November 5, 2014

Court Rules Disparate Impact Claims Cannot Be Made Under Fair Housing Act

Holland & Knight Regulatory Litigation Blog
Lynn E. Calkins | Rafe Petersen | Christine N. Walz

Earlier this week, a federal district court judge struck down a regulation issued by the U.S. Department of Housing and Urban Development (HUD), which would have allowed for claims of housing discrimination to be based on neutral practices that have a discriminatory impact or effect. 

The regulation was challenged by two groups, the American Insurance Association and the National Association of Mutual Insurance Companies, who argued that the plain text of the Fair Housing Act prohibits only discriminatory treatment, not discriminatory effects, and, therefore, the agency had exceeded its authority under the Administrative Procedure Act. 

The court agreed and held that the Fair Housing Act only prohibits intentional discrimination in the sale or rental of housing. The court based its reasoning on the fact that the defined prohibitions included on the face of the Act refer to intentional actions: refusing to sell or rent; discriminating in the terms or conditions of a sale or rental; making, printing or publishing a discriminatory advertisement; representing that a unit is not available for sale or rental; or inducing any person to sell or rent. The court further reasoned that Congress did not include effects-based language — or language prohibiting conduct that "tends to" cause a particular result — in the Fair Housing Act. 

HUD promulgated the particular regulation at issue in 2013; however, other courts have considered disparate impact claims for decades. The U.S. Supreme Court is poised to address this issue this term in the case Texas Department of Housing v. The Inclusive Communities Project, Inc. Two other cases addressing this issue were pending before the Supreme Court in recent terms, but the litigants settled both before the Court ruled. 

American Insurance Association v. U.S. Department of Housing and Urban Development, Case No. 13-00966 (D.D.C. 2014).

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