I wanted to update Fair Housing Defense blog readers on the disparate impact case winding its way through the courts.  I have written about the Mount Holly Gardens Citizens in Action, Inc. v. Township of Mount Holly, 658 F.3d 375 (3d Cir. 2011) decision previously.  This is the case in which private plaintiffs have filed a Fair Housing Act (FHA) lawsuit which includes disparate impact claims.  The allegations arise out of a planned demolition of a predominantly minority neighborhood and whether that plan violates the law.  On June 17, 2013 the U.S. Supreme Court granted certiorari (legalese for taking the case) to answer the following single question:  “Are disparate impact claims cognizable under the Fair Housing Act?”

Interestingly, the Solicitor General of the United States advised the Court not to grant review.  The Obama Administration’s brief offered two main arguments in support of this position:  (a) that HUD recently published regulations regarding disparate impact and the FHA and that the lower federal courts should have the chance to review the new regulations before the Supreme Court steps in; and (b) this case is the wrong one because it involves an interlocutory appeal and the specific legal questions was not addressed in the lower courts.  Nevertheless, the Supreme Court took the case.

Initially, a U.S. District Court judge rejected the homeowners’ claims, but the U.S. Court of Appeals for the Third Circuit reversed and concluded they had a right to a trial to see if the redevelopment plan disproportionately affected minorities.  According to the 2000 census, 75% of the homeowners who lived in the 320-unit in the community were minorities.

This decision will be important to the professional apartment management community because disparate impact is a tool used by HUD to probe if we are discriminating against one or more protected classes.  Rejecting the disparate impact theory would change how HUD (and private plaintiffs) bring cases against management.

There will be more to come here as the Supreme Court will now have the final word.

Just A Thought.