Texas Department of Housing & Community Affairs v. Inclusive Communities Project, Inc.: Fair Housing Act Disparate-Impact Liability; U.S. Supreme Court Holds That Disparate-Impact Claims Are Cognizable Under the Fair Housing Act in Certain Limited Circumstances

Sullivan & Cromwell LLP - June 25, 2015
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Today in Texas Department of Housing & Community Affairs v. Inclusive Communities Project, Inc., No. 13-1371, the Supreme Court held that the Fair Housing Act permits challenges to housing practices or policies on the ground that they disparately impact minorities.  The Court emphasized, however, that disparate-impact liability is subject to important limits because it only mandates the removal of “artificial, arbitrary, and unnecessary barriers” and does not displace legitimate business and governmental policies.  Lower courts must allow defendants to show that their challenged policies serve valid interests; examine with care whether plaintiffs have made a prima facie case that the challenged policy caused a disparate impact on minorities; and craft any remedial order to focus on eliminating the arbitrary practice and to address any additional measures through race-neutral means.  Today’s decision does not address whether disparate-impact claims are cognizable under differently worded antidiscrimination laws, such as the Equal Credit Opportunity Act.