Clark v. Universal Builders, Inc.

A group of Black citizens (buyers) (plaintiffs) who bought new homes in Chicago from Universal Builders, Inc., and other sellers (sellers)(defendants), filed a class-action lawsuit against the sellers pursuant to 42 U.S.C. § 1982. The buyers alleged that pervasive racial discrimination had resulted in a dual housing market in Chicago, with one market for White homebuyers and one market for Black homebuyers. The buyers further alleged that the sellers had violated the buyers’ statutory and constitutional rights by taking advantage of the dual housing market, selling houses in the smaller, more concentrated Black market at higher prices and with less favorable terms than those available to homebuyers in the White market. A district court judge denied the sellers’ motion to dismiss, reasoning that the buyers had stated a claim pursuant to § 1982. The case was tried before a different district court judge. At trial, the sellers presented expert testimony that dual, racially segregated housing markets existed in Chicago and that Black buyers paid between 20.6 percent and 34.5 percent more than White buyers for similar homes. The buyers’ experts also testified that, despite buyers in the Black and White markets having similar levels of creditworthiness, the sellers refused to allow deed and mortgage transactions with Black buyers. Instead, the sellers offered only land-installment contracts, sometimes demanding down payments of 45 percent, so that they could charge exorbitant prices for new homes. At the close of the buyers’ case, the district court entered a directed verdict for the sellers, reasoning that the sellers sold only homes in the Black market and that the buyers therefore had not stated a § 1982 claim because they had offered no evidence that the sellers had sold property to White homebuyers at more favorable terms than they had offered to Black homebuyers. The buyers appealed.