Through the looking glass and beyond: the future of disparate impact doctrine under Title VIII.

• Author: Sacher, Lindsey E.

INTRODUCTION

The disparate impact theory, which allows a plaintiff to make out a case of discrimination without proving the defendant's intent to discriminate, (1) has been one of the most controversial and highly debated areas of antidiscrimination law. (2) Despite the criticism it has received, disparate impact doctrine is almost universally accepted as an important part of antidiscrimination law. (3) Still, disparate impact doctrine is fraught with inconsistencies and variations that have proven a source of confusion among courts and scholars, particularly in the contexts of employment and housing discrimination.

While Supreme Court precedent and the Civil Rights Act of 1991 (4) have given courts ample guidance in addressing disparate impact claims brought under Title VII of the Civil Rights Act ("Title VII"), (5) the law is less settled with respect to cases brought under the Fair Housing Act, (6) also known as Title VIII of the Civil Rights Act of 1958 ("Title VIII"). (7) The Supreme Court has never ruled on whether Title VIII includes a disparate impact standard, however, all of the circuit courts to address the issue have answered this question in the affirmative. (8) Still, these lower courts have failed to reach a consensus over the proper test to apply when evaluating disparate impact claims brought under Title VIII. While a number of courts have adopted the "burden-shifting" test commonly applied in Title VII cases, (9) other courts continue to apply a quasi-constitutional "balancing test" developed in early Title VIII decisions. (10)

In addition to this divide over the proper standard, questions have recently arisen over the relationship between disparate impact doctrine and the constitutional guarantee of equal protection. Specifically, the Supreme Court's recent decision in Ricci v. DeStefano (11) raises the possibility that disparate impact doctrine may directly conflict with equal protection. (12) As Ricci suggests, disparate impact may encourage third parties to engage in race-conscious decision making. And disparate impact provisions may, themselves, qualify as "racial classifications," such that equal protection jurisprudence would compel a strict scrutiny analysis. (13) Therefore, assuming that a constitutional challenge is inevitable, (14) courts must construe the disparate impact doctrine in a manner that comports with equal protection and strict scrutiny analysis. While courts have utilized disparate impact as both a method of remedying the social hierarchies that have resulted from past discrimination and an "evidentiary dragnet" designed to "smoke out" instances of intentional discrimination, (15) the doctrine is most likely to survive a constitutional challenge under the latter construction. (16) Specifically, when viewed as a tool for uncovering instances of intentional discrimination that are often difficult or impossible to prove, disparate impact may survive strict scrutiny review; the government's interest in deterring racial discrimination may be sufficiently compelling to justify the race-based classifications that disparate impact either embodies or promotes. (17)

Because strict scrutiny also requires that racial classifications be "narrowly tailored" to serve a compelling government interest, however, disparate impact must also operate in a manner that directly serves the government's interest in remedying hidden intentional discrimination, without imposing an undue burden on innocent parties. (18) While the concept of "narrow tailoring" remains largely undefined, this requirement may provide valuable guidance to courts searching for the proper test to apply in Title VIII cases.

As this Note will illustrate, the "balancing test" formulation of disparate impact may prevent the doctrine from effectively serving the government's interest in preventing intentional discrimination, such that disparate impact provisions may not satisfy the narrow tailoring requirement. And because the balancing test often fails to consider the full extent of a defendant's legitimate, nondiscriminatory interests, it may unduly burden defendants who are undeserving of liability under the evidentiary dragnet view of disparate impact. Moreover, since the balancing test often measures the adverse effects of a housing practice based only on the income of potential applicants, it may lead courts to dismiss cases where a discriminatory motive is present, as housing providers often rely on factors other than income when deciding how to allocate housing. (19)

