Is Disparate Impact Having Any Impact? An Appellate Analysis of Forty Years of Disparate Impact Claims Under the Fair Housing Act

After four decades of unanimity in the circuit courts, with several denials of certiorari by the Supreme Court, the Court has recently granted certiorari in two cases to resolve the apparently settled question of whether the disparate impact theory is cognizable under the Fair Housing Act (FHA). Although these two recent cases, Magner v. Gallagher and Mount Holly v. Mount Holly Gardens Citizens in Action, Inc., may have raised questions about the potential reach of disparate impact theory, they are not representative FHA cases with respect to their outcomes or their facts. The circuit courts in both cases reversed summary judgment and reinstated plaintiffs' disparate impact claims, which is exceedingly rare given its occurrence only twice before in forty years. In general, plaintiffs have obtained positive outcomes in only 20% of their FHA disparate impact claims considered on appeal. Further, plaintiffs' positive FHA disparate impact outcomes have been affirmed only 33.3 % of the time, compared with defendants' affirmance rate of 83.8%. The facts of Magner and Mount Holly are not representative considering that these disparate impact challenges were made against housing improvement plans, rather than housing barriers. Housing improvement challenges typically seek to prevent the disproportionate displacement of minorities from existing housing opportunities, whereas housing barrier challenges seek to remove barriers and create housing opportunities for minorities where they do not presently exist. Only one other housing improvement case prior to Magner and Mount Holly had resulted in a positive outcome for plaintiffs in forty years. Housing barrier challenges almost always further the nondiscrimination and integration purposes of the FHA. Housing improvement challenges may or may not further the purposes of the FHA, depending on the facts of the case. This means that summary judgment will not be appropriate in some housing improvement cases. Housing barrier cases represent the predominant type of FHA disparate impact claim considered on appeal and the predominant type of claim among those on which plaintiffs have obtained positive outcomes. Given the persistence of residential racial segregation and Congress's purpose in enacting the FHA to eliminate such segregation, the disparate impact theory remains a vital tool for overcoming barriers to housing opportunity and should be upheld.INTRODUCTIONFor forty years, the Fair Housing Act (FHA) has prohibited not only practices that are undertaken pursuant to a discriminatory motive, but also unjustified practices with discriminatory effects.1 Every circuit court to decide the question, which includes all but the D.C. Circuit, has considered the broad purposes of the FHA and analogous interpretations of Title VII and determined that liability can be imposed under the FHA on a showing of discriminatory effects.2 The Supreme Court has never squarely addressed the question but after repeatedly denying certiorari in the earliest appellate cases to apply a disparate impact standard, it issued a per curiam affirmance of an appellate finding of disparate impact in an FHA case.3 The U.S. Department of Housing and Urban Development (HUD) issued a final rule in 2013 establishing uniform standards for evaluating FHA effects claims.4 Prior to the promulgation of its regulation, HUD, like the courts, had long interpreted the FHA to prohibit discriminatory effects, even in the absence of any evidence of discriminatory intent.5Despite the well-settled nature of the jurisprudence and HUD's regulatory interpretation, the Supreme Court recently decided to review the disparate impact standard as a method of proof under the FHA.6 After the Supreme Court granted certiorari in 2011 in an Eighth Circuit decision upholding the disparate impact claim on an unusual set of facts, the City of St. Paul, the petitioner in the case, decided to withdraw its petition, thus preventing Supreme Court review. …