Texas Dept. of Housing and Community Affairs v. Inclusive Communities Project, Inc.
135 S. Ct. 2507, 192 L. Ed. 2d 514 (2015)
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Rule of Law:
Disparate-impact claims are cognizable under the Fair Housing Act, prohibiting practices that have a disproportionately adverse effect on minorities if such practices are not justified by a legitimate rationale and if less discriminatory alternatives exist.
Facts:
- The Federal Government provides low-income housing tax credits (LIHTC) to states for distribution to developers, with certain federal criteria favoring the development of housing units in low-income areas.
- The Texas Department of Housing and Community Affairs (Department) distributes these federal tax credits in Texas, using a point system that prioritizes statutory criteria and permits consideration of additional factors like neighborhood schools.
- The Inclusive Communities Project, Inc. (ICP), a Texas-based nonprofit, assists low-income families in obtaining affordable housing.
- ICP alleged that the Department's disproportionate allocation of tax credits resulted in continued segregated housing patterns, granting too many credits for housing in predominantly Black inner-city areas and too few in predominantly white suburban neighborhoods.
- ICP contended that the Department must modify its selection criteria to encourage the construction of low-income housing in suburban communities.
Procedural Posture:
- Inclusive Communities Project, Inc. (ICP) sued the Texas Department of Housing and Community Affairs (Department) and its officers in the United States District Court for the Northern District of Texas.
- The District Court concluded that ICP had established a prima facie case of disparate impact and, finding that the Department failed to prove less discriminatory alternatives, ruled for ICP.
- The District Court issued a remedial order requiring the Department to add new selection criteria for tax credits.
- The Department appealed the District Court's ruling to the Court of Appeals for the Fifth Circuit.
- The Fifth Circuit Court of Appeals affirmed that disparate-impact claims are cognizable under the FHA but reversed and remanded on the merits, holding that the District Court improperly placed the burden on the Department to prove there were no less discriminatory alternatives for allocating low-income housing tax credits.
- The Department filed a petition for a writ of certiorari with the Supreme Court of the United States.
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Issue:
Does the Fair Housing Act (FHA) permit disparate-impact claims, allowing plaintiffs to challenge practices that have a disproportionately adverse effect on minorities without proving discriminatory intent?
Opinions:
Majority - Justice Kennedy
Yes, the Fair Housing Act (FHA) permits disparate-impact claims, allowing individuals to challenge practices that have a disproportionately adverse effect on minorities even without proof of discriminatory intent. This interpretation is supported by the results-oriented language of the FHA, particularly "otherwise make unavailable" in § 804(a) and "discriminate" in § 805(a), which focuses on the consequences of actions rather than intent, similar to how the Court interpreted analogous language in Title VII in Griggs v. Duke Power Co. and the ADEA in Smith v. City of Jackson. Congress's 1988 amendments to the FHA, enacted against a unanimous backdrop of appellate court decisions recognizing disparate-impact liability, implicitly ratified this understanding through its decision to retain the relevant statutory text and by including exemptions that would be superfluous if only disparate-treatment claims were allowed. Furthermore, recognizing disparate-impact liability is consistent with the FHA's broad remedial purpose to eradicate discriminatory housing practices, uncover hidden biases, and remove artificial barriers that perpetuate segregation. However, the Court cautions that such claims require robust causation, allowing for legitimate governmental and business interests, and that remedies must be consistent with the Constitution, avoiding racial quotas.
Dissenting - Justice Thomas
No, the Fair Housing Act (FHA) does not permit disparate-impact claims because the foundational premise of disparate-impact liability, as established in Griggs v. Duke Power Co., is flawed and based on an erroneous interpretation of Title VII's "because of" language, which clearly denotes discriminatory intent. Griggs represented an agency's policy preferences triumphing over Congress's clear enactment. The assumption that racial disparities inherently signal discrimination and would disappear in its absence is unsubstantiated and ignores the complex realities of multi-ethnic societies. The Court should not extend this "error" of disparate-impact liability from Title VII to other statutes like the FHA, especially since the FHA's text does not mirror Title VII's operative provisions. Such an expansion risks racial balancing, which is unconstitutional, and imposes significant costs on local governments and private entities, hindering efforts to provide affordable housing.
Dissenting - Justice Alito
No, the Fair Housing Act (FHA) does not permit disparate-impact claims, as the text of §§ 804(a) and 805(a) explicitly prohibits actions taken "because of" a protected characteristic, meaning "by reason of" or "on account of" a discriminatory intent, not merely actions that have a disproportionately adverse effect. The phrase "make unavailable" must be read in context with other intentional acts listed in the statute and is modified by the "because of" language. Disparate-impact liability was a novel concept in 1968 when the FHA was enacted, making it anachronistic to presume Congress implicitly included it. The 1988 amendments do not change the law's meaning or implicitly ratify disparate-impact liability, as the Supreme Court had not addressed the issue, the U.S. Government actively argued against it at the time, and the safe-harbor provisions can be explained as a compromise or clarification without assuming existing disparate-impact liability. Applying disparate-impact liability to housing presents serious practical difficulties, such as forcing housing authorities into a "double bind" where any decision can lead to litigation, and risking the imposition of unconstitutional racial quotas, as demonstrated by the Magner case involving housing code enforcement. The Court's reliance on Griggs and Smith is misplaced because the FHA's language more closely resembles the ADEA provision (Section 4(a)(1)) that Smith unanimously held does not authorize disparate-impact claims.
Analysis:
This landmark decision solidifies the legal landscape for civil rights, confirming that disparate-impact claims remain a vital tool under the Fair Housing Act to combat systemic discrimination beyond overtly discriminatory intent. It signals the Court's commitment to the FHA's remedial purpose of achieving an integrated society, but also establishes critical safeguards. Future cases will likely scrutinize the "robust causation" requirement and the "substantial, legitimate, nondiscriminatory interests" defense, placing a greater burden on plaintiffs to demonstrate a direct link between a challenged policy and a discriminatory effect, and on defendants to justify their practices with clear necessity. This ruling requires a delicate balance, allowing housing authorities and developers flexibility while preventing arbitrary barriers to fair housing, with a strong emphasis on race-neutral remedies to avoid constitutional concerns over quotas.
