When we wrote about the lawsuit filed on June 26, 2013 against HUD by two insurance industry trade groups challenging HUD’s final rule formalizing its use of disparate impact liability under the Fair Housing Act (FHA), we suggested that HUD might ask the court to stay further proceedings in the case pending a decision by the U.S. Supreme Court in Township of Mount Holly v. Mt. Holly Gardens Citizens in Action. On August 15, HUD did exactly that by filing a motion to stay proceedings. The motion states that the trade groups do not oppose the stay.
In their complaint filed in federal district court in Washington, D.C., the trade groups alleged that based on its plain language, the FHA only prohibits intentional discrimination. (The complaint also alleged that the HUD rule is invalid as applied to homeowners insurance companies because it conflicts with the federal McCarran-Ferguson Act.) On June 17, the Supreme Court had granted certiorari in Mount Holly to decide the issue of whether disparate impact claims are available under the FHA. HUD’s motion asks the court to stay the case brought by the trade groups pending the Supreme Court’s resolution of Mount Holly because the outcome in Mount Holly “is likely to affect the disposition of this case significantly, if not eliminate the need for litigation in this case entirely.”
As we have reported, although the parties in Mount Holly have been engaged in settlement discussions, they have hired Supreme Court advocates. The August 26 due date for the Township’s merits brief is fast approaching. The plaintiffs will have until October 21 to file their merits brief. We continue to believe that Mount Holly will settle before the Supreme Court hears oral argument.