Promoting 'Inclusive Communities': A Modified Approach to Disparate Impact Under the Fair Housing Act

Louisiana Law Review Volume 75 | Number 1 Fall 2014 Promoting “Inclusive Communities”: A Modified Approach to Disparate Impact Under the Fair Housing Act Cornelius J. Murray IV Repository Citation Cornelius J. Murray IV, Promoting “Inclusive Communities”: A Modified Approach to Disparate Impact Under the Fair Housing Act , 75 La. L. Rev. (2014) Available at: http://digitalcommons.law.lsu.edu/lalrev/vol75/iss1/11 This Comment is brought to you for free and open access by the Law Reviews and Journals at DigitalCommons @ LSU Law Center. It has been accepted for inclusion in Louisiana Law Review by an authorized administrator of DigitalCommons @ LSU Law Center. For more information, please contact sarah.buras@law.lsu.edu . Promoting “Inclusive Communities”: A Modified Approach to Disparate Impact Under the Fair Housing Act TABLE OF CONTENTS Introduction ..........................................................................214 I. Disparate Impact Theory: What it is and Where it Came From ...........................................................................219 A. Disparate Treatment .......................................................220 B. Disparate Impact ............................................................221 C. The Origins of Disparate Impact in Employment Law ...........................................................222 1. Early Inklings of Disparate Impact ..........................222 2. Supreme Court Approval of Disparate Impact ........224 D. The Development of Disparate Impact in the Fair Housing Context .....................................................226 II. Disparate Impact Today: A Proposal to Resolve the Theory’s Uncertain Future Under the FHA .........................227 A. The Current State of Disparate Impact Under the FHA ..........................................................................228 1. A Sign of Things to Come: Ricci v. DeStefano .......228 2. An Opportunity Lost: Magner v. Gallagher ............229 3. A Repeat Performance: Mount Holly v. Mount Holly Gardens Citizens in Action, Inc. .........230 4. Round Three, the Potential Knockout Blow: Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. ........232 B. A Call to Amend the FHA .............................................236 III. Dissecting Disparate Impact Under the FHA: The Standard Debate ...................................................................239 A. Examining the Current Standards Employed by the Circuit Courts: Pros and Cons ..................................240 1. The Burden-Shifting Approach ................................241 2. The Relevance of Intent ............................................244 3. The Balancing Test ..................................................245 4. The Hybrid Approach ..............................................247 214 LOUISIANA LAW REVIEW [Vol. 75 B. Proposing a Proper Standard: The Modified Burden-Shifting Approach .............................................249 C. Codification: Incorporation of the Modified Burden-Shifting Approach Into an FHA Amendment ...254 Conclusion ............................................................................255 Appendix A ..........................................................................257 INTRODUCTION In New Orleans, a cursory examination of the city’s neighborhoods and surrounding areas tells the story. Lime green dots shade almost the entirety of Central City, Algiers, Gentilly, New Orleans East, and the Lower Ninth Ward. 1 Conversely, blue dots predominate in Uptown, Algiers Point, Lakeview, Metairie, the Garden District, and the French Quarter. 2 In Detroit, 8 Mile Road forms the line of demarcation, blue dots blanketing north of the road and green dots covering the south. 3 Atlanta, Birmingham, Chicago, and St. Louis present similar pictures. 4 The colored dots reflect data from the 2010 Census: one dot for every individual; green represents blacks, and blue represents whites. 5 The images described come from “the most comprehensive map of race in America ever created.” 6 The map—particularly the close-ups of individual cities—shows conclusively that racial segregation continues to plague this country’s residential communities. 7 Although a few cities such as New York, San Francisco, and Los Angeles have more integrated neighborhoods, racial segregation proves to be the norm. 8 Copyright 2014, by CORNELIUS J. MURRAY IV. 1. Dustin A. Cable, The Racial Dot Map, WELDON COOPER CTR. FOR PUB. SERV., UNIV. OF VA., http://demographics.coopercenter.org/DotMap/index.html, archived at http://perma.cc/7MEA-7WUH. 2. Id. 3. Id. 4. Id. 5. Id. Further, red represents Asians, orange represents Hispanics, and brown represents all others. Id. 6. Kyle Vanhemert, The Best Map Ever Made of America’s Racial Segregation , WIRED (Aug. 26, 2013, 6:30 AM), http://www.wired.com/design /2013/08/how-segregated-is-your-city-this-eye-opening-map-shows-you/?viewall =true, archived at http://perma.cc/X6XX-CWG3 (presenting the work of Dustin Cable, a statistician at the University of Virginia). 