Supreme Court Observations: The Fair Housing Act and “Disparate Impact” Claims

supreme courtThe Supreme Court on Wednesday will hear arguments in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, a case that will determine whether the federal Fair Housing Act (FHA) applies to conduct that, although not intentionally discriminatory, has an allegedly disparate impact on protected groups. Assertions that disparate-impact claims are cognizable under the FHA are difficult to square with the statutory language, which bars housing discrimination “because of” race, color, religion, sex, familial status, or national origin. The phrase “because of” suggests volition by the defendant, not merely that the effects of his actions were felt more strongly by members of protected groups. Proponents of disparate-impact liability frequently respond that whatever the scope of the FHA when first adopted in 1968, Congress later expanded the statute by acquiescing to an unbroken line of court and Executive Branch decisions that had interpreted the FHA as encompassing disparate-impact claims.

But an examination of the federal appeals court decisions cited by the Solicitor General and other disparate-impact claims proponents indicates that lower courts’ endorsement of such claims has been anything but uniform. Thus, putting to one side whether it is ever appropriate to discern the meaning of a federal statute based on evidence of Congress’s inaction in the wake of decisions construing the statute, the case for using that method of statutory interpretation in this instance is particularly weak.

In making the case for congressional acquiescence, the Solicitor General’s brief focuses on 1988, when Congress amended several FHA provisions but did not amend the “because of” language set forth in 42 U.S.C.§ 3604(a). According to the Solicitor General, “Between the enactment of the FHA in 1968 and its amendment in 1988, all nine of the courts of appeals to consider the issue concluded that the Act authorizes disparate impact claims.” Based on that history, he asserts, the 1988 amendments “confirm” that Congress sanctioned disparate-impact claims under the FHA.

The federal appeals court decisions cited by the Solicitor General tell a different story. In virtually every one of those cases, the plaintiffs’ principal claim was that the defendant had acted with discriminatory intent. Several of the decisions failed to endorse disparate-impact FHA liability at all, or said that such liability would be warranted only in extraordinary circumstances not present in the case under review. Other courts said that while evidence of disparate impact might be sufficient to establish a prima facie case, the defendants would be entitled to rebut that case by demonstrating, inter alia, that any discrimination was not intended—thereby indicating that disparate impact simpliciter is not actionable. In short, the judicial landscape that existed in 1988—considered in conjunction with an Executive Branch that for the previous eight years had shunned FHA disparate-impact claims—was not as it is being portrayed by the Solicitor General.

For example, the Solicitor General cites Arthur v. City of Toledo as evidence that the Sixth Circuit endorsed FHA disparate-impact claims. Arthur involved a challenge to a referendum that repealed a sewer extension ordinance that would have permitted sewer service for a proposed low-income housing development. The Sixth Circuit affirmed the district court’s decision rejecting an FHA claim premised both on intentional racial discrimination and disparate impact. While stating in dictum that disparate-impact claims might under some circumstances be cognizable under the FHA, the court added, “[W]e fear that recognizing a [disparate-impact] cause of action in such instances goes far beyond the intent of Congress and could lead courts to untenable results. Accordingly, we hold that, absent highly unusual circumstances, the discriminatory effect of a referendum cannot establish a violation of the Fair Housing Act.” (Emphasis added.)

The Solicitor General cites United States v. Marengo County Comm’n as evidence that the Eleventh Circuit had endorsed FHA disparate-impact claims prior to 1988. But Marengo County wasn’t even an FHA case; it addressed a claimed violation of § 2 of the Voting Rights Act. The Eleventh Circuit’s only mention of the FHA appeared in a footnote in which the court listed various federal statutes in which Congress authorized imposition of disparate-impact liability. The court did so solely for the purpose of demonstrating that Congress has the power to legislate against disparate racial impacts, not to provide a definitive construction of the FHA.

Other cited appeals court decisions only discussed disparate-impact claims in the abstract after upholding dismissal of FHA claims. For example, the Fifth Circuit in United States v. Mitchell affirmed a district court’s factual findings that an alleged practice (steering African-American applicants for public housing to sections of housing projects with a predominantly black population) was not intentionally discriminatory and had no disparate impact on the basis of race. The court went on to state that claims of “significant” disparate impact were actionable under some circumstances; but in light of the district court’s factual findings, the appeals court saw no need to consider what evidence of disparate impact would have been sufficient to justify a finding of liability.

Indeed, several of the cited decisions made clear that disparate-impact evidence was relevant because it constituted evidence of discriminatory intent. Thus, the Eighth Circuit in United States v. City of Black Jack explained that evidence of disparate impact is the “touchstone” in FHA cases, in large measure “because clever men may easily conceal their motives.” The Eighth Circuit said that evidence of disparate impact was sufficient to create a prima facie case of an FHA violation and imposed on defendants the evidentiary burden of demonstrating that their conduct did not violate the FHA. The court did not specify how defendants could successfully rebut the prima facie case, thereby leaving open the possibility that defendants could prevail by proving that the challenged policies, although they had some disparate impact, were motivated by goals having nothing to do with race.

Moreover, federal appeals courts were not the only ones weighing in on the meaning of the FHA in the 1980s. The Reagan Administration stated repeatedly in the 1980s that disparate-impact claims were not cognizable under the FHA. When he signed the FHA amendments in 1988, President Reagan stated unequivocally that the FHA “speaks only to intentional discrimination.” The Supreme Court has never weighed in on the issue; in a 1988 FHA opinion, Town of Huntington v. Huntington Branch, NAACP, the Court explicitly declined to reach the issue of whether “the disparate-impact test . . . is the appropriate one” for evaluating FHA challenges to zoning ordinances. In sum, in light of the conflicting interpretations of the FHA adopted between 1968 and 1988, there is no basis for concluding that Congress’s failure to alter the FHA’s liability standards when it amended the statute in 1988 is evidence that Congress intended those amendments to constitute ratification of a disparate-impact standard.

Indeed, as Washington Legal Foundation explained in its brief in support of Texas, the Supreme Court has routinely rejected claims that the meaning of a statute can be inferred from congressional inaction in the face of judicial interpretations of the statute. When, as here, those judicial interpretations consist of widely varying lower-court interpretations of a statutory provision whose meaning has not been construed by the Supreme Court, the case for congressional acquiescence is untenable.

Also published by Forbes.com at WLF’s contributor site

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