Inclusive Cmtys. Project, Inc. v. Lincoln Prop. Co.
930 F.3d 660 (2019)
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Rule of Law:
To state a plausible disparate impact claim under the Fair Housing Act, a plaintiff must allege facts showing a 'robust causal connection' between a defendant's specific policy and a statistical disparity. Merely alleging that a facially neutral policy disproportionately affects a protected class that has a pre-existing statistical imbalance is insufficient without pleading facts that the policy caused the imbalance.
Facts:
- Inclusive Communities Project, Inc. (ICP) is a nonprofit organization that assists low-income households in the Dallas area, primarily African-American families using Section 8 Housing Choice Vouchers, to find housing in predominantly non-minority, high-opportunity neighborhoods.
- Lincoln Property Company (Lincoln) manages numerous apartment complexes in predominantly white, non-Hispanic areas within the Dallas metropolitan area.
- Lincoln has an advertised, company-wide policy of refusing to negotiate with or rent to any household that uses Section 8 vouchers.
- In the Dallas area, the population of households using Section 8 vouchers is over 80% African-American and 10% or less white.
- In contrast, the non-voucher-holding population in the Dallas area is approximately 19% African-American and 53% white.
- ICP attempted to negotiate with Lincoln on behalf of its voucher-holding clients, but Lincoln refused due to its 'no vouchers' policy.
- ICP asserts that Lincoln's policy prevents voucher households from accessing housing in high-opportunity areas, thereby perpetuating racial segregation and disproportionately harming African-American households.
Procedural Posture:
- Inclusive Communities Project, Inc. (ICP) filed a lawsuit against Lincoln Property Company and other defendants in the U.S. District Court for the Northern District of Texas.
- The defendants filed a Rule 12(b)(6) motion to dismiss for failure to state a claim.
- The district court granted the defendants' motion and dismissed ICP's complaint.
- ICP, as appellant, appealed the dismissal to the U.S. Court of Appeals for the Fifth Circuit.
- A three-judge panel of the Fifth Circuit affirmed the district court's dismissal.
- ICP, as appellant, filed a petition for rehearing en banc, asking the full court to reconsider the panel's decision.
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Issue:
Does a complaint plausibly state a disparate impact claim under the Fair Housing Act by alleging that a landlord's blanket policy of refusing Section 8 housing vouchers disproportionately harms African-American tenants, where the local voucher-holder population is predominantly African-American, thereby satisfying the 'robust causality' requirement at the pleading stage?
Opinions:
Dissenting (from denial of rehearing en banc) - Judge Haynes
No. A complaint that identifies a specific policy and alleges a resulting statistical disparity should be sufficient to state a plausible disparate impact claim under the Fair Housing Act (FHA). The panel majority incorrectly affirmed the dismissal of ICP's complaint by creating an impossibly high pleading standard that misinterprets the Supreme Court's 'robust causality' requirement. The majority wrongly requires a plaintiff to plead that the defendant's policy created the pre-existing racial imbalance in the affected population (i.e., that Lincoln's policy caused voucher holders to be predominantly Black), rather than merely having a disproportionate effect on that population. This standard requires immutable proof at the pleading stage, contrary to the plausibility standard of Twombly and Iqbal, which anticipates that discovery will reveal supporting evidence. By requiring this, the majority opinion renders FHA disparate impact liability a 'dead letter' for any long-standing policy and ignores the FHA's goal of combating practices that perpetuate existing segregation. ICP plausibly pleaded its claim by identifying Lincoln's 'no vouchers' policy and alleging with specific statistics how that policy disproportionately excludes African-Americans from housing and perpetuates segregation in Dallas.
Analysis:
This decision significantly heightens the pleading standard for disparate impact claims under the Fair Housing Act within the Fifth Circuit. By interpreting the 'robust causality' requirement to mean that plaintiffs must show a defendant's policy created the underlying racial disparity, the court makes it exceedingly difficult to challenge facially neutral policies that perpetuate existing segregation. This effectively shields defendants from liability for long-standing policies, as plaintiffs will struggle to survive a motion to dismiss without the benefit of discovery. The ruling creates a more demanding standard than other circuits and may substantially curtail the use of disparate impact litigation as a tool to combat housing discrimination.
