The Supreme Court agreed yesterday to review a ruling that the Fair Housing Act of 1968 permits homeowners and municipal governments to sue real estate agents to prevent them from steering prospective customers into neighborhoods on the basis of race.
The 7th U.S. Circuit Court of Appeals handed down the ruling last January in a case brought by four whites and one black who live in the Village of Bellwood, a Chicago suburb, and a black resident of adjacent Maywood, Ill. The defendants were Gladstone Realtors and Robert A. Hintze Realtors.
Bellwood, which also was a plaintiff, is one of the few Chicago suburbs with a significant and growing black population. The village alleged that the agents, by steering blacks into black neighborhoods and whites either into white neighborhoods or to nearby white communities, "wrongfully and illegally manipulated" Bellwood's housing market "to the economic and social detriment" of its citizens.
The six individual plaintiffs said they brought the suit because they wanted to prevent the fear, hardship and panic that often has accompanied rapid racial change in a community. When "the real estate industry is allowed to operate unchecked, the pase of racial transitition will be manipulated in a way that will irreparably distort any chance for normal and stable racial change," they alleged.
Each of the individual plaintiffs was a "tester" who posed as a prospective homebuyer to determine whether the realtors engaged in racial steering in Bellwood.
Finding that whites and blacks received disparate treatment under similar circumstances, they alleged that they were "denied their right to select housing without regard to race and . . . deprived of the social and professional benefits of living in an integrated society."
In separate trials in 1976, two U.S. District Court judges ruled that the individuals had no right, or legal standing, to sue because they were indirect rather than direct victims of actual discrimination. Because they were indirect victims, the actual case or controversy required by the Constitution didn't exist, the judges said.
The appellate court reversed, saying that the evidence generated by the testers conveyed "the perfectly permissible inference" that the firms engaged in steering. It described the practice as "a subtle form of discrimination that is difficult if not impossible to prove otherwise than by comparing the areas to which homeseekers of different races are directed."
"The strength of the inference . . . is not affected by whether or not the 'homeseeker' has a bona fide intent to purchase a home," the court declared. It also upheld the right of the village to sue.
The realtors, petitioning for Supreme Court review, said the 7th Circuit decision was "irreconciliable" with one handed down by the 9th Circuit. Conflicts among the circuits commonly are resolved by the Supreme Court.