In Texas Dep’t of Housing and Community Affairs v. The Inclusive Communities Project, 135 S. Ct. 2507 (2015), the Supreme Court held that disparate impact claims are legally cognizable under the Fair Housing Act (“FHA”). Is this reasoning applicable to the Equal Credit Opportunity Act (“ECOA”)?

On August 27, 2015, David Scheffel, Joe Lynyak, Nicholas Vlietstra and Eric Epstein of Dorsey’s Consumer Financial Services Practice Group presented a Webinar on the U.S. Supreme Court’s Inclusive Communities decision, in which the Court held that disparate impact claims are cognizable under the Fair Housing Act. You can hear a playback of the Webinar at this link. We discuss the litigation and regulatory implications of this important decision.

Because the scope of the Supreme Court appeal was limited to a question of law, namely whether the FHA contemplates disparate impact liability, the Supreme Court’s opinion does not fully elaborate on the facts of the case. The record of the underlying District Court proceedings, which culminated in a bench trial, paints an even more complete picture of how disparate impact litigation can lead to arguably absurd results.

In a recent decision, the U.S. Supreme Court held that disparate impact claims are cognizable under the Fair Housing Act, (“FHA”), 42 U.S.C. § 3601 et seq. See Texas Department of Housing & Community Affairs v. Inclusive Communities Project, Inc., 576 U.S. ___, 2015 WL 2473449 (Jun. 25, 2015). The specific issue on appeal in Inclusive Communities was whether Congress intended the FHA to open the door to disparate impact litigation, and the Court answered that question in the affirmative.