For the second time in the last two years, a settlement will prevent the United States Supreme Court from deciding whether a disparate impact claim may be brought under the Fair Housing Act.
According to a National Mortgage News report, on November 13, 2013, the Township of Mount Holly, New Jersey approved a settlement resolving a lawsuit brought by township residents displaced by a redevelopment plan. The lawsuit alleged that the redevelopment plan, while neutral on its face, had a disparate impact on minority residents in violation of the Fair Housing Act. The settlement is subject to approval by the U.S. District Court.
In accepting the Mount Holly appeal, the Supreme Court agreed to decide whether disparate impact claims are cognizable under the Fair Housing Act. Currently, eleven federal circuits, and numerous federal agencies, recognize the disparate impact theory under the Fair Housing Act, allowing government and private plaintiffs to establish unlawful discrimination based solely on the results of a neutral policy, and without any evidence of an intent to discriminate. While not a lending case, many in the mortgage lending industry were anxiously awaiting the Supreme Court's decision on the case, according to the National Mortgage News report. The Supreme Court was set to hear oral argument on December 4.
In 2011, the Supreme Court was scheduled to hear a Fair Housing Act disparate impact case in Gallagher v. Magner, 619 F.3d 823 (8th Cir. 2010). Instead, the parties settled the case and withdrew the appeal before the Supreme Court had an opportunity to address the issue.