All Men Are Created Equal

Texas Department of Housing and Community Affairs v. The Inclusive Communities Project (2015)


  • May 31 2018

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Issue

Whether disparate-impact claims—those alleging that apparently neutral employment practices nonetheless adversely affect certain protected groups—are cognizable under the Fair Housing Act of 1968.

Facts

Congress passed the Fair Housing Act in 1968 to protect citizens from discrimination based upon race, color, national origin, religion, sex, disability, or the presence of children. At the same time, the Equal Employment Opportunity Commission EEOC was redefining the authority given to it by Congress under Title VII of the Civil Rights Act of 1964. EEOC introduced the legal concept of disparate impact — an action that is not expressively discriminatory but has unequal effects on protected minorities. Applying disparate-impact liability to Title VII meant that employers were now liable not only for discriminatory actions, but also apparently neutral actions that had an unequal effect on protected minorities. This case examines whether disparate impact created by the EEOC for Title VII also applies to housing under the Fair Housing Act of 1968 FHA.

Under the FHA, the national government provides tax credits to developers who choose to construct low-income housing. The Texas Department of Housing and Community Affairs TDHCA is in charge of allocating these tax credits within the state of Texas. In Dallas, the department distributes a majority of vouchers to developers in low-income, inner-city areas. The Inclusive Communities Project ICP is a Texas-based, non-profit “that seeks racial and socioeconomic integration in the Dallas metropolitan area,” specifically focusing on “finding affordable housing [for African-American families] in predominately Caucasian, suburban neighborhoods.” In 2012 ICP filed suit against TDHCA, claiming that the department was violating the Fair Housing Act of 1968 by distributing a vast majority of housing vouchers to developers in predominantly low-income, African-American areas rather than Caucasian areas, which they claimed perpetuated racial segregation in Dallas. It claimed that the actions, while not openly discriminatory, qualified as having a disparate impact.

The Court Below

The U.S. District Court for the Northern District of Texas was the first to hear the case. The court ruled in favor of ICP, holding that disparate impact claims are within the jurisdiction of the court under the FHA, and the department’s actions demonstrated such disparate impact. See opinion below:

Inclusive Communities Project, Inc. v. Texas Department of Housing and Community Affairs, 08-CV-0546-D N.D. Tex., 2012

The Texas department appealed to the Fifth Circuit Court of Appeals, which agreed that the department’s actions demonstrated disparate impact, but reversed and remanded the decision on the “primary issue” of determining the correct legal standard to be applied in disparate impact claims under the FHA. See opinion below:

Inclusive Communities Project, Incorporated v. Texas Department of Housing and Community Affairs, 747 F.3d 275 5th Cir., 2014

The Texas department appealed to the Supreme Court, which granted certiorari. The Supreme Court upheld the decision of the court below, holding that disparate-impact claims are cognizable under the FHA. See opinion below:

Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc., 135 S.Ct. 2507 2015

Question before the Court

“1. Are disparate-impact claims cognizable under the Fair Housing Act?

“2. If disparate-impact claims are cognizable under the Fair Housing Act, what are the standards and burdens of proof that should apply?”

CCJ filed an amicus curiae in support of Texas Department of Housing and Community Affairs

Summary:

Congress intended to include disparate impact in neither Title VII of the Civil Rights Act of 1964 nor the Fair Housing Act of 1968. Disparate impact was a creation of the EEOC, which overstepped its authority when it created the policy. First, the Supreme Court erroneously interpreted the EEOC’s “disparate impact” as the intent of Congress. Second, disparate impact liability for employers encourages political favoritism, is incoherent, and may disadvantage those it was intended to benefit. Third, disparate impact liability is subject to strict scrutiny, which it likely cannot withstand because it has been used and was intended to help only those who are not white males—that is, white males constitute the only group to which disparate impact claims have been systematically denied.

Congress never intended to give expansive authority to the EEOC. It was to be a mediating agency only. Creative EEOC officials, concerned about what they considered to be an otherwise “powerless” agency implementing “an apparently weak statute,” openly admitted to replacing Title VII's original design with a disparate-impact framework that they believed would be more effective in coping with the problems of their time. Alfred Blumrosen, disparate impact’s primary architect, admitted that he took great liberty in expanding the EEOC’s power far beyond where Congress intended it to be. He wrote that he was unconcerned with whether courts would sustain the disparate-impact test, thus admitting to his openly anti-democratic approach. In 1968, then-EEOC Commissioner Samuel Jackson also admitted that he made it unlawful not only to discriminate in the hiring process, but also to hire in a way that has any racial effect.

