Persons in need of financial assistance to afford housing are in a variety of categories of persons protected by the Fair Housing Act. African Americans are more likely than white persons to be poor; women of all races are more likely to be poor than men; persons with disabilities are more likely to need government assistance than those who are temporarily abled; and children are much more likely to be poor than adults. It would seem easy to show that refusing to rent to persons who are eligible for and who receive housing vouchers from the federal government (so-called Section 8 certificates) causes a disparate impact based on race, disability, sex, and familial status that may be unlawful under the Fair Housing Act unless the impact can be justified by a sufficient strong business objective that cannot be achieved in a less discriminatory way.
However, the 5th Circuit rejected a claim that a landlord caused an unlawful disparate impact because of race when it refused to accept tenants with a housing voucher. Inclusive Communities Project, Inc. v. Lincoln Prop. Co., 2019 U.S. App. LEXIS 10480 (5th Cir. 2019). Plaintiffs had sought to prove that the defendant accepted housing vouchers in areas dominated by African American residents but not in neighbors that were majority white districts. The Court held that the plaintiffs floundered in proving causation. The denial of housing vouchers was not itself the cause of racial segregation in the housing market.
This focus on causation is a result of language in Texas Dept. of Hous. & Comty. Aff. v. Inclusive Cmtys Project, Inc., 135 S. Ct. 2507 (2015) that required plaintiffs to show that the defendant's actions caused the denial of housing opportunities. On the plaintiff's theory, this was easy to find based on the fact that refusal to accept housing vouchers would have a far greater impact on African Americans as a group than white persons as a group. The court believed this was not enough.
Further, it held that the test promulgated by HUD did not adequately capture the statutory requirements and found that the Supreme Court had not formally ruled that the HUD regulations were valid. It found that the federal judges have argued for four different tests to determine whether causation is present:
1. proving the defendant has an "artificial, arbitrary, and unneccesary policy causing the problematic disparity;
2. proving the defendant's actions had a disproportionate effect on a protected group;
3. proving the defendant's actions caused the statistical disparity that they challenge;
4. proving "robust causality" that goes beyond showing that a policy impacted more member of a protected class than nonmembers.
The Fifth Circuit took a highly restrictive approach to the causation test, concluding that, even if refusal to accept housing vouchers has a disparate impact on a protected group, that does not mean that the refusal to accept vouchers caused any denial of housing opportunities, promoted racial segregation, or "diminished the amount of rental opportunities for African American or Black prospective tenants previously available before Defendants' policy was implemented." Id.at *33.
Alternatively, the Court found that the refusal to accept housing vouchers is justified by business concerns, including increased costs, administrative delays, and other financial risks.