On June 17, 2013, the United States Supreme Court granted certiorari in Mount Holly v. Mount Holly Gardens Citizens in Action, Inc., which will address whether disparate impact claims are cognizable under the Fair Housing Act, 42 U.S.C. § 3601, et seq. (FHA).
Background Facts and Lower Court History
Mount Holly involves a group of predominantly low-income minority homeowners who sued a township, alleging that the town’s plans to redevelop the area were discriminatory and violated the FHA under a disparate impact theory. The trial court initially dismissed the homeowners’ claims on summary judgment. The Third Circuit reversed, holding that the homeowners made a prima facie showing that the redevelopment plan disproportionately affected minorities. The township appealed, and the Supreme Court will review the sole issue of whether minorities may sue under the FHA when a policy has a disparate impact on them even if there is no proof of intentional discrimination.
The FHA contains no express language permitting disparate impact claims. Nonetheless, most Circuit Courts — as well as the Department of Justice, the Department of Housing and Urban Development and the Consumer Financial Protection Bureau — have taken the position that disparate impact claims are available under the statute. These Circuit Courts and government agencies have similarly insisted that disparate impact claims may also be brought under the Equal Credit Opportunity Act, 15 U.S.C. § 1691, et seq. (ECOA), despite the absence of such language in the ECOA authorizing such claims.
Accordingly, the Supreme Court’s ruling in Mount Holly may ultimately resolve uncertainty over whether housing and lending policies that result in unintended discrimination may be subject to litigation under the FHA and ECOA. We are monitoring the case closely and will report on further developments.