On June 17, 2013, the U.S. Supreme Court agreed to consider whether a Fair Housing Act violation may be established under the disparate impact theory, which focuses on discriminatory effects not discriminatory intent. In Mount Holly v. Mount Holly Gardens Citizens in Action, the Supreme Court will consider whether a New Jersey township's plan to redevelop lower income housing violated the Fair Housing Act because it would result in less affordable housing for minorities. The Court is expected to decide whether liability under the Fair Housing Act may be established by showing that a neutral practice has a discriminatory effect. Oral argument and a ruling is expected during the Court's next term, which begins in October and ends in June 2014.
The Supreme Court limited the review to the availability of the disparate impact theory under the Fair Housing Act, and did not grant review on a burden-shifting question that arises in those types of cases.
The case comes at a critical time for lenders, who argue that new mortgage standards from HUD --which finalized disparate impact rules under the Fair Housing earlier this year-- and the CFPB will unjustifiably increase their liability in bias claims even when there is no evidence of intent to discriminate.
Township of Mount Holly v. Mt. Holly Gardens Citizens in Action Inc., U.S., No. 11-1507, cert. granted 6/17/13.