930 F.3d 660
5th Cir.2019Background
- Plaintiff Inclusive Communities Project (ICP), a fair-housing nonprofit, sued Lincoln Property Company alleging a facially neutral "no vouchers" policy that refuses Section 8 tenants, claiming it causes disparate impact and perpetuates segregation in Dallas-area housing.
- ICP alleges Lincoln advertises and enforces a blanket refusal to rent to voucher holders at apartment complexes in majority-white census tracts with units affordable under vouchers.
- ICP pleaded statistical allegations: voucher-using households in the Dallas area are over 80% African-American and 10% or less white, while the non-voucher population is ~19% African-American and ~53% white.
- The district court dismissed ICP’s disparate-impact claims under Rule 12(b)(6); the Fifth Circuit panel affirmed in Inclusive Cmtys. Project v. Lincoln Prop. Co., 920 F.3d 890 (5th Cir. 2019).
- A petition for rehearing en banc was denied; several judges dissented, arguing the panel imposed an overly onerous pleading standard inconsistent with Texas Dep't of Hous. & Cmty. Affairs v. Inclusive Cmtys. Project (Supreme Court).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FHA §3604 permits disparate-impact claims | ICP: FHA allows disparate-impact claims and alleged a specific policy (no-vouchers) causing statistical disparity | Lincoln: voluntary voucher participation and demographic disparities alone do not establish liability; ICP failed to plead robust causation | Panel: affirmed dismissal for failure to meet an elevated "robust causation" pleading requirement |
| Pleading standard at Rule 12(b)(6) for FHA disparate-impact claims | ICP: plausibility standard (Twombly/Iqbal) suffices when complaint alleges a policy plus statistics that make causation plausible | Lincoln: plaintiff must plead stronger proof that the policy caused the specific racial composition of voucher holders (including pre-policy demographics) | Panel: required heightened showing of causation at the pleading stage; dissent argued this is too demanding |
| Whether a facially neutral policy perpetuating segregation is actionable | ICP: segregative-effect claim requires showing a policy perpetuates existing segregation; alleged facts suffice to plausibly plead perpetuation | Lincoln: contends plaintiffs must show more direct causal linkage—e.g., change in enforcement or that policy produced the voucher demographics | Dissent: segregative-effect claim plausibly pleaded; panel majority treated such claims more narrowly |
| Role of discovery and statistical proof pre-dismissal | ICP: some evidence (timing, enforcement, precise disparity) may be unavailable without discovery; complaint must survive to obtain discovery | Lincoln: plaintiff had not alleged sufficient factual detail to show causation without discovery | Panel: dismissed for inadequate pleading; dissent criticized denying plaintiffs access to discovery to prove causation |
Key Cases Cited
- Inclusive Cmtys. Project v. Texas Dep't of Hous. & Cmty. Affairs, 747 F.3d 275 (5th Cir. 2014) (Fifth Circuit recognized FHA disparate-impact claims and adopted HUD framework)
- Tex. Dep't of Hous. & Cmty. Affairs v. Inclusive Cmtys. Project, 135 S. Ct. 2507 (U.S. 2015) (Supreme Court held FHA encompasses disparate-impact claims but requires a causal connection between policy and disparity)
- Inclusive Cmtys. Proj. v. Lincoln Prop. Co., 920 F.3d 890 (5th Cir. 2019) (panel opinion affirming Rule 12(b)(6) dismissal and interpreted robust causation to demand heightened pleading)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (announced the plausibility pleading standard under Rule 8)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (clarified application of plausibility standard and pleading requirements)
- Griggs v. Duke Power Co., 401 U.S. 424 (U.S. 1971) (classic disparate-impact analysis recognizing practices fair in form but discriminatory in operation)
- Wards Cove Packing Co. v. Atonio, 490 U.S. 642 (U.S. 1989) (addressed causation and links between particular practices and statistical disparities)
- Reyes v. Waples Mobile Home Park L.P., 903 F.3d 415 (4th Cir. 2018) (Fourth Circuit found pleading adequate where policy and disparity alleged; discussed enforcement-change context)