Symposium: The case for disparate impact under the Fair Housing Act

Joe Rich and Thomas Silverstein are attorneys at the Lawyers’ Committee for Civil Rights Under the Law, which filed an amicus brief in support of the respondent, Inclusive Communities Project.

Texas Department of Housing and Community Affairs v. Inclusive Communities Project brings before the Court for the third time in three years the question whether disparate impact claims are cognizable under the Fair Housing Act of 1968. The previous two times the issue was before the court – in Magner v. Gallagher in 2012 and Township of Mount Holly v. Mount Holly Citizens in Action in 2013 – the petition was withdrawn (Magner) or the case settled (Mount Holly) before oral argument. In taking these cases, the Court has ignored the fact that there is no split in the courts of appeals on this issue. Indeed, for over forty years, eleven courts of appeals, in numerous cases, have held that violations of the FHA can be established through a disparate impact standard of proof. The basis for this unanimity of the courts of appeals is sound and compelling. A decision from the Supreme Court upholding the use of the disparate impact standard to enforce the Act will preserve long-settled expectations and avoid upending decades of settled case law, an untenable outcome that would absolve actors who have known for decades that they are liable under the Act for actions with significant, unjustified disparate impact.

The stakes of this examination of the FHA are extremely high. Residential segregation is central to this case and to the purpose of the Act. Yet, in its brief and petition for certiorari Texas ignores this crucial issue. The history of the Act is instructive. In the face of deeply entrenched patterns of residential segregation and exclusion, Congress enacted the FHA in 1968 to effectuate “the policy of the United States to provide, within constitutional limitations, for fair housing throughout the United States.” In Trafficante v. Metro. Life Ins. Co.,the Court recognized the importance of residential integration in its first FHA decision, noting that the purpose of the Act was to foster “truly integrated and balanced living patterns. Historically marginalized communities bear the brunt of a long history of intentional discrimination that caused residential racial segregation, and the FHA is needed to remediate that unconscionable legacy. This must be considered when determining whether disparate impact claims are cognizable under the Act.

In 1968, the sponsors of the Act made clear that their goal was the eradication of residential segregation, and that goal could only be achieved if decision-makers were required to give up policies or practices that have avoidable disparate impacts. In the years leading up to the 1988 amendments to the Act, Congress repeatedly refused to adopt language limiting its reach to intentional discrimination. By the time the Act was amended in 1988, nine courts of appeals had held that the disparate impact was a necessary and appropriate standard of proof to enforce the statute. The language of the amendments themselves reflects an understanding of the existence and viability of disparate impact claims.

Conduct prohibited by the Act – both intentional acts and facially neutral practices – has produced and perpetuated racially segregated neighborhoods where many Americans reside, isolated from high-performing public schools, good jobs, safe streets, reliable public services, and a clean, healthy environment. Such isolation has intergenerational effects that continue to limit the opportunities available to emerging generations. Social science evidence confirms the determination of Congress that segregation is harmful and integration beneficial to educational achievement, access to employment, personal and environmental health, and other aspects of a fulfilling and stable life. The use of unjustified disparate impact analysis under the Act is needed to combat these harms of segregation and achieve the integrated residential patterns sought by Congress. Experience shows that the intentional discrimination standard alone is insufficient and the Act’s goal can only be achieved if decision-makers are required to give up policies or practices that have avoidable disparate impacts.

The text of the FHA is likely to be the primary focus of the Court. On its face, the statutory language strongly supports the conclusion, uniformly accepted in the lower courts for nearly four decades, that the Act authorizes disparate impact claims. In Section 804(a) of the Act, Congress prohibited not just intentionally discriminatory actions, but also those leading to an impermissible and unjustified result. That section states in full that it shall be unlawful “[t]o refuse to sell or rent after the making of a bona fide offer, or to refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or national origin.” The language “ma[d]e” housing “unavailable” to someone because he or she is a member of a protected group does not require proof of the actor’s intent. By focusing on the end result of housing “unavailab[ility],” Congress directed attention away from the mental state of the actor and toward the consequences of the action.

Texas contends that the text of the Act must be read to prohibit only disparate treatment because of the Court’s decision in Smith v. City of Jackson. The plurality decision in that case pointed to differences between the language in Sections 4(a)(1) and 4(a)(2) of the Age Discrimination in Employment Act to support its conclusion that disparate impact claims are cognizable under Section 4(a)(2) — namely that Section 4(a)(2) focuses on practices that “otherwise adversely affect” persons because of age. The Court in Smith pointed to the catch-all phrase in Title VII, “otherwise adversely affect his status as an employee,” noting that “the text focuses on the effects of the action on the employee rather than the motivation for the action of the employer.” But, Section 804(a)’s “otherwise make unavailable” language is also effects-based language, signaling the same congressional intent as Section 4(a)(2). Section 804(a), like Title VII and the ADEA, focuses on effects rather than motivation by drawing attention toward the effect of “mak[ing a dwelling] unavailable” rather than the subjective intent of any individual.

Even if the Court concludes that the text of the Act does not conclusively support recognition of disparate impact claims, the language is, at a minimum, ambiguous. Indeed, in the wake of decades of consistent judicial interpretation supporting the disparate impact standard, it is hard to imagine how the Court could conclude that the language of the Act is unambiguously limited to disparate treatment claims. The Court made clear in Chevron, U.S.A., Inc. v. NRDC, Inc., that when a statute “is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.” The agency has the power to “fill any gap left, implicitly or explicitly by Congress.” Under Chevron, the Court ordinarily defers to an administering agency’s reasonable statutory interpretation, and Justice Antonin Scalia gave such deference to the EEOC’s interpretation of the ADEA in his concurring opinion in Smith.

It follows that the Court here should defer to the consistent interpretation of the Act adopted by the Department of Housing and Urban Development, which is charged with administering and enforcing the Act. HUD has a decades’ long history of interpreting the FHA to encompass a discriminatory effects theory of liability in guidance, administrative law decisions, and most recently in a final rule – enacted in early 2013 – entitled “Implementation of the Fair Housing Act’s Discriminatory Effects Standard.” Texas agrees — it argued in the Fifth Circuit in this case that HUD’s interpretation of the FHA should be afforded Chevron deference, and it prevailed when that court adopted HUD’s three-part burden-shifting approach for disparate impact claims under the Act. It is more than a bit ironic that Texas, which was victorious in the Fifth Circuit and yet sought Supreme Court review, now abandons this position.

Finally, Texas also argues that imposing disparate impact liability under the Act raises serious equal protection constitutional questions because it requires consideration of race. But, disparate impact in the fair housing context is strikingly similar to the examples of permissible strategies for increasing school diversity noted by Justice Anthony Kennedy in his concurrence in Parents Involved in Community Schools v. Seattle School District No. 1 in that they encourage potential defendants to do nothing more than “devise race-conscious measures to address the problem [of segregation] in a general way and without treating each [individual homeowner or renter] in different fashion solely on the basis of a systematic, individual typing by race.” The types of remedies that are most common in disparate impact cases under the FHA include reforming zoning ordinances to allow multi-family housing, establishing siting policies for affordable housing that promote integration, and eliminating mortgage underwriting and pricing criteria that are unrelated to risk. This kind of generalized race-consciousness does not result in racial classifications.

Consistent with congressional intent, the text of the Act and the Equal Protection Clause, the Court should hold that disparate impact claims are cognizable under the FHA to ensure that marginalized communities continue to have the tools needed to promote and foster the primary purpose of Act – residential integration.