                            In the

United States Court of Appeals
                 For the Seventh Circuit

Nos. 08-1763 & 08-2159

JENNIFER H O ,
                                                      Petitioner/
                                               Cross-Respondent,
                               and


C HAK M AN F UNG,
                                          Intervening Petitioner/
                                              Cross-Respondent,
                                v.


S HAUN D ONOVAN, Secretary of Housing
and Urban Development,
                                                     Respondent/
                                                 Cross-Petitioner,
                               and



M EKI B RACKEN and D IANA L IN,
                                       Intervening Respondents.


        Petition for Review and Cross-Petition for Enforcement
   of an Order of the Secretary of Housing and Urban Development



        A RGUED JUNE 1, 2009—D ECIDED JUNE 23, 2009
2                                  Nos. 08-1763 & 08-2159

  Before E ASTERBROOK, Chief Judge, and B AUER and
E VANS, Circuit Judges.
   E ASTERBROOK , Chief Judge. Chak Man Fung owns a
condo unit in Chicago’s Loop. The unit has been subdi-
vided and rented to three occupants, who share a kitchen
and bathroom. Jennifer Ho, one of the occupants, acts
as Fung’s agent for choosing other renters. When Diana
Lin planned to move out before her lease was up, she
proposed Meki Bracken as a replacement. As soon as
Ho recognized that Bracken is black, however, Ho refused
to accept her as a tenant. Ho told Lin: “I don’t want to
rent to blacks.” Lin replied that racial discrimination is
illegal, to which Ho responded: “Fine. Sue me.” Lin
complained to Fung, who refused to allow Bracken to
replace Lin as the tenant. Lin nonetheless gave Bracken
her key—but, when Bracken tried to move in, Ho barri-
caded the door. Bracken had to use a hotel while she
searched for a place to live. She felt humiliated by the
events and was inconvenienced because the place she
eventually found was farther from her job. For several
weeks Bracken lived with Lin, who felt responsible
for Bracken’s predicament; this was an uncomfortable
arrangement for them both.
  Bracken and Lin filed a complaint with the Department
of Housing and Urban Development, which administers
Title VIII of the Civil Rights Act of 1968, 42 U.S.C.
§§ 3601–19. HUD investigated, found the complaint
substantial, and initiated an administrative proceeding
with itself as the charging party. The agency served
copies of the charge, and related documents, on Fung and
Nos. 08-1763 & 08-2159                                    3

Ho by both first-class mail and FedEx delivery. Neither
Fung nor Ho filed an answer. HUD filed a motion for
default, which was served the same way; Fung and Ho
did not reply. An administrative law judge granted the
motion for default on October 18, 2007. Fung and Ho were
served as usual. The ALJ scheduled a hearing on remedies
for November 15, 2007; Fung and Ho were notified, for a
fourth time, by mail and FedEx.
  Fung did not attend the hearing. Ho did appear, without
counsel, and asked for a postponement. She told the ALJ
that she had left all of the notices unopened for months,
believing that they contained legal documents that she
did not want to read. Opening them only days before the
hearing, Ho said, she realized that she needed a lawyer,
but the lawyer she hired had a prior commitment for
November 15. When the ALJ denied the motion for a
continuance, observing that Ho had only herself to blame
for failing to open the many notices, and that a postpone-
ment would waste the time of the assembled witnesses
(some from out of town), Ho walked out. The ALJ
took testimony and invited post-hearing submissions;
Bracken, Lin, and HUD filed briefs, while Fung and Ho
did not. In an order issued on January 31, 2008, the ALJ
found that Fung and Ho had violated 42 U.S.C. §3604
by engaging in racial discrimination and awarded com-
pensatory damages for mental distress and financial
injury ($49,284 to Bracken and $25,345 to Lin), a
penalty, and prospective relief. This order became final on
March 3, 2008, after time for review by the Secretary
expired. Ho has filed a pro se petition for judicial review.
Fung, who is represented by counsel, has intervened. The
4                                   Nos. 08-1763 & 08-2159

