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When Will SCOTUS Rule on Disparate Impact Liability?



In January of this year, the US Supreme Court held oral arguments on a vital question:  Does the Fair Housing Act (“FHAct”) recognize liability for policies and practices that have a disproportionately adverse impact on persons protected by the FHAct?  There is no doubt that the FHAct protects these classes against intentional discrimination (referred to as “disparate treatment” liability); most of the Federal appellate courts have ruled that that otherwise neutral policies that have a “disparate impact” on protected classes may also violate the FHAct, even if there was no intent to discriminate.  Despite this broad acceptance, the Supreme Court accepted two cases in recent terms that challenged the availability of disparate impact under the FHAct, both of which were settled before oral argument.  Last year, the Court accepted a third case, Texas Dept. of Hous. and Community Development v. The Inclusive Communities Project, Inc., which argued that the Texas agency adopted policies to allocate low income housing tax credits (LIHTCs) that resulted in the majority of LIHTC units being developed in minority neighborhoods, thereby making it more difficult for minorities to obtain housing in non-minority neighborhoods.  The claim was that even though the Texas agency followed neutral allocation rules required by the IRS, its allocation policies violated the FHAct because they had a disparate impact on minorities.  Among the issues addressed in the Supreme Court briefs was whether the express terms of the FHAct, which prohibit discrimination “because of” race and other protected class status, also prohibit action that has a discriminatory effect.   During the oral argument, the justices appeared split, with even the more conservative justices suggested that the entrenched disparate impact case law should not be overruled. 


Typically, the court wraps up all of its decisions on pending cases by the end of June, a little more than a month from now.  The fact that the Inclusive Communities decision is still outstanding suggests that the Court is having difficulty reaching a consensus and that some sort of split decision, including multiple opinions, may result.  Watch this space for a full update when the decision is finally issued.


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