Will the Supreme Court take up the cause of disparate impact in housing once again?

To recap briefly: disparate impact liability was born in the employment discrimination context. It permits an employer to be sued for using employment practices that have an adverse or disproportionate effect on one particular racial group unless justified by business necessity, even if the employer did not intend (either consciously or subconsciously) to discriminate based on race or other protected characteristics. But critics of disparate impact argue that virtually all employment practices have a disproportionate effect on one or another protected group. Disparate impact liability means that just about every employer in the country is constantly at risk of a lawsuit.

Because disparate impact also leads some employers to change hiring, firing, or promotion practices to get the right racial percentages, some – including Supreme Court Justice Antonin Scalia –  have questioned whether disparate impact is constitutional under the Equal Protection Clause. The Court’s “resolution of this dispute [in Ricci v. DeStefano, the case at hand],” Scalia wrote, “ merely postpones the evil day on which the Court will have to confront the question: Whether, or to what extent, are the disparate-impact provisions of Title VII of the Civil Rights Act of 1964 consistent with the Constitution’s guarantee of equal protection?… If the Federal Government is prohibited from discriminating on the basis of race, then surely it is also prohibited from enacting laws mandating that third parties. . . whether private, state, or municipal—discriminate on the basis of race.” Disparate impact provisions in effect mandate third parties to discriminate on the basis of race by putting a racial thumb on the scale by often requiring employers to evaluate the racial outcomes of their hiring policies and to make decisions about how to structure employment procedures in light of those outcomes.

In spite of these powerful criticisms, the Obama administration has been aggressive in pursuing disparate impact cases. Russlyn Ali, a former assistant secretary of education for civil rights, once said that “disparate impact is woven throughout civil rights enforcement in [the Obama] administration.” The administration has thus enthusiastically exported disparate impact liability to new contexts –including housing. One problem is that it is less than clear that the Fair Housing Act – the main federal statute outlawing racial discrimination in housing – is actually a disparate impact statute. The issue has made it to the Supreme Court twice already in the past four years. On both occasions, the Court granted certiorari – only to find that the Department of Justice had settled the case before the Court heard it.

Despite DOJ’s efforts, disparate impact liability under the Fair Housing Act is before the Court once again in a petition for certiorari in Texas Department of Housing v. The Inclusive Communities Project. As the petition puts it (p. 12), “The questions presented in this petition are indistinguishable from the questions on which this court granted certiorari in Gallagher and Mount Holly.” If the Court thought that certiorari was appropriate in these two cases, then it should also be appropriate in this one.

Resolving the question right now, rather than later, is important because nearly any government or landlord action can potentially trigger disparate impact liability. As the petition for certiorari notes, the State of Texas administers almost two dozen housing programs, and many of the other forty-nine states operate similar ones. Most do not have perfectly proportional racial effects. Similarly, nearly any criterion that a landlord might use to determine who gets to rent an apartment or that a lender uses to figure out mortgage eligibility will have an adverse effect on some group. To be sure, some government programs like Texas’s may deserve criticism because they disproportionately hurt the poor and racial minority individuals that they are intended to help. But the Fair Housing Act was never intended to address such concerns, and the policy debate about them should thus instead take place in a different context.

Could Scalia’s “evil day” be here”? Or — to continue Ms. Ali’s metaphor – could the tapestry that the Obama administration has so carefully unwoven be about to unravel?