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Supreme Court Upholds Disparate-Impact Claims Under the FHA, But Recognizes Important Limitations to Protect Defendants From Abuse

In a 5-4 opinion issued earlier today, the Supreme Court held that disparate-impact claims are cognizable under the Fair Housing Act (“FHA”). Texas Dep’t of Housing & Community Affairs v. Inclusive CommunitiesProject, Inc., --- U.S. --- (2015). Justice Kennedy wrote the majority opinion, joined by Justices Ginsburg, Breyer, Sotomayor, and Kagan. Justice Alito wrote the dissent in which Justices Roberts, Scalia, and Thomas joined. Justice Thomas also filed a separate dissenting opinion.

While the Court upheld the availability of disparate-impact claims under the FHA, it emphasized that disparate-impact liability must be limited to protect defendants from abusive litigation. In particular, the Court recognized that disparate-impact liability could pose “serious constitutional questions” if “liability were imposed based solely on a showing of a statistical disparity.” (Slip op. at 18.) As such “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.” (Id. at 19-20.) The majority emphasized that the FHA’s “robust causality requirement” “protects defendants from being held liable for racial disparities they did not create.” (Id. at 20.) The Court further advised that “[c]ourts must therefore examine with care whether a plaintiff has made out a prima facie case of disparate impact and prompt resolution of these cases is important.” (Id. at 20.)

In concluding that the statute provides for disparate-impact liability, the majority found the language of Section 804(a) of the FHA--which makes it unlawful “[t]o refuse to sell or rent after the making of a bona fide offer, or to refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or national origin”--to be analogous to the effects-based language of Title VII of the Civil Rights Act of 1964 and the Age Discrimination in Employment Act (“ADEA”). (Slip op. at 11-12 (quoting 42 U.S.C. § 3604(a) (emphasis added).) In contrast to the language of the FHA, the relevant text under both Title VII and the ADEA makes it unlawful to “adversely affect [an employee’s] status as an employee” on the basis of his membership in a protected class. 42 U.S.C. § 2000e–2(a); 29 U.S.C. § 623(a).

The Court also reasoned that Congress’s 1988 amendments to the FHA, which left the relevant statutory text of Section 804(a) intact, presupposed the validity of disparate-impact claims. In particular, the Court noted that Congress was aware at the time that nine courts of appeal had held that disparate-impact claims were cognizable under the statute and that Congress could have revised the relevant language but did not do so. (Id. at 13.) The Court further reasoned that clarifying provisions specifying that nothing in the FHA prohibits (1) appraisers from considering factors other than race, (2) conduct against a person because of a drug conviction, or (3) maximum occupancy restrictions would be “superfluous” if disparate-impact claims were not cognizable under the FHA. (Id. at 15.) Additionally, the Court concluded that recognition of disparate-impact claims is consistent with the purpose of the FHA: “to eradicate discriminatory practices within a sector of our Nation’s economy.” (Id. at 17.)

A copy of the opinion can be found here.