In late September 2012, several members of Congress sent a letter to Attorney General Eric Holder, inquiring about the Department of Justice’s (DOJ) potential involvement in removing a key disparate impact case (Magner v. Gallagher) from the U.S. Supreme Court’s docket. The letter states that DOJ Assistant Attorney Thomas Perez had a stake in the court’s interpretation of housing discrimination claims under the Fair Housing Act and feared that a ruling in favor of the plaintiff-the City of St. Paul--would establish unfavorable legal precedent for lending discrimination cases.
It is alleged that Perez promised that the DOJ would not intervene in an unrelated case against the city if the city withdrew its appeal; the city withdrew its case just weeks before the court was scheduled to hear it. The DOJ denied that such a deal was made and defends its decision not to pursue the unrelated False Claims Act case against the city. The House Oversight and Government Reform and Judiciary Committees have requested that Holder release internal documents that would provide more information on the DOJ’s involvement in both cases.
The case involved a group of rental property owners in St. Paul who sued the city, claiming that aggressive enforcement of the city’s housing code had a disparate impact on the availability of housing for racial minorities. The trial judge dismissed the case on summary judgment, concluding there was insufficient evidence of disparate impact. On appeal, the 8th U.S. Circuit Court of Appeals reversed this decision, and the city petitioned the Supreme Court to review the case. In November 2011, the Supreme Court agreed to review the case. The court was scheduled to hear the case in February.
Housing providers, lenders and local municipalities have kept a close watch on the case because disparate impact arguments often surface during local zoning controversies. In June 2012, the Township of Mount Holly, N.J., requested the court review an earlier decision to determine whether disparate impact claims are recognized under the Fair Housing Act. NMHC/NAA joined a housing coalition in submitting a “friend of the court” brief in support of the township.
On a similar note, in November 2011, the U.S. Department of Housing and Urban Development (HUD) published a proposed rule to establish uniform standards for determining disparate impact. NMHC/NAA submitted comments, and to date, HUD has yet to finalize the rule.