Will the third time be the charm for the Fair Housing Act and disparate-impact claims? In Plain English
The blog is delighted to host an online symposium on Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, in which the Court will consider whether the Fair Housing Act encompasses claims based on disparate impact. This “Plain English” preview of the case provides an overview of the facts and issues in the case; over the next few days, we will publish a series of posts that further explore the issues and arguments before the Court.
The Fair Housing Act makes it illegal to “refuse to sell or rent . . . 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.” For the third time in less than four years, the Supreme Court granted review to consider whether this language allows lawsuits based on disparate impact. A disparate-impact claim is an allegation that a law or practice has a discriminatory effect, even if it wasn’t based on a discriminatory purpose. The first two cases – Magner v. Gallagher and Mount Holly v. Mount Holly Gardens Citizens in Action – both settled less than a month before the oral arguments.
With just over two weeks before the oral argument in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, slated for January 21, it appears that the Court may finally weigh in on the question.
The Inclusive Communities Project is a Texas non-profit whose mission includes promoting racial and socioeconomic integration in and around Dallas. As part of this mission, the Project tries to help lower-income African-American families find affordable housing, for which they receive subsidies in the form of a voucher, in the mostly white suburbs of Dallas. To do so, those families have to find a landlord who will accept the voucher; most private landlords decline to do so, but landlords who receive federal tax credits for lower-income housing are required to do so. Those tax credits are distributed by state government agencies, such as the Texas Department of Housing and Community Affairs. Because the state agencies determine where to allocate the tax credits, they can affect the housing options available to lower-income families like the Project’s clients.
In 2008, the Project filed this lawsuit against the state agency. It argued that the agency had allocated the tax credits in a racially segregated manner: it disproportionately granted the housing credits in minority areas of the Dallas region, while at the same time disproportionately denying them in white areas of Dallas. A federal district court agreed with the Project, finding that the agency’s allocation of tax credits violated the FHA because it had a disparate impact on minorities. Under the ruling, it did not matter whether the agency intended to discriminate against minorities; the effect was enough to violate the law. The U.S. Court of Appeals for the Fifth Circuit agreed that a disparate-impact claim could be brought under the statute. The state then asked the Supreme Court to weigh in, which it agreed to do in October of last year.
The state urges the Court to hold that the FHA does not permit disparate-impact claims. To the contrary, the FHA only prohibits actions that discriminate “because of” race, which the state says is limited to purposeful discrimination.
The Project’s arguments rest on the history and text of the FHA. It emphasizes that Congress passed the Act to correct the consequences of both intentional racial segregation by the government and practices by the housing industry that had the effect of continuing racial segregation. “Importing an intent requirement” into the text of the FHA, it maintains, would be contrary to Congress’s purpose – to say nothing of the long string of decisions by the courts of appeals holding that the FHA encompasses disparate-impact claims.
The federal government supports the Project and urges the Court to defer to its interpretation of the FHA. In the FHA, it stresses, Congress gave the federal government “broad authority to administer” the law, and it has repeatedly acknowledged that the FHA allows claims based on disparate impact. That interpretation is consistent with the text and history of the FHA, the government says, which “focuses on the consequences of the action – the unavailability or denial or a dwelling – rather than the motivation of the actor.” Indeed, although Congress amended the FHA in 1988, it did not change the text of the FHA to preclude disparate-impact claims, despite the decisions by the courts of appeals allowing such claims.
It’s not a coincidence that the two earlier Supreme Court cases presenting this issue settled before the Court could weigh in. The federal government and civil rights groups had worked hard to make sure that they did, because they worried that, if it ruled on the merits, the Roberts Court would hold that disparate-impact claims are not available under the FHA. And that, they believe, would take away an important tool in the efforts to combat housing discrimination. After all, government officials and businesses rarely announce that they intend to discriminate, so it’s much easier to prove that a law or practice has a discriminatory effect. On the other hand, the housing and banking industries believe that allowing disparate-impact claims would go too far and might actually require them to make decisions based on race to avoid liability. All that should matter, they say, is whether a law or practice is based on an intent to discriminate.
[In the interest of full disclosure, I was among the counsel to the plaintiffs in one of the earlier cases, Magner v. Gallagher. However, I am no longer affiliated with Goldstein & Russell and was in no way involved in this case.]