Academic journal article Albany Law Review

Twiqbal, INC.: Finding Disparate-Impact Claims Cognizable under the Fair Housing Act and Raising Serious Concerns in the Process

Academic journal article Albany Law Review

Twiqbal, INC.: Finding Disparate-Impact Claims Cognizable under the Fair Housing Act and Raising Serious Concerns in the Process

Article excerpt

I. INTRODUCTION

The Supreme Court generally leaves controversial cases to the end of the year, leading to a number of highly contested decisions being released all at once. (1) The summer of 2015 was no exception, with several cases being deemed worthy of notice. (2) However, some cases are more controversial than others, with same-sex marriage, lethal injection, and the Affordable Care Act grabbing most of the attention. (3) But "[t]he most significant race-related case of the term," (4) Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. ("ICP, Inc."), (5) was merely listed as one of the "[o]ther cases to watch." (6)

ICP, Inc. involved the use of federal credits intended to facilitate the development of housing units in low-income areas. (7) In 2008, the Inclusive Communities Project, Inc. ("ICP"), "a Texas-based nonprofit corporation that assist[ed] low-income families in obtaining affordable housing," (8) sued the Texas Department of Housing and Community Affairs ("Department"), the organization responsible for "granting tax credits under 26 U.S.C. [section] 42 to low-income housing developers to encourage investment in low-income, multifamily rental housing." (9) ICP brought a disparate-impact claim against the Department, alleging that the Department "caused continued segregated housing patterns by its disproportionate allocation of the tax credits, granting too many credits for housing in predominately black inner-city areas and too few in predominantly white suburban neighborhoods." (10) On June 25, 2015, Justice Kennedy, writing for the majority, found disparate-impact claims cognizable under the Fair Housing Act ("FHA"). (11) While fair housing advocates celebrated the decision as a decisive victory, (12) others were not as thrilled. (13) These advocates, however, may have rejoiced prematurely, because while the Court found disparate-impact claims cognizable under the FHA, the Court also severely increased the difficulty in bringing these actions.

Under ICP, Inc., a disparate-impact plaintiff must demonstrate a causal connection between the defendant's policy and the alleged disparity in order to make out a prima facie case. (14) However, in order to limit potential liability, the Court provided housing developers with some added protection and specified that market factors, as well as both objective and subjective factors that contributed to a community's quality of life, were "substantial, legitimate, nondiscriminatory interests." (15) While at first these factors seem to be applicable only as an affirmative defense, the Court also stated that these factors can make it "difficult to establish causation," strongly implying that they can be used to attack a plaintiff's prima facie case. (16) ICP, Inc., however, does not exist in a vacuum. Rather, civil rights plaintiffs, like most plaintiffs, must produce "a short and plain statement of the claim showing that the pleader is entitled to relief[.]" (17) Under "Twiqbal," (18) a plaintiff must satisfy a two-pronged test. (19) The first prong requires that the plaintiff assert factual allegations beyond mere conclusions of law in order to be entitled to "the assumption that all the allegations in the complaint are true[,]" and the second prong requires the plaintiff to state a plausible claim for relief. (20) A complaint fails to be plausible if the effect could be equally "explained by[] lawful...[rather than unlawful] behavior." (21)

Under "Twiqbal, Inc." (22) the plaintiff must allege facts at the pleading stage demonstrating a causal connection between the defendant's policy and the disparity that is plausible on its face in order to make out a prima facie case for disparate-impact liability. (23) Yet ICP, Inc. 's factors can be used by the defendant interchangeably as either an affirmative defense or as an attack on the plaintiff's prima facie case. (24) These factors serve as legitimate interests, and because a complaint fails to be plausible if the effect in question could be equally explained by lawful behavior, a plaintiffs disparate-impact claim will most likely fail Twiqbal's second prong if these factors offer a more likely legal explanation for the disparity. …

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