In contrast to the balancing test, the burden-shifting analysis may more effectively serve the government's interests in rooting out intentional discrimination, as it offers courts the opportunity to expose the true motives behind a defendant's actions. The burden-shifting analysis may also reduce the pressure felt by employers and housing providers to take race-conscious actions for the sole purpose of avoiding disparate impact liability, thus reducing one potential source of constitutional conflict. (20) Thus, if disparate impact is to survive a constitutional challenge within the framework of strict scrutiny, courts should adopt the burden-shifting test as the proper framework for Title VIII disparate impact claims. (21)

Of course, the different contexts and concerns faced by employers and housing providers indicate that burden-shifting analysis, as it is applied in Title VII, may not be an entirely perfect fit for Title VIII disparate impact claims. Though Title VII provides a proper framework, several modifications to the test are warranted when applied in the housing context. Specifically, this Note argues that because certain justifications carry less weight in the housing context, Title VIII defendants seeking to justify their practices under the "business necessity" prong of the burden-shifting analysis must satisfy a higher standard.

Part I of this Note will illustrate the development and current application of disparate impact doctrine, and will underscore the lack of consistency among lower courts over the proper test to apply in Title VIII cases. Part I will also highlight the two most commonly applied standards, including the Arlington Heights II "balancing test" and the Title VII "burden-shifting" test. Part II will identify and explore an additional source of confusion in disparate impact doctrine--the possible conflict recognized in Ricci between disparate impact doctrine and the constitutional principle of equal protection.

Part III will explore how, despite this conflict, disparate impact may survive a constitutional challenge within the framework of strict scrutiny, even when construed as an "evidentiary dragnet." If disparate impact is to satisfy the narrow-tailoring requirement of strict scrutiny, however, only the burden-shifting test will achieve this result. Finally, Part IV will discuss the differences between housing and employment, and will argue in favor of certain variations on the burden-shifting test when applied to Title VIII, particularly with respect to the "business necessity" prong of the analysis. Specifically, Part IV will argue that while a heightened business necessity standard akin to constitutional "intermediate scrutiny" may be most appropriate in cases involving private defendants, a higher "compelling business necessity" standard is warranted for government defendants in light of the remedial or regulatory functions they often perform in the housing industry.

1. DEVELOPMENT OF DISPARATE IMPACT DOCTRINE

   1. Foundations in Employment

      The Supreme Court first recognized the concept of disparate impact as a basis for liability under Title VII of the Civil Rights Act of 1964 ("1964 Act") in Griggs v. Duke Power Co.22 Although the words "disparate impact" never appeared in the original version of the 1964 Act, the Griggs Court found that the language of section 703(a)(2), which makes it unlawful for an employer to "limit, segregate, or classify his employees in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual's race," (23) demonstrated a congressional intent to prohibit practices producing a disparate effect on members of certain groups. Noting that "Congress directed the thrust of the Act to the consequences of employment practices, not simply the motivation," (24) the Court held that the Act proscribes not only overt discrimination but also practices that are "fair in form, but discriminatory in operation." (25) While this reading of Title VII was once largely criticized, (26) Congress never overruled it. Instead, when Congress amended Title VII in the Civil Rights Act of 1991, (27) it codified Title VII's disparate impact standard by placing those words into the statute, and by addressing the mechanics of a disparate impact claim. (28) As amended, the statute provides:

      An unlawful employment practice based on disparate impact is established under this title only if--

      (i) a complaining party demonstrates that a respondent uses a particular employment practice that causes a disparate impact on the basis of race ... and the respondent fails to demonstrate that the challenged practice is job related for the position in question and consistent with business necessity; or

      (ii) the complaining party... [identifies an adequate] alternative employment practice and the respondent refuses to adopt such an alternative employment practice. (29)

      While the Supreme Court once required plaintiffs to carry the burden of persuasion on the issue of business necessity, (30) the 1991 Act affirmatively placed that burden on the defendant. (31) Under the current version of the statute, a plaintiff" bears the initial burden of establishing a prima facie case, and must show that the employer's practices produce a disparate impact on members of a certain group. In the employment context, plaintiffs can...