Supreme Court upholds key tool used to fight housing discrimination

'Much progress remains to be made in our nation’s continuing struggle against racial isolation,' Justice Anthony Kennedy wrote in the court’s majority opinion addressing the federal Fair Housing Act.

In a significant and surprising victory for civil rights groups, the US Supreme Court on Thursday embraced a broad reading of the scope of the Fair Housing Act (FHA), ruling that the law authorizes discrimination lawsuits based on disparate impacts suffered by protected minority groups, in addition to lawsuits charging intentional acts of bias.

In a 5-to-4 decision, the high court said the statute allowed so-called disparate-impact lawsuits when minority groups are disproportionately affected by a policy, even when the policy is racially-neutral.

At issue in the case was whether the statute – the FHA – only authorized lawsuits against intentional discrimination, or whether it also permitted a broader category of litigation.

Writing for the majority, Justice Anthony Kennedy said the court was persuaded to embrace the broader reading by examining the language of the statute, amendments made by Congress in 1988, and the fact that nine courts of appeals have reached the same conclusion.

“Residents and policy-makers have come to rely on the availability of disparate-impact claims,” Justice Kennedy wrote. Without such claims, states and others would be left with fewer means to fight systemic discrimination in housing, he said.

“Much progress remains to be made in our nation’s continuing struggle against racial isolation,” Kennedy said.

But the justice also warned that disparate-impact lawsuits might cause race to be used improperly in a pervasive way resulting in numerical quotas. Such a development would raise “serious constitutional questions,” he said.

In a dissent, Justice Samuel Alito said the statute only prohibits intentional discrimination. He said the court’s decision would perpetuate race-based considerations rather than move the country beyond them.

“We agree that all Americans should be able to buy decent houses without discrimination because of the color of their skin,” Justice Alito wrote. “But this court has no license to expand the scope of the FHA to beyond what Congress enacted.”

“The court acknowledges the risk that disparate impact may be used to perpetuate race-based considerations rather than move beyond them. And it agrees that racial quotas raise serious constitutional questions,” Alito said. “Yet it still reads the FHA to authorize disparate-impact claims.”

Alito added: “We should avoid, rather than invite, such difficult constitutional questions.”

The decision came as a surprise to many legal analysts because the Texas housing case marked the third time in recent years the Supreme Court had sought to decide whether the FHA supports disparate impact claims.

In 2011, the justices agreed to decide a Minnesota case raising that issue. And in 2013, the court agreed to decide a New Jersey disparate-impact case.

Both cases were settled before they could be heard. The settlements came in part because the Obama administration and civil rights groups were afraid the Supreme Court’s conservative wing – including Justice Kennedy – would use those cases to invalidate disparate-impact claims under the FHA.

On Thursday, Kennedy proved them wrong. He did so by joining the court’s liberal wing to affirm a broad reading of the FHA.

The FHA makes it illegal to refuse to sell or rent an apartment or house to any person because of their race, religion, national origin, or other protected status. Such intentional discrimination is clearly covered by the law and was not at issue in the case.

What was at issue was a second category of discrimination lawsuits based on evidence that a particular policy, although racially-neutral, nonetheless disproportionately impacts protected minorities. 

This so-called disparate impact theory of discrimination arose after the FHA was enacted in 1968. It was embraced by civil rights advocates as an effective way to fight discrimination in its more disguised or subtle forms. It seeks to fight discrimination by identifying race-neutral policies that are nonetheless designed to exclude minorities.

Civil rights advocates say such tactics are invaluable in the fight against discrimination. Critics say some racial imbalances have nothing to do with illegal discrimination, but may trigger a lawsuit, nonetheless. They complain that it is a focus on statistics rather than intent.

Until Thursday, the Supreme Court had never ruled on the issue.

The decision stems from a lawsuit challenging efforts by the Texas Department of Housing and Community Affairs to award tax credits for low-income housing in Dallas. The housing agency sought to provide new affordable housing in areas where existing housing was blighted or nonexistent. It sought to do so under race-neutral criteria set by federal and state regulations.

A Dallas-based group seeking to foster racial integration, the Inclusive Communities Project (ICP), sued the Housing Department because it said the agency was failing to provide affordable housing that would allow minority residents to move out of the city and into Dallas’s suburbs.

The group’s lawsuit cited a statistical analysis that showed the agency approved disproportionately more applications for low-income housing in minority neighborhoods than in more affluent white suburbs.

This pattern of activity was the functional equivalent of intentional racial segregation, the group said. Regardless of whether the housing decisions were based on race-neutral criteria, the end result was a perpetuation of racial segregation, the ICP charged.

A federal judge agreed and issued a decision that was later upheld by the New Orleans-based Fifth US Circuit Court of Appeals.

In its ruling on Thursday, the high court agreed with the Fifth Circuit that the FHA recognizes disparate-impact claims. But the court remanded the case back to the lower courts to reassess the viability of the ICP suit.

“This case, on remand, may be seen simply as an attempt to second-guess which of two reasonable approaches a housing authority should follow in the sound exercise of its discretion in allocating tax credits for low income housing,” Kennedy said.

Although the majority decision approves the use of disparate-impact lawsuits generally, it does not endorse the ICP’s lawsuit. In addition, the decision sets out limitations to help lower courts facing such cases.

“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,” Kennedy said. Statistical proof of a racial imbalance is not enough to make a claim, he said.

“Government or private policies are not contrary to the disparate-impact requirement unless they are artificial, arbitrary, and unnecessary barriers,” Kennedy said.

He added: “Difficult questions might arise if disparate-impact liability under the FHA caused race to be used and considered in a pervasive and explicit manner to justify governmental or private actions that, in fact, tend to perpetuate race-based considerations rather than move beyond them.”

The justice warned: “Courts should avoid interpreting disparate impact liability to be so expansive as to inject racial considerations into every housing decision.”

Joining Kennedy in the majority were Justices Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor, and Elena Kagan.

In dissent with Alito were Chief Justice John Roberts, and Justices Antonin Scalia, and Clarence Thomas.

The case was Texas Department of Housing and Community Affairs v. The Inclusive Communities Project (13-1371).