A Federal judge has refused to dismiss a case brought by an indigent woman living with HIV/AIDS who claims the LeFrak Organization discriminated against her in renting an apartment because she was receiving a housing subsidy from New York City’s HIV/AIDS Services Administration.

Southern District Judge Denise Cote (See Profile) said lawyers for the woman and the advocacy group Fair Housing Justice Center had adequately pleaded claims under the federal Fair Housing Act and New York City’s Human Rights Law that the woman was discriminated against because she was subjected to a “more burdensome and delayed process” and was not shown apartments she could have afforded with a city subsidy.

Formed in 1985, The HIV/AIDS Services Administration (HASA), provides owners of New York City apartments with a “direct-vendor check” for the first month’s rent, a voucher for a security deposit and a direct-vendor check for each month’s rent on behalf of over 30,000 renters with clinical or symptomatic HIV or AIDS.

HASA must first inspect the apartment before it provides the money, but it does not provide a letter to landlords guaranteeing it will subsidize the tenant.

In 2011, L.C. was told she would get a full housing subsidy for $1,100 a month and she learned there were apartments renting for that amount in LeFrak City, but when she visited a company office on Queens Boulevard, she was told LeFrak required a letter from HASA confirming it would pay the $1,100 per month.

L.C. turned to Housing Works, a non-profit that works to fight AIDS and homelessness. A Housing Works case manager called LeFrak and confirmed that apartments were available for $1,100 and that the company would not rent to L.C. without a letter from HASA.

This experience was repeated by workers at the Fair Housing Justice Center, which sent “testers” to LeFrak in May 2012.

One tester said she was immediately shown a floor plan, given an application and shown a studio apartment—all without having to provide documentation. Other testers who explained they had a brother living with AIDS who had a HASA housing subsidy said they were not shown any apartments and were directed to another LeFrak office for renters who get government subsidies.

Armed with these allegations, the plaintiffs in April filed the case of L.C. and Fair Housing Justice Center v. LeFrak Organization, 13 Civ. 2759, and LeFrak moved to dismiss.

In her opinion issued Dec. 13, Cote first held that the Fair Housing Justice Center had standing to sue as an organization because it alleged that it “expended staff time and other resources to investigate and respond to Defendants’ discriminatory rental practices, which diverted resources away from other FHJC activities.”

The plaintiffs charged violations of three provisions of the Fair Housing Act, 42 U.S.C. §3604: (1) discriminating on the basis of disability for limiting information on apartment availability, (2) “using different qualification criteria, procedures or standards for the rental” and (3) failing to process an offer to rent.

Cote held they had adequately pleaded disparate treatment and disparate impact claims based on “at least two” of the three provisions.

“Based on her allegations, L.C. has identified two ways in which she was treated differently (1) in the information given to her regarding available apartments, namely that she was not shown such apartments…and (2) in the qualification and rental criteria applied to her, namely a more burdensome and delayed process,” Cote said.

As for disparate impact, she said the plaintiffs survived a motion to dismiss because “They have alleged that LeFrak has a facially neutral policy regarding applicants who are recipients of housing subsidies, and that those policies cause individuals within a protected group to be provided with limited information and to face a more burdensome rental process.”

Cote said the plaintiffs were not required at this stage to present statistics backing up their disparate impact claim, but it was fair to require “at least one allegation that raises an inference of such disparity”—and this they have done.

The complaint, she said, states that, “as of 2010, New York City had a population of approximately eight million individuals, the HIV population in New York City was approximately 67,000 people, 49 [percent] of which are HASA clients, the ‘vast majority’ of which utilize a HASA housing subsidy.”

Cote said this gives notice to LeFrak that the alleged basis for the disparate impact claim “is that the percentage of the HIV population in New York City on housing subsidies exceeds the percentage of the non-HIV New York City population on housing subsidies.”

The judge kept the Human Rights Law claims in the lawsuit, one that alleges intentional disability discrimination and a second claiming discrimination based on “source-of-income,” which the City Council added to the law in 2008 as an impermissible grounds for denying housing.

The plaintiff is represented by Armen Hagop Merjian of Housing Works Inc. and Diane Lee Houk of Emery Celli Brinckerhoff & Abady.

“From the perspective of Housing Justice Center, what’s very important here is the court’s understanding the intersection between people who are disabled and low income and the different types of rental subsidies available in New York City,” Houk said. “We have a variety of tools to provide subsidies but when landlords don’t follow the law, it impacts people with disabilities and it was good for the judge to recognize that nexus and then allow us to proceed with the legal claims and pretrial discovery.”

Merjian said “Source-of-income discrimination remains a major problem in New York City. Low income individuals who depend on housing subsidies have a hard enough time finding an apartment within their price range without having to wrestle in addition with discriminatory policies.”

LeFrak is represented by Randy Mastro, Gabriel Herrman and Jennifer Reardon of Gibson, Dunn & Crutcher. Mastro declined comment.