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Eric W.M. Bain

excerpted from: Eric W.M. Bain, Another Missed Opportunity to Fix Discrimination in Discrimination Law, 38 William Mitchell Law Review 1434 (2012)(214 footnotes omitted)(Student Note)

A. History of the FHA

1. Need for the FHA

Prior to the FHA, segregated housing in the United States persisted because of racially restrictive zoning regulations and covenants, segregated public housing projects, realtors steering minorities away from white neighborhoods, and voluntary segregation. White flight only made matters worse.

Senator Walter Mondale, who introduced the original FHA bill, argued that it was necessary to eliminate discriminatory practices of property owners, real estate brokers, builders, and home financers. Mondale intended the FHA to replace the ghettos by truly integrated and balanced living patterns.

2. Building Support for the FHA

Ultimately, the FHA was passed as Title VIII of the Civil Rights Act of 1968. But two years prior to its passage, the issue of fair housing languished in Congress. It was a divisive issue, prompt[ing] the most vicious mail [President Lyndon B. Johnson] received on any subject.

The lobbying efforts of two men turned the tide, however. The first was Senator Edward Brooke, the first African-American Senator to be elected by popular vote. Partnering with Senator Edward Kennedy, Senator Brooke spoke of his personal experience returning from World War II and being denied housing for his family due to his race. Incidentally, a similar problem was reoccurring with the Vietnam War. In particular, wartime casualties fell disproportionately on racial minorities and the families of fallen soldiers of color were being denied housing due to their race.

The second individual was Martin Luther King, Jr., who became closely associated with fair housing legislation because he organized the Chicago open housing marches, which occurred in 1966. As of March 1968, according to President Johnson's special assistant for domestic affairs, there was no hope of passage of the FHA in the House. But President Johnson used King's assassination as an opportunity to finally push the fair housing bill through Congress, as a last tribute to King. Just seven days after King's assassination on April 4, 1968, the FHA was quickly passed without debate.

3. FHA Today

The FHA today makes it unlawful to discriminate against any person in the . . . sale or rental of a dwelling . . . because of race, color, religion, sex, familial status, or national origin. Protection from discrimination is also extended to the handicapped in a few instances, such as in the context of advertisements or denials of the availability of a rental dwelling. There is no express language in the FHA requiring a showing of intent, in part because Congress thought doing so would make it too difficult to show discrimination. There is also no express language in the statute authorizing discrimination claims based on showings of disparate impact. Such ambiguity has opened the door for judicial interpretation.

B. The Roots of Disparate Impact

1. The Court's First Recognition of Disparate Impact

The concept of disparate impact comes from employment discrimination law. In 1971, the landmark Supreme Court opinion Griggs v. Duke Power Co. interpreted Title VII of the 1964 Civil Rights Act to include a discriminatory effect standard.

In Griggs, a group of African-American employees in North Carolina brought suit against their employer, Duke Power Company, claiming that their employment practices violated the Civil Rights Act.

Prior to the 1964 Civil Rights Act, Duke had a policy of relegating African-American employees to a single department, Labor, where the highest-paying jobs paid less than the lowest-paying jobs in any of the other white departments. But after the Civil Rights Act passed, Duke changed its race-based employment assignments to a policy of requiring either a high school diploma or passing a standardized general intelligence test to either be employed in, or transferred to, certain jobs, primarily ones with higher wages.

Plaintiffs argued that degree and testing requirements disproportionately affected African-Americans because they were less likely than whites to have diplomas or pass the intelligence test. In 1960 in North Carolina, thirty-four percent of white males completed high school, compared to only twelve percent of African-American males. Further, fifty-eight percent of whites passed Duke's standardized intelligence tests, compared to only six percent of African-Americans.

Plaintiffs also argued that degree and testing requirements did not relate to job performance because the percentage of white employees promoted without high school diplomas was nearly the same as the percentage of non-graduates in the entire white work force. In other words, high school graduates were no more likely than non-graduates to be promoted.

Duke, on the other hand, argued that they lacked intent to discriminate against African-American employees, and that section 703(h) of the Civil Rights Act provided for a right to condition promotions or transfers on passing certain tests.

The Court in Griggs sided with plaintiffs, holding that Congress directed the thrust of the Act to the consequences of employment practices, not simply the motivation. Accordingly, Duke's intention for implementing testing requirements was not a dispositive factor for proving or disproving employment discrimination. Instead, what mattered was the impact caused by the testing requirements.

The Court reasoned that Congress did not intend to prohibit testing or measuring procedures, as long as they are a reasonable measure of job performance and measure the person for the job and not the person in the abstract. Since the diploma and testing requirements were not significantly related to successful job performance and disqualified African-Americans at a substantially higher rate than white applicants, Duke's policy was held to be discriminatory in violation of Title VII of the Civil Rights Act.

2. Codification of Disparate Impact in Employment Discrimination Law

The burden of proof in Title VII disparate impact cases was discussed by the Court in 1989 in Wards Cove Packing Co. v. Atonio and codified in an amendment to the Civil Rights Act in 1991. Under the current statute, an unlawful employment practice based on disparate impact may be established in only one of two ways: (1) the complainant demonstrates that an employment practice causes a disparate impact and the employer fails to show that its practice is job-related and consistent with business necessity; or (2) if the employer refused to adopt an alternative employment practice that complainant demonstrated (in accordance with pre-Wards Cove law) is less discriminatory.

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.