Supreme Court Upholds Disparate Impact Liability

You’ve likely heard about the Supreme Court’s ruling in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc., but in case you haven’t here’s the info we’ve received from the National Apartment Association‘s Greg Brown:

The U.S. Supreme Court today decided to uphold disparate impact liability under the Fair Housing Act, a legal theory that prohibits neutrally-applied practices with a disproportionate impact on minority groups protected by the law, even without proving an intent to discriminate. The 5-4 decision in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc. also emphasized limitations on the policy, stating that neutrally-applied practices should not fail on disparate impact grounds unless they are “artificial, arbitrary and unnecessary.”

Importantly, the majority opinion highlighted limitations on disparate impact liability to allow “practical business choices and profit-related decisions that sustain the free-enterprise system.” Leeway must be given to housing providers to explain the validity of their policies. Further, a disparate impact claim is not demonstrated by statistical disparity alone. A claim must show that a challenged practice actually caused a disparate impact on a protected group, and the availability of an “alternative practice that has less disparate impact” to serve legitimate business needs.

We are currently conducting a detailed analysis of the Supreme Court’s decision and will continue to seek further clarification on disparate impact liability.

We will keep you updated as we learn more.

Update 6/30/15:

NAA has just added some excellent reference links on this issue:

Commentary: Supreme Court Affirms, Narrows Disparate Impact Liability Under Fair Housing Act

Holland & Knight: Fair Housing Act Prohibits Policies and Practices Causing a Disparate Impact

Ballard Spahr: In 5-4 Decision, U.S. Supreme Court Recognizes Disparate Impact Liability