SUPREME COURT HOLDS DISPARATE-IMPACT CLAIMS COGNIZABLE UNDER FAIR HOUSING ACT

This article was written by Iyen A. Acosta and Meghan Levine.  Iyen is currently an associate at Reno & Cavanaugh PLLC and has been admitted to the bars of Maryland and the District of Columbia. She was a January 2014 cum laude graduate of the Catholic University Columbus School of Law, where she was a staff editor on the Catholic University Law Review.  Meghan will soon begin her third year at the Georgetown University Law Center, where she is an Articles Editor on the Georgetown Journal of Legal Ethics. She is currently a Summer Law Clerk at Reno & Cavanaugh PLLC.  She graduated in May 2012 from Vassar College where she received a B.A. in Political Science and Urban Studies.

Texas Department of Housing and Community Affairs, et al. v. Inclusive Communities Project, Inc., et al.
Case No. 13-1371
June 25, 2015

Justice Kennedy delivered the opinion of the Court, in which Justice Ginsburg, Justice Breyer, Justice Sotomayor, and Justice Kagan joined. Justice Thomas filed a dissenting opinion. Justice Alito filed a dissenting opinion, in which Chief Justice Roberts, Justice Scalia, and Justice Thomas joined.

The United States Supreme Court issued an opinion on June 25, 2015 in Texas Department of Housing and Community Affairs, et al. v. Inclusive Communities Project, Inc., et al.,____ U.S. ____, ____ U.S.L.W. _____ (2015), holding that disparate-impact claims are cognizable under the Fair Housing Act, 82 Stat. 81, as amended, 42 U.S.C. § 3601 et seq. (the “FHA”).

Procedural History

The Inclusive Communities Project, Inc. (“ICP”) is a Texas-based nonprofit corporation that assists low-income families in obtaining affordable housing. In 2008, ICP brought a disparate-impact claim against the Texas Department of Housing and Community Affairs (“TDHCA”) in the United States District Court for the Northern District of Texas. ICP alleged that TDHCA “caused continued segregated housing patterns by its disproportionate allocation of the tax credits, granting too many credits for housing in predominantly black inner-city areas and too few in predominantly white suburban neighborhoods.” The District Court ruled for ICP, holding that TDHCA failed to establish “that there are no other less discriminatory alternatives to advancing their proffered interests.” 860 F. Supp. 2d 312 (2012). TDHCA appealed.

In 2014, the Court of Appeals for the Fifth Circuit held that disparate-impact claims are cognizable under the FHA but reversed and remanded the case. 747 F. 3d 275 (2014). While the appeal was pending, the Secretary of Housing and Urban Development (“HUD”) issued a “regulation interpreting the FHA to encompass disparate-impact liability” and “establish[ing] a burden-shifting framework for adjudicating disparate-impact claims.” The Fifth Circuit relied on this regulation and “held that it was improper for the District Court to have placed the burden on [TDHCA] to prove there were no less discriminatory alternatives for allocating low-income housing tax credits.”

TDHCA filed a petition for a writ of certiorari on the question of whether disparate-impact claims are cognizable under the FHA.

Holding: Disparate-impact claims are cognizable under the FHA.

The Supreme Court considered a number of factors in reaching the conclusion that disparate-impact claims are cognizable under the FHA. The Supreme Court considered the “results-oriented language” of the FHA, specifically Section 804(a) of the FHA providing that it shall be unlawful “[t]o refuse to sell or rent after the making of a bona fide offer, or to refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or national origin.” 42 U.S.C. § 3604(a). The Supreme Court reasoned that Congress’ use of the phrase “otherwise make unavailable” refers to the consequences of an action, i.e. the impact, rather than the actor’s intent. This “results-oriented” language, and the Supreme Court’s interpretation of similar language in Title VII of the Civil Rights Act of 1964 (“Title VII”), 78 Stat. 255, and the Age Discrimination in Employment Act of 1967 (the “ADEA”), 81 Stat. 602 et seq., favors recognizing disparate-impact liability. The Supreme Court also looked at the 1988 amendments to the FHA and reasoned that those amendments, which included three exemptions from liability that assume the existence of disparate-impact claims, effectively ratified disparate-impact liability.

