HOUSING DISCRIMINATION AND SOURCE OF INCOME: A TENANT'S LOSING BATTLE

Kim Johnson-Spratt [FNa1]

32 Ind. L. Rev. 457

Indiana Law Review

1999

Copyright © 1999 by the Trustees of Indiana University; Kim Johnson-Spratt

INTRODUCTION

Many believe that housing discrimination is a past wrong that is now corrected by the Fair Housing Act of 1968. [FN1] Nothing could be further from the truth. Housing discrimination against the poor is still permissible in many realms under current law. The poor in this country often cannot obtain adequate housing and can be forced to move their families into unsafe neighborhoods or find themselves homeless. Finding adequate housing can be a poor family's losing battle, as the law does not protect the family from discrimination. More specifically, a prospective tenant's source of income alone can serve as a justification for a landlord's refusal of tenancy. Sources of income that become tools of discrimination include Social Security, unemployment compensation, alimony, child support, and food stamps.

However, two sources of income are particularly unprotected by federal housing law: Section 8 of the Low-Income Housing Act [FN2] ("Section 8") and Temporary Assistance for Needy Families ("TANF"). [FN3] Those who participate in the Section 8 Voucher and Certificate Programs [FN4] can be turned away by private landlords merely because of this source of income. The Certificate Program created by the Housing and Community Development Act of 1974 [FN5] allows certificate holders to pay only thirty percent of their income for a privately-owned apartment. [FN6] Landlords are then reimbursed for the difference between the tenant's contribution and the rental cost. [FN7] The Voucher Program allows more flexibility as vouchers are given to the tenants for the difference between the fair market rent in the tenant's geographical area and thirty percent of the tenant's income. [FN8] In both subsidy programs, landlords must maintain their rentals at the Department of Housing and Urban Development's ("HUDs") Housing Quality Standards in order to rent to voucher and certificate holders.

Likewise, private landlords discriminate against recipients of TANF. [FN9] The source of a prospective tenant's income can serve as a justification for refusal of tenancy by a private landlord. While this problem exists in public housing as well, approximately sixty-four percent of those receiving federal assistance live in private housing. [FN10] This Note focuses on this realm of private housing and the struggle of tenants receiving vouchers or certificates from the Section 8 program or TANF to obtain adequate housing.

First, this Note discusses the existing protections against source of income discrimination and why they are inadequate without further interpretation or additional regulations. This Note explores the impact of the lack of protection against source of income discrimination on tenants and the policy reasons for why it is imperative that such protection exist. Inconsistent case decisions also indicate a need for such protection, as courts have little guidance on how to handle such a claim. Next, this Note explores solutions for improving source of income discrimination protection. This analysis includes an in-depth look at existing housing statutes and an examination of how protection is implicit in the legislative intent and purpose of such statutes. Other solutions discussed and evaluated include Congress amending the Fair Housing Act to include source of income as a protected category and HUD acting to promulgate regulations that ban source of income discrimination. This Note concludes by highlighting the seriousness of this problem, including the public's ignorance of it, and then calls for change.

67 Fordham L. Rev. 1145

Fordham Law Review

December, 1998

Copyright © 1998 Fordham Law Review; Dmitri Mehlhorn

Introduction

Blockbusting and panic peddling are real estate practices in which brokers encourage owners to list their homes for sale by exploiting fears of racial change within their neighborhood.

. . . .

Panic peddling and blockbusting did occur in Chicago during the 1960s and early 1970s.

However, blockbusting and panic peddling rarely, if ever, occur in Illinois today. [FN1]

WITH these words, an Illinois district court appeared to recognize the end of an era. For nearly two decades, beginning in the late 1950s, real estate speculators known as "blockbusters" profited handsomely from racial turnover in real estate markets by buying homes from urban whites and reselling them at inflated prices to blacks, or merely from the commissions available in a high- turnover market. [FN2] During this period, blockbusters were national pariahs; whites hated them for dismantling their cozy neighborhoods, [FN3] progressives hated them for harming blacks, [FN4] and newspapers and government reports blamed them for destroying neighborhoods and fostering racial tension. [FN5] By the end of the 1960s, governments at the local, state, and federal level had passed legislation designed to stop blockbusting. [FN6]

Two decades later, blockbusting appears to have disappeared from the national consciousness. Published sources rarely mention the term, except to state that the practice has vanished. [FN7] Legal academia, in particular, has ignored blockbusting's plateau and disappearance; the most recent law review article on blockbusting appeared over twenty-five years ago, and described blockbusting as an "[i]ncreasingly [s]erious [p]roblem." [FN8] The Illinois district court cited above noted that "[t]here have been no prosecutions by the Cook County State's Attorney Office for violations of the Illinois anti- solicitation or blockbusting statutes since 1987 or 1988." [FN9] Given the harms for which blockbusting was blamed, and the success of government programs in eliminating it, the conventional wisdom about blockbusting suggests that it was a major civil rights problem that arose, and was defeated, over a period of roughly four decades.

This Article revisits the blockbusting era, using economic and historical perspectives to dispute the conventional wisdom. Although blockbusting caused some damage to race relations and racial justice, its harms were overstated. During that period, the country sought scapegoats for racial problems in housing markets, and blockbusters were the most salient candidates. This is unfortunate, because the vilification of the blockbusters obscured the positive role that they played in the struggle for racial justice. As a result, anti- blockbusting hysteria led to crude legal regimes that did more harm than good.

More importantly, the blockbusting example makes a larger point about progressives generally. The rapid rise and fall of blockbusting make it a rich, self-contained study of the interaction among racial issues, politics, law, and economics. During the blockbusting era, progressives' visceral hostility to market forces caused them to advocate simplistic solutions to the blockbusting problem. Those solutions not only harmed blacks, but also actually helped reinforce racist norms and patterns. Had the progressives not been so hostile to markets, they might have used their political energy to create effective solutions to the problem of racism in American housing markets. Thus, the blockbusting era represents an important example of how progressives can actually cause damage to the people they care about through economic ignorance.

This Article proceeds in four parts. Part I provides the history and legacy of the blockbusting era. Part II describes the various harms attributed to blockbusting, and then argues that although blockbusting was a problematic industry, its harms were overstated and it conveyed substantial benefits to blacks. Part III goes further, arguing that the anti-blockbusting movement did significant damage to the cause of racial justice. Part IV examines how the anti-blockbusting progressives were crippled by their hostility to market forces, and explores how they might have been more effective.
 

I. The History and Legacy of Blockbusting

American residential segregation essentially did not exist prior to 1900. [FN10] Although blacks experienced discrimination, they lived closely with whites until the period around World War I. [FN11] During that time, however, demand for black workers in the South dried up just as the need for unskilled workers skyrocketed in the North. [FN12] From 1910 through the 1920s, hundreds of thousands of blacks migrated North annually. [FN13] Northern whites identified these blacks as a serious social and economic threat, and mobilized their physical, political, social, and economic resources to drive blacks into strictly-circumscribed ghettos and to punish blacks who attempted to live elsewhere. [FN14] Whites also used their power to prevent other whites from selling to blacks. [FN15] Many institutions took part in this segregationist regime, including local government, [FN16] state and federal agencies, [FN17] courts, [FN18] businesses, [FN19] and the media. [FN20] Thus, by 1930, "African Americans were well on their way to experiencing a uniquely high degree of spatial isolation in American cities." [FN21] By the 1940s, integrated neighborhoods had ceased to exist in every major city in the United States, [FN22] and segregationist values remained widespread through the 1960s. [FN23]

Perhaps the most powerful forces for segregation during this period, however, came from the real estate industry. Real estate agents, who were mostly white men, [FN24] were ideologically committed to keeping races and ethnic groups separate from each other. [FN25] Various pressures reinforced this natural inclination. From 1917 until 1950, the charter of the National Association of Real Estate Boards made it a violation of professional ethics to sell a home to someone whose race or ethnicity might disturb the neighborhood or its property values. [FN26] Even after 1950, this professional code remained an unwritten governing ethic for real estate boards. [FN27] As one real estate agent put it in the mid-1950s,

It's a sort of unwritten code that respectable real estate brokers should guide people into the areas where they'll fit in socially and keep them out of areas where they won't. Everybody's happier that way. The people who live in the neighborhood are happier. The customers are happier, in the long run. And as for the broker himself, he's happier--it's good business to fit people in.

Listen. If I didn't steer people around and match them up with a neighborhood where they'd fit in, I'd be out of business so fast my kids would starve to death. [FN28] Lenders helped as well, by refusing to provide mortgages for black purchases in white neighborhoods. [FN29] Thus, although some whites might have tolerated interracial living, ambient racism expressed in the real estate industry kept neighborhoods strictly segregated.

