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Section 8 Rent Increase Notice Found Lacking

PASADENA, Calif. (CN) - For the second time, the Ninth Circuit on Monday reversed a federal judge by finding that the Housing Authority of Los Angeles failed to adequately inform Section 8 tenants of an impending rent increase.

Class representatives Michael Nozzi and Nidia Palez sued the housing authority in 2007, claiming a flyer sent to Section 8 recipients in April 2004 did not clearly explain that many of them would have to pay on average $104 extra per month in rent.

The cuts to Section 8 spending, which affected 45 percent of the agency's 45,000 Section 8 tenants including 5,000 elderly families, were enacted due to federal budget cuts in 2004. However, federal regulations require the agency to give Section 8 renters at least one year's notice before their benefits are cut, according to the Ninth Circuit ruling.

"The flyer was, without doubt, entirely insufficient to meet this standard," Circuit Judge Stephen Reinhardt wrote for the three-judge panel. "In no respect does it reasonably inform its intended recipients of the changes to the payment standard, the meaning of those changes, or, most important, their effect upon the recipient."

The appeals court previously rescinded a federal judge's 2009 ruling in favor of the housing authority and remanded the case. Now on its second appeal, the Ninth Circuit found the housing authority can no longer present facts to show it provided adequate notice to the renters.

The panel rejected the housing authority's argument that it took other steps to notify Section 8 tenants of the changes, including offering meetings, training sessions and sending out a second notice detailing the actual change in benefits for specific households four weeks before the changes took effect.

"This was the first time tenants were actually notified that the change would affect them personally or that there would be e an increase to their rent contributions," Reinhardt wrote, referring to notices mailed to tenants four weeks before their subsidies were cut.

The panel found a Housing Authority employee practically regurgitated the language of a regulation requiring the agency to notify Section 8 recipients of changes, but the notice did not explain the impending changes in a clear or understandable way.

Its original flyer referred to "payment standards" six times without ever defining what the term meant, the circuit judge wrote.

The flyer also failed to inform tenants that the change would affect roughly 45 percent of Section 8 renters and require them to pay an average of $104 more in rent each month, even though those details were shared with the mayor of Los Angeles, the LA City Council and members of the United States Congress.

"Notably missing from the list of people who received an adequate explanation are the people who needed it most," Reinhardt wrote.

The panel applied the Mathews test, established by the 1976 U.S. Supreme Court case Mathews v. Eldridge, to determine if the plaintiffs' due process rights were violated and found the claims satisfied all three standards prescribed by the test.

"The totality of these deficiencies makes it is impossible to say that the flyer was reasonably calculated to give notice to the average recipient, or possibly even to the average reasonable jurist," Reinhardt wrote.

The Ninth Circuit reversed the district court's ruling on all claims, including California state law claims alleging the housing authority is liable for the "negligent" actions of its employees.

Additionally, the panel granted the plaintiffs' request to remand the case to a different judge, since U.S. District Judge George H. Wu specifically stated he wanted the case to be reassigned to a new judge if his ruling was reversed a second time.

"The district judge's statements constitute a 'rare and extraordinary circumstance' justifying reassignment," Reinhardt wrote for the panel. "The judge repeatedly made clear that he would have substantial difficulty setting aside his previous views of the case."

Wu must reverse his summary judgment ruling in favor the plaintiffs, and the panel added that further fact development may be necessary to determine the "size and validity" of the plaintiff class and appropriate remedies.

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