Supreme Court asks for U.S. Solicitor General’s brief in disparate impact case

Today the Supreme Court asked the U.S. Solicitor General to provide the government’s views on whether the federal Fair Housing Act encompasses disparate impact claims.  The Court had agreed to rule on that issue last Term, but the case providing that question settled without a decision.  The case now being considered by the Court is called Mount Holly v. Mt. Holly Gardens Citizens in Action, Inc.  Attorneys for PLF filed a brief urging the Court to accept review, but the Court will now wait until after the U.S. Solicitor General’s brief to decide.

The Fair Housing Act makes it unlawful to refuse to sell or rent property because of race, color, religion, sex, familial status, or national origin.  The Act also applies to banks and lending institutions by prohibiting discrimination in the granting of home loans.

According to the legal theory of disparate impact, a law or even a decision by the government may be illegal if it has a disproportionate adverse impact on members of a minority group.  Even action that is facially neutral and taken without any discriminatory intent may be challenged.  PLF attorneys have filed numerous legal briefs against the expansion of disparate impact claims, because the threat of such claims encourages government decision makers to intentionally discriminate against members of one race to avoid being sued by members of another.

That was the problem in a case called Ricci v. DeStefano.  In Ricci, the City of New Haven, Connecticut threw out the results of a firefighters test because none of the minority firefighters who passed the exam had scored high enough to be considered for promotion.  City officials refused to hire the non-minority firefighters who were eligible for promotion.  The Supreme Court held that New Haven’s decision to ignore the test results violated the civil rights of the non-minority firefighters.

Though the Supreme Court has reviewed claims under the Fair Housing Act several times, it has yet to determine whether the Act allows for claims of discrimination under a disparate impact theory. Last year, the Court agreed to hear a case called Magner v. Gallagher, which presented the same issue as the Mount Holly case.  Although the Court took the case and scheduled it for oral argument, the City of St. Paul, Minnesota was pressured by the Obama administration to dismiss its petition.

Extending the disparate impact doctrine to the Fair Housing Act would lead to serious adverse consequences.  If the Act is interpreted as allowing disparate impact claims, banks and mortgage lenders would be pressured to provide loans to unqualified applicants in order to avoid disparate impact liability.  Similar actions may have played a key role in triggering the mortgage crisis of 2007-2008.