Firms Settle Suit Over Race Bias in Ads : Agree to Pay $325,000; Luxury Home Promotion Excluded Blacks

In the largest settlement of its kind, the developers of a luxury home project in Maryland and the agency that designed its advertising have agreed to pay $325,000 for excluding blacks from their promotional campaign, attorneys said Friday.

A 1987 lawsuit filed by a black Washington resident charged that Avenel Corp. of Potomac, Md., used white models almost exclusively in its newspaper advertisements with the intent to discourage blacks from buying homes.

“What these ads say to me is we don’t want people like you living in our development,” said Girardeau A. Spann, who filed the suit along with two local nonprofit housing organizations.

Discrimination Denied

The company, however, denied any intent to discriminate. The settlement, approved by U.S. District Judge Harold H. Greene, said that neither Avenel nor its advertising agency, Words & Company, had admitted any wrongdoing.

The housing organizations that participated in the lawsuit said that Avenel’s current ads, which feature blacks, are “very nice.”

The settlement, reached under the Fair Housing Act, which was amended in 1988 to remove a $1,000 limit on damage awards, was by far the largest involving allegedly discriminatory advertising and among the largest for any kind of housing discrimination complaint.

“The people in the real estate business need to see that there’s a price for doing this,” said lawyer David Webbert, who called de facto housing segregation a “major bastion of racism in the country.” De facto segregation refers to discrimination maintained by custom or tradition rather than by law.

Executives of Avenel disputed that any of its ads were racist by implication or intent and said that the firm was never charged with discriminating in the sales of homes.

“We are firm believers in the Fair Housing Act and all that it stands for,” said Tony Natelli, a partner in the firm. “We deny that we’ve done anything wrong.”

Citing mounting legal costs, Natelli said: “It just seemed sensible to settle.”

The agreement contains a provision requiring the company to continue using human models in its ads. The plaintiffs had argued that, in the past, companies stopped using all models rather than feature blacks in ads.

Before passage of the 1968 Fair Housing Act, newspapers ran separate housing ads for blacks. Webbert said that, even into the 1970s, some real estate promotions were still labeled “whites only,” in violation of the law.

“They got rid of the statement but kept the all-white ads,” Webbert said, referring to more recent ads excluding blacks.

In 1986, after a survey showed that 98% of the real estate ads it published showed only whites, the Washington Post began requiring that blacks appear in 25% of its ads. Avenel stopped advertising in the paper after the policy was put into practice, but it denied it did so to avoid using blacks.

“I think this is one of the most important areas of racism we have to deal with,” Webbert said. “I don’t think this is going to solve all the problems, but it’s something that should not be this late in the game.”