Roger Clegg is president and general counsel of the Center for Equal Opportunity, which joined amicus briefs (at the petition stage and on the merits) filed by Pacific Legal Foundation in this case, and in Magner v. Gallagher and Mount Holly v. Mount Holly Gardens Citizens in Action.
The question presented in this case is: “Are disparate-impact claims cognizable under the Fair Housing Act?”
Under a disparate-impact claim, discriminatory motive is irrelevant: It need not be alleged nor proved, and it doesn’t even matter if the defendant proves that there was no discriminatory motive. If a policy or procedure results in a disproportion of some sort — not only on the basis of race, color, or national origin, but also religion, sex, or familial status (that is, having children) – then that’s enough, even if the policy is nondiscriminatory by its terms, in its intent, and in its application. The defendant can prevail only by showing – to the satisfaction of a judge or jury who may know or care nothing of the defendant’s needs – some degree of “necessity” for the policy.
1. Text. This approach is flatly inconsistent with the Act’s text. The text uses not only the phrase “because of” race but also “on account of” and “based on.” All of these phrases are naturally read to require a showing of disparate treatment. The phrase “on account of” also appears in a section of the Act that bans coercion and intimidation of those exercising fair-housing rights, and intent is clearly implied there; and the “because of” and “on account of” language also is used to delineate certain fair-housing violations as crimes, and criminal prosecutions cannot be based on a disparate-impact theory. A construction of the Fair Housing Act that interprets a phrase one way in one section and in another way elsewhere is implausible.
The disparate-impact approach would render superfluous many of those provisions in the statute regarding the disabled. For instance, the failure to make or allow “reasonable modifications” and “reasonable accommodations” could have been attacked under a disparate-impact theory without those provisions.
The federal government’s brief stresses three provisos against specific kinds of possible disparate-impact causes of action to suggest that any other disparate-impact cause of action must be permissible. But in two instances the non-protected characteristics are close enough to protected characteristics that Congress wanted to spell out what was and wasn’t protected a bit more. That is, drug crimes – which were especially unpopular when this proviso was enacted –get close to the line of disability, since addiction is often viewed as a disability; likewise, occupancy limits get close to familial status. As for the exemption for real-estate appraisals, perhaps the appraiser lobby was really effective – that happens sometimes, you know. In all events, according to the federal government’s interpretation of the statute, anyone can be liable under a disparate-impact cause of action except for real-estate appraisers — now, what exactly is the logic in that?
2. History. If there is no textual support for a disparate-impact cause of action in the original Act or its 1988 amendments, and since the legislative history points in the other direction as well, the remaining argument to support disparate impact in fair housing law is that some lower courts had recognized a disparate-impact cause of action under the original 1968 version of the Act, and so Congress implicitly endorsed the approach when it reenacted the statute in 1988 with full knowledge of those decisions.
But Congress also knew that the Supreme Court had not resolved this question. During the summer of 1988, while the amendments were still before Congress, the Justice Department was arguing to the Supreme Court that it ought to grant certiorari in a Second Circuit case and rule against a disparate-impact approach. In other words, Congress could hardly be said to have been endorsing settled case law by passing the 1988 legislation, because no settled case law existed.
3. Deference. There are some newly minted HUD regulations that endorse the disparate-impact approach, and it is argued that the Court should defer to the agency’s interpretation of the statute. But in fact there are a number of very good reasons why these regulations are entitled to little deference.
First and foremost, the meaning of the statute is clear that only actual discrimination – “disparate treatment” – is banned.
Further, the Fair Housing Act has been on the books since 1968, and during that time the executive branch has sometimes endorsed the disparate-impact approach and sometimes not. For example, President Reagan explicitly rejected the approach in signing major amendments to the Act, and his Justice Department argued against it in a brief to the Supreme Court; the Bushes didn’t think much of it, either.
