Disparate Impact Doctrine Survives Supreme Court Review

Morrison & Foerster LLP

After years of debate and false starts, the Supreme Court has held that the Fair Housing Act (“FHA”) permits disparate impact claims. In Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc., No. 13-1371, 576 U.S. __ (2015), a divided Court held that specific language in the statute permits plaintiffs to challenge housing practices that have an unintentional but “disproportionate adverse effect on minorities.” The Court cautioned that such practices must be “artificial, arbitrary, and unnecessary,” as well as “unjustified by a legitimate rationale,” in order to violate the FHA, and that policy considerations require caution in fashioning a disparate impact test. But, the Court provided only faint guidance on the mechanics of that test, ensuring that the lower courts and litigants around the country will continue to struggle with applying the disparate impact standard. One thing is for certain, though: The decision has far-reaching implications, opening up avenues of argument not only in housing development cases, but in litigation and enforcement actions under the Fair Housing Act, the Equal Credit Opportunity Act, and beyond.


The Foundational Cases: The arguments in Inclusive Communities are built on a line of foundational decisions. These decisions will, in turn, continue to shape how courts and litigants argue and decide the many open issues remaining today.

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