In a 5-4 decision overshadowed by today’s ruling in King v Burwell, the U.S. Supreme Court has ruled that disparate impact claims are cognizable under the Fair Housing Act (“FHA”).
The opinion was authored by Justice Kennedy and joined by Justices Ginsburg, Breyer, Sotomayor and Kagan. Chief Justice Roberts joined Justices Scalia and Thomas in a dissent authored by Justice Alito.
The Court found that the 1988 amendments to the FHA reflect Congress’ intent to ratify disparate impact liability in the wake of nine appellate courts’ holdings concluding that the FHA allows such claims. The Court held that disparate impact liability must be properly limited, by giving housing authorities and developers leeway to explain the valid interest behind their policies. Thus, a plaintiff cannot rely merely on a statistical disparity – it must point to a defendant’s policy that causes the disparity.
The Court noted that both governmental and private policies are not contrary to the disparate impact requirement unless they are “artificial, arbitrary and unnecessary barriers.” The Court also cautioned lower courts to fashion remedial orders that strive to design race-neutral remedies, noting that racial targets or quotas might raise constitutional questions.