For the second time in less than two years, pressure from the US Department of Housing and Urban Development (HUD) and the US Department of Justice (DOJ) has caused a community to retreat from a legal test of the theory known as disparate impact, a concept embraced by both Cabinet departments as a tool to fight racial discrimination.
For the second time in recent months, the Supreme Court will miss an opportunity to decide a significant issue of civil rights law — the scope of the federal law against racial discrimination in home sales and rentals. The Justices were scheduled to hear on December 4 the case of Mount Holly v. Mount Holly Gardens Citizens in Action, but Wednesday evening, the local government in the New Jersey community agreed to settle the case. Under the agreement, the two sides will withdraw their case in the Court — an automatic result when a case settles.
At issue in the case, granted review last June, is whether the Fair Housing Act of 1968 outlaws official housing policies that are not the result of intentional racial or other bias, but rather have a negative impact on minorities or others protected by the law. The Court had agreed two years ago, for the first time, to decide that issue in a case from St. Paul but that case, too, ended in a settlement. Sixteen months after that case closed, the Court took on the Mount Holly case. Although there has been continuing talk in New Jersey of a possible deal to end the dispute, the case had continued to go through the Court’s normal processes, and was ready for oral argument in three weeks. The St. Paul case also had ended close to its argument date at the Court.
All sides involved in the case issued statements praising the terms of the settlement.
The Justices obviously are interested in the legal issue at stake, having agreed twice to answer it. But, because the Court does not issue advisory opinions, a case that the Justices have agreed to review dissolves without any action by the Court when the parties notify it that they have worked out a deal to resolve the lawsuit. All that they need to do is tell the Court and the case is then dismissed.
The local government in Mount Holly Township, a community with about 10,000 residents, had taken the case to the Court in a dispute over plans to redevelop a part of town known as “the Gardens” — a cluster of 329 brick rowhouses occupied mainly by African Americans and Hispanics, most of whom were poor. Their houses, built in the 1950s, were boxed in by commercial districts on two sides. When the challenged town council’s actions began in 2000, the housing was severely overcrowded.
The council commissioned a study to determine whether the area could be redeveloped under state laws designed to upgrade blighted communities. A series of development plans emerged, some of which would have provided for affordable housing, but most of which provided for tearing down the existing structures and building new ones that would cost in excess of $200,000 — well above the price that most Gardens residents could afford.
Relocation aid was provided, but many residents found they could not afford to rent or buy in other areas of the community, which is an eastern suburb in Philadelphia’s metro area. The township government started tearing down or buying up houses in the Gardens. Lawsuits were filed first in state court, and then in federal court. The federal case was based on the Fair Housing Act. A federal judge ruled for the township, finding no overt proof of discrimination. The Third Circuit, having ruled earlier that “disparate impact” claims could be pursued under the Act, ordered the federal judge to gather more evidence on whether alternative ways to redevelop the Gardens area could be done. The court of appeals found no sign of intentional racial bias.
In asking the Supreme Court to overturn the appeals court ruling, town officials argued that Congress never intended to impose liability for actions that were taken for non-discriminatory reasons, simply because they affected the availability of housing for minorities. The Court asked the federal government for its views, and the Justice Department urged the Court not to hear the case, noting that the U.S. Department of Housing and Urban Development had adopted a new rule interpreting the Act to permit “disparate impact” claims, and no court had yet ruled on the rule.
The Court, however, granted review limited to the simple question: “Are disparate impact claims cognizable under the Fair Housing Act?”
The Act was passed by Congress as part of broader civil rights legislation in 1968. It makes it illegal for anyone to refuse to sell or rent housing after the making of a genuine offer, or to fail to make available or deny a home to any person “because of race, color, religion, familial status or national origin.” The Supreme Court had never ruled on the “disparate impact” question, but federal appeals courts were uniform in allowing such claims to proceed.
The settlement of the Mount Holly case, of course, does not bar the Court from granting review of the same issue in another case.