Fair Housing Case Pulled Off Supreme Court Docket

The U.S. Supreme Court will not review a controversial fair housing case after all. The case, highlighted in the January 2012 Fair Housing Coach, centered on disparate impact claims under the Fair Housing Act (FHA). While everyone agrees that the FHA bans intentional discrimination, the issue was whether the FHA also bans policies, which are not intentionally discriminatory, but have a disparate impact—that is, an unfair negative effect—on racial minorities or other protected classes.

The case was filed by rental property owners in St. Paul, Minn., who claimed that the city’s enforcement of its housing code had a disparate impact on racial minorities. The owners rented primarily to low-income households receiving federal housing assistance, many of whom were African American.

The city’s policy called for enhanced efforts to enforce its housing code at so-called “problem properties” to compel rental property owners to take better care of their properties or force changes in ownership.

The owners claimed that they were singled out for enhanced enforcement, resulting in multiple citations for conditions including rodent infestation, inadequate sanitation facilities, inadequate heat, inoperable smoke detectors, and missing doors or screens. As a result of the city’s actions, the owners alleged that they suffered increased maintenance costs, fees, condemnations, and were forced to sell properties in some instances.

The owners sued the city, asserting claims of disparate treatment and disparate impact under the FHA. The disparate treatment claim was dismissed because there was no evidence to show the city had any discriminatory intent. In contrast, the court ordered further proceedings on the owners’ claim that the city’s aggressive code enforcement had a disparate impact on racial minorities.

Last fall, the Supreme Court agreed to hear the city’s appeal. The crux of the case was whether the FHA is broad enough to cover disparate impact claims. Although courts across the country have recognized such claims, the high court had never ruled on the issue.

The Court’s decision to hear the appeal set off a chain reaction among federal and state government officials, housing advocates, and others who feared that the case might have the unintended consequence of gutting federal fair housing law.

Within days, HUD unveiled proposed rules to formalize its longstanding policy that the FHA prohibits housing practices with a discriminatory effect, even where there has been no intent to discriminate. The comment period ended last month, but the proposal has yet to be formalized.

The appeal, which was scheduled for hearing in late February, was pulled from the Court’s docket and dismissed by agreement of the parties. That means that the case will head back to the federal district court in Minnesota for further proceedings [Magner v. Gallagher, February 2012].