In May 2016, NFHA filed the lawsuit, claiming the policy has a disparate impact and that the group had standing because it diverted resources to education efforts as a result of the policy.
The Supreme Court’s decision in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Williams explained, outlined that though disparate impact claims are valid under the Fair Housing Act, plaintiffs do need to satisfy a “robust causality requirement” at the pleading stage. In May, the U.S. Court of Appeals for the Ninth Circuit declined to revive two such suits by the city of Los Angeles against Wells Fargo and Bank of America, on the grounds the city failed to show the banks’ policies disproportionately affected minorities.
“These types of claims have always been very hard to bring,” Williams said. “Prior to Supreme Court’s [decision], there was wide consensus in federal circuit court jurisprudence that these were viable claims, but they’ve always been hard to bring because of … the extent to which you do need to harness some sort of evidence of the disparity.”
Still, in this case, Bates wrote that NFHA satisfied the requirements outlined by the Supreme Court. The judge criticized Travelers’ assertion that failure to provide insurance to a landlord is “too remote” to have an effect on tenants, noting there’s a “large body of case law holding that insurers” can be held liable under the FHA. The company also argued the statistical evidence NFHA relied on was “bare” and insufficient.
Bates wrote that there have only been a “handful of cases” since the Inclusive Communities decision that examine what kind of statistical analysis is necessary, but the groups’ analysis clearly showed that voucher recipients in D.C. were more likely to be black or women than the D.C. population as a whole.
“NFHA not only conducted a general statistical analysis, but also focused on the relevant geographic region of the district: it ensured that testers claimed they were buying properties in the Anacostia neighborhood, which is also the area with the highest portion of voucher recipients,” the judge wrote.
The judge also rejected Travelers’ argument that the case lacked merit because the company no longer uses the policy. Bates said that had no effect on standing, and noted the company’s admission that it had the policy in the first place “will likely bolste[r] NFHA’s claims at a later stage of this litigation.”
Whether Travelers actually ended the policy is still a fact in dispute, Williams said.
The case now moves to discovery and the summary judgment phase.
Williams said the case will have an impact “certainly in regards to what plaintiffs and industry players and other courts may look to in assessing what is needed to establish ‘robust causality’ and sufficiently plead evidentiary basis for disparate impact claims.”
