U.S. Supreme Court

Supreme Court allows disparate impact claims in fair-housing cases; dissent fears 'rat's nest'

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The U.S. Supreme Court has ruled in a 5-4 decision that the Fair Housing Act allows discrimination lawsuits based on disparate impact as well as intentional discrimination.

Justice Anthony M. Kennedy wrote the majority opinion (PDF) allowing disparate-impact suits–within limits. “Courts should avoid interpreting disparate-impact liability to be so expansive as to inject racial considerations into every housing decision,” Kennedy wrote.

SCOTUSblog calls the decision “a big deal for housing rights and civil rights groups, and a bit of a surprise.”

The court ruled in a disparate impact suit targeting a Texas housing agency for awarding tax credits to construct affordable housing more often in minority inner-city areas of Dallas than in white suburban neighborhoods.

Kennedy pointed to a provision of the Fair Housing Act that makes it unlawful to “otherwise make unavailable” a dwelling because of race, color, religion, sex, familial status, or national origin.The phrase “otherwise make unavailable” supports disparate impact claims because it refers to the consequence of action, rather than intent, Kennedy said.

Kennedy also noted that Congress chose to keep the language when it amended the Fair Housing Act in 1988, a time when all nine appeals courts that had addressed the question concluded that disparate impact claims were allowed under the law.

Kennedy added, however, that disparate-impact liability has always been limited. “It would be paradoxical,” Kennedy said, “to construe the FHA to impose onerous costs on actors who encourage revitalizing dilapidated housing in our nation’s cities merely because some other priority might seem preferable.”

In fair housing cases, one limit would allow housing authorities and private developers leeway to explain the valid interest served by their policies, Kennedy said. Plaintiffs alleging a statistical disparity in fair housing cases should also be able to point to a policy causing the disparity, Kennedy said.

“The litigation at issue here provides an example,” Kennedy continued. “From the standpoint of determining advantage or disadvantage to racial minorities, it seems difficult to say as a general matter that a decision to build low-income housing in a blighted inner-city neighborhood instead of a suburb is discriminatory, or vice versa. If those sorts of judgments are subject to challenge without adequate safeguards, then there is a danger that potential defendants may adopt racial quotas—a circumstance that itself raises serious constitutional concerns.”

On remand, Kennedy said, the case before the court “may be seen simply as an attempt to second-guess which of two reasonable approaches a housing authority should follow.”

Kennedy’s opinion was joined by Justices Ruth Bader Ginsburg, Stephen G. Breyer, Sonia Sotomayor and Elena Kagan.

Justice Samuel A. Alito Jr. dissented in an opinion joined by Chief Justice John G. Roberts Jr. and Justices Antonin Scalia and Clarence Thomas. Alito said the text of the Fair Housing Act did not allow disparate-impact claims, and he pointed to a 2010 appeals court opinion to show the theory can have far-reaching consequences.

The decision, Gallagher v. Magner, allowed a suit challenging St. Paul, Minnesota’s efforts to combat rats and bad landlords on the theory that aggressive enforcement of the housing code drove up rents, having a disparate impact on minorities, who were more likely to be low income.

“Something has gone badly awry,” Alito wrote, “when a city can’t even make slumlords kill rats without fear of a lawsuit.”

“No one wants to live in a rat’s nest.”

Kennedy responded in the majority opinion that Magner was decided “without the cautionary standards announced in this opinion.”

Thomas wrote a separate dissent arguing the court should “drop the pretense” that the Supreme Court’s 1971 opinion Griggs v. Duke Power correctly interpreted Title VII of the Civil RIghts Act to allow disparate impact claims.

The case is Texas Department of Housing and Community Affairs v. Inclusive Communities Project.

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