Supreme Court Takes Up Landmark Disparate Impact Case, Again, Over U.S. Objections

Morrison & Foerster LLP

On June 17, 2013, the Supreme Court granted certiorari in Mount Holly v. Mt. Holly Gardens Citizens in Action, Inc., No. 11-1507, to decide whether disparate impact claims are cognizable under the Fair Housing Act (“FHA”). It did so over the U.S. government’s strenuous objection that HUD’s new rule interpreting the FHA is “dispositive.” Of interest, the Court simultaneously declined to grant cert. on the question of the appropriate standard for evaluating disparate impact claims if the FHA is deemed to allow them. The repercussions of the Supreme Court’s decision will be far-reaching, assuming a settlement does not prevent the Court from reaching the issue.


In 2002, the Township of Mount Holly (“Township”) proposed a redevelopment project in the predominately African-American and Hispanic low-income neighborhood of Mount Holly Gardens, a subdivision of Mount Holly, New Jersey known as the “Gardens.” The Township declared the Gardens blighted and proceeded with a plan to acquire all of the houses there through exercise of its powers of eminent domain, and replace them. In 2008, current and former Gardens residents filed suit in the District of New Jersey. They alleged, among other things, disparate-impact and intentional discrimination in violation of the FHA. The case proceeded slowly through dispositive briefing until, in January 2011, the District Court granted the Township’s motion for summary judgment. It held that respondents had not established either intentional discrimination or a prima facie case of disparate impact. Plaintiffs appealed. The Third Circuit reversed, holding that the FHA permits disparate impact claims and that plaintiffs had established a prima facie case of disparate impact.

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