Management Company Not Liable for Racial Discrimination

Facts: A nonprofit organization that seeks to maintain racially and economically inclusive communities sued a property management company alleging violations of the Fair Housing Act. The lawsuit claimed that the company has a general policy that it won’t negotiate with, rent to, or make certain units available to voucher households. The nonprofit claimed that the company applies this policy in white, non-Hispanic areas and applies it even when the combined income of the family and the voucher subsidy meet or exceed the contract rent for the unit.

The lawsuit stemmed from the company’s alleged refusal to negotiate to rent to the nonprofit’s African-American clients in white neighborhoods despite the fact that the nonprofit offered various bonuses, sublease agreements, and other incentives to the owner to address the objections they cited in refusing voucher holders. The nonprofit claimed that the company routinely rents to African-American voucher holders in majority African-American neighborhoods.

The lawsuit alleged that the company’s policy of refusing to negotiate with or rent to voucher households perpetuates racial segregation by excluding the predominantly black voucher population from renting available multifamily units in white, non-Hispanic areas.

Ruling: A Texas district court granted the company’s request to dismiss the nonprofit’s complaint.

Reasoning: Disparate treatment is shown when one group is treated less favorably than another because of their race, color, or other protected characteristic. Here, the company refused to rent to or negotiate with Section 8 voucher holders, regardless of race or color. No facts were alleged to show that the company implements its policy in a way where it considers the race or color of the Section 8 voucher holder. According to the court, the nonprofit’s issue is with the existence of the policy, which is indicative of disparate impact rather than disparate treatment.

The court said the nonprofit’s disparate impact claim against the company also failed. Disparate impact occurs when policies, practices, rules, or other systems that appear to be neutral result in a disproportionate impact on a protected group. Here, the nonprofit didn’t prove that the company’s policy caused a “robust” or any statistical disparity. The nonprofit presented the court with a sequence of events in an attempt to show how the policy caused a statistical disparity for a disparate impact claim. The court saw the statistical information and arguments presented by the nonprofit as conclusory rather than descriptive of how the company’s policy actually caused a disparate impact.

The court said that the nonprofit also failed to show how the company’s policy adversely affected African-American prospective renters. None of the allegations showed or inferred that the company’s policy diminished the number of rental opportunities for African-American prospective tenants previously available before the policy was implemented.

• Inclusive Communities Project, Inc. v. Lincoln Property Company, August 2017