Fair Housing Act's Burden-Shifting Framework Shifts

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By Melissa Stanzione

March 23 — The Second Circuit's burden-shifting framework for disparate impact claims under the Fair Housing Act was abrogated by a 2013 Housing and Urban Development regulation, the court said March 23 (MHANY Mgmt., Inc. v. Cty. of Nassau, 2016 BL 88823, 2d Cir., No. 14-1634, 3/23/16).

Plaintiffs raising such claims now have the burden to prove that defendants with proffered nondiscriminatory interests could have served those interests “by another practice that has a less discriminatory effect,” Judge Rosemary S. Pooler wrote for the U.S. Court of Appeals for the Second Circuit.

Previously, the burden fell on defendants to show that “no alternative would serve that interest with less discriminatory effect,” the court said.

Recent SCOTUS Ruling

This is “a very important exclusionary zoning case,” Joe Rich, an attorney for the plaintiffs, told Bloomberg BNA March 23.

Although the Second Circuit's holding does increase the burden on the plaintiff, this is not nearly as important as the fact that the court adopted the U.S. Supreme Court's disparate impact standard from Tex. Dep't of Hous. v. Inclusive Cmtys. Project, Inc., 83 U.S.L.W. 1993, 2015 BL 203075 (U.S. June 25, 2015) (83 U.S.L.W. 1993, 6/30/15), Rich said.

Prior to Tex. Dep't of Hous., there was no one burden standard, he said.

Some circuits placed the burden on the defendant, while others shifted it back to the plaintiff, Rich, of the Lawyers' Committee for Civil Rights Under Law, Washington, said.

Attorneys for the defendants didn't respond to a request for comments.

Rezoning Plans

Here, Garden City—part of Nassau County, N.Y.—decided to rezone a site the county used for offices to a residential one.

Initially, it was proposed to apply “multi-family residential group” zoning controls to the property.

Amid concerns that such housing would generate more traffic, more schoolchildren and “affordable housing” projects, the village modified the proposal and created a new zoning classification for “single-family dwelling” units.

After the contract was awarded to a developer of single-family homes, several plaintiffs, including a state housing company sued the village and county, alleging the zoning shift was racially discriminatory and had a disparate impact on minority groups, in violation of the FHA.

The district court found that the zoning change violated the disparate impact prong of the FHA. After concluding that the plaintiffs presented a prima facie case of disparate impact, the court looked to the defendant to prove that its acts served a “bona fide governmental interest and that no alternative would serve that interest with less discriminatory effect.”

Old Standard

The district court in this case improperly relied upon the old Second Circuit standard rather than the new HUD regulation, 24 C.F.R. §100.500(c)(3), the court said.

The Supreme Court “implicitly adopted” HUD's burden-shifting approach in Tex. Dep't of Hous., the Second Circuit said.

What was so significant about the Supreme Court's holding in Tex. Dep't of Hous. is that it upheld the disparate impact standard and established a uniform rule, Rich said.

Circuits Adopt HUD's Interpretation

Several other circuits, including the Third, Fifth, Sixth and Eighth, “have now since deferred to HUD's interpretation,” the court said.

The court found that because it hadn't previously held that the FHA was unambiguous, it “was obliged to defer to the more recent HUD regulations.”

It remanded for the district court to consider whether the plaintiffs had met their burden of proving that there exists “an available alternative practice that has less disparate impact and serves Defendants' legitimate nondiscriminatory interests.”

Hogan Lovells US LLP, the Lawyers' Committee for Civil Rights Under Law, and Frederick K. Brewington, Hempstead, N.Y., represented the plaintiffs.

Jones Day represented Garden City. The Nassau County attorney's office represented the county.

To contact the reporter on this story: Melissa Stanzione in Washington at mstanzione@bna.com

To contact the editor responsible for this story: Jeffrey D. Koelemay at jkoelemay@bna.com

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