Supreme Court May Not Get The Chance To Rule Against Housing Discrimination Laws

A suit that threatens to undermine housing discrimination law nationwide could be nearing a settlement that would let the rules live to fight another day.

Residents of Mount Holly, New Jersey are joining the town in seeking to push back deadlines for filings to the Supreme Court, which agreed last month to hear the town’s appeal of a previous court finding that a decade-long redevelopment effort amounts to illegal housing discrimination. The delay signals that the two sides continue to seek a settlement that would remove the case from the court’s docket, depriving justices of a chance to rule on the “disparate impact” theory that underlies federal housing discrimination enforcement.

In a letter sent in late June, the town’s lawyer asked to delay an August 1 filing deadline by 25 days to allow more time for settlement talks.

In 2002, the city deemed the predominantly black and latino neighborhood of Mt. Holly Gardens blighted and sought to raze and redevelop it. The city began buying up and razing 329 homes in for prices ranging from $30,000 to $50,000, intending houses in the revamped neighborhood to be priced above $200,000.


A nonprofit group called Mount Holly Gardens Citizens In Action sued to stop the redevelopment in 2003, saying the city’s plan would inevitably displace current Gardens residents. Because those residents are mostly black and latino, they claimed the plan would have a “disparate impact” against the populations federal housing laws seek to protect from discrimination. Even though the city had no discriminatory intent, the plan was de facto discriminatory.

That “disparate impact” doctrine has become core to federal housing law because housing discrimination has moved underground, with the most obviously and easily proven discriminatory practices replaced by subtler forms of bias. A recent Housing and Urban Development-funded study found the race of a qualified would-be homeowner significantly alters realtor behavior, and minority buyers are shown far fewer options than whites with similar credit histories. A variety of other research in recent years has shown the housing crisis was much harder on minority borrowers.

Disparate impact legal theory has led to multi-million-dollar settlements with firms like Wells Fargo and Countrywide. It’s also a core piece of recent Equal Employment Opportunity Commission complaints.

Yet the theory, which HUD made into an official rule earlier this year, might well be struck down by a conservative Supreme Court that’s been unsympathetic to anti-discrimination laws. ProPublica previously reported that experts believe three of the nine justices would vote to strike down “disparate impact” and are unsure if either Justice Antonin Scalia or Justice Anthony Kennedy might side with the court’s liberals to uphold it.

If the Mt. Holly case gets settled, it would be the second time in as many years that the high court had an opportunity rule on disparate impact snatched away by local events. A similar case involving St. Paul, Minnesot, was resolved before justices could take it up last year, leading conservatives to criticize the Obama administration on factually dubious grounds.