Tuesday, October 14, 2014

Supreme Court Puts "Disparate Impact" Discrimination on the Chopping Block Again

When was the last time somebody said something like this to your face: "Sorry ma'am, we would have approved you for this loan but we can't because you're a woman"?  Or how about this: "John, there's no question that you are the most qualified employee for our new sales position, but we've decided to go with Bob because you're Black and Bob is White"?  No?  Not ringing any bells?  OK, let's try this one more time. How about this one: "Everything on your housing application is great, but I'm afraid we're going to have to reject you because your last name is 'Hernandez' which means you're probably of Latin origins and we can't be seen providing housing to people of Latin origins"?  Chances are, all of these quotes sound pretty foreign to most of us today.  In fact, in today's liability-conscious society, these quotes probably sound downright outrageous, right?  That's because these are all examples of what we refer to in the law as "facially discriminatory" statements.   Which is another way of saying that the statements are "direct" or "blatant" proof of discrimination.  Each of these examples, if introduced as evidence in a law suit against the people who said them, would be referred to as the infamous "smoking gun" evidence that plaintiff lawyers only dream of.  In other words, they're the type of evidence that is so obvious that the case would be over before it even began.

Even though many of us may have faced some form of discrimination in our lifetimes, it is rare in this day and age to come across a "smoking gun" example of discrimination in our day to day professional settings.  This is because no bank loan officer, employee supervisor, or any other person of authority is willing to subject their entire company to untold millions in liability by saying something as blatant as the above-cited examples.  Nobody is that stupid anymore.

But the conservative Justices on the United States Supreme Court seem to think so.

In Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, the Supreme Court has, for the third time within the last two years, taken up the issue of "disparate impact" discrimination (the previous two cases were Township of Mount Holly v. Mt. Holly Gardens Citizens in Action, dismissed due to a settlement in 2013, and Magner v. Gallagher, dismissed due to a settlement in 2012).  In this case, the main issue before the Supreme Court is whether disparate impact can be used to show racial discrimination in housing under the Fair Housing Act. 

What is disparate impact?

Disparate impact is a legal theory which, at its core, recognizes that the "smoking gun" examples cited above are rare and no longer represent how the world works.  The disparate impact doctrine allows a victim of discrimination to prove that discrimination exists without having to come up with a "smoking gun" if the victim can produce evidence that a certain law or a certain practice disproportionately affects one group of people differently than another group.  But the analysis does not end there.  A plaintiff does not win their case simply by showing disparate impact.  If a plaintiff can produce evidence which shows that a certain law or a certain practice has a disproportionate impact on a certain group, then the burden shifts to the defendant to produce a legitimate non-discriminatory reason for the law or practice at issue.  If the defendant can do that, then the burden shifts one last time back to the plaintiff to prove that the legitimate reason cited by the defendant is nonsense.  This is commonly known as the "burden shifting" method and has been used by the courts in determining discrimination cases since the Supreme Court first announced this method in the 1973 landmark case of McDonnell Douglas Corp. v. Green.

Disparate impact claims are required to go through the "burden shifting" method because it gives both sides a chance to explain what is going on behind the numbers. For example, a female plaintiff might sue a fire department for gender discrimination under a disparate impact theory by producing evidence that the fire department has only hired 5 out of the last 500 female applicants as compared to hiring 450 out of the last 500 male applicants.  These numbers clearly show a disparate impact in hiring against women and in favor of men.  However, this showing alone does not win the case.  It only shifts the burden to the fire department to explain why the numbers are so skewed against women and in favor of men.  If the fire department can come up with a legitimate, non-discriminatory explanation -- such as the fact that the fire department requires its applicants to be able to physically carry 100 pounds of fire fighting equipment on their bodies for 3 consecutive hours in order to pass the test which, coincidentally but not intentionally, tends to favor men over women -- then the burden of proof would shift back to the female plaintiff to show why the physical strength test for firefighters is not legitimate.  If she can show that the physical strength test is not a necessary test for firefighters, then she wins.  If, however, she is unable to disprove the necessity of the physical strength test, then the fire department wins.

Disparate impact has long been a target for conservatives, both on and off the Supreme Court, primarily for two reasons: (1) it is an acknowledgment that racism, sexism and other forms of non-blatant discrimination still exist in today's society; and (2) it is perceived by conservatives as placing an unfair burden on states, municipalities, banks, corporations and other big businesses to have to explain the many shortcomings of minorities and women.  For example, White families are an average of 5 times richer than Black families.  So critics of the disparate impact doctrine argue that it is unfair to use this doctrine to hold banks liable for approving Whites for mortgage loans at higher rates than Blacks because, statistically speaking, it is more likely that White candidates will be approved at higher rates than Blacks even if race is not a factor in the decision making process.

In the Texas Department case, the plaintiff, a fair housing group, argues that the state of Texas is distributing low-income housing tax credits in a manner that discriminates against racial minorities.  The federal 5th Circuit Court of Appeals agreed that the plaintiff should be allowed to use the disparate impact doctrine to show that the state has approved more low-income housing in Black neighborhoods than in White neighborhoods, a practice that often leads to or maintains racially segregated neighborhoods.

The state of Texas, however, argues that the Supreme Court should not allow the plaintiff to use disparate impact in this case because it would subject many of the state's housing programs to liability where racially divided neighborhoods already exist.

But the implications of this case go beyond the issue of housing discrimination.  If the Supreme Court strikes down the use of disparate impact here, it creates a legally binding precedent for the Supreme Court and other lower courts to reject the use of disparate impact in other scenarios such as employment discrimination.  If disparate impact is eliminated by the Supreme Court, the only way to prove discrimination going forward would be to find a "smoking gun" as we discussed up above.  And you already know the chances of finding that.

What do you think?
Is disparate impact analysis necessary?  Why or why not?
If not, how else would you suggest that discrimination be proven?
Is anybody else noticing a pattern here with the Roberts Court when it comes to race?

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