251 F.3d 31, 40 (2d Cir. 2001) (apportionment of liability in
desegregation funding order); Adray v. Adry-Mart, Inc.,
76 F.3d 984, 988–89 (9th Cir. 1995) (trademark
infringement); Starceski v. Westinghouse Elec. Corp., 54 F.3d
1089, 1100–01 (3d Cir. 1995) (employment discrimination
under the Age Discrimination in Employment Act); Brock v.
Seto, 790 F.2d 1446, 1448 (9th Cir. 1986) (Fair Labor
Standards Act). Because the Group Homes submitted ample
evidence from which a jury could infer that they lost some
business as a result of the Ordinance, a jury would be entitled
to determine the precise quantum of damages by drawing
“just and reasonable” inferences from the evidence, given that
the City’s enactment of the Ordinance was an act that
“preclude[d] the ascertainment” of what portion of the Group
56 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH

Homes’ decline in business was attributable to other causes.35
Story Parchment, 282 U.S. at 563; see, e.g., Gilchrist v. Jim
Slemons Imports, Inc., 803 F.2d 1488, 1501 (9th Cir. 1986)
(holding that a jury reasonably estimated a terminated
employee’s lost commissions by relying on the commissions
he earned the previous year, even though that year had been
abnormally profitable).

C

For similar reasons, the Group Homes also created a
triable issue of fact regarding causation as to the expenses
they incurred contacting referral sources and advertising to
combat the widespread impression that the City was forcing
them to close. The Group Homes’ managers each testified
that they expended substantial amounts of time combating the
perception that they were on the verge of closure. As we
explained above, diverted staff time is a compensable harm
under the FHA and ADA. As to causation, the managers
themselves explained that their promotional efforts were not
undertaken because of a general, unexplained, drop in
business, but rather because their referral sources were
concerned whether they could remain open and provide a
healthy atmosphere as a result of the Ordinance. Similarly,
Pacific Shores increased its advertising expenditures in 2008
for the purpose of “inform[ing] the public that its Newport
Beach houses were open and provided a safe place for sober
living.” In addition, Pacific Shores and NCR each hired a
web consultant to assist them with promoting their presence
on the internet because publicity surrounding the City’s

35
The City, of course, would be free at trial to present proof to the jury
that a significant portion of the Group Homes’ losses were attributable to
other causes such as the downturn in the economy.
 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH 57

enforcement efforts appeared prominently in response to
internet searches. The Group Homes’ managers’ testimony,
which a reasonable jury could certainly credit, creates a
triable issue of fact as to whether these expenses were
incurred as a result of the Ordinance and the district court
clearly erred in concluding otherwise.

D

Finally, the individual Plaintiffs also challenge the district
court’s dismissal of their damages claims for emotional
distress. Damages are available under the FHA for any
unusual level of anxiety, embarrassment, or humiliation
suffered by plaintiffs as a result of a defendant’s
discriminatory actions, and a plaintiff’s testimony is
sufficient to create a triable issue of fact as to such emotional
distress. See 24 C.F.R. § 180.670(b)(3)(i) (HUD regulations
recognizing availability of damages for “humiliation and
embarrassment”); see also Krueger v. Cuomo, 115 F.3d 487,
492 (7th Cir. 1997) (tenant’s testimony sufficient to establish
FHA liability for emotional distress where her landlord’s
discriminatory actions made her “feel ‘real dirty,’ ‘like a bad
person,’ and ‘scared’ her”); Banai v. Sec’y of HUD, 102 F.3d
1203, 1207 (11th Cir. 1997) (damages “clearly” available
under FHA for “anger, embarrassment, and emotional
distress” suffered by spurned tenant); Morgan v. Sec’y of
HUD, 985 F.2d 1451, 1459 (10th Cir. 1993) (damages
available under FHA for any emotional distress “which
exceeds the normal transient and trivial aggravation attendant
to securing suitable housing”); cf. Phiffer v. Proud Parrot
Motor Hotel, Inc., 648 F.2d 548, 552–53 (9th Cir. 1980)
(damages available to § 1982 plaintiff for “humiliation and
distress” resulting from landlord’s discriminatory refusal to
rent commercial space).
58 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH

Wiseman, a resident at Pacific Shores, testified at his
deposition that he experienced anxiety as a result of Pacific
Shores’ potential closure. The anxiety was sufficiently acute
that he visited a doctor and was prescribed medication to
manage his symptoms. This testimony created a triable issue
of fact as to whether he suffered compensable emotional
distress. The City argues that Wiseman waived his damages
claim based on statements made at his deposition that he did
not believe the City owed him damages. In context, those
statements constitute an expression of Wiseman’s resentment
towards the City rather than a “voluntary, deliberate, and
informed” declaration of waiver. See Stroman v. West Coast
Grocery Co., 884 F.2d 458, 462 (9th Cir. 1989) (recognizing
that waivers of civil rights claims must be “voluntary,
deliberate, and informed” (citation omitted)).

We agree with the district court, however, that Bridgeman
did not create a triable issue of fact as to whether she suffered
compensable emotional distress. Bridgeman—a resident at
Pacific Shores—stated only that she was “kind of upset”
about the possible closure of Pacific Shores. However, she
also stated that she did not feel any stress as a result.
Although an FHA plaintiff can certainly recover for distress,
even if that distress does not physically manifest itself or
necessitate pscyhological counseling, Bridgeman’s mild
annoyance at the Ordinance is insufficient to support a claim
for emotional distress damages.

CONCLUSION

For the foregoing reasons we reverse the district court’s
dismissal of the Plaintiffs’ disparate treatment claims. The
Plaintiffs have created a triable issue of fact that the
Ordinance was enacted in order to discriminate against them
 PAC. SHORES PROPERTIES V. CITY OF NEWPORT BEACH 59

on the basis of disability, and that its enactment and
enforcement harmed them. We also reverse the district
court’s dismissal of all of the Plaintiffs’ damages claims,
except for its dismissal of Terri Bridgeman’s claim for
emotional distress.

REVERSED AND REMANDED.