Federal District Court Rejects ‘Disparate Impact’ Housing Discrimination

The following is provided for informational purposes only and does not constitute legal advice.  Please consult your attorney for legal advice regarding these matters.

On November 3, a U.S. federal district court in the District of Columbia rejected the notion that a disparate impact discrimination claim can be brought under the Fair Housing Act (“FHA” or the “Act”).

However, the D.C. court’s position has a limited reach, is in direct conflict with the position taken by the federal appeals courts, and the nation’s highest court has yet to rule on the matter.  So, as you establish or review your leasing policies and practices, including applicant screening, it’s still worth keeping in mind that: (i) your practices could someday be challenged via a disparate impact claim; and  (ii) a defense to a such a  claim is that “the challenged practice . . . [i]s necessary to achieve one or more substantial, legitimate, non-discriminatory interests . . . [a]nd those interests could not be served by another practice that has a less discriminatory effect.”

Under the disparate impact theory, a practice that is neutral or non-discriminatory on its face may nevertheless be considered discriminatory if it has a disproportionate effect (or “disparate impact”) on a protected class, even if there was no intent to discriminate underlying the practice.

In a notable break from the 11 federal circuit courts of appeal that have held a disparate impact theory is viable under the FHA, the district court in American Insurance Association v. HUD, Civ. No. 13-00966 (RJL) (D.D.C. Nov. 3, 2014) (“AIA”) came to the opposite conclusion.  The court thus invalidated a rule issued in 2013 by the US Department of Health and Urban Development (“HUD”) that permits disparate impact claims to be brought under the Act.

The AIA court noted that the U.S. Supreme Court “has made clear that statutes will only prohibit practices resulting in a disparate impact – in the absence of any discriminatory intent – when they contain clear language to that effect.”  It then analyzed the language of the FHA and easily concluded it “unambiguously only prohibits intentional discrimination.”

This ruling is a small victory for those who oppose the controversial legal principle under the FHA – it’s a district, and not an appellate, court decision, and its direct reach is limited to the district of DC where it was handed down.  The U.S. Supreme Court has not yet ruled on the viability of disparate impact under the FHA (two prior cases in which the question was teed up before the Court settled before the Court could rule), but is again set to consider the issue next year in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc.  The Supreme Court’s decision will trump those of the district and circuit courts who have examined this issue.  So, it still remains to be seen how this issue will play out in the end.

Read the official ruling from Judge Richard J. Leon.

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