Supreme Court opens door to housing discrimination lawsuits

A closely divided Supreme Court on Thursday allowed housing bias lawsuits based on unintentional actions that happen to have a discriminatory effect on racial minorities.

In an unexpected defeat for the Texas Department of Housing and Community Affairs, and for conservatives more generally, the court by a 5 to 4 vote concluded the so-called “disparate impact” lawsuits filed were authorized under the federal Fair Housing Act.

“Recognition of disparate-impact claims is consistent with the FHA’s central purpose,”’ Justice Anthony Kennedy wrote, adding that “the FHA “provides a clear national policy against discrimination in housing.”

Underscoring the case’s significance, cities including Miami, Chapel Hill, N.C. and Columbia, S.C. had filed a brief supporting the challengers to the Texas Department of Housing and Community Affairs. Seventeen states including California, Washington and Missouri had likewise weighed in to support the challenge.

From the other side, groups including the Texas Apartment Association and the National Association of Home Builders had urged the court to limit legal exposure.

Amidst the urban turmoil of the 1960s, with racial segregation still rampant, Congress passed the Fair Housing Act in 1968. The law makes it illegal, among other things, to discriminate in “residential real-estate related transactions” against any person on the basis of “race, color, religion, sex, familial status, or national origin.”

The Fair Housing Act does not explicitly identify disparate impact as a measurement of discrimination, forcing the court to delve into the law’s meaning.

A “disparate impact” arises when a practice produces different effects across racial groups, even if the practice wasn’t racially motivated. For instance, if a mortgage lender establishes borrowing standards based on income and net worth, and some racial groups are less likely than others to qualify for loans under those standards, this could result in a disparate impact

The Texas Department of Housing and Community Affairs administers the Low Income Housing Texas Credit program in the state. The federal tax credits are provided to developers to encourage the production of affordable rental housing

The Texas program was challenged by The Inclusive Communities Project, Inc., a non-profit that says it “seeks racial and socioeconomic integration in Dallas housing.”

The challengers noted that the Texas housing department assigned 92.9 percent of its tax-credit units in Dallas to minority census tracts. The challengers argued this amounted to the same impact achieved by intentional discrimination, even if the housing officials didn’t intend to discriminate.

“Recognition of disparate impact liability under the FHA also plays a role in uncovering discriminatory intent: It permits plaintiffs to counteract unconscious prejudices and disguised animus that escape easy classification as disparate treatment,” Kennedy wrote.

The highly anticipated decision marked the third time the Supreme Court had faced a Fair Housing Act disparate-impact challenge in recent years. The two prior cases, arising out of Minnesota and New Jersey, were settled before the conservative-dominated court could weigh in.

This story was originally published June 25, 2015 at 7:36 AM with the headline "Supreme Court opens door to housing discrimination lawsuits."