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disparate impact

I was a guest on Ray Dunaway’s program on Hartford-based WTIC discussing (audio) the new Minneapolis plan for race-conscious school discipline, which is likely to be replicated around the country as more cities and states fall into line with the new Department of Justice policy. Earlier here, and a somewhat different view from Coyote, who writes: “By the way, in today’s legal environment, any private employer who says they don’t put extra scrutiny on terminations of folks in protected classes, or don’t increase the warnings and documentation required internally before firing someone in a protected class, is probably a liar.”

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The Obama Administration has repeatedly dodged cases in fear of judicial review of its controversial application of the disparate impact theory to mortgage lending and other aspects of the housing market, but its position has now met with a stiff rebuke from district court judge Richard Leon [Insurance Journal]:

“This is yet another example of an administrative agency trying desperately to write into law that which Congress never intended to sanction,” Leon wrote.

He called the rule “nothing less than an artful misinterpretation of Congress’s intent that is, frankly, too clever by half.”

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Disparate impact by way of location? “Four environmental groups announced a federal complaint Thursday alleging that North Carolina’s hog farms discriminate against ethnic minorities because the stench and pollution from the swine operations disproportionately affect African Americans, Latinos and Native Americans who live nearby.” [Raleigh News & Observer]

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  • In banking and FCPA cases, targets of DOJ prosecution are disproportionately firms domiciled abroad, and other countries do notice that [Jesse Eisinger, NYT "DealBook"]
  • “Los Angeles’ Confused Suit against Mortgage Lenders” [Mark Calabria, Cato] Providence also using disparate impact suits in hopes of making banks pay for its housing failures [Funnell]
  • Podcast discussion on Operation Chokepoint with Charles J. Cooper, