U.S. Supreme Court Upholds Disparate-Impact Claims in Fair Housing Act Cases

by Wilson Elser
Contact

On June 25, 2015, in Texas Dep't of Housing and Community Affairs v. Inclusive Communities Project,  the U.S. Supreme Court held that a plaintiff may establish a prima facie case under the Fair Housing Act (FHA) on the basis of statistical evidence that a governmental policy causes a disparate impact, without proof that the discrimination was intentional. The case, involved the allocation of low-income housing tax credits. But Justice Kennedy's opinion for the 5-4 majority (Chief Justice Roberts and Justices Scalia, Thomas and Alito dissented), made it clear that the Court's analysis extended to any claim under FHA, including claims based on local land use regulation. In fact, Justice Kennedy pointed directly at “zoning laws and other housing restrictions that function unfairly to exclude minorities from certain neighborhoods without any sufficient justification,” commenting that suits “targeting such practices reside at the heartland of disparate-impact liability.”

The Court’s Analysis
The effect of this is that bringing an FHA claim reverses the usual burden of proof in challenging the substance of a land use regulation. The FHA makes it unlawful to “make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or national origin.” 42 U.S.C. § 3604(a). Basically, applying the employment discrimination analogy, if the plaintiff adequately pleads statistical evidence that a local government policy has caused a disparity in housing patterns along lines protected by the statute, the burden shifts to the defendant to justify the regulation.

In the context of land use regulation, this analysis reverses the burden of proof in challenging the substance of a land use regulation. In a traditional substantive due process challenge, there is a heavy burden on the plaintiff to overcome the presumption of constitutionality and establish that the regulation is irrational. Now, in an FHA case, where the plaintiff can establish that there is disparate impact, the local government has to prove that the regulation is rational.

The Causation Requirement
The causation requirement, however, may be a significant factor in limiting claims here, or at least defeating them at an early stage. Establishing that a local land use regulation has caused a particular racial or ethnic housing pattern is far more complicated than demonstrating the linkage in an employment discrimination case between an allegedly discriminatory policy and the statistical disparity in employment.

In addition, Justice Kennedy emphasized the importance of the causation requirement: “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.” Further, the plaintiff must satisfy the causation requirement at the pleading stage. “A plaintiff who fails to allege facts at the pleading stage or produce statistical evidence demonstrating a causal connection cannot make out a prima facie case of disparate impact.” While the liberality of federal pleading standards suggests that it will not be difficult for a plaintiff to overcome this burden, Justice Kennedy’s opinion certainly provides a basis for a vigorous defense on causation at the earliest stages of the litigation.

The Business Necessity Defense
Even where there is sufficient proof of the statistical disparity and causation, the local government can still defend on the basis of the land use analogue of the “business necessity” defense against disparate-impact liability available under Title VII. “Governmental or private policies are not contrary to the disparate-impact requirement unless they are ‘artificial, arbitrary, and unnecessary barriers.’” Justice Kennedy recognized in his opinion that the factors that traditionally sustain land use regulations will not be ignored in the context of an FHA claim. “Zoning officials, moreover, must often make decisions based on a mix of factors, both objective (such as cost and traffic patterns) and, at least to some extent, subjective (such as preserving historic architecture). These factors contribute to a community’s quality of life and are legitimate concerns for housing authorities.” As Justice Kennedy stated further: “Disparate-impact liability mandates the ‘removal of artificial, arbitrary, and unnecessary barriers,’ not the displacement of valid governmental policies.”

Critically, the burden on the local government under an FHA case will not be as substantial as it is in a First Amendment case. The Supreme Court affirmed the order of the United States Court of Appeals for the Fifth Circuit, including its holding that it was error for the District Court to require the defendant to prove “that there are no other less discriminatory alternatives to advancing their proffered interests.”

Summary
How these issues will play out as FHA disparate-impact litigation spreads across the country is unclear. Certainly, where the statistics are favorable, this decision makes it much easier for a plaintiff to survive a motion to dismiss and perhaps even a motion for summary judgment. Costly trials will be inevitable until the courts work out more precisely how the burden-shifting works in this context. What standards the courts adopt for pleading causation will be critical. As Palsgraf v. Long Island R.R, 248 N.Y. 339, 162 N.E. 99 (1928), teaches, causation is hard enough to analyze even in the context of a discrete incident. But how does one prove – or disprove – that a particular governmental policy caused hundreds or thousands of residents to reside or not reside in a particular locality? Also unclear, although we know that the traditional justifications for zoning laws – traffic and environmental issues and even community character – will support a defense, is what level of justification the courts will require.

 

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.

© Wilson Elser | Attorney Advertising

Written by:

Wilson Elser
Contact
more
less

Wilson Elser 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):
hide

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.

Security

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 info@jdsupra.com. 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: info@jdsupra.com.

- 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.