U.S. Supreme Court Rules in Long Anticipated Disparate Impact Case

On June 25, 2015, the Supreme Court of the United States in Texas Dept. of Housing and Community Affairs et al. v. Inclusive Community Project, Inc. et al, No.: 13-1371, affirmed the holding of the Fifth Circuit that the Fair Housing Act (“FHA”) prohibits decisions in housing that have a disparate impact.  This means that non-profit testing groups now have an additional tool by which to measure compliance with the FHA, and argue that a policy or practice causes a disparate impact, i.e., not that your policy on its face discriminates based upon a protected category but that your policy or practice causes a discriminatory effect.

 

The analysis courts will apply to disparate impact actions begins with the burden on the Plaintiff, in many cases the non-profit testing group, to show that your policy or practice has or will have a discriminatory effect.  Once shown, the burden moved to the Defendant to prove that the challenged practice or policy “is necessary to achieve one or more substantial, legitimate, non-discriminatory interests.”  If the Owner/Operator successfully meets this burden, the burden then shifts back to the Plaintiff to prove that the “substantial, legitimate, nondiscriminatory interests supporting the challenged practice could be served by another practice that has a less discriminatory effect.”  Id.  If proven, the Plaintiff is successful in their action.

 

This decision adds a powerful tool under FHA available to non-profit groups testing and measuring FHA compliance.  Which means those who must comply with the FHA, landlords, building managers, developers, etc., need to be vigilant and proactive in FHA compliance, considering not only whether their policies and practices, on their face, violate the FHA but also whether the impact of those policies and practices violates the FHA.

 

Thank you to Charles X. Gormally, Esq., of the law firm Brach Eichler, LLC, for authoring this update. Click here for a copy of the Court’s decision.