Against this legislative framework, the Supreme Court also considered the basic statutory purpose of the FHA. The FHA, like Title VII and the ADEA, was enacted to eradicate discriminatory practices within a sector of our Nation’s economy. Recognition of disparate-impact liability under the FHA also plays a role in uncovering discriminatory intent because it permits plaintiffs to counteract unconscious prejudices and disguised animus that escape easy classification as disparate treatment. The Supreme Court found further support in the fact that all nine Courts of Appeals also found disparate-impact liability.

The Supreme Court did warn against a broader interpretation of this holding than what was intended:

“This case, on remand, may be seen simply as an attempt to second-guess which of two reasonable approaches a housing authority should follow in the sound exercise of its discretion in allocating tax credits for low-income housing…An important and appropriate means of ensuring that disparate-impact liability is properly limited is to give housing authorities and private developers leeway to state and explain the valid interest served by their policies.”

While disparate-impact liability is cognizable under the FHA, the Supreme Court cautioned that Public Housing Authorities (“PHAs”) and developers must still “be allowed to maintain a policy if they can prove it is necessary to achieve a valid interest.” A plaintiff cannot maintain a disparate-impact claim that relies solely on a statistical disparity. Further, “[c]ourts should avoid interpreting disparate-impact liability to be so expansive as to inject racial considerations into every housing decision.” Rather, to maintain a disparate-impact claim, the plaintiff must show a causal connection between the specific PHA or developer policy to the disparity alleged. “A robust causality requirement ensures that ‘[r]acial imbalance . . . does not, without more, establish a prima facie case of disparate impact’ and thus protects defend¬ants from being held liable for racial disparities they did not create.”


Dissent (Thomas, J.):
The Civil Rights Act of 1964 lacked an express or implicit prohibition on “policies or practices that produce a disparate impact.” Therefore, the Court’s interpretation of Title VII in Griggs v. Duke Power Co., 401 U.S. 424 (1971) was wrongly decided as it was not Congress who authored disparate-impact liability under Title VII, it was the Equal Employment Opportunity Commission (“EEOC”) which lacked the proper legal authority to do so. As such, the Court’s decision in Griggs ought not to serve as a basis for the Court’s current decision in the present case and ought to be confined solely to Title VII. Because the operative text of the Fair Housing Act does not mirror Title VII’s, the disparate-impact claims allowed under Title VII ought not to be permitted under the Fair Housing Act.

Justice Thomas states, “Standing alone, the fact that a practice has a disparate impact is not conclusive evidence, as the Griggs Court appeared to believe, that a practice is ‘discriminatory’” and continues, “[w]e should not automatically presume that any institution with a neutral practice that happens to produce a racial disparity is guilty of discrimination until proved innocent.” The threat of disparate-impact suits arising under the Fair Housing Act are likely to hinder future efforts to provide affordable housing, yielding a “dire consequence[ ] . . . for those who actually need a home.”

 

Dissent (Alito, J.): Neither the Fair Housing Act, Congress, nor the Court’s precedents establish disparate-impact liability. To do so would have “unfortunate consequences for local government, private enterprise, and those living in poverty.” In conducting a textual analysis, the language of Section 804(a) and Section 805(a) of the Fair Housing Act makes certain activity or the lack thereof unlawful when done “because of” protected characteristics, including race. Someone acts “because of” something else, when that something else is “the ‘reason’ that the [person] decided to act.’” (citation omitted). Justice Alito asserts that contrary to the majority’s interpretation of the statute, the phrase “make unavailable” refers solely to “intentional deprivations of equal treatment, not merely actions that happen to have a disparate impact.” Therefore, Congress only outlawed the covered actions “when they are motivated by race or one of the other protected characteristics.” Accordingly, the text of the Fair Housing Act does not authorize disparate-impact suits. Furthermore, to allow disparate-impact suits in housing cases will “put[ ] housing authorities in a very difficult position because programs that are designed and implemented to help the poor can provide the grounds for a disparate-impact claim. . . [E]ven a city’s good-faith attempt to remedy deplorable housing conditions can be branded ‘discriminatory.’”

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: