Judge rules JWB must stand trial for alleged use of algorithms against black tenants

A federal judge has allowed a lawsuit to move forward with his accusations that one of Northeast Florida's largest landlords used faulty algorithms to discriminate against black tenants, greenlighting a jury trial that could set precedents in civil rights law.

In an order issued last week, U.S. District Judge Wendy Berger denied Jacksonville Wealth Builders' motion to dismiss.

JWB Property Management LLC, which rents and manages thousands of homes in Duval County, and JWB Real Estate Capital LLC, which owns those properties, are being sued by four Jacksonville residents. These plaintiffs seek to represent a broader class of Black rental applicants who have been denied leases by JWB in recent years.

Jacksonville Area Legal Aid filed a lawsuit, presenting a new legal argument based on the Fair Housing Act of 1968, which The Tributary previously covered.

The plaintiffs allege that JWB biased the housing market against black people in Jacksonville by using “tenant screening services,” a type of background check software used by landlords nationwide to decide whether to accept or not aspiring tenants.

Both sides in the lawsuit declined to comment on the ongoing case beyond reiterating points they have already made in court filings.

“We vehemently deny any allegations of discrimination,” JWB co-founder and president Alex Sifakis told The Tributary last year. In court, JWB denied the allegations against it and argued that even if the claims were true, the plaintiffs had not demonstrated that they had violated the law.

A key part of the plaintiffs' argument is that the algorithms behind these decisions are flawed, resulting in some rental applicants being denied housing based on mistaken identities or outdated information. This argument is not new; this has been the basis for numerous Fair Credit Reporting Act lawsuits against tenant screening companies like SafeRent Solutions LLC, whose software is used by JWB.

The Jacksonville lawsuit is unique because it further claims that the way JWB uses this software creates illegal barriers for black people in particular, subjecting them to housing discrimination based on eviction records.

For years, JWB had what the lawsuit describes as a “blanket policy” of disqualifying any rental applicant who faced an eviction request in the previous five years. If a tenant screening report claims a person has an eviction record on their record, the plaintiffs say JWB considers that an automatic disqualification — even if the algorithm inaccurately cites another person's record , or if the algorithm is accurate, but it's only citing a case that was thrown out in court and didn't lead to an actual eviction.

This policy creates race-based discrimination on two fronts, the plaintiffs claim: First, Black Americans have faced a disproportionate share of eviction filings at the local and national level for decades; and second, JWB's properties are primarily located in parts of Duval County where there are more black residents than the county average.

In its motion to dismiss the lawsuit, JWB argued that the second point invalidates the rest of the plaintiffs' case. To prove that its eviction policy illegally discriminates in areas with higher black populations, JWB argued, the plaintiffs must demonstrate that the tenants they approved are “disproportionately non-black” compared to the population. tenant of these areas.

The plaintiffs in this case argue that JWB's deportation policy creates “disparate impact,” meaning it has a discriminatory effect regardless of intent. JWB can be held liable for disparate impacts, Judge Berger wrote.

JWB argued that the lawsuit should be dismissed because the plaintiffs failed to demonstrate a direct connection between the deportation policy and racial disparities.

But the plaintiffs' complaint cites data from property records and the U.S. Census to support their case. Nationally, it says Black renters make up more than half of all renters “threatened with eviction,” although they make up only about 19 percent of the country's total renting population. At the local level, he cites “a random sample of eviction petitions filed in Duval County Court” that found that 71 percent of those facing those petitions were black.

Berger said the plaintiffs have done enough to allege that JWB's eviction policy is “likely to disproportionately exclude rental opportunities for black applicants in Duval County compared to their white counterparts.”

JWB's insistence that plaintiffs must present accurate evidence, the judge wrote, was premature at this point in the case. She said the plaintiffs have presented enough evidence to suggest the policy unfairly affects many Black tenants, even without specific numbers, which is enough to pursue the case for now.

The plaintiffs “alleged statistical evidence that black applicants are more likely than white applicants to have been subject to a request for deportation,” the judge wrote. “This in turn would result in a significant reduction in housing opportunities for Black renters in Duval County, which would be directly related to this policy.” »

If no settlement is reached between the plaintiffs and JWB, the trial is expected to proceed before a jury on March 3, 2025.

The plaintiffs are seeking class certification from Berger, which would allow the four Jacksonville residents named in the suit to represent a broader group of people who may also be entitled to JWB relief.

This class would include all Black rental applicants in Duval County that JWB has rejected in recent years based on an eviction filing that does not represent an actual eviction on their record. The plaintiffs want JWB to reimburse all of these people for the fees they had to pay to apply for a rental. JWB currently charges between $80 and $160 in non-refundable application fees.

After the Jacksonville lawsuit was filed in March 2023 with its untested and potentially groundbreaking argument in American law, Chicago-area advocates filed a federal lawsuit and a civil rights complaint that presented virtually identical arguments against institutional owners of Cook County.

Charlie McGee covers poverty and the safety net for The Tributary. He is also a Report for America corps member at the GroundTruth Project, an independent, nonpartisan, nonprofit news organization dedicated to supporting the next generation of journalists in the United States and around the world. McGee can be contacted at [email protected]. Follow him on Twitter @bycharliemcgee.

Related