Setting the Standard in Disparate Impact Claims

Today we return to the application of disparate impact theory to fair housing claims. In her recent article, Nikole Hannah-Jones outlined the history of disparate impact theory's recognition by the eleven federal appellate courts and the shift to a view of housing discrimination that focuses on results and not intent. Additionally, she articulated concern that an eventual consideration of disparate impact claims by SCOTUS would result in the Court overturning the theory upon which so many fair housing claims have been built for four decades. While discussing her article on the radio program Tell Me More, host Michel Martin asked Hannah-Jones why HUD had not yet established disparate impact as part of the Fair Housing Act, quoting the FHA's chief sponsor Sen. Walter Mondale as saying the Act was meant to include discrimination causing disparate impacts.

Image Credit: HUD 

Perhaps it was Ms. Martin's fortuitous question; perhaps it was the repeated introductions of the Housing Fairness Acts, which included a fund to test for housing discrimination, by Rep. Al Green (D-Texas); or perhaps it was four decades of swirling controversy, but less than seventy-two hours after the interview, HUD issued a final rule establishing a national standard to evaluate whether housing policies disproportionately harm protected classes under the FHA. The final rule formalizes a framework for proving claims under disparate impact theory and expresses HUD's intention to "prohibit practices with an unjustified discriminatory effect, regardless of whether there was an intent to discriminate."

The enumerated HUD standard is essentially a formalization of the burden-shifting test currently employed by appellate courts in evaluating housing discrimination claims, with the aim of stating a uniform rule that will eliminate the varying standards courts have previously used to make decisions (e.g. the Second and Third Circuit Courts of Appeals have historically weighed the disparate impact claim against the municipality's defense while other courts give more deference to legislative decisions). The final rule's three-part burden-shifting test places the initial burden of proof on the Plaintiff, meaning that Plaintiff must prove that a practice results in, or  would predictably result in, a prohibited discriminatory effect. If Plaintiff proves a prima facie case, the burden of proof shifts to Defendant to prove that the practice is necessary to achieve one or more
substantial, legitimate, nondiscriminatory interests. If the Defendant satisfies this burden, then Plaintiff may still establish liability by proving that the aforementioned interest could be served by a practice that has a less discriminatory effect. Once again, this echoes much of the appellate analysis of disparate impact claims. See Gallagher v. Magner, 619 F.3d 823 (8th Cir. 2010).

HUD's final rule standard is an articulation of previous organizational statements and decades of substantive common law and thus HUD has issued a clear and uniform guideline for adjudicating  disparate impact housing discrimination claims that places very few costs or burdens on courts, fair housing providers, or potential litigants. The standard places administrative support behind decades of court decisions and, in a legal system without a disparate impact ruling from SCOTUS, provides more definition to the often confusing fair housing discussions that circulate legislative chambers, courtrooms, and, yes, even afternoon radio shows.

Note: The HUD Final Rule 24 CFR Part 100 [Docket No. FR-5508-F-02] RIN 2529-AA96 for the Implementation of the Fair Housing Act’s Discriminatory Effects Standard has (at this time) been submitted for the Federal Register for publication. The final rule will be effective 30 days after publication in the Federal Register.