Symposium: Raising the stakes for disparate impact

Statutory interpretation has seen better days. Title VII of the Civil Rights Act of 1964 (Title VII) bans job actions that “adversely affect” employees on the basis of race and other protected traits. The Age Discrimination in Employment Act (ADEA) likewise protects older workers from job actions that “adversely affect” them. The Fair Housing Act (FHA) includes no such statutory language. That should have foreclosed a finding that the FHA authorizes disparate impact claims. But it did not. The majority instead ruled that the FHA’s use of the phrase “make unavailable … a dwelling to a person because of race” performed the same function as “adversely affect” and that a mix of tangential statutory amendments, precedent from the lower courts, and various historical factors supported an expansive construction of the law’s text. The dissenting opinions extensively critiqued the majority’s reasoning. But one essential point should not be lost in the back and forth: Congress understood that the Court twice relied on the “adversely affect” language to recognize disparate impact claims, and, despite multiple opportunities to do so, never amended the FHA to bring the statute into line with Title VII and the ADEA.

Thus, for those worried that the Court might nevertheless read the FHA to authorize disparate impact claims, deference to HUD’s fairly recent rulemaking on this topic was their chief concern. As a consequence, it seemed the case might boil down to a contest between administrative deference and constitutional avoidance given the equal protection concerns raised by disparate-impact liability. Yet this battle never materialized. Indeed, Chevron deference was conspicuously absent from the majority opinion. Perhaps that was a result of Justice Alito’s strong criticism of HUD; the dissent explained that HUD did not interpret the FHA to authorize disparate impact claims until more than forty years after the law’s enactment and, even then, under unusual circumstances. Or, perhaps the majority’s refusal to rely on Chevron was part of a larger trend away from deference to administrative rulemakings on purely legal issues. Time will tell. But given the majority opinion’s intricate and multilayered reasoning, deference would have been an obvious ally. The unwillingness to invoke it seems significant.

The majority likewise evaded constitutional avoidance, expressing little concern for the possible equal protection problems raised by disparate impact liability. At first glance, this appears to be at odds with Ricci v. DeStefano, in which the Court expressed misgivings with disparate impact. To be sure, the tenor of today’s opinion is quite different from Ricci. But the difference may be explained by the way in which the majority narrowed the ability of courts to impose race-based remedies for housing policies with a disparate impact. The majority made clear that “courts should strive to design [remedies] to eliminate racial disparities through race-neutral means” and that “[r]emedial orders that impose racial targets or quotas might raise more difficult constitutional questions.” To avoid these constitutional issues, the majority encouraged housing authorities to craft remedies promoting diversity without explicitly using racial classifications. But that may be easier said than done. As this case shows, avoiding racial balancing is difficult enough when the task is merely drawing zoning lines or taking other actions one step removed from individual remedies. Avoiding racial remedies is a far more complicated proposition when it comes to lending practices and other practices governed by the FHA.

It appears from the opinion, however, that the majority has made a bet there will not be enough successful disparate impact claims to trigger the constitutional concerns so prevalent in Ricci. The Court essentially built the FHA into a law making it quite difficult to successfully bring a disparate impact claim. The Court held that “[d]isparate-impact liability mandates only the removal of artificial, arbitrary, and unnecessary barriers” and that it is “not an instrument to force housing authorities to reorder their priorities.” Thus, to defeat a disparate impact claim, housing authorities need only bring forth a “valid interest served by their policies.” Furthermore, “a disparate-impact claim that relies on a statistical disparity must fail if the plaintiff cannot point to a defendant’s policy or policies causing that disparity.” Indeed, the Court sent a strong signal that the disparate impact claim that gave rise to this dispute will have a difficult time moving forward under this standard. What the decision gives with one hand, it may well take away with the other.

All that said, there is no question the Court has made a sizable constitutional wager. The Court could have interpreted the FHA to avoid these constitutional questions and put the ball in Congress’s court. The Court instead chose to rely on FHA plaintiffs and HUD to bring disparate impact claims selectively and lower courts to sparingly invoke race-based remedies when violations occur. But as Ricci showed, it only takes one stray case to bring the issue to the Court’s doorstep. If it returns, today’s decision ensures that there will be no statutory exit ramp. The Court will be forced to decide whether civil liability based on how racial groups fare under neutral practices that treat all individuals equally can be squared with the Equal Protection Clause. Thus, those advocating for FHA disparate impact liability are assuredly relieved that the Court read the law so liberally. But going forward, the stakes could not be higher.