The Texas Department of Housing and Community Affairs is asking the Supreme Court to rule that disparate impact claims are not a part of the Fair Housing Act.
If the Court grants the writ of certiorari the Texas agency wants, it would be the third Fair Housing Act disparate impact case before the Court since 2012.
Inclusive Communities Project, Inc. v. Texas Department of Housing and Community Affairs raises the question of whether simple disparate outcomes that aren’t the result of intentional discrimination should be treated as such.
The prior two cases that tested the question, Mount Holly v. Mt. Holly Gardens Citizens in Action, Inc. and Magner v. Gallagher, were both settled before the Court could answer the question, Ballard Spahr said in a note to client Monday.
The Texas agency argues that the statutory language of the Fair Housing Act does not expressly provide for disparate impact, as do Title VII and the ADEA.
Inclusive Communities Project Inc., the plaintiff that promotes low-income families eligible for Section 8 vouchers, argued at the trial court that the Texas DHCA disproportionately approved tax credits for non-elderly affordable housing developments in predominantly minority neighborhoods.
It disproportionately denied tax credits for the similar affordable housing developments in predominantly white neighborhoods, the plaintiffs argued.
On March 24, 2014, the Fifth Circuit issued an opinion in in the suit applying HUD’s discriminatory effects rule and burden-shifting analysis to a Fair Housing Act claim. This is the first circuit court to apply the rule since it took effect on March 18, 2013.
The Fifth Circuit adopted the burden-shifting approach found in HUD’s newly adopted disparate impact rule.
“Specifically, the Fifth Circuit instructed the trial court to reassess the case and to use HUD’s new regulation—namely, that plaintiff must first prove discrimination by showing that a challenged practice causes a discriminatory effect; second, the defendant must prove that the challenged practice is necessary to achieve one or more substantial, legitimate, nondiscriminatory interests; and third, the plaintiff must then show that the defendant’s interests could be served by another practice that has a less discriminatory effect,” Ballard Spahr said.
After a bench trial, the district court determined that a disparate impact on minorities had in fact existed based on plaintiff's statistics. The court also concluded that the Texas DHCA had a legitimate interest in its review process but failed to produce any evidence that there were no less-discriminatory alternatives.
Briefs in opposition to the petition for certiorari are due on Monday, June 16, 2014.
“In the event that the Court decides to hear the case, it is likely that the United States, through the Solicitor General's office, will file an amicus curiae brief, as was done in both Gallagher and Mount Holly,” Ballard Spahr said. “Ballard Spahr will continue to monitor and report on any developments in this case and similar disparate impact cases.”