112 Harv. L. Rev. 578

Harvard Law Review

December, 1998

Copyright © 1998 Harvard Law Review Association

In 1958, the Boston Housing Authority (BHA) ordered the taking by eminent domain of a downtown Boston neighborhood called the West End. [FN1] Forty years later, as the last parcel of this neighborhood was slated for redevelopment, the predominately white displaced residents asserted a statutory preference to all units in the new development. [FN2] Accordingly, they challenged the developer's housing plan, approved by the federal Department of Housing and Urban Development (HUD), which limited the former residents' preference by making some units subject to an equal access policy. Last January, in Raso v. Lago, [FN3] the First Circuit held that the plan was not based on racial classification and therefore was not subject to strict scrutiny. [FN4]

The HUD-approved lottery system should have been subject to strict scrutiny, which would have required the First Circuit to evaluate whether the action was justified by a compelling governmental interest and whether it was narrowly tailored to meet that interest. [FN5] In applying this test, the court should have weighed the interest of Boston's racial and ethnic minorities in having equal access to housing, the government's interest in promoting fair housing, and the former residents' interest in returning to their neighborhood. By avoiding this balancing, the court missed an opportunity to define how connections to place fit into the taxonomy of interests in the strict scrutiny analysis.

A conflict arose because the new development was subject to two sets of requirements--one giving former residents preference and one aimed at preventing housing discrimination. A Massachusetts statute obligates urban renewal project developers to "give preference in the selection of tenants for dwelling units built in the project area to families displaced therefrom because of clearance and renewal activity." [FN6] A second provision of this statute, which "arguably qualifies" the former, [FN7] mandates compliance with the federal legislation or regulations pursuant to which funding has been granted. [FN8] As a recipient of HUD funds, the West End developer was required to design an "affirmative fair housing marketing plan" that aimed at achieving a racial composition in the new project similar to that of Boston as a whole. [FN9] These requirements directly conflicted with the former residents' state statutory preference because minorities made up 41% of Boston's population at the time the plan was designed, whereas the displaced West Enders were almost all white. [FN10]

In 1996, the former West End residents sued the Boston Redevelopment Authority (BRA), [FN11] HUD, the City of Boston, and the developer. [FN12] Bringing constitutional, statutory, and property claims, the former residents objected to the developer's HUD-approved system that gave former residents preference in 55% of the new units, leaving the remaining 45% open to all other applicants through a race-blind lottery, [FN13] and sought a declaration that they had preference in all of the new development's units. [FN14] The plaintiffs appealed the district court's dismissal of their claims, [FN15] focusing on their § 1983 claim that the developer's HUD-approved plan violated equal protection principles by depriving them of a benefit on the basis of a racial classification, [FN16] and on their claim that the Massachusetts statutory preference for displaced residents created a trust, which subjected both the BRA and the developer to a trustee's fiduciary duty to the former West Enders. [FN17]

The First Circuit affirmed. [FN18] Writing for the court, Judge Boudin [FN19] determined that neither the type of action nor the basis for the action could be considered a "racial classification," which he defined as "a governmental standard, preferentially favorable to one race or another, for the distribution of benefits." [FN20] He reasoned that the "ad hoc administrative action" at issue did not qualify as a "governmental standard." [FN21] Judge Boudin also differentiated between a "racial classification," which would trigger strict scrutiny under Adarand Constructors, Inc. v. Pena, [FN22] and "racial concerns," which motivated the governmental action in Raso. [FN23] Judge Boudin emphasized throughout that the governmental interest was "benign." Although he acknowledged that benign intentions do not "immunize" government action, he suggested that they "narrow the inquiry." [FN24]

Judge Stahl dissented from the majority's dismissal of the plaintiffs' equal protection claims. [FN25] He reasoned that HUD's action should have been subject to strict scrutiny because preference in obtaining the units was a benefit that had been taken from the former residents on the basis of their race. [FN26] Judge Stahl focused on the asymmetry of the consent decree, pointing out that the requirement to mirror Boston's racial composition applies only when HUD-assisted housing is located in predominately white neighborhoods. [FN27] Reserving judgment on whether HUD's action would pass strict scrutiny at such an early stage in the litigation, Stahl concluded that the suit should not have been dismissed. [FN28]

As the dissent explained, governmental action in Raso should have triggered strict scrutiny. The Supreme Court never explicitly defined "racial classification" in Adarand, but its use of the term suggests a broader definition than that adopted by Judge Boudin. [FN29] Although the Adarand Court held that "all racial classifications" require strict scrutiny, [FN30] it interchangeably used more general language about "race-based governmental action" throughout the opinion. [FN31] The Court interpreted its precedent as advocating skepticism not only of racial classifications, but also of "any preference based on racial or ethnic criteria." [FN32] Furthermore, the Adarand Court explicitly rejected the principle that race-based actions motivated by benign intentions required only intermediate scrutiny. [FN33] Judge Boudin himself acknowledged that the "[l]anguage in a few Supreme Court decisions could be taken to mean that any action in which race plays a role is constitutionally suspect." [FN34]

If the Raso court had subjected HUD's action to strict scrutiny, it could have considered whether the burden placed on the former residents was acceptable. [FN35] In applying the two-pronged strict scrutiny test, courts have considered countervailing interests of particular people burdened by the action at issue and have framed this consideration as a protection of legitimate expectations. [FN36] Moreover, even in the absence of a specifically identified burdened group, the Court has described the compelling interest prong as requiring a balancing between the interest in remedying discrimination and society's interest in being color-blind. [FN37]

There are suggestions both in this case and in others that the former residents' interest in preserving or reinstating their connection to a place deserves legal protection. [FN38] The Raso majority and dissent each described this interest as that of people who had been "ousted" from their neighborhood. [FN39] By using such a negative characterization of the initial displacement, the court suggested that the former residents had an interest in the remedying of a past wrong. [FN40] If the court had applied the two-pronged strict scrutiny test, it could have drawn an analogy to Nordlinger v. Hahn, [FN41] in which the Supreme Court upheld a California tax measure that resulted in long-time homeowners' paying lower property taxes than newcomers. [FN42] Balancing the interests of earlier and more recent residents, the Nordlinger Court found that the state had "a legitimate interest in local neighborhood preservation, continuity, and stability." [FN43] Similarly, commentators have pointed to a respect for property, particularly the home, that is connected to "personhood" [FN44] as an undercurrent in decisions and policies concerning such topics as tenant eviction restrictions and homestead laws. [FN45]

Courts have treated the "compelling governmental interest" and "narrow tailoring" prongs as requiring a race-based action to address specific discrimination. [FN46] Because the HUD-sponsored plan addressed housing discrimination specifically in Boston, it would be unlikely to fail for being based on an "amorphous" claim of past discrimination. [FN47] However, this specificity requirement suggests that in Raso, the First Circuit might have examined each group's specific connection to the neighborhood and the nature of the past event and then favored the more specific relation. In Raso, the former residents' relation might at first seem to be more specific: although racial minorities have experienced discrimination nationally [FN48] as well as in Boston, the former residents had been removed from that particular neighborhood. However, the intervening forty years may have weakened the connection, [FN49] in part because former residents had had enough time to establish new homes, and in part because children of former residents and residents who had been very young at the time of displacement would be the main beneficiaries of a full preference.

Regardless of the result it would have reached, the First Circuit should have strictly scrutinized the HUD-approved plan and should have addressed whether the governmental interest in remedying housing discrimination in Boston justified the curtailment of former residents' preference in all units. The Raso majority wrote that this case was "a difficult and unusual one on the edge of developing law." [FN50] Although the dissent interpreted this statement to refer only to "reverse discrimination claims," [FN51] the case actually had the potential to form part of a developing "jurisprudence of place." [FN52] By dismissing the claim, the First Circuit lost an opportunity to examine how and when a person's connection to a particular location should be legally protected.

Shelley Ross Saxer [FNaa1]

47 U. Kan. L. Rev. 61

University of Kansas Law Review

November 1998

Copyright © 1998 Kansas Law Review, Inc.; Shelley Ross Saxer

I. Introduction

Fifty years ago, the United States Supreme Court in Shelley v. Kraemer [FN1] refused to evict two families from their homes by enforcing racially restrictive private covenants. [FN2] The Shelley decision was long overdue in the battle against racial discrimination in this country. [FN3] The Court held that enforcement of the private covenant violated the Equal Protection Clause under the Fourteenth Amendment, [FN4] concluding that judicial enforcement constituted state action subject to constitutional restrictions. [FN5] Shelley ended the use of private restrictive covenants to overtly exclude racial and ethnic minorities from certain neighborhoods. By finding state action based on a court's involvement in enforcing private action, [FN6] however, the Court blurred the line [FN7] between state action, which is subject to constitutional restrictions, [FN8] and private action, which is not subject to constitutional restrictions. [FN9] Although it is with great trepidation that this author recommends the dismantling of the state action theory developed in Shelley, [FN10] it is time to recognize that much of the country's difficulties with private racial discrimination can now be addressed using alternatives other than the state action doctrine. [FN11] Alternatives such as public policy, balancing of conflicting rights, and legislative enactments are available to achieve the same, if not a better result, without clouding the difference between state and private action. [FN12] In contrast, retaining Shelley's state action theory can potentially subject other individual liberties and freedoms of private action to offensive, but constitutionally protected, private action. [FN13] Extracting the Shelley principle from the state action doctrine will help ensure that in the context of competing constitutional private rights, [FN14] the balancing of these rights will occur as part of the underlying substantive law analysis, rather than as a constitutional evaluation performed by state courts. [FN15]

