Supreme Court holds Fair Housing Act prohibits disparate impact discrimination

In a disappointing 5-4 decision written by Justice Kennedy, the Supreme Court held today that the Federal Fair Housing Act, Title VIII of the Civil Rights Act of 1968, encompasses claims for disparate impact.  The majority insists that disparate-impact claims are consistent with the FHA’s central purpose to eradicate discriminatory practices within a sector of our Nation’s economy.  The case is Texas Department of Housing and Community Affairs v. Inclusive Communities Project.

Attorneys for PLF filed a brief in that case, with Center for Equal Opportunity, Competitive Enterprise Institute, Cato Institute, Individual Rights Foundation, Reason Foundation, and Project 21.  PLF’s brief demonstrated how the text and legislative history of the original Act are not consistent with a theory of discrimination that imposes liability on defendants who act without any discriminatory motive or intent.

PLF further opposes the use of disparate impact theory because it leads to race-conscious decisionmaking.  Public and private entities must base their policies and decisions on a predicted racial outcome to avoid being sued for disparate impact.  That is the equivalent of using racial quotas, which the Supreme Court has routinely condemned as unconstitutional.

Use of disparate impact theory leads to absurd results.  For instance in Magner v Gallagher, the issue was whether a city’s aggressive enforcement of its housing code resulted in a disparate impact on minorities.  Property owners claimed they could not afford to fix the violations of the housing code identified by city inspectors, and this would cause fewer homes for minorities.  The case was brought by white landlords essentially claiming that their minority tenants had a right to substandard housing – a claim that does not further any of the purposes of the Fair Housing Act.  But the Eighth Circuit allowed the plaintiffs to proceed with their case, which ultimately settled.

The bright side of the opinion is that the Court recognizes the dangers presented by disparate impact claims and offers this advice to lower courts:

Courts must therefore examine with care whether a plaintiff has made out a prima facie case of disparate impact . . . . A plaintiff who fails to allege facts at the pleading stage or produce statistical evidence demonstrating a causal connection cannot make out a prima facie case of disparate impact. For instance, a plaintiff challenging the decision of a private developer to construct a new building in one location rather than another will not easily be able to show this is a policy causing a disparate impact because such a one-time decision may not be a policy at all.

PLF attorneys will be blogging more about this case later today and in the next few days.