"The Court acknowledges," Kennedy wrote, "the Fair Housing Act’s continuing role in moving the Nation toward a more integrated society."
He cautioned, though, that "disparate impact" claims don’t simply arise any time statistical disparities appear along racial lines in housing. It must be clear that housing policies caused that disparity, and that those policies don’t serve another valid goal.
The decision upholds a legal strategy that civil rights groups and the federal government have used for four decades to fight lending practices, local housing policies and zoning laws that have had the effect of limiting housing options available to minorities. Lower courts have repeatedly agreed that the Fair Housing Act allows such "disparate impact" claims, but the Supreme Court had not weighed in on the question until now.
As overt racial discrimination has receded from the housing market, civil rights lawyers and housing advocates have argued that "disparate impact" claims are vital to dismantling policies and practices that sound like they have little to do with race at all, such as zoning laws that bar multi-family apartment construction in wealthier white suburbs. If the Supreme Court had ruled that such claims couldn't be made under the Fair Housing Act, civil rights groups argued that the landmark civil rights law would have lost much of its power.
"This really is the most we possibly could have hoped for," said Betsy Julian, the president of the Inclusive Communities Project, the Texas nonprofit that brought the case. "We’re thrilled that 'disparate impact' as a principle was upheld. We're also particularly gratified that the court appreciated that we are not a post-racial society when it comes to housing and that we have a ways to go."
The ruling is a defeat for banks and developers who countered that the fear of disparate impact lawsuits might discourage them from trying to build affordable housing. Critics have also argued that "disparate impact" claims unfairly impugn the motives of banks, communities and developers who never intended to discriminate.
In his dissent, Justice Samuel A. Alito Jr. warned that the court “makes a serious mistake” in giving meaning to the Fair Housing Act that Congress never intended when it passed the law.
The case arose from a lawsuit filed by the Inclusive Communities Project against the Texas Department of Housing and Community Affairs over how it distributes tax credits for low-income housing. ICP argued that the state's formula effectively ensured that low-income housing was primarily built in poor, minority neighborhoods, and seldom placed in white suburban ones. As a result, poorer, minority families in need of affordable housing had little option but to live in impoverished communities without access to good schools, jobs or opportunity.
"This is going to open up this issue all over the country," said Myron Orfield, a law professor at the University of Minnesota. "The things that are happening in Texas are happening in every city in the Untied States. They’re all evading civil rights law by concentrating affordable housing in segregated neighborhoods, thus perpetuating segregation — which Justice Kennedy said they cannot do today."
While the Texas case was winding its way through the courts, the Department of Housing and Urban Development, which is charged with enforcing the Fair Housing Act, issued a rule in 2013 explicitly interpreting the law to cover disparate impact claims. HUD Secretary Julian Castro in a statement Thursday called the ruling "another important step in the long march toward fulfilling one of our nation’s founding ideals: equal opportunity for all Americans."
The White House, in a separate statement, said the decision "reflects the reality that discrimination often operates not just out in the open, but in more hidden forms," such as predatory lending and exclusionary zoning.
The decision was expected to be a close one. The Supreme Court had twice previously tried to take up "disparate impact" cases to resolve the question, despite the agreement among lower courts. But both earlier cases settled before they reached the high court, to the relief of civil rights groups and administration officials who feared conservative justices were searching for a case to weaken the law.
The court's four liberals sided in the case with Kennedy, while Alito was joined in his dissent by Antonin Scalia and John G. Roberts Jr. Clarence Thomas wrote a separate dissent.
In his rebuttal, Thomas wrote that racial imbalances don't always disfavor minorities, pointing to instances in which minorities have dominated certain industries.
"And in our own country, for roughly a quarter-century now, over 70 percent of National Basketball Association players have been black," Thomas wrote. "To presume that these and all other measurable disparities are products of racial discrimination is to ignore the complexities of human existence."