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Section 8 Recipients Win Historic Class Action Settlement against L.A. Housing Authority for Illegal Cuts to Subsidies

Plaintiff Nidia Palaez sued the L.A. Housing Authority in 2007 for illegal cuts to her Section 8 voucher

Class Members Receive Over $2 Million in Reimbursements; Case Establishes Landmark Protections to Prevent Surprise Decreases in Rental Vouchers

Feb 6, 2018

A U.S. District Judge last week approved a class action settlement in which plaintiffs alleged that the Housing Authority for the City of Los Angeles (HACLA) failed to provide adequate notice to nearly 12,000 Section 8 tenants of a future reduction in rental voucher payments. After ten years of litigation, the settlement provides relief to 2,269 individuals who joined the lawsuit, providing over $2 million in reimbursements of overpayment in their rent, averaging $952 per claimant.  The case also establishes important protections for Section 8 recipients – with wide-ranging implications for any government communication – by establishing that notices must be written in clear and understandable language.

The lawsuit concerned a 2004 notice sent by the L.A. Housing Authority to Section 8 recipients that was so poorly worded that its meaning was incomprehensible. In 2015, a three-judge panel of the U.S. 9th Circuit Court of Appeals determined the notice “in no way explained the potential effect of the change: that it could potentially increase the tenant’s expected rent contribution and decrease his subsidy.” Consequently, Section 8 recipients were blindsided when their housing vouchers later decreased in value – forcing them to pay an average increase of $104 per month in rent.

“For low-income folks in the Section 8 program even small financial changes can have a devastating effect – it can mean the difference between putting food on the table and paying bills, or becoming homeless.” said Anne Richardson, director of Public Counsel’s Consumer Law Project. “This settlement helps to correct the Housing Authority’s mistake, and it provides protections for all Section 8 recipients moving forward.”

The Section 8 Housing Choice Voucher Program is a federal program that provides rental assistance to low-income individuals – providing protection to many vulnerable members of society, including single parent families, the elderly, and people with disabilities. Federal and state laws require that local housing authorities send Section 8 recipients a notice before any cuts to voucher payments are enacted.

“This case will set new precedent for this federal regulation,” explained Stephanie Carroll, an attorney with Public Counsel. “This ruling establishes that when communicating an important change to a Section 8 tenant’s housing cost, the government can’t use bureaucratic jargon that a regular person can’t understand.”

The 2004 notice that was sent by the L.A. Housing Authority used the term “payment standards” six times without ever defining what that term meant. The notice stated that “the Housing Authority lowered the payment standards used to determine your portion of the rent.” There was also no contact number that recipients could call with questions.

“Our clients had no idea what the ramifications of this notice would be, which was incredibly unfair to people who rely on this housing support to survive,” said attorney Barry Litt. “By identifying commonsense guidelines for government communications, this case strengthens the social safety net for our entire country.”

The lawsuit was filed in 2007 by Section 8 tenants Michael Nozzi and Nidia Palaez, along with the Los Angeles Coalition to End Hunger and Homelessness. The plaintiffs were represented by the nonprofit law firm Public Counsel, and attorney Barry Litt of Kaye, McLane, Bednarski & Litt, LLP.