Contract Buyers League
In honor of “Black History Month,” we look back at the Contract Buyers League (CBL) cases of the late 1960s and 1970s. It was a time when racial segregation still marred one foundation of the American Dream for hundreds of Chicago African-American families: buying a home.
Read More It is impossible fairly to summarize in a few paragraphs the extensive litigation, in both federal and state courts, spanning more than 15 years, involving hundreds of African-American home owners who were our clients. They purchased homes on the west and south sides of Chicago after the end of World War II. On the west side, the sellers engaged in blockbusting-panic tactics, purchasing from frightened white owners with predictions that black buyers were moving into their neighborhoods. The houses were then sold at highly inflated prices to unsophisticated black families. Owing to racial prejudice, the buyers were unable to obtain regular mortgage financing, because Chicago-area banks were unwilling to make mortgage loans to African-Americans, and the federal supervisory agencies were not authorized to take corrective action. As a result, the buyers were required to make significant down payments and sign contracts that extended for many years. The terms of the contracts provided that if the buyers missed a single payment, the sellers were entitled to declare the contracts terminated, retain all previous payments, and repossess the homes. The same situation existed on the south side, except that the homes were newly built, but were sold at similarly inflated prices on land contracts with the same harsh forfeiture provisions.
We filed two cases in the federal District Court in Chicago, one for the west side buyers, and the other for the south side buyers. We also brought suit against the federal lending agencies, alleging illegal racial discrimination in refusing to provide mortgage financing. We litigated the cases in the Court of Appeals for the Seventh Circuit.
To prepare the cases for trial, we held countless weekly meetings at churches located on the west and south sides. The lawyers from Jenner & Block included Tom Sullivan, John Tucker (deceased), Dick Franch, John Stifler (deceased), Carol Thigpen (deceased), Jeff Colman, and many others, including paralegals who served without fee. We were assisted by several Jesuit seminarians, including Jack Macnamara, the instigator of the CBL movement, and the young lady who later became his wife, Peggy. We were assisted by two of the finest lawyers in Chicago, William R. (Bob) Ming (deceased) and Thomas J. Boodell, Jr.
When we were unable to settle the cases or obtain a trial, the clients staged what became known as “the hold outs” — they refused to make their monthly payments, thus risking being foreclosed and evicted. Wide publicity followed. We sought relief from evictions from both the Illinois Supreme Court and then Mayor Richard J. Daley. Many of the evictions were halted, and settlements obtained. Eventually, we renegotiated contracts for over 450 families, which yielded a savings to the buyers of at least $7 million, or more than $30 million in today’s dollars.
The CBL cases resulted in two jury trials and a bench trial in the federal court. The publicity engendered by these cases, including that related to the holdouts, contributed to the end of exploitive contract sales, the availability of mortgage financing for African-American home buyers, and significant restrictions on racial profiling in the housing market.
The CBL cases have been the subject of numerous news and magazine articles, several books, and have been the subject of master and doctoral theses. We made lifelong friends of many of the client members of the Contract Buyers League.
Apart from the savings obtained by our CBL clients, the publicity engendered by the CBL cases were a major influence in bringing about a number of major reforms:
• Changes to the Illinois Forcible Entry and Detainer Act(the eviction law), to allow buyers to raise defenses for non-payment, and to remove the requirement that they post an appeal bond of one year’s payment.
• Passage of an Illinois statute requiring contracts to be treated like mortgages.
• Passage of the federal Home Mortgage Disclosure Act, which forced banks to disclose where they made their loans, thereby making it possible to prove that banks were racially discriminating in their lending policies.
• Passage of the federal Community Reinvestment Act, which by the early 1990s was responsible for the reinvestment of $18 billion dollars in more than 70 U.S. cities.
Firm Wins U.S. Supreme Court Victory for Client NextWave
On this day in 2003, the U.S. Supreme Court ruled in favor of firm client NextWave in FCC v. NextWave Personal Communications Inc., returning billions of dollars worth of wireless phone spectrum licenses. The FCC had attempted to repossess the licenses after NextWave failed to make installment payments while reorganizing under Chapter 11 of the Bankruptcy Code. The agency argued that the licenses were automatically cancelled when the company missed its first payment-deadline and denied NextWave’s petition for reconsideration of the cancellation. The Court of Appeals for the D.C. Circuit held that the cancellation violated 11 USC section 525(a), which provides that a "governmental unit may not...revoke...a license...to...a debtor...solely because such...debtor...has not paid a debt that is dischargeable in the case.” The Supreme Court upheld the appellate court ruling 8-1. Former partner Don Verrilli, later appointed U.S. solicitor general, argued the case in the Supreme Court. Former partners Ian Gershengorn (now principal deputy solicitor general in the U.S. Department of Justice) and Bill Hohengarten were also on the team.
