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Disparate Impact Update

September 20, 2016 | Andrew Lomo

Another chapter has been written in the eight-year long saga that is Texas Department of Housing and Community Affairs v. Inclusive Communities Project. The case was brought into the national spot light in June of 2015, when the U.S. Supreme Court issued their decision declaring disparate impact theory valid under the Fair Housing Act. As part of the decision, the case was sent back to the lower court to be reheard under the new guidelines set by Justice Anthony Kennedy’s opinion.

On August 26th the U.S. District Court for the Northern District of Texas ruled that The Inclusive Communities Project was not able to pass the first test required to sustain a disparate impact claim as set by the Supreme Court’s decision. The district court held that in order for a disparate impact claim to be continue, the plaintiff must identify a specific and facially-neutral policy that creates an artificial, arbitrary, and unnecessary barrier to housing. The policy identified must also cause a significant disparity between subject groups. It was decided that inclusive Communities was not able to identify a specific policy, and that the lack of a policy was not grounds for a claim.

The District Court also said that a plaintiff may not be entitled to all remedies and in some cases, there may not be an appropriate remedy at all. When deciding if there is an appropriate remedy, the court must be able to “craft a race-neutral remedy that removes the offending practice.” Again, the court ruled that there was no remedy they could impose that would solve the problem Inclusive Communities was alleging.

The Texas court went a step further, pointing out that even if Inclusive Communities was able to satisfy the requirements in identifying a specific policy, their claim would still not be valid as it did not prove causality. Inclusive Communities failed to prove that the disparity was actually caused by the Texas Department of Housing, and not some other factor outside of their control. This is especially important as it shows a distinction between disparate treatment and disparate impact. Under the Fair Housing Act, in order to be a valid disparate impact claim, the policy being challenged must have an actual, objective effect on the group being discriminated against. A hypothetical effect of disparate treatment would not be sufficient for legal action.

The Supreme Court’s ruling is in opposition to IREM’s Statement of Policy on disparate impact housing theory, but the district court’s ruling gives hope that proper discretion will be used when deciding these cases.

IREM opposes policies and practices which are known to have a disparate impact on any demographic group defined by race, religion, national origin, sex handicap familial status, sexual orientation, or gender identity. Additionally, IREM supports the right to continue a policy or practice, such as a credit check or background check, that has or could have a known disparate impact if there is a legitimate business purpose for the practice or policy. We oppose actions by governments, groups or individuals which require unreasonable research by IREM members into whether practices or policies do indeed have such a disparate impact.

Read more information regarding the Supreme Court’s disparate impact decision:

June 2015 - Supreme Court Upholds Disparate Impact Housing Theory
April 2016 - HUD Publishes Guidance on Renting to People with Criminal History

About the Author
Andrew Lomo is the Government Affairs Liaison for IREM headquarters, working on industry legislative issues at the national, state, and local levels and assisting IREM Chapters in their public policy needs.

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