Preserving a Legal Theory
California Lawyer

Preserving a Legal Theory

July 2012

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When the city of Lancaster was sued for race discrimination last year, disparate impact theory was on the minds of housing rights attorneys nationwide. Many cases brought under the Fair Housing Act attempt to show that a particular policy - regardless of its intent - unfairly affects a constitutionally protected group.

The Impact Fund in Berkeley, for instance, sued on behalf of Section 8 recipients in Antioch, an East Bay suburb on the edge of San Pablo Bay. In addition to arguing that city officials harbored discriminatory intent, the complaint, filed in 2008, acknowledged the disparate effects of the ongoing housing crisis in the Bay Area, which include pushing many low-income families to outlying areas. The African-American population of Antioch, it noted, had doubled in the previous five years.

"The City reacted with alarm and hostility to the newcomers," the complaint stated, "choosing to scapegoat them as the cause of economic downturn because they allegedly bring blight and crime into the community." (Williams v. City of Antioch, No. C-08-2301 (N.D. Cal. first amended complaint filed July 16, 2008).)

The Williams case settled in January; Antioch officials agreed they no longer would publicly identify voucher holders or focus on Section 8 recipients in policing neighborhoods. (The city also agreed to pay damages of $180,000 to five named plaintiffs.) But disparate impact theory remains at risk as a weapon for plaintiffs lawyers.

In the past half-century, all twelve federal circuit courts have recognized some form of disparate impact theory, but they apply at least four different tests. The Department of Housing and Urban Development didn't propose a standard test until last November, and the U.S. Supreme Court has never ruled directly on whether the Fair Housing Act (FHA) includes such a standard. This year the Court had a chance to do so.

The City of St. Paul, Minnesota, had petitioned the high court to review an appellate ruling that landlords could pursue a disparate impact claim under the FHA. The claim alleged that the city's maintenance and repair ordinance discriminated against minorities by increasing their housing costs and decreasing the number of rental units available. The Court accepted the case last November and scheduled oral argument for February. (Gallagher v. Magner, 619 F.3d 823 (8th Cir. 2010), cert granted sub. nom. Magner v. Gallagher, 132 S. Ct. 548 (2011)).)

At issue was whether disparate impact claims are recognized under the FHA and, if so, what test should be used. More than a dozen amicus briefs were filed, including some by the NAACP and the ACLU on behalf of the landlords.

"This case is probably the most important fair housing case the Supreme Court has [accepted] since the act passed," says Joseph Rich, director of the Fair Housing Project at the Lawyers' Committee for Civil Rights Under Law in Washington, D.C. Without a disparate impact theory, Rich explains, plaintiffs would be less able to champion affordable housing requirements or challenge mortgage loan practices that discriminate against minorities.

Two weeks before oral argument, however, the appellants suddenly withdrew the case from consideration. (Magner, 132 S. Ct. 1306 (2012) (cert. dismissed).) St. Paul's Pioneer Press reported that the city had been asked, by the Department of Justice as well as by former vice president and Minnesota senator Walter Mondale, to withdraw its appeal rather than risk prevailing in a potentially expansive ruling by the Roberts Court. The city released a statement saying it "likely would have won," but that "such a result could completely eliminate 'disparate impact' civil rights enforcement, including under the Fair Housing Act and the Equal Credit Opportunity Act."

Republican lawmakers sent two letters to the city demanding to know if federal officials had improperly influenced its decision, and the U.S. House Committee on Oversight and Government Reform has opened an investigation.


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