In Shelley v. Kraemer, the Court consolidated two cases to address whether courts could enforce private restrictive covenants that excluded persons of designated race or color from real property ownership or occupancy. [FN16] The first case, an appeal from the Missouri Supreme Court, involved petitioners Shelley, who had purchased residential property without actual knowledge of the restrictive covenants. [FN17] The Missouri Supreme Court reversed the trial court and granted relief to the respondents, neighboring property owners subject to the covenant, by divesting title from petitioners Shelley and restraining petitioners from taking possession. [FN18] The second case, an appeal from the Michigan Supreme Court, also involved a racially restrictive agreement that prevented the petitioners, who were African- American, from occupying the residential property they had purchased. [FN19]

Noting that the restrictive covenant in the Missouri case restricted both the use and ownership of the property, while the restriction in the Michigan case barred only occupancy, the Shelley Court concluded that the restrictions in both agreements were "directed toward a designated class of persons" and that the "excluded class is defined wholly in terms of race or color." [FN20] The Court observed that equality in the enjoyment of property rights is a liberty guaranteed by the Fourteenth Amendment and that such restrictions on occupancy would violate constitutional requirements if imposed by state or local regulation. [FN21] Although the cases at issue in Shelley did not involve state or local regulation, [FN22] the Court held that state action was present because "but for the active intervention of the state courts, supported by the full panoply of state power, petitioners would have been free to occupy the properties in question without restraint." [FN23]

If, however, courts extend Shelley to contexts outside of racially restrictive covenant enforcement, then we potentially lose much of our personal autonomy and the right to control our individual "space." [FN24] For example, neighbors, in the absence of zoning regulations, could not stop the operation of an adult bookstore or a nude dancing establishment in their community either through the use of private covenants or nuisance law because such activities would be protected by the First Amendment. [FN25] Additionally, with the rapid growth of homeowners associations over the last twenty years, issues of enforcing private restrictive covenants that burden individual freedoms will likely arise with more frequency as the restrictions become more restrictive, more uniform, and more widespread. [FN26]

This Article proposes that it is no longer necessary to use Shelley's state action theory to fight private racial discrimination. [FN27] Shelley blurs the distinction between public acts, which are subject to constitutional restraints as state actions, and private acts, which are not subject to those restraints, by labeling as state action virtually all private acts brought to the court for enforcement. Some scholars advocate the abandonment of the state action doctrine completely because it "frustrate[s] the needed reformation of our social and economic institutions" and "encourage[s] so-called private discrimination." [FN28] In contrast, this author believes that the state action doctrine should remain, but that it should not be used to reach private action, particularly action involving the exercise of property rights, as in Shelley. [FN29] For example, racially restrictive covenants should be void as against public policy or as an unreasonable restraint on alienation rather than be allowed to exist and operate so long as court enforcement does not implicate state action and resulting constitutional restrictions. [FN30] Part II presents an overview of the current understanding of the state action doctrine and its application. It then proposes that the current state action analysis remain, but without the influence of Shelley. Although the state action doctrine likely will remain a "briarpatch" even without Shelley, it might become less dense. Part III briefly examines the history of racial discrimination in this country leading up to Shelley and discusses the decision itself. Part IV details Shelley's aftermath-the criticism, [FN31] how its application has been limited, [FN32] and how it can be and has been carried to its logical extreme. Part V offers alternatives to prevent racial discrimination and other socially undesirable private actions without unnecessarily blurring the line between state and private action and without throwing away the entire corpus of the state action doctrine. [FN33]

Richard H. Sander [FNa1]

University of Miami Law Review

July, 1998

52 U. Miami L. Rev. 977

Copyright © 1998 University of Miami Law Review; Richard H. Sander

Abstract .................................................... 977

I.    Introduction ................................................ 978

II.   Some Preliminary Issues ..................................... 981

        A. The Measurement of Segregation ......................... 981

        B. The Formation of the Ghetto ............................ 982

        C. The Role of Income Differences ......................... 983

III.  A Theory of Segregation ..................................... 984

        A. Five Components ........................................ 984

          1. discrimination as an economic cost ................... 984

          2. the diversity of racial preferences .................. 986

          3. the mechanism of resegregation ....................... 988

          4. the pattern of ghetto expansion ...................... 989

          5. the demographic environment .......................... 990

        B. Three Types of Outcome ................................. 991

          1. the contained ghetto ................................. 991

          2. the distended ghetto ................................. 991

          3. the dissolving ghetto ................................ 993

        C. Reprise ................................................ 994

IV.   Empirical Tests of the Theory ............................... 994

        A. Intermetropolitan Differences .......................... 994

        B. Declining Discrimination and the Dual Housing Market .. 1002

V.    Conclusion ................................................. 1008

Abstract

Thirty years after the Fair Housing Act, blacks remain highly segregated in most American cities. But segregation has changed in important ways, and the changes began in the 1970s, right after fair housing laws came into effect. This article looks closely at the ways that segregation changed during the 1970s, and builds and empirically tests a theory about these changes and the dynamics of modern black/white housing segregation. According to this theory, fair housing law produced significant reductions in housing discrimination but did not eliminate it, leaving it as an important factor influencing housing choices among blacks. In all urban areas, the range of black housing choices increased substantially in the 1970s, but in most cities the new mobility of blacks led only to an expansion of the old ghettos, as newly-integrated neighborhoods rapidly experienced white fllight and resegregration. In some cities, though, black mobility produced stably-integrated neighborhoods and a sharp decline in segregation levels. The difference, the author argues, was due to the demographic characteristics of different urban areas. In two tests of this theory, regression analysis shows a close link between these demographic characteristics and both (a) changes in segregation during the 1970s, and (b) changes in the "dual" housing market. These findings suggest that fair housing strategies that take account of the metropolitan dynamics of neighborhood change are needed if the nation is to make further progress in reducing segregation.

I. Introduction

Analyses of black housing conditions over the past fifteen years have been consistently shaded with disappointment over the durability of segregation. [FN1] Following the civil rights achievements of the 1960s, culminating in the Fair Housing Act of 1968, there was much hope among activists and scholars alike that the extraordinary levels of black housing segregation prevailing in virtually all American cities from the 1920s through the 1960s might decline substantially in the 1970s. However, a series of reports published in the mid-1980s demonstrated what community observers already suspected: blacks continued to be extraordinarily segregated. [FN2] In the nation's fifteen largest metropolitan areas, which together contain nearly half of the nation's black population, the most widely used index of segregation fell only 5% between 1970 and 1980. [FN3] Early analyses of 1990 data suggest an even smaller decline during the 1980s. [FN4]

Virtually lost amid this gloom are some striking signs of progress. The years after 1970 did witness, here and there, substantial drops in black segregation. In cities as diverse as San Antonio, Seattle, and Minneapolis, well over a third of the black residents were living in integrated neighborhoods by 1980. Indeed, there is good reason to believe that in over a dozen of the nation's one hundred largest cities, the ghettos are gradually melting away. [FN5]

These declines are of only modest significance on a national scale, since most of the cities with large declines in segregation have comparatively small black populations. But, they are of great importance from an analytical point of view, because they provide a rich opportunity to develop testable theories of the causes of segregation. If all cities are more or less uniformly segregated--as they were in 1960)--it is difficult to gainsay any plausible theory. Now, more rigorous tests are possible; a theory of segregation can be judged by its success in explaining how--and where--desegregation occurs.

Perhaps because segregation was homogenous for so long, the tendency of most segregation research was to describe and analyze, rather than to test overarching theories. Geographers studied patterns of ghetto expansion; sociologists surveyed public attitudes towards racial integration; demographers measured life cycles of migration; political scientists documented the origins of segregation in public housing; and economists modeled urban housing markets. [FN6]

Explanations for the persistence of segregation traditionally take one of two forms. The first and still the most common theory has placed the blame on the continuing high levels of discrimination. [FN7] It is argued that blacks strongly desire integration, but are excluded from white areas by systematic efforts of white institutions and individuals to keep blacks out of white areas. A second, less common view has been that segregation arises from the operation of black and white preferences in a free, open housing market. [FN8] Proponents of this theory believe that whites have a substantial preference for all-white neighborhoods, and will pay a premium to live in such areas. Thus, blacks are 'priced out' of white communities by a sort of racial 'Tiebout' mechanism. [FN9]

Both theories, in their pure form, founder on their inability to account for the rise of integration in the desegregating cities. [FN10] Why should discrimination, or a white desire for homogeneity, be intense in Milwaukee, but be dissipating in San Antonio?

