Disparate impact occurs when government or certain private actors unjustifiably pursue practices that have a disproportionately harmful effect on communities of color and other groups protected by the FHA. To establish that prima facie case, a plaintiff cannot simply rely on a statistical disparity, but, rather, must “point to a defendant’s policy or policies causing that disparity.” As the Court explained, without this “robust causality requirement” at the prima facie stage, “disparate-impact liability might cause race to be used and considered in a pervasive way and would almost inexorably lead [covered] entities to use numerical quotas, and serious constitutional questions could then arise.” Correspondingly, the Court warned lower courts not to “interpret[] disparate-impact liability to be so expansive as to inject racial considerations into every housing decision.” Rather, employing “race-neutral means,” courts should “concentrate on the elimination of the offending practice that ‘arbitrar[ily] ... operate[s] invidiously to discriminate on the basis of rac[e].”In a 5-4 majority opinion, the Supreme Court held that disparate impact claims are cognizable under the FHA. The court of appeal first acknowledged that, under Supreme Court precedent, disparate-impact claims are cognizable under the FHA and FEHA.
(In the context of FHA disparate impact claims against governmental entities, this is known as the “public interest” defense.) The HUD proposed disparate impact rule provides a framework for establishing legal liability for facially neutral practices that have unintended discriminatory effects on classes of persons protected under the Fair Housing Act. In June 2012, defendants in another FHA disparate impact matter petitioned the Supreme Court for a writ of certiorari.
Disparate impact liability under the FHA arises when a housing provider’s policy or practice that seems neutral on its face actually results in discriminatory effects on a protected class.
The court of appeal first acknowledged that, under Supreme Court precedent, disparate-impact claims are cognizable under the FHA and FEHA.
Noting that all nine circuits that had addressed the subject at the time of the amendments had endorsed disparate impact claims, the Court inferred that Congress was aware of, and, through its silence, implicitly ratified those decisions.The Court also made clear that, if and when a plaintiff has made a prima facie showing of FHA disparate impact liability, the same “business necessity” defense available in employment disparate impact claims is also available in the FHA context. [9] To date, the Supreme Court has not ruled on the petition, and it therefore remains to be seen whether the Court will address the availability of the disparate impact theory under the FHA. Even if the housing provider did not intend to discriminate, it can Thank you for your consideration. While NAMIC vehemently opposes illegal discrimination, this rule is not supported by any existing cases, is duplicative of current state prohibitions, ignores the basic mechanics of pricing and providing insurance, and would seriously disrupt the ability of property and casualty insurance companies to assign risk on objective and relevant factors.HUD issued a final rule on February 8, 2013, to formalize the national standard for determining whether a housing practice violates the FHA as the result of discriminatory effect.
Since passage of the FHA back in 1968, any number of courts had approved of using “disparate impact” to prove housing discrimination. Using a disparate impact theory of liability, Inclusive Communities pointed to statistical evidence that the Department awarded a disproportionately high number of tax credits to projects in predominately minority neighborhoods as compared to projects in predominantly Caucasian neighborhoods.
By Angela Luh on July 22, 2020. The ability to identify the underlying “business necessity” or “public interest” will go a long way in undercutting a claim that a policy is “artificial, arbitrary and unnecessary.” And, finally, because plaintiffs will have to show that there is “an available alternative practice that has less disparate impact and serves the [entity’s] legitimate needs,” an entity subject to the FHA may wish to proactively engage in that analysis itself and modify its policies and practices if it determines that an alternative approach would serve its purposes and soften the statistically adverse impact on a protected group.In 2008, the Inclusive Communities Project, a nonprofit Texas group assisting low-income, predominantly African-American families in finding affordable housing in predominantly Caucasian, suburban neighborhoods, filed suit against the Texas Department of Housing and Community Affairs, alleging the Department’s administration of federal Low-Income Housing Credits for residential developers violated the FHA.