Supreme Court preserves tool for fighting housing discrimination

The Supreme Court upheld on Thursday a major tool that civil rights advocates have used for decades to combat discrimination in housing. In a 5-4 decision, the justices ruled that the Fair Housing Act of 1968 may be used to prohibit housing policies that disproportionately harm racial minorities or other protected groups, even if there is no discriminatory intent behind them.  

Writing for the majority, Justice Anthony Kennedy said that the statute’s language refers to the “consequences of an action rather than the actor’s intent.” The decision — affirming what is called disparate impact theory, which has been used to challenge exclusionary zoning and other practices when they have different consequences for people, depending on their race, religion, sex or membership in another protected class — was celebrated by fair housing advocates.

“This was a 100 percent victory for the Fair Housing Act,” said Stephen Dane, a partner at civil rights law firm Relman, Dane and Colfax. “There were no new theories or developments. The only surprising thing is that the court took it up.”

In the case, Texas Department of Housing and Community Affairs v. Inclusive Communities Project, plaintiffs accused the housing agency of promulgating segregation by approving too few tax credits for low-income housing in white communities. The Inclusive Communities Project, a group that helps black families find affordable housing in areas with better schools, lower crime and other factors contributing to improved social mobility, said Texas’ record of allocating tax credits in majority black and Latino, high-poverty neighborhoods limited housing choices in other areas.

Lawyers for the agency argued that the language in the Fair Housing Act supports claims based on discriminatory intent but not those based on disparate impact. The high court disagreed. In his opinion Kennedy wrote that the law’s language is analogous to that in other statutes passed during the civil rights era, such as Title VII of the Civil Rights Act of 1964, which more explicitly authorize disparate impact claims. He also referred to a 1988 amendment to the Fair Housing Act, which lists specific conditions in which disparate impact claims are not valid. If the statute didn’t allow disparate impact claims in the first place, he wrote, those exemptions would be “superfluous.” 

Today’s ruling doesn’t settle the case, it just sends it back to a Texas appeals court, which will now have to apply Kennedy’s opinion. The decision settles only whether disparate impact claims may be brought under the Fair Housing Act and what standards and burden of proof apply.

Those standards are high. To prove disparate impact, Kennedy wrote, plaintiffs must demonstrate statistically that a policy has produced an unequal impact on a certain group of people and show a “causal connection” between the policy and the disparities in question. On top of that, they must establish that the policy is “artificial, arbitrary and unnecessary.”

Businesses that face legal challenges under the 1968 act may claim that their housing policies are a “business necessity,” Kennedy wrote. Governments may claim “public interest.” Challengers can win these cases only if they successfully identify an alternative policy that achieves those interests without harming protected classes of people.

Kennedy’s standards for disparate impact claims closely match guidance on the topic released in 2013 by the U.S. Department of Housing and Urban Development. Critics of disparate impact had hoped that the Supreme Court would scrap the theory under the Fair Housing Act in favor of a principal called disparate treatment, which is much harder to prove.

Business associations were disappointed with today’s decision. “This approach can have unintended consequences, such as causing financial institutions to shrink their operations rather than risk litigation, hurting the very groups it is intended to help,” the American Bankers Association wrote in a statement.

Other critics of disparate impact theory say it forces state and local governments to consider race-based policies that run afoul of the U.S. Constitution’s equal protection clause. Kennedy addressed this concern too. If a court finds that a policy has produced a disparate impact, he wrote, the first remedy is to simply scrap that policy. Any remedy beyond that, he wrote, should “strive to … eliminate racial disparities through race-neutral means.”

This opinion is just one of many in which Kennedy has shown “a preference for race-neutral policies over race-conscious policies,” says Columbia law professor Olati Johnson, who has written about the ways federal agencies can better harness the power of disparate impact. “He’s very clear about that.”

Yet in this opinion, Kennedy seems to have left open to interpretation the role of race in finding solutions to disparate impact. “Race,” he wrote, “may be considered in certain circumstances and in a proper fashion.”

Fair housing advocates, meanwhile, say they do not see the ruling as restricting the opportunities to challenge policies under the disparate impact theory. Today’s decision justifies the way the “legitimate civil rights community” has conducted its work, said Lisa Rice, the executive vice president of the National Fair Housing Alliance.

In detailing the circumstances in which people may bring cases of disparate impact, Kennedy may have been cautious and specific. But he was bold and broad in his penultimate paragraph, noting the role of the Fair Housing Act in America’s “historic commitment to creating an integrated society.”

“Much progress remains to be made in our nation’s continuing struggle against racial isolation,” he wrote. The Fair Housing Act, he added, must play an important part in avoiding the “grim prophecy” of the 1968 Kerner Commission report on race riots “that ‘our nation is moving toward two societies, one black, one white — separate and unequal.’”