No Proof of Discriminatory Intent Required for Disparate Impact Liability Under Fair Housing Act – U.S. Supreme Court

Fair Housing case victory TDHCA v. ICP in U.S. Supreme Court

 Daniel & Beshara represented the Inclusive Communities Project in the Supreme Court case that upheld the use of disparate impact cases brought under the Fair Housing.

 “The Supreme Court Keeps the Fair Housing Law Effective” was the headline for the New York Times June 25, 2015, editorial supporting the U.S. Supreme Court decision that the Fair Housing Act allows plaintiffs to challenge government or private policies that have a discriminatory effect, without having to show evidence of intentional discrimination. The Supreme Court opinion was in Texas Dept. of Hous. and Community Affairs v. Inclusive Communities Project, Inc., 576 U.S. 519 (2015). The ruling in favor of the disparate impact rule was not the expected result from a perceived conservative majority on the Court. Two previous fair housing cases presenting this issue had been taken by the Supreme Court. Id. at 575-576. These cases were then settled because of the concerns about the Supreme Court eliminating the disparate impact standard. [1] The U.S. Supreme reaffirmed both the disparate impact rule and the continued need for effective Fair Housing Act enforcement in the TDHCA v. ICP opinion. Id. at 546-547.

The case began eight years earlier when Daniel & Beshara filed suit on behalf of the Inclusive Communities Project, Inc. against the Texas Low-Income Housing Tax Credit (LIHTC) allocation agency, the Texas Dept. of Housing and Community Affairs (TDHCA), for racial discrimination in the administration of the LIHTC program. The discrimination focused on the agency’s practices that kept the low-income housing tax credit projects out of White non-Hispanic areas and concentrated those projects in high poverty, predominantly Black and Hispanic neighborhoods. The evidence showed that 92% percent of all LIHTC units in the city of Dallas were in census tracts where more than one-half of the population is Black or Hispanic or both. Inclusive Communities Project, Inc. v. Texas Dept. of Hous. and Community Affairs, 749 F. Supp. 2d 486, 493 (N.D. Tex. 2010).

After finding TDHCA liable, the District Court entered a remedial plan to be in place for five years. Inclusive Communities Project, Inc. v. Texas Dept. of Hous. and Community Affairs, 3:08-CV-0546-D, 2012 WL 3201401, at *14 (N.D. 2012), amended in part, 3:08-CV-0546-D, 2012 WL 5458208 (N.D. Tex. Nov. 8, 2012), rev'd and remanded, 747 F.3d 275 (5th Cir. 2014), aff'd and remanded, 576 U.S. 519 (2015).

After the Fifth Circuit affirmed the use of the disparate impact liability standard, the State of Texas filed a petition for certiorari to the U.S. Supreme Court. The petition was granted.

Daniel & Beshara briefed the ICP case at the U.S. Supreme Court. Mr. Daniel argued the case for ICP at the U.S. Supreme Court. A host of groups filed amicus briefs. There was substantial support from various civil rights, fair housing, and academic advocates. The Solicitor General argued for the applicability of the disparate impact standard on behalf of the United States of America.

The U.S. Supreme Court affirmed the applicability of the disparate impact standard under the Fair Housing Act based in large part on the disparate impact interpretation approved in civil rights employment cases brought pursuant to Title VII of the Civil Rights Act. Texas Dept. of Hous. and Community Affairs, 576 U.S. at 520. Affirming the importance of the disparate impact liability standard, the majority opinion ended with a strong reminder of the work that remains.

The FHA must play an important part in avoiding the Kerner Commission's grim prophecy that “[o]ur Nation is moving toward two societies, one black, one white—separate and unequal.” Kerner Commission Report 1. The Court acknowledges the Fair Housing Act's continuing role in moving the Nation toward a more integrated society. Texas Dept. of Hous. and Community, 576 U.S at 546–47. 

On remand the District Court found that the evidence no longer supported a disparate impact liability finding and dismissed the case. Inclusive Communities Project, Inc. v. Texas Dept. of Hous. and Community Affairs, 3:08-CV-0546-D, 2016 WL 4494322 (N.D. Tex. 2016). By this time the five-year remedial period was almost expired. ICP did not appeal.

HUD cites the U.S. Supreme Court opinion in support of the reinstatement of the HUD Fair Housing Act disparate impact standards. 86 Fed. Reg. 33591 (2021). The opinion will continue to further fair housing and move the country towards the end of racial segregation in housing.

[1]  Supreme Court upholds key tool for fighting housing bias, June 25, 2016, Washington Post.