Earlier this year, the Supreme Court was poised to hear oral arguments in the fully briefed Magner v. Gallagher, a case presenting the issue of whether a “disparate impact” cause of action may be brought under the Fair Housing Act. Now, the theory in disparate-impact causes of action is that someone can be held liable for racial discrimination if he uses a selection device that leads to a racial imbalance, even if the device is neutral on its face, in its intent, and as applied. In the housing context, for example, rejecting mortgage applicants because of their credit history can be challenged if this results in a higher percentage of blacks than Asians being turned down, and it then becomes up to the lender to prove to a jury some degree of “business necessity” for his practice. The Obama administration is a great fan of this approach to civil-rights enforcement, and it was quite upset that the Supreme Court might rule it illegal. So it successfully leaned on the City of St. Paul, a petitioner in the suit, to withdraw its case from the Supreme Court.
The Magner case stems from the city of St. Paul deciding to crack down on slumlords by enforcing already written laws and regulations in the housing code (e.g., fire safety). The slumlords got together and sued the city for racial discrimination because most of their tenants are black, and they argued that enforcing the laws would have disparate impact on blacks because that would raise the slumlords' costs, which they would pass on to their black tenants. (I don't know what race(s) the slumlords are.) So, that would be discrimination!
The plaintiffs and defendants split the first two rounds, and the Supreme Court accepted the case.
I imagine the Obama Administration found Magner to be an extremely hot potato. On the one hand, the Roberts Court might use this ridiculous case to do major damage to the legal concept of disparate impact. On the other hand (and this is much more speculative, but it's fun to follow out the logic), the Roberts Court just might have strongly uphold disparate impact, and then started applying the logic of disparate impact to do who knows what damage to liberal interests.
For example, how about the Endangered Species Act, which has a huge disparate impact in reducing the number of blacks and (especially) Hispanics in sophisticated locales by driving up the cost of new developments.
Or, in employment, disparate impact is a huge deal in hiring firemen, but it's a very small deal in Hollywood and Silicon Valley. You might think that being a big city fireman and being a movie set technician are fairly similar jobs: they are among the best blue collar jobs in America in terms of pay and fun. But they are wildly different in terms of discrimination lawsuits. But nobody ever notices. Movie crews look like the LA Fire Department in 1975 — a whole bunch of competent white guys. You might think that's illegal these days, but the discrimination laws don't apply to Hollywood. Angelina Jolie would not be pleasant to be around after she saw the dailies of what her wrinkles looked like with a cut rate diverse lighting crew.
The Obama Administration likes to occasionally poke at liberal areas like Marin County, but it likes doing it at its own discretion, maybe getting some Awardable Housing units to hand out to allies. You know, that kind of thing. The last thing in the whole world the Obama Administration wanted in an Election Year was the chance of the Supreme Court either cracking down disparate impact or calling its bluff and ordering it to enforce it impartially.
So, the word came down from inside the Obama Administration: make this case disappear:
When the Justice Department’s coercion came to light, two House committees decided to investigate, and what they found is the subject of today’s Journal editorial. It turns out that part of the deal with the City of St. Paul was that the Justice Department agreed not to intervene in a separate, False Claims Act lawsuit alleging that the City had made false certifications to the federal government. That deal was made at the insistence of Civil Rights Division head Thomas Perez and over the objections of the department’s career attorneys in the Civil Division. Oh, and here’s another nugget, not mentioned by the Journal: The false certification was that the city was using federal funds to create jobs for low-income workers of all races, when in fact it was only focused on employing minorities. To Perez, then, it was a win-win deal: He would ensure that the Obama administration could continue to bring disparate-impact lawsuits (which result in politically correct racial discrimination) in exchange for giving the city a pass on its policy of . . . politically correct racial discrimination. Of course, staying out of the False Claims Act suit may have cost U.S. taxpayers over $180 million, according to the House committees, but who says that social justice is cheap?