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Tex. Dep't of Hous. & Cmty. Affairs v. Inclusive Cmtys. Project, Inc. - 135 S. Ct. 2507 (2015)


After a plaintiff does establish a prima facie showing of disparate impact, the burden shifts to the defendant to prove that the challenged practice is necessary to achieve one or more substantial, legitimate, nondiscriminatory interests. 24 C.F.R. § 100.500(c)(2). The Secretary of Housing and Urban Development has clarified that this step of the analysis is analogous to the Title VII of the Civil Rights Act of 1964 requirement that an employer’s interest in an employment practice with a disparate impact be job related. Once a defendant has satisfied its burden at step two, a plaintiff may prevail upon proving that the substantial, legitimate, nondiscriminatory interests supporting the challenged practice could be served by another practice that has a less discriminatory effect.

The Fair Housing Act (FHA), 42 U.S.C.S. § 3601 et seq., encompasses disparate-impact claims. Congress’s use of the phrase “otherwise make unavailable” refers to the consequences of an action rather than the actor’s intent. The word "make" has many meanings, among them "to cause to exist, appear or occur." This results-oriented language counsels in favor of recognizing disparate-impact liability. The Supreme Court has construed statutory language similar to FHA § 805(a), 42 U.S.C.S. § 3605(a), to include disparate-impact liability.


The Federal Government provideed low-income housing tax credits that were distributed to developers by designated state agencies. In Texas, the Department of Housing and Community Affairs (Department) distributes the credits. The Inclusive Communities Project, Inc. (ICP), a Texas-based nonprofit corporation that assisted low-income families in obtaining affordable housing, brought a disparate-impact claim under §§804(a) and 805(a) of the Fair Housing Act (FHA), alleging that the Department and its officers had caused continued segregated housing patterns by allocating too many tax credits to housing in predominantly black inner-city areas and too few in predominantly white suburban neighborhoods. The District Court relied on statistical evidence and concluded that the ICP had established a prima facie showing of disparate impact. It found that the Department failed to meet its burden to show that there were no less discriminatory alternatives for allocating the tax credits. While the Department's appeal was pending, the Secretary of Housing and Urban Development issued a regulation interpreting the FHA to encompass disparate-impact liability and establishing a burden-shifting framework for adjudicating such claims. The Court of Appeals for the Fifth Circuit held that disparate-impact claims are cognizable under the FHA, but reversed and remanded on the merits, concluding that, in light of the new regulation, the District Court had improperly required the Department to prove less discriminatory alternatives. In 1988, Congress amended the FHA, and created certain exemptions from liability. The Department filed a petition for a writ of certiorari on the question whether disparate-impact claims are cognizable under the FHA.


Was the disparate-impact claims were cognizable by the Fair Housing Act?




The Court held that the disparate-impact claims are cognizable under FHA. The Court noted that under the FHA, it was unlawful to “refuse to sell or rent . . . or otherwise make unavailable or deny, a dwelling to a person because of race” or other protected characteristic, §804(a), or “to discriminate against any person in” making certain real-estate transactions “because of race” or other protected characteristic, §805(a). The results-oriented phrase “otherwise make unavailable” referred to the consequences of an action rather than the actor's intent. this phrase was equivalent in function and purpose to Title VII's and the ADEA's “otherwise adversely affect” language. In all three statutes the operative text looked to results and plays an identical role: as a catchall phrase, located at the end of a lengthy sentence that begins with prohibitions on disparate treatment. The introductory word “otherwise” also signaled a shift in emphasis from an actor's intent to the consequences of his actions. This similarity in text and structure was even more compelling because Congress passed the FHA only four years after Title VII and four months after the ADEA. Although the FHA did not reiterate Title VII's exact language, Congress chose words that serve the same purpose and bear the same basic meaning but are consistent with the FHA's structure and objectives. The FHA contained the phrase “because of race,” but Title VII and the ADEA also contained that wording and this Court nonetheless held that those statutes impose disparate-impact liability. Recognition of disparate-impact claims was also consistent with the central purpose of the FHA, which, like Title VII and the ADEA, was enacted to eradicate discriminatory practices within a sector of the Nation's economy. Furthermore, the Court asserted that an important and appropriate means of ensuring that disparate-impact liability was properly limited was to give housing authorities and private developers leeway to state and explain the valid interest their policies serve, an analysis that was analogous to Title VII's business necessity standard. A disparate-impact claim relying on a statistical disparity must fail if the plaintiff cannot point to a defendant's policy or policies causing that disparity. When courts do find liability under a disparate-impact theory, their remedial orders must be consistent with the Constitution. Remedial orders in disparate-impact cases should concentrate on the elimination of the offending practice, and courts should strive to design race-neutral remedies. The Court affirmed the appealed decision and remanded the case for further proceedings.

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