Civil rights groups, fearing another devastating loss in court, hope for a settlement in a Mount Holly, N.J., housing dispute

WASHINGTON – Fresh from race-related rulings this summer on voting rights and affirmative action, the Supreme Court now faces another landmark civil rights case that could make it tougher for minorities to prove housing discrimination.

At stake is the Fair Housing Act, a law enacted one week after Martin Luther King’s assassination in April 1968 during the race riots that followed. The justices are being asked to weaken the law as interpreted by the Obama administration and lower courts, and civil rights groups weary over this year’s battles are gearing up for another.

One potential development could reduce the growing tension between those groups and a court they view as antagonistic: a settlement between the small town of Mount Holly, N.J., and low-income residents of a blighted housing complex that has been targeted for redevelopment for a decade. A similar case in St. Paul, Minn., was settled last year, just two weeks before the Supreme Court was to hear oral arguments.

“We have wanted to settle this case from day one,” says Olga Pomar of South Jersey Legal Services, which is representing the residents. “We think that continuing this litigation is not in anyone’s interest.”

But as the two sides negotiate, they are plowing ahead with legal briefs and preparing for oral arguments as early as December, less than six months after the justices’ landmark decision striking down a key section of the 1965 Voting Rights Act.

James Maley, the attorney representing the town, says Mount Holly (pop. 9,536) isn’t out to reverse decades of settled housing discrimination law, in much the same way Shelby County, Ala., brought the case that struck down a key section of the Voting Rights Act.

“Discussions will continue right up until there’s a decision,” Maley says of the settlement talks. The town, he says, “is not focused on making a statement in the world of fair housing.”


The town’s brief was filed last week, marking the first legal step since the justices agreed in June to hear its appeal of an appellate court ruling. At issue is whether the Fair Housing Act requires blacks and other minorities to prove intentional racial discrimination in sales, rentals, zoning or lending practices, or whether a policy’s “disparate impact” is enough to make it illegal.

That difference between intent and impact is at the root of many civil rights laws, from education and employment to disability and voting rights. In most cases, showing that minorities are disproportionately affected is enough; that is how lower courts and the Department of Housing and Urban Affairs have enforced the Fair Housing Act.

But opponents – including developers, bankers, insurers and conservative groups – have challenged that interpretation, noting that the law does not refer to disparate impact. And the high court’s decision to hear the case without a split among federal appeals courts has led civil rights groups to worry that its conservative majority is ready to rule against them.

“It would really cut the legs out of fair housing enforcement,” says Joseph Rich, director of the fair housing project at the Lawyers Committee for Civil Rights Under Law. Proving intentional racial bias is more difficult, he says, because “discrimination is pretty subtle these days.”

Andrew Sandler, chairman of BuckleySandler, a law firm representing the financial services industry, says real discrimination still would be punished if the high court did away with disparate impact claims. The problem now, he says, is that bankers don’t make loans that could benefit all sorts of borrowers when they risk being accused of favoring whites over minorities.

“Innovation is being stifled because of fear that underwriting criteria based on making it easier to make loans for people could have a disparate impact,” Sandler says.


At the center of the case is a 30-acre neighborhood outside Philadelphia of two-story, attached row houses called The Gardens that is blighted and overrun by crime. In 2000, about 1,600 people lived in the neighborhood, about two-thirds of whom were black or Hispanic. Most household incomes were far below the town’s $43,000 median.

Since 2002, Mount Holly officials have sought to demolish the homes and replace them with 520 mostly market-priced apartments and townhomes; 56 would be reserved for Gardens residents.

While about 260 families have moved out, many with relocation assistance from the town, about 70 remain, including about 30 that are parties to the lawsuit. They have charged that any redevelopment of the neighborhood would affect blacks and Hispanics more than whites and is therefore discriminatory.

Not true, the town argues in its recent brief to the court. The Fair Housing Act “prohibits intentional discrimination alone; it does not require local officials to use race as a criterion in determining how best to allocate limited resources in the context of redeveloping an entire section of a community,” it says.

But proving intentional discrimination is “an extremely hard burden for a plaintiff,” Pomar says.” People don’t leave memos that contain obvious smoking guns in this day and age.”

The Obama administration and its civil rights allies aren’t eager to fight this battle in a court with a 5-4 conservative majority. The Department of Justice intervened in the last case to get St. Paul officials to drop their appeal and settle with landlords, who had alleged that the city’s aggressive enforcement policies reduced the amount of affordable housing for minorities.

Shanna Smith, president of the National Fair Housing Alliance, is hopeful this case will end as that one did – with an out-of-court settlement in which minority residents are compensated. That would be in Mount Holly’s interest as well, she says, because litigation “hurts a community’s reputation.”