A case before the Supreme Court on Wednesday could significantly narrow the scope of the Fair Housing Act of 1968, which prevents landlords, real estate agents, developers, banks and others from discriminating against any protected class of people when it comes to housing.
The court is taking up a challenge to how that law has been interpreted for the last four decades. If the court rules as many civil rights and housing advocates fear it will, the decision could make it much harder for anyone — individuals, organizations or governments — to win housing discrimination cases. That could radically alter how housing, especially government-subsidized affordable housing, is built and could weaken the government’s ability to challenge big banks’ lending practices.
“This could potentially upend the central protection against residential segregation,” said J.P. Schnapper-Casteras, a special counsel for appellate and Supreme Court advocacy at the NAACP Legal Defense and Educational Fund. “It’s a bedrock part of civil rights law.”
The court’s decision comes down to how the Fair Housing Act is interpreted. In 1974 the U.S. Department of Housing and Urban Development won a court case that allowed the agency to interpret discrimination by its impact and not just its intent. The idea was that modern discrimination isn’t as obvious as the discrimination practiced by lenders and landlords prior to the civil rights movement but is nonetheless ever-present in coded language and policies that favor certain groups of people over others.
The case was brought by the Inclusive Communities Project, a nonprofit group in Dallas. The project helps house low-income renters with Section 8 vouchers in affluent communities as part of its mission to create a more racially integrated city. The group sued the state in 2008, saying Texas intentionally provided most subsidies to developers building low-income housing in poor, mostly minority communities. Two lower courts have agreed with the Inclusive Communities Project, and 11 federal appeals courts have made similar decisions in favor of the disparate-impact interpretation of the law in the last few decades, but Texas decided to take the case to the Supreme Court anyway.
“In Dallas there’s a history of discrimination in voting, housing, employment, in every facet of life,” said Elizabeth Julian, the president of the Inclusive Communities Project. “The outcomes of historical discrimination have never been really removed. The question of whether someone has evil in their heart — it’s not really relevant.”
The office of Texas Attorney General Ken Paxton did not respond to a request for comment for this story, but the state and others have argued that the law places too high a burden on housing providers.
The problem, according to housing rights activists, is that today nearly all discrimination is not so obvious, and therefore most fair housing cases rely on the disparate-impact interpretation.
The Supreme Court could take away the ability to make such a challenge. If the court does, anyone suing under the Fair Housing Act would have to prove that the intent of a landlord, bank or real estate agent was discriminatory, not just the outcome.
“To prove intentional discrimination is much more difficult,” said Joe Rich, a co-director of the Fair Housing and Community Development Project, part of the nonprofit Lawyers’ Committee for Civil Rights. “Discrimination is much more covert than it was back in the 1960s. This has been the standard of proof for over 40 years.”
“Simply having politically incorrect results for there to be a violation — we think the statute is clear that’s not what it’s meant for,” said Roger Clegg, the president and general counsel at the Center for Equal Opportunity, a conservative think tank that works on issues of race and ethnicity.
He said if the disparate-impact interpretation is allowed to stand, landlords and lenders could decide they needed to establish racial quotas in order to prevent lawsuits. “A landlord might decide, ‘To make sure I don’t get sued, I have to apply a policy that makes my numbers look right,’” he said.
The banking and mortgage industries have come out in support of Texas’ interpretation of the law.
The Justice Department has used the disparate-impact interpretation to sue big banks for charging minority mortgage applicants higher fees. In one case in 2011, the department won $335 million from Bank of America. If the Supreme Court rules in favor of Texas, that kind of charge would be impossible without something like an email or other direct proof that the bank discriminated on the basis of race, experts say.
Paul Hancock, a lawyer who often represents the mortgage industry and who worked with the American Bankers Association to write an amicus brief for Wednesday’s case, said that disparate impacts are a given in our unequal society, but the blame for them shouldn’t be laid at the feet of lenders and landlords.
“There’s a great disparity between the wealth of whites and minorities, so often those borrowers present differing qualifications,” he said. “Even if lenders are being fair, they could still cause disparate impacts.”
But Myron Orfield, a law professor and director of the Institute of Metropolitan Opportunity at the University of Minnesota, said that without the disparate-impact interpretation, the majority of discrimination cases involving housing and banking would be much harder to prove.
“This would stop us from challenging the basic causes of segregation in this society. It’s really the only way that fair-housing cases prevail these days,” he said. “It’d be a major blow.”
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