Northern Texas District Court Dismisses Fair Housing Disparate Impact Claim

by Ballard Spahr LLP

Ballard Spahr LLP

A federal court in Texas recently dismissed a housing discrimination claim that was based on alleged disparate impact under the Fair Housing Act (FHA), the latest in a series of decisions applying landmark U.S. Supreme Court guidance.

The U.S. District Court for the Northern District of Texas dismissed claims filed against the Texas Department of Housing and Community Affairs (TDHCA) in the fair housing case, The Inclusive Communities Project, Inc. v. The Texas Department of Housing and Community Affairs. The August 26, 2016, decision represents the culmination of several years of litigation, including last year's U.S. Supreme Court decision that found that disparate impact is a cognizable claim under the FHA.

As discussed in prior Ballard Spahr alerts, The Inclusive Communities Project (ICP) originally filed a disparate impact claim under the FHA, alleging that the allocation process used by TDHCA to award low-income housing tax credits (LIHTC) had a disparate impact on racial minorities. The district court initially ruled in favor of ICP, finding that ICP made a prima facie showing that TDHCA's policy violated the FHA. Following the district court's original opinion, the U.S. Department of Housing and Urban Development (HUD) issued regulations establishing a three-step burden-shifting approach for disparate impact claims brought under the FHA. On appeal, the Fifth Circuit Court of Appeals adopted HUD's approach and reversed the district court decision, remanding the case to the district court to apply HUD's burden-shifting framework to ICP's claims and TDHCA's defenses.

After granting certiorari, the U.S. Supreme Court in June 2015 held that disparate impact claims were cognizable under the FHA, but did not rule on the merits of ICP's claims. Following the burden-shifting analysis of the HUD regulations, the Supreme Court also emphasized that to successfully assert a disparate impact claim, plaintiffs must demonstrate a robust causality between the challenged practice and the disparity.

On remand, the district court reconsidered whether ICP indeed made a prima facie showing of disparate impact in light of the guidance from the Supreme Court decision. The district court last week held that ICP’s claims of disparate impact failed under the current standards for a number of reasons.

First, the court ruled, ICP failed to identify a specific, facially neutral policy that caused the disparate racial impact, as required by the first prong of the burden-shifting analysis. ICP challenged TDHCA's exercise of discretion in its LIHTC awards, but the court held that it could not rely on a generalized policy of discretion (even when considered cumulatively) to prove disparate impact. Absent a specific TDHCA policy, the court could not determine whether the practice actually created a barrier to fair housing or devise an adequate race-neutral remedy to alleviate the alleged disparities.

Next, the district court held that ICP's claim failed because it was, in essence, a complaint for disparate treatment, despite the disparate impact language. Relying on prior case law, the court found that because ICP challenged the results of TDHCA's subjective discretion rather than the existence of the discretion itself, the claim should be dismissed.

Lastly, the district court found that ICP's claim failed to show a robust causal connection between TDHCA's use of discretion in awarding LIHTCs and statistical disparities between LIHTC awards in different areas. ICP could not prove that TDHCA's use of discretion, and not other factors such as federal legislative action, actually caused the statistical disparities throughout the years evaluated.

The outcome of this case reflects an ongoing trend in federal and state court decisions applying the new Supreme Court "safeguards" against "abusive disparate impact claims." Almost all plaintiffs have experienced multiple difficulties making a prima facie case of disparate impact liability under the FHA and have seen their claims dismissed.

Ballard Spahr will continue to monitor developments related to disparate impact litigation and provide updates.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ballard Spahr LLP | Attorney Advertising

Written by:

Ballard Spahr LLP

Ballard Spahr LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.