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Supreme Court Holds Disparate-Impact Lawsuits Valid Under Fair Housing Act

on Thursday, 25 June 2015 in Dirt Alert: David C. Levy, Editor

The U.S. Supreme Court today affirmed a decision from the Fifth Circuit Court of Appeals and held that a disparate-impact claim is cognizable under the Fair Housing Act (“FHA”). In Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc., the underlying claim concerned the location of low-income housing in Dallas, Texas, and was based on a disparate-impact theory of liability. Specifically, the Plaintiff, Inclusive Communities Project (“ICP”), argued the Defendant “caused continued segregated housing patterns by its disproportionate allocation of . . . tax credits, granting too many credits for housing in predominantly black inner-city areas and too few in predominantly white suburban neighborhoods.”

In its 5–4 decision upholding disparate-impact claims as valid, the Court said such claims play a vital “role in uncovering discriminatory intent” by permitting “plaintiffs to counteract unconscious prejudices and disguised animus that escape easy classification as disparate treatment.” The Court further said recognition of disparate-impact claims is consistent with the FHA’s central purpose—to eradicate discriminatory practices within the housing sector of the U.S. economy.

Notably, the Court emphasized disparate-impact liability may still be properly limited by allowing housing authorities and private developers to identify, as a defense, a valid interest served by their policies. Furthermore, the Court added, a plaintiff who makes a disparate-impact claim based on a statistical disparity must be able to point out which of a defendant’s policies has caused the alleged disparity.

The Supreme Court’s decision does not fully mute the attacks on disparate impact claims under the FHA. The U.S. Congress is currently considering an amendment to an appropriation bill that would prevent the Department of Justice from utilizing the disparate impact theory as a means for enforcing the FHA. The fate of the amendment in light of the Inclusive Communities decision remains unclear.

Scott P. Moore

Sara A. McCue

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