A federal judge ruled on November 4 that HUD cannot bring fair housing cases against businesses by using only data to demonstrate discrimination. Specifically, a U.S. District Court judge in Washington, DC, struck down a disparate impact case brought by the American Insurance Association and the National Association of Insurance Companies against HUD.
The U.S. Supreme Court will
ultimately decide the issue after recently agreeing to hear the disparate
impact case, Texas
Department of Housing v. Inclusive Communities Project. In the case, the allocation of tax credits is
being challenged as an allegedly discriminatory practice under the Fair Housing
Act (FHA) based on its disparate impact on minority residents. Two previous
cases were accepted by the Court, but the parties settled prior to review,
leaving the issue unresolved.
NMHC urged the Supreme Court to grant the petition for certiorari (cert) in an amicus brief calling attention to the plain language of the FHA, which only recognizes legal liability for intentional housing discrimination, not the disparate impact of unintentional, non-discriminatory acts.
Disparate impact liability has created much uncertainty in the apartment and real estate industry since HUD’s final disparate impact rule was released in February 2013. Apartment business practices such as criminal background screening and Section 8 voucher program participation and policies can be viewed as potential areas of liability under the HUD disparate impact analysis.
Although disparate impact claims are available under other anti-discrimination statutes, Congress did not provide for such claims in the FHA. Therefore, a ruling by the Court will provide much needed clarity for owners and operators of multifamily housing.