Secretary has filed a cross-petition seeking enforcement
of the ALJ’s order.
  Ho maintains that the agency violated the due process
clause of the fifth amendment by not providing her
with adequate notice of the proceedings and not post-
poning the hearing. The problem with this argument is
that the agency did provide notice, frequently, and by
FedEx courier as well as by mail. The Constitution
requires “notice reasonably calculated, under all the
circumstances, to apprise interested parties of the pen-
dency of the action and afford them an opportunity to
present their objection.” Mullane v. Central Hanover Bank &
Trust Co., 339 U.S. 306, 314 (1950). Ho received notices
that conveyed all of the salient information and enabled
her to protect her interests. The Constitution does not
require that an effort to give notice succeed. See, e.g.,
Dusenbery v. United States, 534 U.S. 161 (2002). If it did,
then people could evade knowledge, and avoid responsi-
bility for their conduct, by burning notices on receipt—or
just leaving them unopened, as Ho did. HUD did not
bypass readily available, and superior, alternatives, as
in Jones v. Flowers, 547 U.S. 220 (2006); even delivery in-
hand by a process server does not compel the recipient
to read a notice.
  Conscious avoidance of information is a form of knowl-
edge. That’s the basis of the “ostrich instruction”. See
United States v. Ramsey, 785 F.2d 184 (7th Cir. 1986). Ho
behaved like an ostrich. She tells us that she distrusts all
governments because the People’s Republic of China
mistreated her parents. That’s an overgeneralization;
Nos. 08-1763 & 08-2159                                  5

after all, Ho chooses to live in this nation (she became a
citizen more than ten years ago) in part because govern-
mental practices here differ from those elsewhere. At
all events, fear that governments are up to no good is
a reason to open notices and act to defend one’s
interests, not to ignore notices. Ho’s brinksmanship
did not require the ALJ to delay matters, at the cost of
the agency’s lawyers and the assembled witnesses. Ho
could have had a lawyer’s assistance if she had used
the time that the notices gave her. Likewise she could
have had a translator, had she used the time construc-
tively. (What’s more, the ALJ was not obliged to credit
her self-serving assertion that she needed a Cantonese
translator. Lin testified that Ho speaks English, and
Ho’s pro se brief is written in excellent English.)
   The ALJ ordered Ho to pay a civil penalty of $11,000
in addition to compensatory damages. That penalty was
the highest then allowed for a first offender. 24 C.F.R.
§180.670(b)(3)(iii)(A)(I) (2004 ed.). (No one contends in
this court that the regulation conflicts with 42 U.S.C.
§3612(g)(3)(A), which appears to set $10,000 as the cap.)
The ALJ concluded that the maximum penalty is appro-
priate because Ho not only set out to discriminate
but also was truculent after being told of the conduct’s
illegality. The ALJ deemed Ho’s decision to barricade
the door against Bracken an egregious form of discrim-
ination. Still, Ho insists, the penalty was unauthorized
because the ALJ did not consider her financial resources,
one of the six factors that the agency believes relevant.
24 C.F.R. §180.671(c)(ii). But how was the ALJ supposed
to do this when Ho had stalked out of the hearing? A
6                                     Nos. 08-1763 & 08-2159

person who fails to supply information forfeits any com-
plaint that the decisionmaker was uninformed on
some issue. Ho bypassed her opportunity to be heard on
this and all other subjects.
  For his part, Fung did not do even as much as Ho to
participate in the administrative process. His main
theme in this court is that the agency acted arbitrarily and
capriciously by departing from its rules without explana-
tion. An agency must adhere to its policies unless it
changes them openly—and after a change the new policy
must be applied consistently. An agency that does both A
and not-A at the same time is engaged in self-contradic-
tion. Trying to have things both ways is arbitrary. See
generally FCC v. Fox Television Stations, Inc., 129 S. Ct. 1800,
1810–12 (2009); Richard J. Pierce, Jr., I Administrative
Law Treatise §11.5 (2002). As Fung sees things, HUD
requires complaint counsel to establish a prima facie case
of discrimination at the hearing even if the respondent
has defaulted. The ALJ in this case did not require
such proof, Fung asserts, and so has made an arbitrary
decision.
  Fung misunderstands how HUD handles defaults. A
regulation provides that “[f]ailure to file an answer . . . [to
the complaint] shall be deemed an admission of all
matters of fact recited therein”. 24 C.F.R. §180.420(b). To
admit the facts alleged in the complaint is not necessarily
to admit liability. On occasion an ALJ has tossed out a
charge for that reason. See, e.g., HUD v. Wooten, No. 05-99-
0045-8 (HUD ALJ Dec. 3, 2004). The order assigning the
proceeding against Ho and Fung to an ALJ stated that
Nos. 08-1763 & 08-2159                                    7