Further, Griggs v. Duke Power Co. 1971 was the first case to adopt disparate-impact liability and followed the EEOC’s interpretation of Title VII as opposed to its original text. In Griggs the court assumed that EEOC was expressing the will of Congress when it stated, “If an employment practice which operates to exclude Negroes cannot be shown to be related to job performance, the practice is prohibited.” EEOC claimed to rely on Congress’s larger intent behind Title VII, but Congress took active steps to avoid arguments based on this so-called “larger intent,” keeping the parameters of Title VII narrow and defined. After Griggs, Title VII was interpreted to mean that in deciding upon job qualifications, employers must provide both equal opportunity to all persons regardless of identity, and equal acceptance results for women and minorities. Yet the two requirements — equal opportunity and equal results — are very different, and come into conflict with one another.

Next, regardless of congressional approval, disparate impact is logically incoherent because all job qualifications have a disparate impact. As a group, Chinese Americans and Korean Americans score stronger in mathematics than most other ethnic groups. Subcontinent Indian Americans are much more likely to have experience in motel management than Norwegian Americans. African Americans are over-represented in many professional athletics as well as in many areas of the entertainment industry. As exemplified in Watson v. Fort Worth Bank & Trust, supra, Unitarians are more likely to have college degrees than Baptists. The result is that under disparate-impact liability, because certain groups are more qualified for certain positions and industries, in their interview processes, employers must pay more attention to race and sex than to real, objective qualifications. Yet EEOC argues that disparate impact is acceptable because it abides by the four-fifths rule, where based on application rates, if any demographic is hired at four-fifths the rate of the group with the highest rate, it is not regarded as disparate impact. The problem is that selection rates of less than four-fifths relative to the highest rate are the rule and not the exception. Moreover, the four-fifths rule is useless in practice because a company is unable to predict what the application rates and selection rates are going to be when it starts the employment process.

Indeed, there is strong evidence proposing that disparate-impact liability in the employment context may be doing more harm than good, and the same could end up being true if it is applied to housing. Take the criminal record issue, for example. The book Perceived Criminality, Criminal Background Checks, and the Racial Hiring Practices of Employers, explains how because African-Americans and Mexicans are more prone to have a criminal record, they are more prone to be perceived that way by employers. If employers refuse to check criminal backgrounds out of fear of a lawsuit, they are less likely to hire minorities because of a heightened possibility of their having a criminal record. Thus, minorities with a perfectly clean records are put at a disadvantage. The article “Perceived Criminality” found that in Los Angeles County, employers who use background checks in their application process are 10.7 percent more likely to have recently hired an African-American than those who do not, suggesting that the above example is more the rule than the exception. This is only one of numerous examples of how disparate impact would have the opposite of its intended effect.

Finally, the application of disparate impact liability was intended to be, and is, racially discriminatory, and so it should be held to the standard of strict scrutiny. It would surely fail to withstand such examination because of its stated intent and actual application. The Court has never entertained a disparate impact case on behalf of anyone other than women and racial minorities. In 1981, the Commission issued a report that flatly stated that disparate impact liability “cannot be sensibly applied to white males” given that the purpose of the liability is to uproot historical and contemporary sexism and racism. Contemporary Scholar John J. Donohue III wrote in 2001 regarding white males, “The first prong of a disparate impact case — finding a practice that adversely affects a member of a protected class — will not be met since white males will not be deemed to be ‘protected’ under this doctrine.” Such an openly discriminatory law need be subject to strict scrutiny. Yet even if disparate-impact liability applied to minorities and majorities, it would still be problematic. First, there is little evidence that Congress would support expanding the reach of a statute whose reach is already extraordinary. Second, even if Congress would approve it, disparate liability perpetuates race discrimination, not color-blindness.

In the absence of a compelling purpose and narrow tailoring, Title VII's disparate impact liability must fail. Fisher v. University of Texas 2013 held that a racially discriminatory law is permissible only if it serves a compelling purpose and is narrowly tailored to fit that purpose. Under its current interpretation, Title VII is racially discriminatory and must be subject to the stated criteria. There is currently no evidence that this doctrine has systematically advanced the employment opportunities of underrepresented racial minorities and/or women, and thus would fail the test. The sprawling and incoherent doctrine complicates the labor market in a time that the national economy can ill-afford such a blow, and exporting this doctrine to housing law would only make things worse.

Final Outcome

In a five-to-four decision, the Supreme Court ruled against CCJ’s position, holding that disparate-impact claims are cognizable under the FHA. The Court provided Griggs as legal precedent for its decision, using employment precedent to interpret the FHA. It also emphasized the importance of outcome over intent when looking at decisions that lead to unequal results favoring the majority over a protected minority.