The Corner

Disparate Impact Goes to Court

Monday’s Supreme Court decision regarding voter registration (in Arizona v. InterTribal Council of Arizona) largely drowned out another action taken by the Court. But that little-noted action – an order granting certiorari in Mt. Holly, NJ v. Mt. Holly Gardens Citizens – is no doubt giving the White House and the Justice Department heart palpitations.

The Mt. Holly case involves the dubious “disparate impact” legal theory championed by the administration. Assistant attorney general for civil rights (and Obama labor-secretary nominee) Thomas Perez has applied that theory vigorously to force large settlements from financial companies even in cases where there was no evidence of actual racial discrimination.

Perez’s nomination has run into problems in the Senate because of his involvement in getting a prior disparate-impact case before the Supreme Court, Magner v. Gallagher, dismissed before the Court could hear oral arguments. Perez managed to get the case dismissed by arranging a quid pro quo deal with the city of St. Paul. The Minnesota city had asked the Supreme Court to review its case, but Perez convinced the city to withdraw its petition in exchange for the Justice Department’a agreeing not to intervene in a False Claims Act case against St. Paul worth as much as $200 million. The Wall Street Journal says Perez “stretched the ethical boundaries of his office to prevent” a Supreme Court ruling on disparate impact. (Perez also used his private e-mail account in the matter, a violation of DOJ rules and federal law.)

The administration subsequently had the Department of Housing and Urban Development issue a regulation endorsing the use of disparate impact. The thought was that the regulation would make it tougher to challenge the theory, because the Supreme Court gives great deference to regulatory decisions by federal agencies. But on Monday, the Court granted review of Mt. Holly, despite a brief from the solicitor general telling the Supreme Court that it should not take the case. 

Arguments will be heard in the fall. Don’t be surprised if the administration tries to pressure the city of Mt. Holly into dismissing its case before then. They are none too eager to have the Court examine their favorite legal theory.


The Latest