United States Supreme Court Holding: Plaintiffs Can Allege Disparate-Impact Discrimination Under Fair Housing Act

Today, in the case Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc., the United States Supreme Court held 5-4 (Kennedy, Ginsburg, Breyer, Sotomayor & Kagan for the majority) that disparate-impact is a cognizable cause of action under the the Fair Housing Act (FHA). In short, a plaintiff can now point to statistical evidence of discrimination in lieu of the more difficult standard of proving that the defendant had actual discriminatory intent.

In the legal world, whether under the FHA, Title VII of the Civil Rights Act of 1964, or the Age Discrimination in Employment Act of 1967,  there are two types of discrimination: disparate-treatment, and disparate-impact. Disparate-treatment typically is discriminatory on its face. For instance, when a landlord refuses to rent to women. The landlord has discriminated against a protected class and is liable under the FHA. Disparate-impact is neutral on its face, but results in statistical discrimination of a protected class. For instance, when a landlord refuses to rent to people with long hair. The landlord's policy does not on its face discriminate against a protected class, but the effect is disproportionate discrimination against women. Under the theory of disparate-impact discrimination, the landlord is discriminating against a protected class, even though that may not be his intention, and is liable under the FHA.

In the Texas Department of Housing and Communities Affairs case, the plaintiff alleged that the criteria set by the Texas Department of Housing and Communities Affairs for the distribution of tax credits intended to assist development of low income housing resulted in discrimination on the basis of race. The criteria, which was racially neutral on its face because it considered  economic factors almost exclusively, had the statistical result of higher approval rates for communities with higher proportions of African-Americans. The plaintiff alleged that the criteria resulted in the Texas Department of Housing and Communities Affairs discriminating against Caucasians under the theory of disparate-impact.

The Supreme Court, recognizing the broad expansion of liability under the disparate-impact theory, carefully established the burden a plaintiff must meet to make a prima facie showing of discrimination. That is, statistical discrimination of a protect class alone will not result in liability. First, the plaintiff must show that the action or policy results in statistical discrimination against a protected class. Second, the plaintiff must show that there is a specific policy held or perpetrated by the defendant that is causing the disparate-impact discrimination. Third, the plaintiff must show that there is an alternative practice or policy that has less disparate impact while still serving the defendant's legitimate needs.

The consequences of this ruling will be far reaching as plaintiffs attempt to link facially neutral policies to disparate-impact discrimination against protected classes. In New York, for instance, disparate-impact greatly expands the potential liability for discrimination against the numerous protected classes in our State. While the FHA has seven (7) protected classes (Race, Color, National Origin, Religion, Sex, Familial Status, and Handicap), New York State has eleven (11) protected classes (Race, Creed, Color, National Origin, Sexual Orientation, Military Status, Sex, Age, Disability, Marital Status, and Familial Status) and New York City has fourteen (14) protected classes (Race, Creed, Color, National Origin, Gender, Age, Disability, Sexual Orientation, Marital Status, Partnership Status, Alienage Status, Citizenship Status, Lawful Source of Income, and Children are, may be, or would be residing with such person). While New York City and New York State already recognized disparate-impact as a cognizable cause of action in certain circumstances prior to this most recent Supreme Court ruling, the recognition of disparate-impact under the FHA will likely cause expansion of disparate-impact theories in jurisdictions and statutes which do not specifically recognize disparate-impact as a cognizable cause of action.

The law of the land is clear - disparate-impact is just as damaging as disparate-treatment and violators cannot hide behind facially neutral policies.