The Magazine

Thomas Perez Makes a Deal

How Obama’s Labor nominee made a Supreme Court case disappear

May 27, 2013, Vol. 18, No. 35 • By TERRY EASTLAND
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On November 7, 2011, the Supreme Court decided to hear Magner v. Gallagher, a case about racial discrimination in housing. Oral argument was scheduled for February 29, 2012. But shortly before that, on February 10, the case was dismissed. 

Thomas Perez

Thomas Perez


Dismissal of a case about to be argued in the Supreme Court is unusual, but not unheard of; it happens maybe once a term. The question the Court had agreed to review in Magner was one that Thomas Perez, the assistant attorney general for civil rights, did not want the Court to decide. Making the case “go away,” as one Justice Department lawyer put it, thus became a “top priority” for Perez, as he himself said. Perez achieved it in a brisk three months. 

For more than a year now the House Committee on Oversight and Government Reform and the House and Senate Judiciary Committees have been pursuing the question of how Magner came to be dismissed and thus to evade Supreme Court review. The committees’ joint staffs released their report on April 15, just before confirmation hearings for Perez, the president’s nominee for secretary of labor, began before the Senate Health, Education, Labor and Pensions Committee. The joint staff report makes clear the outline of the Magner story, and Perez’s role is central.

The case had its origins more than a decade ago. In 2002, St. Paul, Minnesota, decided to step up enforcement of its housing code for rental properties. In 2004 and 2005, several property owners sued St. Paul in federal district court, alleging that the enhanced enforcement effort violated the prohibition of racial discrimination in the Fair Housing Act (FHA). 

The district court threw out the case, finding that the plaintiffs hadn’t made a strong enough claim for a trial. But on appeal, the U.S. Court of Appeals for the Eighth Circuit decided they had done so and reinstated their claim of “disparate impact.” The city then appealed that ruling to the Supreme Court. In taking the case, the Court asked the parties to address a question it had never resolved but which was certainly ripe: whether disparate impact claims are “cognizable under the FHA”​—​meaning, whether in St. Paul or anywhere else, they may be brought before a court.

Disparate impact is not to be confused with “disparate treatment,” the different treatment of someone because of his race or some other forbidden category, such as national origin, sex, or religion. Disparate impact targets companies and other entities for policies that are neutral and nondiscriminatory in their intent but have a disproportionate impact on people of a particular race, ethnicity, sex, or religion. For example, in a 1971 Supreme Court case, a power company was accused of discrimination because it required applicants to have a high school diploma. The policy adversely affected those lacking diplomas​—​vastly more blacks than whites. 

Disparate impact has been duly legislated in employment and some other areas, but not in housing. It is not provided for in the Fair Housing Act.

Eleven appeals courts, however, have concluded that disparate impact claims may be brought under the FHA. Parties have used the theory to challenge race-neutral actions by landlords, businesses, and local governments that affect groups differently. In Magner, the plaintiffs contended that St. Paul’s aggressive code enforcement burdened their rental businesses and decreased the amount of affordable housing in the city​—​developments, they said, that had a disparate impact on African Americans, who made up 60 to 70 percent of the city’s low-income renters.

Had Magner remained on the Court’s docket, and had the Supreme Court decided that disparate impact claims are not cognizable under the FHA, St. Paul would have won its case. But such a ruling would have denied Perez the chief tool he had been using to bring housing discrimination cases​—​a major initiative of his tenure at the Civil Rights Division. It also might have constrained his use of disparate impact in other areas, such as employment. And it could have complicated efforts elsewhere in the administration to apply disparate impact in new provinces, among them criminal background checks and school discipline.

Russlynn Ali, then the assistant secretary of education for civil rights, said during a press conference in March 2010 that “disparate impact is woven throughout civil rights enforcement in [the Obama] administration.” To continue the metaphor, the chief weaver of this thread is Perez, who holds the most important civil rights office in the government. Perez has called disparate impact “the linchpin” of civil rights enforcement.

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