Earlier today in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc., the United States Supreme Court affirmed and remanded the opinion of the Fifth Circuit that disparate-impact claims are “cognizable under the Fair Housing Act.”
The Inclusive Communities Project, Inc. (“ICP”), a nonprofit corporation that assists low-income families in obtaining affordable housing, brought a claim against the Texas Department of Housing and Community Affairs (“Department”) alleging that the Department distributed too many federally funded low-income housing tax credits to housing developers in predominantly black inner-city areas and not enough in predominantly white suburban neighborhoods, thereby perpetuating segregated housing patterns in the state.
Initially, the United States District Court for the North District of Texas ruled that the ICP had established a prima facie showing of disparate impact and found that the Department—although successfully proffering a legitimate, non-discriminatory reason for its method of distributing the tax credits—failed to demonstrate that no less discriminatory alternatives existed for distributing the tax credits.
While the Department’s appeal was pending, the Secretary of Housing and Urban Development issued an interpretation of the FHA finding that, among other things, disparate-impact claims are permitted under the FHA and establishing a burden-shifting framework for adjudicating disparate-impact claims. Based on this interpretation, the Fifth Circuit reversed and remanded the District Court’s opinion finding that disparate-impact claims may be brought under the FHA, but that the District Court had improperly required the Department, as the defendant in the case, to prove that there were no less discriminatory alternatives.
At issue before the Supreme Court was an appeal by the Department of the Fifth Circuit’s determination that disparate-impact claims are permitted under the FHA. In a 5-4 decision the Supreme Court found that disparate-impact liability exists under the FHA. Interestingly, however, the Supreme Court also noted that, when examining whether a prima facie case of disparate impact has even been established, “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” and voiced further concerns with having adequate safeguards at the prima facie stage of bringing a disparate-impact claim.
A copy of the Court’s Justice Kennedy’s majority opinion (joined by Justices Ginsburg, Breyer, Sotomayor, and Kagan) as well as the dissents of Justice Thomas and Justice Alito (joined by Chief Justice Roberts and Justices Scalia and Thomas) is available here.