Wednesday, May 22, 2019

Article Index

C. Disparate Impact Evolution in Housing Discrimination Law

1. The Supreme Court's First FHA Decision: Trafficante v. Metro. Life Ins. Co.

Four years after the enactment of the FHA, and just one year after Griggs, the Supreme Court in 1972 issued its first FHA decision in Trafficante. The plaintiffs, who were tenants at an apartment complex, claimed that their landlord discriminated against non-white rental applicants. Plaintiffs asserted that they had: (1) lost the social benefits of living in an integrated community; (2) missed business and professional advantages from not living with members of minority groups; and (3) suffered embarrassment and economic damage in social, business, and professional activities from being stigmatized as residents of a white ghetto. Further, plaintiffs argued that they had standing to bring an FHA claim because they fell under the FHA's definition of aggrieved persons, which includes any person who either claims to be injured, or will be injured, by a discriminatory housing practice.

Even though plaintiffs were not directly discriminated against by their landlord based on race, the Court found that they had standing. The Court noted that the FHA's language is broad and inclusive and should be given generous construction. The Court justified a broad interpretation for standing by reasoning that barriers must be removed to private suits under the FHA because private suits are the best enforcement mechanism--particularly when considering that the Department of Housing and Urban Development (HUD) does not have enforcement powers, and the Attorney General has a small staff for fair housing litigation.

2. The Initial Circuit Court Decision Regarding Disparate Impact Under the FHA: United States v. City of Black Jack

Following Griggs (Title VII allows for showings of discriminatory effect) and Trafficante (the FHA should be broadly interpreted), the Eighth Circuit became the first federal appellate court to find an FHA violation based on disparate impact. In United States v. City of Black Jack, a municipal zoning ordinance that prohibited construction of any new multifamily dwellings was challenged on the grounds that it denied persons housing on the basis of race in violation of the FHA. At the time, Black Jack, Missouri was virtually all white, with a black population of between one and two percent. Neighboring St. Louis, by comparison, was about forty percent black, with a pupil population of approximately sixty-five percent in the city's school district. Furthermore, about forty percent of black families in the area, compared to fourteen percent of white families, were living in overcrowded housing.

Relying on Griggs for the proposition that Congress intended Title VII to remove artificial, arbitrary, and unnecessary barriers to employment when the barriers operate invidiously to discriminate on the basis of racial or other impermissible classification[s], the Eighth Circuit in Black Jack concluded that such barriers must also give way in the field of housing. The court went on to declare that a prima facie case of racial discrimination may be proven with no more than a defendant's conduct actually or predictably result[ing] in racial discrimination; in other words, that it has a discriminatory effect . . . . Effect, and not motivation, is the touchstone . . . .

Under this standard, the Eighth Circuit held that the municipal zoning ordinance had a discriminatory effect because prohibiting construction of affordable multifamily dwellings would contribute to the perpetuation of segregation in a community which was [ninety-nine] percent white. Since discriminatory effect had been shown, the Eighth Circuit shifted the burden to the municipal defendant to demonstrate that its conduct was necessary to promote a compelling governmental interest. Because Black Jack could not show a compelling governmental interest, the Eighth Circuit held that the ordinance violated the FHA.

3. Development of Disparate Impact Since Black Jack

In the years since Black Jack, a strong consensus has emerged among the circuit courts that the FHA includes a disparate impact standard. Today, every circuit uses the disparate impact standard. But, due to a lack of guidance from the Supreme Court, the circuit courts have developed substantively different standards for judging FHA disparate impact claims. In fact, three different standards have emerged among the circuits: a balance-of-factors test, a burden-shifting analysis, and a hybrid test.

Disparate impact under the FHA has also been adopted by HUD. In a 1993 administrative decision, for example, the HUD Secretary found that a disparate impact, if proven, would establish a violation of the Act. Furthermore, HUD's Complaint Intake, Investigation, and Conciliation Handbook recognizes that disparate impact may be used to show a violation of the FHA.

Although there is consensus among the circuit courts and HUD that a violation of the FHA can be shown with disparate impact, the Supreme Court has remained out of the debate. The Court has held that a violation of the FHA can be found when discriminatory intent is shown. But the Court has never held that an FHA violation can be found with a showing of disparate impact.