Pro Bono Case Was First in Illinois Granting Post-Convicting Ballistics Testing
On January 26, 2011, a team including Robert Stauffer, Andrew Vail and Kyle Palazzolo achieved a groundbreaking result in a pro bono post-conviction case on behalf of client Patrick Pursley. The Pursley case was the first case in Illinois granting a prisoner ballistics testing under the Post-Conviction Testing Act. Mr. Pursley has adamantly maintained his innocence since his conviction for first-degree murder during the course of an attempted robbery in 1993. The decision was featured in the January 2012 Pro Bono Hot List by The National Law Journal.
Firm Defends Associate of 1950s-era Automaker Preston Tucker
Name Partner Floyd Thompson defended one of Preston Tucker’s associates in the headline-grabbing case that inspired Francis Ford Coppola’s Tucker: A Man and His Dream. Floyd D. Cerf, the underwriter who handled the Tucker Corporation stock offering, stood accused along with Mr. Tucker and six other colleagues on charges of mail fraud, conspiracy and violating federal securities laws. The government said the corporation engaged in a large-scale con scheme, bilking the public and prospective dealers out of $28 million without mass producing the car. The defendants argued their honest attempts at producing the “Tucker 48” were hampered by government interference possibly driven by rival automakers. “This [case] is fantastic,” Floyd Thompson said in his closing arguments. “The prospectus plainly said Tucker stock was speculative…A couple more months, a couple more million dollars, and they would have had the production line rolling.” When the jury pronounced all the defendants “not guilty” on this day in 1950, it “loosed a tumult of cheering from more than 200 onlookers,” according to the Chicago Tribune.
The Stamler Case and the Demise of HUAC
When the 94th Congress opened on this day in 1975, one of its first moves was to officially abolish the Internal Security Committee, born in 1938 as the House Un-American Activities Committee (HUAC). Charged with investigating alleged Communists, HUAC’s influence peaked during the anti-Communist fervor of the Cold War. By the 1960s, Americans had for a generation witnessed the damage the Committee inflicted on innocent lives. In 1965, the firm began representing a prominent Chicago cardiologist whose long fight against the Committee would endure up to its dying days. Rather than bow to the Committee’s subpoena, Dr. Jeremiah Stamler engaged Albert Jenner and the firm to sue the Committee, seeking to have its mandate declared unconstitutional. After eight and a half years of litigation, the government agreed to drop its indictment against Dr. Stamler for contempt of Congress, and the doctor agreed to drop his civil suit against the Committee. By this time, “the Committee, under pressure from impending judicial review, had sharply curtailed its activities and mandate. A year after the Stamler case ended, the House voted to terminate the Committee altogether,” wrote Tom Sullivan, Chet Kamin and Arthur Sussman in a law review article about the matter.
Firm's Role In Capital Punishment
The firm played a significant role in the state of Illinois’ journey toward abolishing capital punishment. On this week in 2003, then-Governor George Ryan issued clemency to approximately 160 inmates on the state’s Death Row, commuting their sentences to life in prison without parole. The unprecedented decision was based in part on the findings of Ryan’s Commission on Capital Punishment, co-chaired by Partner Tom Sullivan. Partners David Bradford and Terri Mascherin were also involved in the issue by representing three Death Row inmates seeking clemency. In 2004, when newly elected Attorney General Lisa Madigan challenged the governor’s power to issue some of those clemency orders, Terri successfully defended the orders in arguments before the Illinois Supreme Court. In 2005, Tom chaired the Capital Punishment Reform Study Committee. The Committee issued its report to the General Assembly on October 28, 2010. In 2008, Tom spoke before the ISBA Board of Governors in support of abolishing the death penalty, a resolution the Board ultimately adopted. On March 9, 2011, Governor Pat Quinn signed a bill abolishing the death penalty in Illinois, making it the 16th state in the nation without a death penalty.