Several papers have capitalized on the wealth of descriptive research, and the new diversity of segregation levels, to develop and test more complex and powerful theories of segregation. [FN11] This Article is one such attempt. I have sought to combine methodologies and data from a wide range of disciplines to outline a comprehensive theory of how changes in social attitudes, housing markets, and the law have interacted at the neighborhood level to fundamentally change the mechanisms of segregation over the past generation. To be sure, both discrimination and preferences play an important role in this theory. But, three other factors are also of central importance: (1) the tendency of collective behavior to defeat individual choices through the process of resegregation; (2) the characteristics of ghetto expansion under the pressure of black population growth; and (3) the influence of local demographic factors in shaping the interaction of all the other factors.

Part II of this Article provides some descriptive background on segregation for the non-specialist. In Part III, I outline the theory in some detail, and create three urban scenarios to illustrate the distinctive patterns of segregation that have arisen over the past thirty years. This is followed, in Part IV, by two empirical tests of the theory: one which models changes in metropolitan segregation levels from 1970 to 1980, and one which models some profound changes in black housing prices over the same period.

TABLE I

Changing Patterns of Segregation and Desegregation 1960-1980

Level of Segregation     1970-80 Rate of Resegregation

Segregated SMSAs       1960      1970    1980     (central city only)
Baltimore                      .82         .81        .74             .67
Chicago                        .91         .91        .88             .69
Cleveland                      .90         .90        .88             .88
Milwaukee                    .90         .89         .84             .86
New Orleans                 .65         .74         .73             .73

Desegregating SMSAs
Denver                         .85         .85         .64             .15
Minneapolis                 .83          .86         .68               --
Phoenix                       .81          .82         .59            .20
San Diego                   .79          .76          .62            .21
San Antonio                .77          .74          .60            .12

Intermediate SMSAs
Jacksonville                  .78           .82          .68          .42
Los Angeles                 .89           .88           .79          .32
Washington, D. C.        .78           .81           .70          .44

'Segregation' refers to the SMSA dissimilarity index measure for each SMSA. 'Resegregation' refers to the percent of 1970 'integrated' tracts in each SMSA's central city (tracts 10% to 90% black) that had a significant (5% or more) increase in the tract's percent black by 1980.

Sources: 1960 dissimilarity measures for Phoenix and Minneapolis are from Van Valey, Roof & Wilcox (1977); 1970 and 1980 measures for those cities are from Massey & Denton (1987); dissimilarity measures for other cities are from Farley & Wilger (1987). Data on resegregation are from Lee (1985).

Margalynne Armstrong

52 U. Miami L. Rev. 1051

University of Miami Law Review

July, 1998

Copyright © 1998 University of Miami Law Review; Margalynne Armstrong

I. Introduction

An examination of residential segregation thirty years after the passage of the Fair Housing Act (the 'FHA') reveals a complex picture of stark facts and difficult questions, interspersed with incremental successes. Difficult questions and bleak facts seem to predominate when contemplating the interaction of race and residence. Why do African-Americans continue to experience disproportionately high levels of residential segregation? Why do the "tipping" phenomenon and its resultant resegregation continue, despite FHA prohibitions? The discouraging facts that serve to perpetuate residential segregation are epitomized by the results of two studies of America's ten largest cities. These studies present a desolate statistic: "69 percent of minority apartment-seekers who look at four different units will be subjected to discrimination at least once." In addition, despite industry-wide education about the provisions of Title VIII, many real estate professionals continue to steer African-American home-seekers away from predominantly white neighborhoods.

Even the FHA's successes are hard won and double-edged. Millions of dollars in damages and settlements are awarded to discrimination plaintiffs, mostly on an individual basis. Although Title VIII is finally providing substantial monetary remedies, the frequency of complaints and awards indicate that extensive housing discrimination still occurs. Although fewer and fewer communities contain no African-American inhabitants, blacks are continually under represented in many areas where they would otherwise dwell if residence correlated to income and if race were not a factor. Even though individual access has clearly increased, the 1990 census reported that nine million African-Americans resided in neighborhoods that were at least 90 percent black and that 68 percent of whites lived in virtually all-white neighborhoods. Granted that many factors contribute to what Nancy Denton and Douglas Massey have evocatively termed "American Apartheid," one important piece of this complicated puzzle is the fact that many white realtors, home-sellers and home-seekers continue to make excuses to and decisions that avoid integrating. One of the most commonly asserted, longstanding, and deeply-entrenched excuses is that African-American land ownership or possession causes property values to decline.

Many Americans share a strongly-held, but essentially irrational, belief that the dark skin color of an occupant can cause real property values to depreciate, or at least fail to appreciate. Racial valuation and devaluation of property is undoubtedly tied to powerful beliefs. Although these convictions may not be accurate, they shape the reality in which we live. This irrational proposition creates and maintains a shameful reality that black-owned real property appreciates at lower rates than comparable property owned by whites and thus becomes less valuable than it would be if the owner were white. But, of course, any skin-color-related decrease in value is attributable to decreased white demand rather than to actions attributable to the black landowners.

The perception that blacks devalue property has the additional pernicious effect of undermining the ability of the FHA to achieve its goals of "truly integrated and balanced living patterns." For thirty years, significant sectors of society have effectively resisted the mandates of Title VIII. Such intransigence raises another set of difficult questions about the power of positive law to change hearts and minds and about the limited ability of the law to enlighten a benighted citizenry.
 

II. Prevailing Perceptions

Although property professors teach about the reification of real property interests, the underlying property itself is a concrete, inanimate thing that has physical existence and tangible characteristics. The characteristics of a given parcel of land are not determined by its ownership, that is, the identity of the property's owner at any given moment does not change the property's physical characteristics. Logically, the identity of the property's owner should not affect the property's market value. But logic flies out the window when real property belongs to African-Americans.

This phenomenon is illustrated in the book Rage of a Privileged Class. Ellis Cose describes the experience of Joseph Boyce, an African-American journalist who sought an assessment of his home:

Because Time Inc. (his employer), has a policy of buying transferred employee's current homes at 105 percent of appraised value, it was in his interest to get a high appraisal. The first appraisal on his four-bedroom house came in significantly lower than expected, and Boyce . . . wondered whether his race was blinding the realtors to its true value, so he summoned another team of realtors. On the appointed day, he moved out and had his white secretary move in. She replaced the photographs of his beaming family with hers, and when the appraiser arrived she waltzed around the house as if she had lived there all her life. The result was an appraised value nearly 15 percent above the prior assessment.

John O. Calmore

52 U. Miami L. Rev. 1067

University of Miami Law Review

July, 1998

Copyright © 1998 University of Miami Law Review; John O. Calmore

I.    Introduction ....................................................... 1068

II.   Racism in the 1990s: Its Changing but Central Significance ......... 1073
        A. Polarized Conceptions of Racism: Expansive-Impersonal vs.
        Restrictive-Personal ............................................. 1073
        B. The Reactionary Approach to Racism: "Reductio Ad Absurdum" .... 1080

III.  Racism's Reincorporation of Prejudice, Stereotype, and Rational
        Discrimination ................................................... 1087
        A. The Increasing Significance of "Aversive Racism" .............. 1087
        B. The New Deployment of Prejudice and Stereotypes ............... 1092
        C. "Rational Discrimination" in Lieu of Racism ................... 1097

IV.   Integration Warriors and Fair Housing .............................. 1102
        A. The Huxtable Family Syndrome .................................. 1102
        B. The Quest for Dignity, Respect, and Acceptance ................ 1105
        C. Asians, Latinos, and "Post-Kerner Report" Cities .............. 1108
        D. Practicing the Open-Housing Commitment ........................ 1117

V.    Reconsidering the "Contact Hypothesis" and Deepening Integration ... 1121
        A. Revisiting the "Contact Hypothesis" ........................... 1121
          1. social and institutional support ............................ 1122
          2. acquaintance potential ...................................... 1122
          3. equal status ................................................ 1123
          4. cooperation ................................................. 1124
        B. Raising the Integration Ante .................................. 1124
        C. Individuating Fair Housing Rights Away ........................ 1126

VI.   Conclusion ......................................................... 1129

The prevailing view concerning contemporary racism is that it is something that belongs to the past. Where it is taken to occur at all, it is considered as socially anomalous, as unusual, an individual aberration or institutional hangover placed in check as soon as its occurrence is noticed. Anyone extending to racist expression a greater place in contemporary culture . . . is bound to be considered paranoid . . . .

I. Introduction

Efforts to resolve issues of race and racism reflect what David Shipler describes as "a curious coexistence of intensive effort and cold neglect." This article examines the operation of fair housing law and policy within the tension of this "curious coexistence." In this view, we generally confront issues of race in this country simultaneously on three levels: public policy, institutional, and individual. Transcending these levels, we find that race is highly embedded within our societal organization and cultural understandings. These, too, are contexts for racism. At all levels and within each context, equal opportunity in housing is either advanced or blocked.

My title refers to "race/ism," labeling it in this way in order to conscientiously draw out the need to join race and racism, rather than to follow the prevalent trend in discourse, which is to speak of race as a vague force or matter that is separated from human agency and accountability. This dominant discourse speaks mistakenly about sharp lines of social division that are divorced from the processes and consequences of racism. Hence, the transformative potential of fair housing policy to contribute to an open society stops short of the necessary anti-racism orientation.

