In a blow to the housing and mortgage finance industry but a victory for fair housing advocates, the Supreme Court ruled in a contentious and qualified opinion that the legal doctrine of “disparate impact” is cognizable under the Fair Housing Act.
The 5-4 decision holds that there is a disparate impact claim under the FHA as a matter of statutory interpretation.
The majority opinion, which can be read here and which was written by Justice Anthony Kennedy, strongly cautions that remedial orders in disparate impact cases that impose racial targets or quotas could be unconstitutional.
The question in the case of Texas Department of Housing and Community Affairs v. Inclusive Communities Projectsis whether the Fair Housing Act allows lawsuits based on disparate impact – that is, an allegation that a law or practice has a discriminatory effect, even if it wasn’t based on a discriminatory purpose. The Court had granted review to consider this question in two earlier cases, but both of those cases settled before the Court could rule on them.