13.7.3 Discriminatory Effect

There have been two broad types of discriminatory effect cases: (1) perpetuation of segregation (e.g., Huntington Branch, NAACP v. Town of Huntington)1  and (2) discriminatory impact (Betsey v. Turtle Creek Associates).2

In 2015, the U.S. Supreme Court affirmed that disparate impact claims are cognizable under the Fair Housing Act.3  In its decision, the Court cited favorably the burden-shifting test in HUD’s 2013 discriminatory effects rule, though it declined to settle the issue of what test should apply. After the Trump Administration substantially rolled back the rule in 2020, the Biden Administration reinstated it in 2021.4

HUD’s burden-shifting is as follows: (1) The plaintiff or charging party is first required to prove as part of the prima facie showing that a challenged practice caused or predictably will cause a discriminatory effect. (2) If the plaintiff or charging party makes this prima facie showing, the defendant or respondent must then prove that the challenged practice is necessary to achieve one or more substantial, legitimate, nondiscriminatory interests of the defendant or respondent. And (3) If the defendant or respondent meets its burden at step two, the plaintiff or charging party may still prevail by proving that the substantial, legitimate, nondiscriminatory interests supporting the challenged practice could be served by another practice that has a less discriminatory effect.

Despite the Supreme Court’s favorable citation to this standard, the Fifth Circuit has applied a more restrictive “robust causation” test. This test requires that either “a change in the defendant's enforcement of [a] policy” caused a disparate impact or that a challenged policy “caused [the relevant minority group] to be the dominant group” of those affected by the policy.5  The robust causation requirement references the Supreme Court’s emphasis that where a claim relies on a statistical disparity, the claim “must fail if the plaintiff cannot point to a defendant’s policy or policies causing that disparity.”6  This is a developing area of the law.

• 1844 F.2d 926 (2d Cir. 1988).
• 2736 F.2d 983 (4th Cir. 1984).
• 3Tex. Dep’t of Hous. & Cmty. Affairs v. Inclusive Cmtys. Project, Inc., 576 U.S. 519 (2015).
• 486 Fed. Reg. 33590 (June 25, 2021).
• 5Inclusive Cmtys. Project, Inc. v. Heartland Cmty. Ass’n, 824 F. App’x 210, 217 (5th Cir. 2020) (citing Inclusive Cmtys. Project v. Lincoln Prop. Co., 920 F.3d 890 (5th Cir. 2019) and declining to overrule that widely questioned decision).
• 6Tex. Dep’t of Hous. & Cmty. Affairs, 576 U.S. at 542.