Thirty years ago, Congress expediently passed Title VIII of the Civil Rights Act of 1968, popularly known as the Fair Housing Act. President Johnson signed the legislation into law on April 11, 1968, one week after the assassination of Martin Luther King, Jr. in Memphis, and approximately one month after the Kerner Report, which followed five successive summers of urban disorders. It was a time of dark ghettos, racial unrest and division, and prospects for a truly open society seemed profoundly dim. It was within this context of the social turmoil and backlash in the 1960s that Congress declared that the policy of the United States is to provide, within constitutional limitations, for fair housing throughout the nation.

The Kerner Commission added to the volatile mix the charged term "racism" to explain why this predicament was extant. According to the Commission, "White racism is essentially responsible for the explosive mixture which has been accumulating in our cities since the end of World War II. At the base of this mixture are three of the most bitter fruits of white racial attitudes: [P]ervasive discrimination and segregation . . ., [b]lack migration and white exodus . . ., [and] [b]lack ghettos." Yet, both conservatives and liberals retreated from acknowledging racism. The term, let alone the subject, of racism was seen to be so accusatory, so controversial, that it was deemed unproductive even to speak of racism. It was considered best to address problems of racism more indirectly, more safely, less offensively. Over the years, deja-vu reactions have persisted.

In introducing the Commission's report, Tom Wicker wrote, "Reading it is an ugly experience but one that brings, finally, something like the relief of beginning." As a thirty-year retrospection, I am looking back not only at the Fair Housing Act, but also at Dr. King's life and value orientation, and at the "the relief of beginning" again to look at racism. I write, however, with some trepidation, because many will not only dislike the message, but will dislike even more the messenger. There is, however, no euphemistic, polite way to say what must be said about racism. Less offensive terms sacrifice fundamental accuracy. Indirectly approaching the subject of white racism detours us. The racism that was found thirty years ago has been discarded--imagined away or explained away or ruled away. This article finds racism again and assesses its significance in frustrating the ability of fair housing to render a more inclusive and open society.

The checkered progress of fair housing over the past thirty years cannot be fully understood outside the context of racism's varied iterances. The Fair Housing Act is not simply an equal-opportunity law, but is also an open-society law. Thus, James Chandler argues that a goal of national fair housing policy should be to undo the results of officially approved housing discrimination between the years of 1930 and 1962. This goal would include the achievement of residential integration of the metropolitan areas of the nation, thereby cojoining the 1949 goal of 'a decent home and a suitable living environment for every American family' with the apparent 1968 goal of removing racial barriers to home acquisition.

In Mayers v. Ridley, applying Title VIII to racially restrictive covenants, Judge Wilkey wrote in his concurrence that "Congress was aware that the measure would have a very broad reach, and indeed the legislation was seen as an attempt to alter the whole character of the housing market." This suggests that fair housing is not only a remedy for individual claimants, but also that it seeks to eliminate discrimination from the housing market and the exclusionary features of that market. The open-society goal is further reflected in Senator Mondale's statement that the Act was intended to replace the ghettos with "truly integrated and balanced living patterns." Congressman Celler addressed the need 'to eliminate the blight of segregated housing.'

In spite of these aspirations for fair housing, for twenty years there was little enforcement strength in the Act. Federal housing programs for the poor were decimated. The segregation of blacks from whites not only persists, but has now become "hypersegregation" for a significant segment of the population. Discrimination in the real estate and lending markets persists as well. In many ways, racism has simply overwhelmed fair housing. This is my basic thesis, which for some will appear to be old news or no news, obviously correct or obviously incorrect.

Among the modern civil rights laws, fair housing law persists as the least effective. Housing is the civil rights area that has most been plagued by slow, small advances, where the possibility for real change is viewed as most remote. In John Yinger's authoritative study, he reveals that, in combination, "prejudice and discrimination have a powerful impact on American society. They greatly restrict the housing choices of many black and Hispanic households, and they are among the key causes of racial and ethnic residential segregation. . . ." We are now facing Derrick Bell's virtually irrefutable presumption: "Discrimination in housing, with its vices of segregated housing patterns and inadequate and overpriced housing for minorities, continues to be one of those areas where the law is unable or unwilling to keep up with conditions in the real world." While divisive issues of race are an important part of the story, the neglected issues of racism are an important part of the untold story. This article seeks to find the racism that is lost and to incorporate it more directly in telling the story of fair housing within the theme of this symposium: "Promises Kept, Promises Broken".

Against this backdrop, Part II focuses on the continuing significance of racism and why this charged subject is so difficult, but necessary, to discuss. It argues that discussion by blacks and whites represents such polarized views that the two groups talk past each other. In a story dominated by blacks and whites, the basic narrative of racism is one of a conflict that colors respective views of our racial progress, quantitatively and qualitatively, to the point that prospects for consensus on what an open society is and how America will constitute (reflect) all of its peoples is virtually stalemated.

Part III examines how modern prejudices, stereotypes, and new expressions of racism, such as aversive racism, now join with a legacy of institutional and cultural racism to serve as major obstructions to fair housing. The dispute over the meaning of racism implicates new analyses of prejudice and stereotypes within an intergroup process and relationship. In rebutting claims of racism, some now argue that discrimination against blacks is rationally based on accurate stereotypes. Part III looks at the implications of these different viewpoints for fair housing.

In Part IV, I look at the nation's ambiguous commitment to fair housing in light of an examination of how contests over norms and values are implicated in fair housing policy. I also consider how racism, as a lived experience, affects the integration imperatives of middle-class and affluent blacks in ways that have prompted an ambivalence to residential integration, because of the negative experiences these privileged blacks have experienced in other assimilationist contexts of integration. Part IV also considers some of the multicultural prospects for an open society by focusing on the experiences of particular Asian and Latino ethnic groups in dealing with residential segregation and equal housing opportunity. It also confronts the issue of whether the observations of the Kerner Commission are still instructive in light of the national changes in racial and ethnic demography over the last thirty years.

Part V re-examines the viability of the "contact hypothesis" of integration. It is through contact with larger white society that many blacks experience most acutely the new racism. Similarly, through contact with blacks, whites come to accept or decline stereotypes and racial resentment toward blacks. I argue that both groups must give contact a better chance to set the stage for a broader, deeper conceptualization and practice of integration. Finally, Part V re-asserts the Critical Legal Studies critique of rights to explain how fair housing rights have been individuated away other than for affluent people of color.

As Part V implies, unfortunately, the predicament of the ghetto poor lies beyond the scope of this article. The ghetto poor are really removed from open society. It may be that in light of the unfeasibility of integration, they must look to their communities within as sites and opportunities, resisting their spatial oppression and overcoming, in place, the disabling, opportunity- denying circumstances that are marked by the tripartite intersection of race, class, and space.

45 UCLA L. Rev. 1401

UCLA Law Review

June, 1998

Copyright © 1998 Regents of the University of California; Michael Selmi

Introduction ....................................................... 1402

I.    Enforcement of the Fair Housing Act ................................ 1405
        A. The Government's Efforts ...................................... 1405
          1. The Complaint Filing Process ................................ 1406
          2. The Administrative Process .................................. 1411
          3. Proceeding to Judgment: Choice of Forum ..................... 1415
        B. Government Efforts Compared to the Private Bar ................ 1416
        C. Pattern and Practice Cases .................................... 1422
          1. Home Mortgage Discrimination ................................ 1423
          2. Testing and Disparate Impact Cases .......................... 1425

II.   Employment Discrimination: The Case of the EEOC .................... 1427
        A. Do Politics Matter? ........................................... 1430
        B. Private Attorneys and the 1991 Act ............................ 1435

III.  Can the Government Effectively Enforce Civil Rights? ............... 1438
        A. Explaining the Government's Enforcement Policies .............. 1439
          1. Behavioral Incentives for Government Attorneys .............. 1442
          2. Theory in Action: The Justice Department's Employment
        Litigation ....................................................... 1447
          3. Other Bureaucratic Constraints: The Government as a
        Defendant ........................................................ 1450
        B. Private Attorneys and Civil Rights Cases ...................... 1452
        C. The Role of the Government in Enforcing Civil Rights .......... 1456

      Conclusion ......................................................... 1458
 

In this Article, Professor Michael Selmi contends that one important reason civil rights legislation has produced less change than originally expected is that most of the legislation entrusted principal enforcement to the federal government, and that enforcement has been seriously deficient over time. Through a detailed empirical analysis, this Article compares the efforts of public and private attorneys in enforcing fair housing and employment discrimination laws, and demonstrates that the government generally brings far fewer cases and receives substantially less relief than private attorneys. In both housing and employment, the government has concentrated its efforts on individual cases, focusing primarily on family status housing cases and age discrimination employment cases. The discrepancies between the two enforcement groups arise, Professor Selmi argues, from bureaucratic pressures that prod government attorneys to bring easy and noncontroversial cases as a means of avoiding the conflict that so readily accompanies civil rights enforcement.

