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Supreme Court “Disparate Impact” Ruling May fundamentally Alter the Fair Housing Act

— April 28, 2015

A case argued on January 21st before the Supreme Court may derail a major portion of America’s primary housing-discrimination law. The 1968 Fair Housing Act (FHA) was created by its sponsors to prevent discrimination of housing choices against protected groups as well as being created with the intent to proactively integrate segregated communities. Texas Department of Housing and Community Affairs v. Inclusive Communities ProjectSources puts the question of intent to the test. The issue at stake revolves around “disparate impacts,” i.e. whether or not the impact of a uniform policy leading to less positive outcomes for certain groups in aggregate is a violation of the FHA. The Supreme Court is obviously interested in ruling on this case because this question has been brought to federal appeals court 11 times since 1968 and 11 times; the courts have ruled that policies with disparate impacts among groups can indeed be considered a violation. Also, in the FHA’s first Supreme Court test, Trafficante v. Metro Life Ins. Co., the Court identified that the purpose of the Act was to create, “truly integrated and balanced living patterns,” and ruled that the results are the primary focus of the bill, not intent. The Supreme Court has attempted to take two prior disparate impact cases before, one in 2012, which was withdrawn, and one in 2013 in which a settlement was reached before oral arguments began.

The reason for bringing this topic up now is because Monday’s New York Times’ opinion pages contain a five-expert panel debate over disparate impact, its constitutionality, its practical applicability, and possible solutions. Here is a brief synopsis of each expert’s opinion on the matter with links to the full text:

Aderson B. Francios– Harvard Law Professor:

Mr. Aderson argues that the FHA was created with the primary purpose to curb causes of racial unrest, and to undo the 350 years of overt discrimination leading up to 1968. Therefore, Francios continues, that the “veil of neutrality” in some uniform policies is often a condemnation to continue the status quo, whereas the FHA was geared to change the existing “separate, but unequal” status quo and promote integration.

Meriem L. Hubbard– Principal Attorney with Pacific Legal Foundation:

Ms. Hubbard believes that the 14th Amendment requires a showing of intent, and that the use of disparate impact as a measure of discrimination to be unconstitutional.  She argues that statistics alone do not prove discrimination, and judging these outcomes of neutral policies to be violations is unfair to the accused, forcing them to view someone as a member of a group instead of as an individual.

Eva Patterson– President and co-founder of the Equal Justice Society:

Ms. Patterson notes that racial segregation is still very prevalent today, and that “disparate impact recognizes that implicit biases can create discriminatory results without intent, and lets such results be remedied.” She states that research shows that physiological biases, subtle cues which are largely uncontrollable, produce statistically valid results of discrimination for the victim. This is why she believes that disparate impact is a vital component to the FHA.

Ian Ayres– Yale Law Professor and expert witness in several disparate impact cases:

Mr. Ayres believes that not all statistics that prove disparate impact are proof of a violation. Using mortgage lending policies as an example, Mr. Ayres explains that charging higher interest rates based on credit scores is not a violation even though African Americans and Hispanics statistically have lower scores, yet giving mortgage brokers the discretion to mark up interest rates based on risk of default when it impacts minorities the most could be challenged as a violation. He believes that proper multivariate regression analyses can help rule out extraneous factors, and with enough scientific rigor, can help point to policies that unfairly discriminate against protected groups.

David H. Stevens– President and CEO of the Mortgage Bankers Association:

While Mr. Stevens agrees that mortgage lending practices should be fair and equal, he argues against the punitive nature of some disparate impact results. He believes that these can occur even under sound lending practices, and argues against using every possible statistical variation as a cause to make a claim under the disparate impact provisions. He believes in more rigorous standards for proving a policy to be discriminatory.

All 5 panelists bring vital and reasonable points to the (round) table. It remains to be seen which direction the Supreme Court will rule, considering that these points will likely be included in the discussion among the Justices. It is difficult to predict which way they will go, as there are two likely indicators that run in opposition to each other. The Court has maintained a fairly steady tradition of deferring to the language contained within legislation when it is facing a legal challenge. Language in the FHA makes it fairly clear what the intent of the bill is to be, which has also been the consistent opinion of the appeals’ courts. However, the fact the Court chose to hear this case even though disparate intent appears to be settled law given the consistency of the appeals rulings leads to the theory that an upset is brewing. The speculation will end in either June or July, when the decision is expected.



New York Times Opinion Pages

SCOTUS Blog – Joe Rich and Thomas Silverstein

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