For years, Chicago’s poorest residents found themselves in a tough spot with the Chicago Housing Authority (CHA).
Public housing residents typically pay a reduced rent based on income and other factors, or a minimum rent of $75 per month. Under federal law, those who experience certain hardships and cannot afford the minimum rent have the right to request a hardship exemption.
In Chicago, many public housing residents were not aware that they could apply for the exemption, and some of them sold food stamps or borrowed money to cover rent. Others were evicted when they could not pay the minimum rent—which they should not have been charged.
Legal Action Chicago (LAC) sought to change CHA’s practices to keep low-income families in their homes.
LAC, the National Housing Law Project (NHLP) and a pro bono McDermott litigation team led by Dan Campbell teamed up to draft a class action complaint alleging that CHA did not take appropriate steps to inform families of their right to request a hardship exemption and that it otherwise charged the minimum rent when it should not have done so.
The team approached CHA with the evidence before filing suit.
Although CHA preferred to settle the case with the named plaintiffs behind closed doors, the pro bono team was only willing to accept the settlement offer on a class-wide basis, which would provide every public housing resident the benefit of the deal and make public the resolution of any agreement.
The team negotiated with CHA for the right to settle publicly rather than forcing them to engage in a lengthy, expensive lawsuit.
Within approximately 18 months, LAC, NHLP and the McDermott legal team achieved the intended goal of securing class certification and court approval for a settlement agreement with CHA. The agreement delivers better housing protections to the people in Chicago who need it most.
As a part of the resolution, CHA agreed to:
- Immediately stop charging rent to those eligible for the hardship exemption
- Erase past rent balances and stop reporting past due minimum rent amounts to credit bureaus and debt collectors
- Provide rent credits to qualifying tenants who had inappropriately been charged past rent
- Make the hardship exemption policy clearer and more readily available to public housing residents going forward
With a deal in place, the pro bono team filed a lawsuit to make the matter public and presented the settlement agreement to the court.
Because the primary relief for the class was not monetary, the legal teams had to take additional steps to ensure that the court would approve the settlement. Lawyers for LAC, NHLP, McDermott and CHA built a strategic, forward-thinking deal structure to make plain that it was a good-faith settlement, that it met all legal requirements, and that the relief was robust and meaningful to Chicago’s public housing residents.
The judge found that the settlement agreement satisfied all criteria, and not a single person included in the class opted out of the settlement or objected to the terms.
Settling the case brought a faster conclusion, providing more immediate relief to public housing residents. The outcome provides a guide for other cities and municipalities as they identify and remedy similar issues within their housing authorities.
The court awarded $75,000 in attorneys’ fees to LAC, NHLP and McDermott as part of the victory, which they will reinvest in legal aid organizations in Chicago to continue improving residents’ lives.
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