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UPDATE: U.S. Supreme Court Issues Landmark Ruling in ‘Disparate Treatment’ Case

July 16, 2015 Posted in Landlord/Tenant Law

Recently, we reviewed a closely-watched landlord/tenant case under review by the U.S. Supreme Court. The case, known as Texas Dept. of Housing & Comm. Affairs v. Inclusive Communities Project, Inc., involved a challenge to the notion of ‘disparate impact’ within the context of residential rental properties – a doctrine in place since the 1960’s Civil Rights movement.

As a bit of review, disparate impact is a legal concept that arises when a group of individuals experiences discrimination following the practical application of legislation or policy purportedly neutral on its face. In this case, the Petitioner had alleged that the Texas Department of Housing had implemented a Section 8 housing voucher policy that resulted in an alleged clear segregation of certain minority groups within urban, inner-city areas.

More specifically, the Petitioner asserted that the Department’s tax credit system resulted in low-income housing voucher approvals in just 37% of applications for housing in predominantly Caucasian suburbs, while nearly 50% of vouchers were approved for housing in areas comprised of 0.0%-9.99% Caucasian residents.

While the Department asserted that its policies were not motivated by discrimination and were implemented on a racially-neutral basis, the Petitioner sought to successfully show that even unintentional discrimination is still discrimination – and Texas’s low-income families are struggling to experience inclusion and fair housing opportunities due to the alleged “line-drawing.”

The Department also sought clarification on whether the disparate impact theory should even be considered a cognizable theory under landlord/tenant and fair housing laws – to which the Court held in the affirmative.

Court Upholds Disparate Impact Theory, Offers Additional Protections for Landlords

In its deeply-divided holding, the Court decided in a 5-4 split that the historic disparate impact theory is still a cognizable cause of action under fair housing laws, but landlords deserve a bit more leeway when reviewing and approval applications for rentals – seemingly deferring to the discretion of a landlord tasked with reviewing a number of factors when deciding whether to rent to a particular applicant.

In an opinion penned by Justice Anthony Kennedy, the Court recognized that the “vestiges of residential segregation . . . . remain today.” From there, the Court affirmed the theory and regaled readers with an intimate review of the difficulties faced by minority and low-income renters over the past 60 years – resulting in clear and undeniable racial segregation in major American cities.

However, as the opinion concluded, the Court cautioned against advancing the disparate impact theory to the point of race-centric housing determinations – a result contrary to the original intended purpose of doctrine. In other words, by over-emphasizing disparate impact, landlords will begin to consider race above all other relevant factors on a rental application – which will essentially send fair housing doctrine back to square one.

Instead, the Court laid out a specific and concise cause of action for disparate impact petitioners to follow in the future. For instance, the Court pointed out that it will no longer be enough for a petitioner to set forth a statistical disparity between the existence of minority renters in Location #1 versus Location #2.

Instead, a petitioner must point to an actual policy or regulation causing disparity, and a “robust [causation] requirement is important in ensuring that defendants do not resort to the use of racial quotas.

Further, the Court held that “disparate-impact liability must be limited so employers and other regulated entities are able to make the practical business choices and profit-related decisions that sustain the free-enterprise system.”

Contact a New Jersey and New York Landlord Tenant Law Attorney

If you have questions about the implications of the Court’s recent disparate impact theory analysis, please do not hesitate to contact Griffin Alexander right away for guidance and counsel.

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