Disparate theory is the idea that racial discrimination occurs, even when there is no intent to discriminate. This “theory” eliminates the “discrimination” part of the behavior actually prohibited by the Fair Housing Act of 1968, and it is the justification for a HUD rule written to allow a legal finding of discrimination if there is merely a statistical showing of disparity. This “theory” also disregards the fact that there are many factors in play with such disparity besides actual discrimination, things like financial qualifications, criminal history, and so on.

US District Judge Richard Leon has thrown the BS Flag on the concept in American Insurance Assoc v HUD. He also castigated the government for attempting to apply such a standard, and he decried Labor Secretary Tom Perez’ behavior related to the case. AIA is a case in which the insurer sued the government over that HUD rule, arguing that it was illegal as no such authority exists in the FHA to permit it.

A major part of Leon’s ruling centered on the distinction between “disparate treatment” and “disparate impact.” The former represents actual discrimination—the denial of this or mandate of that based solely on the color of a man’s skin, for instance. The latter is only an outcome—the result of a broad-based and broadly applied criterion, like financial qualifications—and an absence of discriminatory intent other than, e.g., those financial qualifications.

After leading the Federal government, as defendants in AIA, through a grade school use of the dictionary in defining the words the government used in its own briefs to justify the HUD rule, Leon pointed out that, not only did the text of the FHA not say what the government claimed it said—that disparate impact, in addition to treatment, was explicitly barred by the Act—Leon pointed out that the Act contains no language barring disparate impact and further that Congress knew how to do so, and so would have done so, had that been part of the Act’s goal [citations omitted]:

Put simply, Congress knows full well how to provide for disparate-impact liability, and has made its intent to do so known in the past by including clear effects-based language when it so chooses. The fact that this type of effects-based language appears nowhere in the text of the FHA is, to say the least, an insurmountable obstacle to the defendants’ position regarding the plain meaning of the Fair Housing Act.

Leon also was unimpressed with the Federal government’s behavior in attempting to keep disparate impact questions out of the courts altogether. In a footnote in his ruling, Leon said

…both Mount Holly and Magner were settled before the Court could decide the issue. The circumstances behind the Magner settlement, however, are particularly troubling. Indeed, a Congressional Joint Staff Report found that—in negotiating a quid pro quo deal that facilitated Magner’s settlement—then-Assistant Attorney General Thomas Perez “exert[ed] arbitrary authority” to settle the case and “placed ideology over objectivity and politics over the rule of law …. Rather than allowing the Supreme Court to freely and impartially adjudicate an appeal that the Court had affirmatively chosen to hear, [Perez] openly worked to get the appeal off of the Court’s docket.”

In his concluding remarks, Leon also wrote,

This is, yet another example of an Administrative Agency trying desperately to write into law that which Congress never intended to sanction. While doing so might have been more understandable—and less troubling—prior to the Supreme Court’s decision in Smith, in its aftermath it is nothing less than an artful misinterpretation of Congress’s intent….

This is a blow for freedom and for sound business sense in making decisions.

The opinion can be seen here.