Attorney General Bonta Supports HUD’s Efforts to Fight Ongoing Housing Discrimination

OAKLAND — Joining a coalition of 18 attorneys general, California Attorney General Rob Bonta today filed an amicus brief in support of the U.S. Department of Housing and Urban Development’s (HUD) Discriminatory Effects Rule. The rule was adopted by HUD to implement the federal Fair Housing Act (FHA), which aims to root out racial and other forms of prohibited discrimination from housing and housing-related services. Currently being challenged by the insurance industry, the Discriminatory Effects Rule says insurers and other parties are liable for housing practices that may appear neutral but in reality are discriminatory and have a “disparate impact” on certain populations.

“Housing discrimination is no longer what it once was: explicit and obvious for all to see. Instead, housing discrimination remains alive and well in mostly implicit ways. The U.S. Department of Housing and Urban Development’s rule recognizes that unfortunate reality and empowers individuals to do something about it,” said Attorney General Bonta. “I fully support the Biden Administration as it defends the rule in court. At the California Department of Justice, we are committed to eliminating racial, ethnic, and other unlawful disparities in housing and every other aspect of society.”  

In the amicus brief, Attorney General Bonta and other members of the coalition argue that: 

• Despite the enactment of the FHA, vestiges of residential segregation persist in American social life, and the discriminatory effects doctrine, including disparate-impact liability, is a crucial tool to fight ongoing housing discrimination — whether intentional or unintentional.
• Discrimination in homeowner’s insurance can take many forms — such as offering insurance policies with inferior coverage, ignoring interested customers, and imposing different terms and conditions based on neighborhood — and disparate-impact claims have helped to redress discrimination in the homeowner’s insurance market. 
• For instance, Black plaintiffs recently brought a class action lawsuit against State Farm for its use of algorithms that “allegedly resulted in statistically significant racial disparities in how the insurer processed claims.” According to the plaintiffs, Black claimants had to wait longer to receive payouts as compared to white claimants. The court ruled in the plaintiffs’ favor, finding that they successfully stated a disparate-impact claim under the FHA. 
• State law does not categorically shield homeowner’s insurers from federal disparate-impact liability. Indeed, federal law and state law work together to prohibit both intentional and disparate-impact discrimination.
• The availability of a disparate-impact claim under the FHA was reinforced by the U.S. Supreme Court’s 2015 decision in Texas Department of Housing & Community Affairs v. Inclusive Communities Project, Inc.

After the insurance industry challenged the rule, the U.S. District Court for the District of Columbia granted summary judgment in favor of HUD. The insurance industry has appealed the decision to the U.S. Court of Appeals for the District of Columbia. In filing today’s amicus brief, Attorney General Bonta joins the attorneys general of Arizona, Colorado, Delaware, Illinois, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Washington, and the District of Columbia. 

A copy of the amicus brief can be found here.