The Obama administration, on the other hand, is attempting to game the system here; it orchestrated a rather shady deal with the City of St. Paul to get it to withdraw an earlier Term’s cert. petition, and meanwhile worked on promulgating those new regulations. “We were afraid we might lose disparate impact in the Supreme Court because there wasn’t a regulation,” said Sara Pratt, an official in the Department of Housing and Urban Development.
In any event, the principle of deference ought to be trumped in this case by the “constitutional-doubt canon,” as Justice Scalia calls this long-honored principle in his book Reading Law: The Interpretation of Legal Texts. The Justices have repeatedly acknowledged that a statute mandating the disparate-impact approach also can encourage race-conscious decision making; this of course raises serious constitutional issues. (Note that the racial classifications that the approach would require in the FHA are more constitutionally problematic than, say, the age classifications that the Court has accepted under the Age Discrimination in Employment Act.)
The approach raises further constitutional problems here by altering the state-federal balance in far-reaching ways. For example, it renders race-neutral rules – like rules for preserving order in public-housing projects – suspect; the approach will also result in the federal micromanagement of insurance practices, which is at odds with the McCarran-Ferguson Act, a point emphasized in a recent district court decision striking down the HUD regulations.
4. Coherence. One would also expect that, if a statute contemplates use of the disparate-impact approach, it would answer some fundamental questions like how to measure the kind and degree of disparate impact that is required and what sort of rebuttal is needed. But there’s none of that, and the resulting problems are myriad and severe.
For example, what should decision-makers do if a practice has a disparate impact in one location but not in another? Or, if the impact ebbs and flows over time? What should landlords do if a policy (for instance, excluding felons as tenants) has an unfavorable disparate impact on potential tenants of a particular race, but is welcomed by the incumbent tenants who are predominately of that same race?
And what if a practice is favorable for some racial minority groups (say, Asian Americans) but not for others (say, Latinos) – and, what’s more, the opposite is at the same time true for some minority subgroups (thus, unfavorable for Hmong but favorable for Cuban Americans)? And remember, too, that “majority” groups – whites and men and Christians, for example – must be able to bring these lawsuits, too, or you’ve added an even greater equal protection problem.
Thus: (a) a foreclosure policy may have no disparate impact on a particular group in pre-recession 2006, but a severe one in 2009; (b) an income-requirement may have no disparate impact on Latinos in Nashville but a severe one in Denver; this may mean that two companies with identical policies have very different liability risks, or the same company may be liable in one city but not in the other (but should the cities be considered separately if it’s the same company?); and (c) the use of credit scoring may have a disparate impact on Latinos but not Asians, but there may be no disparate impact on Cubans and a severe one on the Hmong.
There’s an even more fundamental problem: It is often hard to say whether the impact a practice has on a group is adverse or not. In fact, all three cases that the Court has taken recently illustrate this. In Magner v. Gallagher, was it bad for blacks that landlords who disproportionately rented to blacks were being cited for violating safety and health code requirements? In Mount Holly v. Mount Holly Gardens Citizens in Action, was the urban renewal there bad for blacks?
And in the present case, is it bad for blacks that low-income housing is being disproportionately located in black areas? Poor black people might prefer to have housing opportunities near where they already live rather than a long way away, and they could complain about the disparate impact of deliberately changing the system so that they had fewer such opportunities. Yes, it might interfere with social engineering that would force blacks to relocate to white areas, but might not even the aim of greater integration be met, at least to some degree (depending on racial breakdown of low-income housing recipients – a breakdown that might vary from city to city and county to county) by encouraging non-blacks (not just whites, but also Latinos and Asians) to live in black areas?
These problems make it difficult to decide not only whether there is a disparate-impact in the first place, but also how to weigh properly the defendant’s rebuttal, which in the public housing context – versus, say, employment – will often involve balancing myriad and hard-to-quantify interests. In sum, it is astonishing to interpret a national civil-rights statute in a way that makes identical conduct in one city illegal while allowing exactly the same conduct in another city, just because of the different racial makeup of the two cities.