Disparate Impact and Integration: With TDHCA v. Inclusive Communities the Supreme Court Retains an Uneasy Status Quo

In June 2015, the Supreme Court handed down its decision in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc., upholding the use of disparate impact theory in cases brought under the Fair Housing Act. The opinion also contains language affirming the law’s commitment to advance residential integration. In light of the fears about what the Court might have done, the recent ruling has been cause for relief, yet fair housing advocates should be wary, because the majority also offered guidance about how many of these cases should be reviewed on the merits – and it is not favorably. In particular, the Court cautioned against allowing disparate impact claims to interfere with the complex, multifactor decisions of housing developers and municipal officials when they seek to improve neighborhoods and housing conditions, even when such decisions exacerbate or entrench segregated patterns. In disparate impact cases the analysis almost always turns on the defendant’s ability to demonstrate that the challenged practice is necessary to achieve one or more substantial, legitimate, non-discriminatory interests. The opinion thus makes clear that fostering integration is just on one of many legitimate interests, which may also include revitalizing dilapidated neighborhoods, ensuring compliance with health and safety codes, and providing affordable housing, that a local government might pursue. This may mean that so-called “Housing Improvement” cases, which by definition involve legitimate goals, will always be an uphill battle for fair housing advocates using disparate impact theory. Such cases represent a significant subset of the fair housing cases that have relied on disparate impact theory in recent years (including all three to come before the Supreme Court). The extent to which this will represent a change from the status quo, in which many disparate impact claims already founder, remains to be seen.