In Surprise Decision, SCOTUS Rules Against Discriminatory Housing Practices

In a decision applauded by housing and civil rights groups on Thursday, the U.S. Supreme Court ruled that the Fair Housing Act (FHA) allows people to pursue lawsuits when a housing practice has a discriminatory effect, even if that practice wasn't intended to discriminate--an effect known as "disparate impact."

The decision, which was anxiously awaited by housing advocates and lenders alike, was "a bit of a surprise," said SCOTUSblog writer Amy Howe.

The FHA, which became law in 1968, states that housing cannot be denied to individuals based on race. The case before the court involved allegations that the Texas Department of Housing and Community Affairs violated the FHA by giving too many federal low-income housing tax credits to developers who own properties in poor, predominantly minority areas.

The court found that it did. "[T]he Department and its officers...caused continued segregated housing patterns by allocating too many tax credits to housing in predominantly black inner-city areas and too few in predominantly white suburban neighborhoods," the judges wrote in their decision (pdf).

The court ruled 5-4 in favor of the plaintiffs, a Texas-based nonprofit called the Inclusive Communities Project, finding that "the Department failed to meet its burden to show that there were no less discriminatory alternatives for allocating the tax credits."

"Disparate-impact claims are cognizable under the Fair Housing Act," the majority opinion concluded.

Advocates like the National Low-Income Housing Coalition (NLIHC) welcomed the ruling, stating that it ensures the FHA "will remain a safeguard against covert discrimination" like disparate impact.

"Strong and effective laws that protect equal opportunity are the cornerstone of our democracy," NLIHC wrote in a press release following the ruling. "We applaud the Supreme Court for its decision today in ensuring that disparate impact will remain a safeguard against covert and unintended discrimination.

"The full reach of the Fair Housing Act is key to expanding opportunity to everyone in this country regardless of the color of one's skin, national origin, religion, gender, family status, and disability. Everyone deserves an opportunity to have adequate housing. If discriminatory practices are allowed it decreases the opportunities for everyone--but especially for those most vulnerable in society--to live the American dream."

As CNNreported earlier this week, the lawsuit "might be the sleeper case of the term," one being watched closely by civil rights groups and housing insurance companies and lenders alike.

Thursday's ruling was "a good example of what's problematic with the proposition that this is a 'liberal' term," said SCOTUSblog writer Eric Citron, referring to the composition of the current court and how its decisions have been trending. "On the one hand, this is a huge victory for the left wing of the Court on a contentious issue; on the other hand, this issue does not get granted with a less conservative Court. It all depends on your baseline."

"This is a big deal for housing rights and civil rights groups," Howe added.