Opinion ID: 2829342
Heading Depth: 2
Heading Rank: 2

Heading: The Use of “Because of” Race in the Federal FHA and Title VII

Text: Did Not Alone Prompt Federal Courts to Hold That These Acts Create Causes of Action Based on Racially Disparate Impacts Ojo relies on federal case law interpreting the FHA and Title VII to provide for disparate impact protection, arguing that the Texas Insurance Code should also be interpreted to provide for disparate impact protection because it uses the same “because of race” language as those federal acts. See 42 U.S.C. § 2000e-2 (prohibiting discrimination by employers of individuals “because of such individual’s race ” ) ; 42 U.S.C. § 3604(b) (prohibiting discrimination in the provision of services in connection with housing “because of race”); Tex. Ins. Code § 544.002(a) (defining unfair discrimination as providing insurance coverage differently “because of the individual’s . . . race”). Although Ojo has pointed us to a wealth of federal authority holding that the FHA and Title VII provide for disparate impact protection, the reasons supporting those holdings extend far beyond the use of the phrase “because of race.” See, e.g. , Metro. Hous . Dev. Corp. v. Vill . of Arlington Heights , 558 F.2d 1283, 1289 (7th Cir. 1977) (focusing on the policy goals of the FHA in deciding on a broad interpretation of its provisions); see also Peter E. Mahoney, The End(s) of Disparate Impact: Doctrinal Reconstruction, Fair Housing and Lending Law, and the Antidiscrimination Principle , 47 Emory L.J. 409, 425 (1998) (describing the origins of the disparate impact standard under the FHA as partially “borrowed” from the case law on Title VII, and also noting the standard’s diverse and inconsistent application by federal courts). In determining whether a statute provides for disparate impact protection, federal and state courts have looked first to the language of the statute to assess whether “the thrust of the Act [is] to the consequences of . . . practices, not simply the motivation.” Griggs , 401 U.S. at 432; see also Tex. Parks & Wildlife Dep’t. v. Dearing , 240 S.W.3d 330, 352 (Tex. App—Austin 2007, pet. denied ). The United States Court of Appeals for the Seventh Circuit actually regarded the phrase “because of race” as a potential obstacle to disparate impact protection before considering the policy goals behind the FHA: The major obstacle to concluding that action taken without discriminatory intent can violate section 3604(a) is the phrase “because of race” contained in the statutory provision. The narrow view of the phrase is that a party cannot commit an act “because of race” unless he intends to discriminate between races. . . . The broad view is that a party commits an act “because of race” whenever the natural and foreseeable consequence of that act is to discriminate between races, regardless of his intent. Vill . of Arlington Heights , 558 F.2d at 1288; accord Resident Advisory Bd. v. Rizzo , 564 F.2d 126, 146 (3d Cir. 1977) (“[W]e note that the ‘because of race’ language might seem to suggest that a plaintiff must show some measure of discriminatory intent.”). The Seventh Circuit declined to take a narrow view of the “because of race” language because of the congressional mandate within the FHA “to provide, within constitutional limitations, for fair housing throughout the United States.” Vill . of Arlington Heights , 558 F.2d at 1289 (quoting 42 U.S.C. § 3601). The Seventh Circuit also relied on previous interpretations of the FHA, and its goal to “promote ‘open, integrated residential housing patterns and to prevent the increase of segregation, in ghettos, of racial groups whose lack of opportunities the Act was designed to combat.’” Id. (quoting Otero v. N.Y. City Hous . Auth. , 484 F.2d 1122, 1134 (2d Cir. 1973)). Other federal circuit courts applying disparate impact protections under the FHA have also relied upon this congressional mandate. 6 Numerous courts have also noted that the need for disparate impact protection under the FHA arose from the lack of disparate impact liability under the Fourteenth Amendment after the United States Supreme Court’s decision in Washington v. Davis , 426 U.S. 229 (1976), and the difficulty of proving intentional discrimination. 7 In determining whether discriminatory impact liability exists within the FHA, Title VII, and the Age Discrimination in Employment Act (ADEA), state and federal courts have also focused on the breadth and reach of prohibitory language, and have refused to find disparate impact liability when a statute focuses only on the nature of an action, and not on its effects. See, e.g. , Monson v. Rochester Athletic Club , 759 N.W.2d 60, 67 (Minn. Ct. App. 2009) (holding that there was no disparate impact liability where “the [state law] does not include such effects-based language”); see also Smith , 544 U.S. at 235–36 (holding that the ADEA provides for disparate impact liability because it not only prohibits employers’ actions that “limit, segregate, or classify” persons, but rather, also prohibits actions that “deprive any individual of employment opportunities or otherwise adversely affect his status as an employee” (citing 29 U.S.C. § 623(a))); Dearing , 240 S.W.3d at 339 (quoting Smith , 544 U.S. at 235). Both Title VII and the ADEA have been interpreted by the United States Supreme Court to provide for disparate impact liability because they go so far as to prohibit practices that “tend to deprive employees of opportunities.” See Smith , 544 U.S. at 235–36 (ADEA); Griggs , 401 U.S. at 430–32 (Title VII); see also Huntington , 488 U.S. at 18 (declining to determine whether the FHA provides for disparate impact protection, stating: “Since appellants conceded the applicability of the disparate-impact test for evaluating the zoning ordinance under Title VIII, we do not reach the question whether that test is the appropriate one.”). Sections 544.002(a) and 560.002(c )( 3) of the Texas Insurance Code do not include the type of broad prohibitory language that gives rise to disparate impact claims. Rather, both sections focus exclusively on the manner in which insureds are classified; that is, they prohibit classifications because of or based on race. Neither statute broadens its application so as to prohibit practices that may “otherwise adversely affect” or “tend to deprive” an insured of an opportunity, or any other similarly expansive language, as was the case in the federal acts at issue in Griggs and Smith . See Smith , 544 U.S. at 235–36 (ADEA); Griggs , 401 U.S. at 430–32 (Title VII). Rather, the Texas Insurance Code authorizes actions that classify individuals based on credit score in order to affect insurance pricing, as long as such classifications are not based on race or because of race. See Tex. Ins. Code §§ 544.002(a), 559.051, 560.002(c )( 3). As long as insurers use race-neutral factors in credit scoring to set insurance rates, they do not run afoul of the Texas Insurance Code in the way an employer would run afoul of Title VII for using race-neutral testing that adversely affects employees of a certain race. See Griggs , 401 U.S. at 430 (“Under [Title VII], practices, procedures or tests neutral on their face, and even neutral in terms of intent, cannot be maintained if they operate to ‘freeze’ the status quo of prior discriminatory employment practices.”). Because the Texas Insurance Code expressly authorizes credit scoring, it cannot be subject to the same breadth of interpretation applied to Title VII or the FHA simply because it uses the phrases “because of” or “based . . . on” race. Ojo’s argument that federal interpretations of these acts should control our interpretation of the Texas Insurance Code is unavailing in light of the additional considerations, other than some similar language, present in the federal case law.