7. See Cable, supra note 1. 8. Id. 2014] COMMENT 215 Almost 50 years ago, the passage of the Fair Housing Act (FHA) provided a potential solution to the segregation of American neighborhoods. 9 A primary purpose of the FHA, “which was passed as an immediate response to Dr. King’s assassination, was to replace the ghettos with ‘truly integrated and balanced living patterns.’” 10 Congress believed that the FHA’s ban on discriminatory housing practices would lead to more integrated communities. 11 However, as scholars have noted and census data indicates, truly integrated communities have not emerged. 12 Despite the passage of the FHA, one of the primary causes of America’s segregated communities continues to be housing discrimination. 13 “Each year, tens of thousands of FHA complaints are filed, and these complaints represent ‘only a fraction of instances of housing discrimination’ that actually occur annually, which is estimated to be about 4,000,000.” 14 One tool for fighting housing discrimination, in addition to the well-established disparate treatment doctrine, 15 is disparate impact theory. 16 As opposed to disparate treatment, which only targets practices motivated by discriminatory intent, disparate impact focuses on practices that have discriminatory effects on protected classes of people. Legal scholars disagree on the ultimate purpose of the disparate impact theory; some claim that it is meant solely to 9. 42 U.S.C. §§ 3601–3631 (2012). 10. Robert G. Schwemm, Overcoming Structural Barriers to Integrated Housing: A Back-to-the-Future Reflection on the Fair Housing Act’s “Affirmatively Further” Mandate , 100 KY. L.J. 125, 125 (2012) (quoting 114 CONG. REC. 3422 (1968) (statement of Sen. Mondale)). 11. See 114 CONG. REC. 3422 (1968). Senator Mondale stated that the goal of the FHA was to replace the ghettos with “truly integrated and balanced living patterns.” Id. 12. Schwemm, supra note 10, at 125, 132–33 (noting that American Apartheid , a 1990s commentary on segregation in this country, recognized that racial segregation is “the principal organizational feature of American society” and that the 2010 census data indicates that “the United States is still a residentially segregated society”). 13. Id. at 134 (“Another cause of segregation is housing discrimination against racial minorities . . . .”); Phyliss Craig-Taylor, To Be Free: Liberty, Citizenship, Property, and Race , 14 HARV. BLACKLETTER L.J. 45, 65 (1998) (“African Americans found themselves limited to de facto segregated geographies by public and private discrimination.”). 14. Schwemm, supra note 10, at 134–35 (quoting U.S. DEP’T OF HOUS. & URBAN DEV., THE STATE OF FAIR HOUSING: FY 2008 ANNUAL REPORT ON FAIR HOUSING 2 (2009), available at http://www.hud.gov/content/releases/fy2008 annual-rpt.pdf, archived at http://perma.cc/4GG4-XVBX). 15. See infra Part I.A. 16. See infra Part I.B. 216 LOUISIANA LAW REVIEW [Vol. 75 provide for inadvertent, effects-based liability, 17 while others argue that it is designed to smoke out well-disguised unlawful intent, 18 but the practical reality is that it can be used to fight effectively against both. 19 Over the past 40 years, though, FHA plaintiffs have had little success with disparate impact claims. 20 Scholars have attributed the theory’s failure to the lack of a clear standard, 21 which is the result of a circuit split over the proper analysis, 22 as well as the theory’s use as a “Plan B” to disparate treatment claims, 23 which very well could be the consequence of disparate impact’s illusory analytical framework. Either way, disparate impact’s failure has contributed to the persistence of housing discrimination, and far too many instances go unchallenged. 24 Rather than looking to resolve the circuit split over the proper standard, the Supreme Court appears destined to read disparate 17. See Stacy E. Seicshnaydre, Is the Road to Disparate Impact Paved with Good Intentions?: Stuck on State of Mind in Anti-Discrimination Law , 42 WAKE FOREST L. REV. 1141, 1198 (2007) [hereinafter Seicshnaydre, Is the Road to Disparate Impact Paved with Good Intentions? ]. 18. See George Rutherglen, Disparate Impact Under Title VII: An Objective Theory of Discrimination , 73 VA. L. REV. 1297, 1299 (1987). 19. See infra Part III. 20. Stacy E. Seicshnaydre, Is Disparate Impact Having Any Impact? An Appellate Analysis of Forty Years of Disparate Impact Claims Under the Fair Housing Act , 63 AM. U. L. REV. 357, 393 (2013) [hereinafter Seicshnaydre, Is Disparate Impact Having Any Impact? ] (“What is abundantly clear when analyzing the FHA disparate impact case law over the past forty years is that the appellate courts have had little difficulty disposing of all manner of disparate impact claims under the FHA. . . . [P]laintiffs have received positive decisions in less than 20%, or eighteen of the ninety-two FHA disparate...