Introduction

When the historic Civil Rights Acts were passed in the 1960s, there was great optimism and hope that the legislation would play a critical role in reducing inequality and eradicating the vestiges of America's segregated past. Thirty years later, we know that the optimism surrounding the legislation far exceeded our abilities, and today there seems to be a wide, and growing, consensus within the American legal establishment that law is an inappropriate or, at best, a limited means to promote social change. In his provocative work, Gerald Rosenberg suggests that courts are incapable of producing the societal support necessary for broad social change, and that, rather than garnering support, courts are more likely to promote a backlash among the public that will ultimately impede social progress. [FN1] Other commentators from both the left and the right have recently adopted a similar theme, [FN2] and it seems that virtually no one today contends that law can play a leading role in fomenting social change. [FN3]

The gains prompted by civil rights legislation are admittedly disappointing by almost any measure. That said, I seek to challenge the prevailing thesis that law is incapable of promoting broad social change. In this Article, I suggest that one of the primary, though by no means only, reasons legal reforms have often failed to produce more social change is the way in which civil rights statutes have been enforced. [FN4] Since their inception, primary enforcement of civil rights laws has been entrusted to the federal government and has been largely handled through administrative procedures. This is especially true with respect to the two areas this Article addresses: housing and employment, both of which rely extensively on a federal administrative process to resolve the vast majority of claims that are filed. Given the requirement that a civil rights litigant must depend on the government for relief, the government has been perceived as the primary enforcement vehicle for civil rights. And yet, for a variety of reasons, the government has failed to play a strong role as an enforcement agency. As has been well-documented, this has generally been true of Republican administrations but, as I establish in this Article, it has also been true of Democratic administrations, when the government has repeatedly failed in its role as a vigorous advocate for those seeking to be free from discrimination. In contrast, private attorneys have been responsible for the vast majority of important civil rights cases and, accordingly, have been principally responsible for whatever social change has resulted from legal challenges. [FN5]

Despite the greater potential of the private bar to bring about social change, civil rights legislation was initially structured in a manner that was certain to limit its attractiveness to private attorneys; specifically, damages were unavailable to private plaintiffs in employment cases, [FN6] and only limited damages were available for fair housing violations. [FN7] Recently, damages have become available for both employment and housing discrimination, [FN8] and, as I document below, those damage provisions demonstrate that private attorneys are willing to pursue civil rights cases as long as they are sufficiently lucrative to warrant their investment. Not only did the absence of damages suppress the supply of attorneys willing to take cases, but also the lack of significant financial penalties likely limited the legislation's deterrent effect on employers and housing providers, both of whom had little financial incentive to change their practices. [FN9]

This Article contains a comparative empirical analysis of the effects of private versus public enforcement of civil rights, concentrating on the areas of housing and employment discrimination. [FN10] Reviewing data from a variety of sources, I demonstrate that, on average, the government seeks and obtains less monetary relief for plaintiffs than does the private bar and fails to address cutting edge issues, choosing instead to concentrate its efforts on small, routine cases. Indeed, one reason for the government's lack of success is that its enforcement is almost entirely driven by the complaints that are filed, and the government has adopted no clear enforcement priorities for these complaints other than to process and dismiss them. This results in a rather haphazard enforcement agenda in which there is little evident effort to employ effectively the government's resources. As a result, the government's enforcement strategies seemingly defy logic: The federal government, with its broad resources, pursues small, politically inoffensive, and easy cases, leaving the private bar to tackle the difficult and important discrimination claims.

In the final part of the Article, I explain why it is that the government's efforts have failed, and why those efforts may have limited the efficacy of the Civil Rights Acts. These reasons include the political concerns that have driven the government's enforcement agenda across various administrations, as well as the composition of the government attorneys charged with enforcing civil rights--many of whom are young and inexperienced but nevertheless afforded substantial responsibility for determining the government's agenda. Under such circumstances, these attorneys act cautiously in their case selection because their primary concern is often future employment opportunities that are best enhanced by winning cases or by obtaining trial experience. Moreover, given the political realities of enforcing civil rights laws, the attorneys who remain through different administrations are likely not to have a passion for civil rights, which again limits their enforcement zeal. As a result, I suggest that the government is inherently a weak enforcer of civil rights, and that it may be time for it to cede its role as a primary enforcement agency.

In Part I of this Article, I discuss the enforcement of the Fair Housing Act, including the relative success and accomplishments of the federal government and the private bar. Next, in Part II, I explore the enforcement of employment discrimination laws, focusing on a comparison between the Equal Employment Opportunity Commission (EEOC) and the private bar, especially under the Clinton Administration. Finally, in Part III, I illustrate why the government's efforts have been of such limited success and further suggest that the government's role must be restructured to focus on class action rather than individual cases of discrimination.

THE END(S) OF DISPARATE IMPACT: DOCTRINAL RECONSTRUCTION, FAIR HOUSING

Peter E. Mahoney [FNa1]

47 Emory L.J. 409

Emory Law Journal

Spring 1998

Copyright © 1998 Emory University School of Law; Peter E. Mahoney

Introduction: The Crisis of Disparate Impact Theory and the Muddle
       of Fair Housing and Lending Law ................................... 411

I.    Deconstructing the Disparate Impact Standard in Fair Housing Law: An
        Archaeological Study .............................................. 421

        A. The Disparate Impact Standard in Employment Discrimination
        Cases Under Title VII ............................................. 421
          1. Elements of the Title VII Employment Discrimination Case ..... 422
        B. The Disparate Impact Standard Under the Fair Housing Act: Equal
        Protection and Title VII Roots .................................... 425
          1. Black Jack and Arlington Heights II: The Narrow Escape from
        Equal Protection .................................................. 427
          2. Breaking Away from Equal Protection: Rizzo and Betsey ........ 435
          3. 1.86--1992: Inconsistent Application of the Disparate Impact
        Models ............................................................ 439
          4. HUD's Attempt to Reformulate the Standard: Mountain Side and
        Its Progeny ....................................................... 442
        C. Conclusion of Part One: Title VII Disparate Impact Theory Is
        the Proper Basis for Disparate Impact Liability for Private
        Defendants Under the FHA and the ECOA ............................. 447
          1. Reconciling the FHA Disparate Impact Standard with the ECOA .. 447
          2. Federal Recognition of the Title VII Analogy ................. 448
          3. Disparate Impact Doctrine Founded on Equal Protection
        Concepts Cannot Sensibly Be Applied to Private Defendants ......... 449

II.   Reconstructing the Disparate Impact Standard in Fair Housing and
        Lending Law: A Comparative Study .................................. 450

        A. The Civil Rights Act of 1991: Supreme Court Decisions and a
        Clean Slate ....................................................... 451
        B. Applying the Emerging Standards of Employment Discrimination
        Law to Cases Under the FHA and the ECOA ........................... 458
          1. The Prima Facie Case Under Title VII ......................... 459
          2. The Prima Facie Case Under the FHA and the ECOA .............. 463
          3. The Business Necessity Standard Under Title VII .............. 469
          4. The Legitimate Business Justification Standard Under the FHA
        and the ECOA ...................................................... 476
          5. Less Discriminatory Alternatives Under Title VII ............. 483
          6. Less Discriminatory Alternatives Under the FHA and the ECOA .. 490

III.  The Antidiscrimination Principle at Twenty Years: Toward a Unified
        Theory of Discrimination .......................................... 495

        Appendix A: Evidentiary Standards for Statistical Defenses and the
        Uniform Guidelines on Employment Selection Procedures ............. 513

        Appendix B: A Disparate Impact Test Under the FHA and the ECOA,
       Applying Current Title VII Standards .............................. 523

Introduction: The Crisis of Disparate Impact Theory and the Muddle of

Fair Housing and Lending Law

The standards applied to determine liability under the substantive antidiscrimination provisions of the Fair Housing Act of 1968 [FN1] and the Equal Credit Opportunity Act of 1974 (ECOA) [FN2] remain inchoate. Decades after statutory enactment, courts, federal agencies charged with enforcing the Fair Housing Act and the ECOA, and commentators have failed to produce a reliable rule for determining liability under a standard known variously as "the effects test," "discriminatory effects," or (most commonly), "disparate impact." [FN3] Notwithstanding the large number of cases decided employing these doctrinal labels, the standard in the fair housing/fair lending arena continues to be sketchy and haphazard.

