Federal housing officials violated the free speech rights of three Berkeley residents who protested plans for a homeless shelter in their neighborhood, the Ninth U.S. Circuit Court of Appeals has ruled. The court ruled that a Department of Housing and Urban Development officials' eight-month investigation into the activities of project opponents trampled on rights that were clearly protected by the First Amendment. The court held that the five HUD officials (one of whom is now deceased) are individually liable for their actions, clearing the way for a U.S. District Court trial to determine damages. In a detailed opinion, the Ninth Circuit made clear that HUD officials had gone way too far with an investigation that involved the threat of subpoenas, demands that project opponents stop publishing a newsletter, and directives for the opponents to turn over all documents related to the homeless shelter. In fact, the investigation, which officials in Washington eventually killed, led to permanent changes in HUD policy for dealing with housing project opponents. In 1992, the nonprofit group Resources for Community Development (RCD) applied for a use permit to convert the Bel Air Motel on University Avenue in Berkeley into a homeless shelter. The city's Zoning Adjustment Board granted the permit; an appeal by the Coalition of Neighborhood Groups Opposing the Bel Air Conversion failed on a 4-4 City Council vote in April 1993. Soon thereafter, the Coalition filed a lawsuit alleging that zoning board member Linda Maio had a conflict of interest because she was also on the RCD board. An Alameda County Superior Court in early 1994 ruled against the Coalition, saying that the "good faith" exemption to the state's conflict of interest law saved Maio. Meanwhile, the director of Housing Rights, Inc., a Berkeley advocacy group, complained to HUD about "discriminatory scare tactics used by the opponents," such as warnings that the shelter would bring mentally disabled people and drug addicts to the area. In November 1993, the Housing Rights director signed a federal housing law complaint prepared by San Francisco HUD staff members. The HUD officials then sent letters to the three Coalition leaders — Alexandra White, her husband, Joseph Deringer, and Richard Graham — notifying them of the investigation and warning that they could face $100,000 penalties if found guilty of discriminatory housing practices. The following month, HUD officials produced a "proposal for conciliation" that required the three to drop their state court litigation and stop publishing the newsletter and flyers about the Bel Air conversion. In January 1994, the HUD officials issued a broad request for all documents related to the project. HUD interviewed the three residents but received little other cooperation. In July, the San Francisco office forwarded the case file to HUD's Washington headquarters with a report concluding that the project opponents had violated the Fair Housing Act and there was reasonable cause to take further enforcement action. But the director of HUD's Office of Investigations in Washington quickly ended the case when she decided that the First Amendment protected opponents' actions. White, Deringer and Graham then sued five HUD officials in their official and individual capacities (and a sixth official only in her official capacity) claiming that they harassed the opponents solely for exercising their rights to free speech and to petition the government for redress of grievances. U.S. District Court Judge Marilyn Hall Patel granted partial summary judgment for White, Deringer and Graham. Patel ruled against the project opponents only on the issue of prospective relief, which they sought to prevent future harassment. On appeal, a unanimous three-judge panel of the Ninth Circuit upheld Patel. Centering on the residents' unsuccessful state court lawsuit, the HUD officials argued on appeal that opponents did not have First Amendment protection because they lost that case. The opponents used the lawsuit in an attempt to prevent people from exercising their right to move into a neighborhood. The HUD officials, citing Bill Johnson's Restaurants, Inc. v. NLRB, 461 U.S. 731 (1983), argued that they only had to show that a lawsuit was filed with a discriminatory motive. Whether there was an objective basis for the suit was immaterial, they argued. But the Ninth Circuit said the HUD officials incorrectly extended the reach of a labor law case. Instead, the court said, the residents were protected by the Noerr-Pennington doctrine, which "ensures that those who petition the government for redress of grievances remain immune from liability for statutory violations, notwithstanding the fact that their activity might otherwise be proscribed by the statute involved." In fact, there was an objective basis for the state court lawsuit — even the Berkeley city manager conceded Maio's conflict of interest — that the HUD officials failed to investigate, the court ruled. Circuit Judge Stephen Reinhardt continued: "Regardless of whether Noerr-Pennington or Bill Johnson's applies, the investigation far exceeded what was reasonable for the purpose of ascertaining the plaintiff's motives for filing the state-court suit and thus intruded unnecessarily on their First Amendment rights. … The plaintiffs' reasons for opposing the Bel Air project were matters of public record and evident from the flyers in the San Francisco Office's possession before HRI even filed its complaint." The court ruled that the HUD officials should have known that the scope and manner of their investigation violated project opponents' First Amendment rights. Thus, the officials lost their qualified immunity as government officials. "In 1993 and 1994, reasonable government officials would have known that they could not conduct an eight-month investigation into the vocal but entirely peaceful opposition of residents to a housing project proposed for their neighborhood, or into their efforts to persuade the appropriate government agencies of their point of view," Reinhardt wrote. As for the prospective relief sought by the residents, the court said there was no need because HUD has permanently altered how it conducts such investigations — in response to this case. Despite the Ninth Circuit's ruling on liability, the U.S. Justice Department said it would continue to provide legal representation for the HUD officials. The Case: White v. Lee, Nos. 99-15098, 99-15109, 99-16033, 00 C.D.O.S. 7958, 2000 Daily Journal D.A.R. 10577, filed September 27, 2000. The Lawyers: For White: Kenneth Marcus, Cooper, Carvin & Rosenthal, (202) 638-3930. For Lee, Robert M. Loeb, U.S. Department of Justice, (202) 514-2000.