District Court Dismisses Disparate Impact Claim under the Fair Housing Act

U.S. Supreme Court Disparate Impact FHA Discrimination

In The Inclusive Cmtys. Project, Inc. v. The Tex. Dep’t of Hous. and Cmty., No. 3:08-cv-00546-D (N.D. Tex. Aug. 26, 2016), on remand from the Supreme Court and the Fifth Circuit, the district court dismissed claims of disparate impact under the Fair Housing Act (FHA) where the plaintiff alleged that the defendant allocated two different types of tax credits in a manner that perpetuated racial segregation. The district court applied the Supreme Court’s previously explained three-part burden-shifting framework to analyze the plaintiff’s claim, and determined that, among other things, the plaintiff’s claim failed to show a “specific, facially neutral policy” causing a racially disparate impact. The court reasoned that “[b]y relying simply on [the defendant’s] exercise of discretion in awarding tax credits, [the plaintiff] has not isolated and identified the specific practice that caused the disparity in the location of low-income housing…. [The plaintiff] cannot rely on this generalized policy of discretion to prove disparate impact.” The district court further reasoned that because the plaintiff had not “sufficiently identified a specific, facially-neutral policy that has caused a statistically disparity,” the court could not “fashion a remedy that removes that policy.”  The district court concluded that the plaintiff “failed to prove a prima facie case of discrimination by showing that a challenged practice caused a discriminatory effect” and entered judgment in favor of the defendants.