The need for a consistent standard for determining the potential disparate impact liability of private party defendants in the fair housing/fair lending arena is a matter of growing urgency. The federal agencies charged with enforcing the Fair Housing Act (FHA) and the ECOA [FN4] have adopted an aggressive approach to enforcement of the fair housing and fair lending laws in the last four years. [FN5] In particular, the Department of Justice (DOJ) and the Department of Housing and Urban Development (HUD) have suggested interpretations of the case law that would impose a more rigorous standard of disparate impact liability on private party defendants such as lenders, insurers and landlords. [FN6] However, these Federal agency interpretations have failed to provide a coherent and consistent reading of prior case law [FN7] and have not been accepted by courts. [FN8]

Viewed in context, the muddled state of fair housing/fair lending disparate impact doctrine is symptomatic of the broader doctrinal confusion over the meaning and enforcement of constitutional and statutory protections against discrimination and the obligation of government to engage actively in efforts to promote opportunities for members of protected classes. Developments such as recent court decisions striking down employment [FN9] and educational programs [FN10] that use diversity as a specific component of evaluation, and voter approval of the Proposition 209 referendum in California, [FN11] demonstrate that whatever fragile political consensus once existed on the meaning of the antidiscrimination principle has all but crumbled. [FN12]

As articulated in the case law, modern antidiscrimination principles rest upon two separate standards that appear to be fundamentally in conflict. More than twenty-five years ago, in Griggs v. Duke Power Co., [FN13] a unanimous Supreme Court created a standard under Title VII of the Civil Rights Act of 1964 [FN14] permitting a finding of liability in employment discrimination suits upon a showing of disparate impact alone. Five years later, in Washington v. Davis, [FN15] the Court determined that, in order to sustain a constitutional challenge under the Equal Protection Clause, [FN16] a plaintiff must prove that the conduct in question was motivated by discriminatory purpose. The Davis court expressly overruled a host of lower court decisions [FN17] that had permitted an equal protection claim to go forward solely on the basis of a showing of disparate impact, but it left the statutory standard in Griggs undisturbed. As George Rutherglen has observed, while the Court offered a number of justifications for its establishment of an intent requirement in the constitutional realm, [FN18] "[w]hat the Court failed to do was to offer any reason why these same arguments should not apply to statutory law." [FN19]

Over the past twenty years, the result has been a jurisprudence of discrimination that continues to be fundamentally discordant in theory and practice. The standard established in Washington v. Davis has met one of its intended goals--preventing the judiciary from invalidating a broad range of legislative measures [FN20]--and provided courts with a durable and relatively straightforward test for evaluating equal protection claims. [FN21] But the intent requirement has proved deeply unpopular with substantial segments of society [FN22] and has provided a seemingly inexhaustible supply of grist for the mill of legal scholars. [FN23] On the other hand, the disparate impact standard announced in Griggs potentially embraces a far-reaching statutory prohibition of any employment practice that creates, contributes to, or perpetuates unequal outcomes among different racial groups. [FN24] The need to develop the meaning of Griggs has spawned a vast amount of litigation, one result of which has been to entangle many district judges in administering complex remedial schemes over the course of decades. [FN25] The practical problems and costs of this development have caused the federal judiciary, led by the Supreme Court, to respond by gradually but inexorably narrowing the disparate impact standard in a series of Title VII decisions culminating in Wards Cove Packing Co. v. Atonio. [FN26] The Wards Cove decision triggered an epic legislative battle over Title VII, resulting in the Civil Rights Act of 1991 (the 1991 Act), [FN27] which codified the existence of a disparate impact standard under Title VII but settled few of the fundamental questions concerning judicial interpretation and implementation of that standard. [FN28]

The constitutional guarantee of equal protection and Title VII's prohibition of discrimination in employment are two of the most vital areas within the broad context of federal law applying the antidiscrimination principle. Each has benefited from extensive scholarly examination and judicial refinement. However, as doctrinal development in these two subject matter areas diverged, so did scholarship on the issue, such that employment discrimination and equal protection concepts now are treated separately by most scholars. A third significant area of antidiscrimination law in which the doctrine of disparate impact has been applied--that of fair housing and fair lending-- remains largely and, somewhat inexplicably, unexplored. [FN29] The failure of both courts and commentators to understand and explicate the workings of the antidiscrimination principle in the fair housing/fair lending domain has obscured the fact that the disparate impact standard under the FHA and the ECOA [FN30] has developed from two entirely distinct and not always consistent sources: constitutional equal protection principles and analogies from the statutory employment discrimination cases.

The tangling of these two distinct lines of precedent has created a proverbial Gordian Knot in the current fair housing and lending jurisprudence. One of the primary tasks of this Article is to unravel these housing and lending cases so that courts and scholars can recognize and understand the manifestations of these competing and sometimes conflicting doctrinal foundations. This is a necessary first step in reconstructing a disparate impact standard for fair housing and fair lending that is both coherent and workable. For it is only by understanding how the doctrine of disparate impact came to be in these housing cases that we can understand what the doctrine means today. [FN31] And only by understanding what disparate impact doctrine means today can courts and scholars engage in informed debate over what it ought to mean in the future.

Thus, this Article comprises: (i) an exercise in deconstruction that explains the current predicament of disparate impact theory in the specific realm of fair housing law; (ii) an exercise in reconstruction of disparate impact standards for fair housing and fair lending law by way of a comparative study of Title VII standards; and (iii) a preface to further inquiry designed to clarify, and perhaps begin to reconcile, the various applications of the antidiscrimination principle across constitutional and several distinct statutory domains.

Part I of this Article is an exercise in deconstruction. It analyzes the case law and regulations to which reference should be made in considering disparate impact liability, primarily by identifying and analyzing the distinct lines of cases that courts have used in developing the doctrine. The Article begins with a brief review of the familiar standards of disparate impact liability under Title VII. Part I then traces the simultaneous development of FHA cases against governmental defendants, in which courts employed a "quasi- constitutional" analysis dependent almost wholly on equal protection standards developed prior to Washington v. Davis. Next, the Article examines recent FHA/ECOA case law involving private defendants. This review demonstrates the confusion and inconsistency resulting from the intermingling of Title VII and "quasi-constitutional" analysis in the fair housing and lending area.

Part I concludes that, in light of relevant statutory and regulatory language, the only disparate impact test appropriately applied to private defendants must be drawn from the principles of Title VII employment law. Injecting principles from FHA cases involving government defendants--something a number of recent decisions have attempted--is simply not a sound idea because the quasi-constitutional "balancing" tests developed and applied in these cases function adequately only when used to analyze decisions made by governmental actors. These early FHA cases do, however, provide an essential link in our understanding of how the Washington v. Davis intent requirement can be reconciled with the disparate impact standard used in Title VII employment discrimination and Title VIII fair housing/lending cases.

Untangling the first strand of cases--the quasi-constitutional cases involving governmental defendants--only leaves another thorny problem, namely, that the remaining disparate impact case law under the FHA and the ECOA provides scarce guidance in terms of meaningful liability standards for private defendants. If the disparate impact doctrine is to be applied to the often complex decisions of market actors such as lenders and landlords in a sustainable way, it is necessary to translate the standards used in Title VII disparate impact cases into a workable test that can be used in the context of both the FHA and the ECOA. Moreover, because courts currently are engaged in a fundamental reshaping of Title VII doctrine, the challenge is to translate a body of precedent that simultaneously is undergoing rapid evolution.

Thus, Part II is a work of reconstruction. It provides a comparative study of each of the three prongs of the Title VII disparate impact test, providing for each prong an analysis of both the employment discrimination cases and the cases under the FHA and the ECOA. This comparative analysis illustrates how a disparate impact liability standard might work for private defendants such as lenders, insurers, and landlords. To accomplish this, it is necessary to revisit the issues that provoked great controversy in Congress during the consideration of the Civil Rights Act of 1991 and to review the cases decided following the enactment of that Act. These cases are beginning to provide answers to many of the questions that remained following the 1991 Act's passage. Only after exploring the labyrinth of Title VII disparate impact principles is it possible to suggest an appropriate standard for use in the arena of fair housing and fair lending. This somewhat detailed analysis of the 1991 Act, the post-1991 Title VII cases, and the fair housing/lending cases form the basis for a demonstrably viable disparate impact doctrine for private defendants under the FHA and the ECOA. [FN32]

This detailed reconstruction of statutory disparate impact standards also serves a larger purpose: it is a necessary preface to further efforts to unify constitutional and statutory theories implementing the antidiscrimination principle. Because the fair housing/lending decisions employ both quasi- constitutional and statutory theories, consideration of these decisions can illuminate the broader analysis. In fact, the confusion and inconsistency that pervade these cases also exemplify the general paradoxes operating in antidiscrimination law. Part I demonstrates that the quasi-constitutional disparate impact test applied to governmental defendants appears to entail a much lighter burden of justification for defendants than the Title VII standard applied to private defendants. Similarly, equal protection doctrine requires plaintiffs to prove discriminatory intent, whereas Title VII merely requires a statistical showing of disparate impact in order to shift the burden to defendants to provide an explanation of the business necessity justifying the challenged practice.

These paradoxes help to explain the unmistakable trend in recent cases applying the statutory disparate impact standard. Part II shows that post-1991 Title VII case law reflects a palpable judicial effort to retard the development of expansive versions of disparate impact theory. The FHA cases using the Title VII analogies are also inexorably following this trend. Notwithstanding the codification of disparate impact liability in the 1991 Act, it is hard to avoid the conclusion that the judiciary remains averse to unilateral creation of an expansive disparate impact theory. The judicial tendency to construe disparate impact liability narrowly seems to have at least two sources. First, the judiciary is having difficulty reconciling the constitutional requirement of intentional discrimination with statutory disparate impact theory and its outcome orientation. Second, there is no obvious limiting principle constraining the scope of disparate impact liability when conceived expansively. For example, in the employment area, the application of broad disparate impact principles has resulted in costly judicial administration in a large number of cases, many of which have been ongoing for decades. The fear of such outcomes is precisely the impulse underlying the Supreme Court's decision to limit equal protection relief to claims involving governmental actions motivated by racial animus.