complaint counsel must establish a prima facie case of
liability. This is the directive that Fung says has been
rescinded without explanation. But it was followed: the
ALJ concluded that the admitted facts do show liability.
Fung apparently thinks that a prima facie case of
liability depends on live testimony. Not at all; ad-
missions are better evidence than testimony, because
admissions are incontestable. The ALJ concluded that the
admitted facts show Fung’s liability. The ALJ then called
on complaint counsel to prove damages. Fung calls this
another “unexplained departure.” If it is a departure
from Wooten and similar decisions, the difference favors
Fung. How can a defaulting party be injured by
insistence that damages be proved via testimony and
other evidence at a hearing?
  We assumed in the preceding paragraph that one ALJ’s
disagreement with another requires explanation. We
doubt, however, that this is so. Explanation is required
when the agency changes course. “The agency” means
the Secretary, and the Secretary has not revised either
regulations or practices. It is common for subordinate
officials, including ALJs, to have different understandings
of rules’ meaning. That different ALJs apply §180.420(b)
differently does not show that the agency has changed
course; it shows only why there is a need for appellate
review within any system of adjudication. None of
the ALJs is authorized to set or change agency policy;
only the Secretary can do that. If ALJs apply the regula-
tions differently, the remedy is an appeal to the Secre-
tary. Fung could have asked the Secretary to step in, but he
abjured the entire administrative process and has no
legitimate complaint.
8                                    Nos. 08-1763 & 08-2159

   Fung does not dispute the ALJ’s conclusion that the
admitted facts show racial discrimination. Instead he
maintains that he is entitled to discriminate by 42 U.S.C.
§3603(b)(1), which says that §3604 does not apply to
“any single-family house sold or rented by an owner:
Provided, That such private individual does not own
more than three such single-family houses at any one
time: . . . Provided further, That . . . the sale or rental of
any such single-family house shall be excepted . . . only
if such house is sold or rented (A) without the use . . . of
any real estate broker, agent, or salesman . . . .” Fung
claims the benefit of this exemption because, he says,
the condo is a single-family dwelling, he does not own
more than three single-family dwellings, and Ho did not
act as his agent.
  Section 3603(b) is captioned “Exemptions”, which makes
it an affirmative defense. See United States v. Space
Hunters, Inc., 429 F.3d 416 (2d Cir. 2005) (holding this
for §3603(b)(2)). See generally Meacham v. Knolls Atomic
Power Laboratory, 128 S. Ct. 2395 (2008). That §3603(b)(1)
requires facts outside the pleadings, facts likely in the
possession of the respondent rather than the agency,
also shows why it is best treated as an affirmative de-
fense. An affirmative defense must be timely as-
serted—usually in the answer, and certainly at the trial.
Fung did not file an answer or participate in the trial, so
he forfeited this defense. The ALJ was not obliged to
explore this issue without a request by the litigants. And
since Fung did not present evidence, he cannot prevail
whether or not the forfeiture is conclusive. How do we
know that Fung owned three or fewer single-family
Nos. 08-1763 & 08-2159                                   9

houses in 2004, when Bracken was turned away? Asser-
tions in an appellate brief are no substitute for evidence.
Fung’s claim to the exemption fails anyway, because the
condo was not a single-family dwelling. Fung rented it to
three unrelated persons; that’s not a single family by
anyone’s definition. Then there is the fact that Ho acted
as Fung’s agent, something that Fung admitted by failing
to answer the complaint, which alleged that an agency
relation existed. The ALJ imposed a maximum penalty
after concluding that Fung is recalcitrant; this frivolous
attempt to invoke §3603(b)(1) vindicates the ALJ’s ap-
preciation of Fung’s attitude toward his legal obligations.
  Neither Ho nor Fung contests the ALJ’s calculation of
compensatory damages or the terms of the prospective
relief. The petition for review therefore is denied, and
the cross-petition for enforcement is granted.




                          6-23-09