But a more modest version of Title VII disparate impact theory--which the federal courts appear to be pursuing in the wake of the 1991 Act--raises the fundamental question of whether the effects test actually means what it says, that is, whether the standard of liability called "disparate impact" or "discriminatory effect" is a standard entirely divorced from any finding of intent to discriminate. The accumulated Title VII case law-- particularly the more recent case law--suggests that many courts, while not requiring an overt finding of intent to discriminate, implicitly incorporate such a requirement or its functional equivalent in their application of the disparate impact standard.

Disparate impact theory is reaching a crossroads. It either must undergo substantial theoretical reformulation, or it inevitably will be applied with standards of proof sufficiently rigorous to ensure that any defendant found liable is likely to have engaged in practices that are functionally equivalent to intentional discrimination.

One conclusion reached here is that the increasing remoteness of dominant legal scholarship from the theoretical and practical problems confronting the courts is hindering a better understanding of disparate impact doctrine. This dialogic failure has limited courts' and commentators' ability to synthesize the fair housing/fair lending cases in a way that permits them to understand their larger implication for the antidiscrimination principle. By demonstrating the manner in which courts are shrinking from the broader implications of disparate impact doctrine, this article hopes to stimulate debate about whether an expansive version of judicially enforced disparate impact liability is a viable or, indeed, desirable mechanism for altering the operation of credit and housing markets. The arduous legislative and judicial course of the doctrine in the other areas studied suggests that determining the place of the disparate impact standard of liability under the FHA and the ECOA is an issue that deserves serious scholarly and public discussion.

Robert L. Schonfeld [FNa1]

25 Fordham Urb. L.J. 413

Fordham Urban Law Journal

Spring 1998

Copyright © 1998 Fordham University School of Law; Robert L. Schonfeld

Introduction

Congress amended the Federal Fair Housing Amendments Act ('Fair Housing Act') in 1988 "to end the unnecessary exclusion of persons with handicaps from the American mainstream." [FN1] To that end, Congress defined prohibited housing discrimination against people with disabilities as, among other actions, "a refusal to make reasonable accommodation in rules, policies, practices, or services, when such accommodations may be necessary to afford such person equal opportunity to use and enjoy a dwelling." [FN2]

As the United States Supreme Court has held, the Fair Housing Act has a "broad and inclusive" compass requiring a "generous construction." [FN3] However, many federal courts have narrowly interpreted the "reasonable accommodation" clause of the Fair Housing Act in conflict with both Congressional intent and the Supreme Court's mandate that the statute be given a "generous construction." [FN4] Some courts have interpreted the terms "necessary" and "equal opportunity" in a manner that nullifies the "reasonable accommodation" clause of the statute. [FN5] These court decisions have permitted landlords and municipalities to exclude people with disabilities from housing.

This Article examines recent Federal court decisions interpreting the "reasonable accommodation" clause of the Fair Housing Act and proposes an interpretation of the clause that is consistent with both the language of the statute and the intent of its drafters. Part I explores the legislative history of the Fair Housing Act and, in particular, the "reasonable accommodation" clause of the statute. This Part also examines the 1995 United States Supreme Court decision City of Edmonds v. Oxford House, Inc. which explains how the statute should be interpreted as well as the Supreme Court's decision interpreting the phrase "reasonable accommodation." As this Part demonstrates, both Congress and the Supreme Court intended the statute be used to promote housing for people with disabilities and not be used as a barrier to housing. In addition, they intended that a "reasonable accommodation" be made except where the accommodation would constitute a substantial hardship, undue burden, or fundamental alteration of a program.

Part II examines the provisions of the Federal Fair Housing Act and the way they are used to attack housing discrimination against people with disabilities. This Part discusses in detail the "reasonable accommodation" clause of the statute and explores the earlier federal district court cases interpreting the "reasonable accommodation" standard.

Part III discusses some of the issues from recent cases brought under the "reasonable accommodation" prong of the statute. This Part examines whether people with disabilities and housing providers must exhaust administrative remedies before resorting to litigation, as well as which parties--people with disabilities and housing providers or municipalities and landlords--have the burden of proof in a "reasonable accommodation" case. This Part also explores the recent narrow Federal court interpretations of the terms "reasonable," "necessity," and "equal opportunity" that have hindered the use of the statute to fight housing discrimination against people with disabilities.

Part IV demonstrates how the "reasonable accommodation" clause of the statute can be interpreted so that it comports with the intention of its drafters and the United States Supreme Court. It also considers an expanded use of the other prongs of the Fair Housing Act as well as the use of the Americans With Disabilities Act in land use disputes.

                    The author gratefully acknowledges the assistance of Beth Pepper and Seth P. Stein on this article.

14 Harv. BlackLetter L.J. 45

Harvard BlackLetter Law Journal

Spring, 1998

Copyright © 1998 by the President and Fellows of Harvard College; Phyliss

Craig-Taylor

Voltaire once described history as a pack of tricks that the present plays on the past. He failed to mention that the people of the past have their own dissembling pranks. The most troublesome for historians is the tendency to change without notice the meaning of words. Whole new concepts can take shape behind an unvarying set of terms. [FN1]
 

INTRODUCTION

"Nothing is static or uncontested and the relevance of the Founders (or of the eighteenth or nineteenth centuries altogether) to current conflict is sometimes opaque. Still there are patterns and even structures--sometimes weighty, sometimes just nightmares weighing upon us." [FN2] Although the issue is still debated, some scholars believe one such "weighty pattern" is the wedding of American law to the secure guarantee of property and liberty. A number of Founders believed equal access to property was necessary to enable individuals to exercise liberty and become self-sufficient. Without property, they believed people would be cast into a dependent status unable to fully exercise the rights and opportunities of citizenship as guaranteed by the Constitution. Although far removed from the historical ideal of productive property, a present day manifestation of this is property in the form of home ownership. Owning a home is the essence of the "American dream."

However, another "weighty pattern" also emerges--the failure to provide to all members of society an equal opportunity to secure the rights and privileges of citizenship which come with property ownership. Overwhelming evidence documents current and persistent inequality in access to property ownership for some in our society. [FN3]

Despite a dramatic increase in home ownership rates, academics and housing experts continue to document discriminatory housing and lending practices. An enduring history of housing and lending discrimination in this country scarred the lives of millions of families seeking the dreams and aspirations of most Americans--to own property and to have a home. Unfortunately, such practices remain with us and are continued not only through intentional acts of discrimination, but through non-intentional institutional practices which reflect our learned history. The discriminatory practices are particularly problematic for African Americans.

This Article explores how legal and social constructions--the ownership of productive property as central to a person's independence--of a racially segmented system of property ownership and access to credit have discriminated against African Americans. Such discrimination thereby ensured their exclusion from the rights and opportunities of republican citizenship.

Part I explores the interpretation of the republican vision of citizenship which focuses on ownership of productive property as central to one's independence and self-sufficiency. Within this interpretation, the definition of productive property includes the ownership of land, tools, equipment, and workplaces that create use and exchange values. Hence, liberty and the ability to obtain the full benefits of republican citizenship were linked intrinsically to productive land ownership and the right to become a co-creator in the shaping of the country's public life. This interpretation provided support for attempts to seek wide distribution of such property ownership among the citizens. Part I also traces the development of legislative acts and case law reflecting signs of the republican citizenship vision and thereby showing how the acts and cases protect open access to property and define the bundle of rights that constitute and protect ownership.

Part II explores the erosion of this interpretation of republican citizenship that occurred within the developing capitalist market economy in the United States. This Part argues that as the material means for universal productive property ownership diminished for most citizens, elements of the republican vision, emphasizing wide distribution of productive property as the basis for self-sufficiency and liberty, would continue to influence public policy debates and political struggles. In particular, since the Great Depression and the New Deal, the republican vision underwent a neo-republican citizenship synthesis, which integrated home ownership, employment and access to credit as a new foundation for independence, self-sufficiency and participation.

Part III details the history of the social and legal constructions of a system of property ownership and access to credit which has discriminated against African Americans. This system ensured their exclusion from the rights and opportunities of republican citizenship and its neo-republican synthesis.

Part IV considers the extent to which a system of racial segregation and discrimination still endure, despite the existence of the Fair Housing Act and the Equal Credit Opportunity Act, both of which were designed to remedy those flaws. Part V questions the country's commitment to dismantling the racially segmented system of access to property and credit by exploring federal circuit and Supreme Court interpretations of provisions of these statutes and the standards of proof required to establish a claim. In Part VI, the Article concludes with suggestions for reforms which may assist in alleviating obstacles to enjoyment, by African Americans, of the promise envisioned in this interpretation of the neo-republican vision of citizenship.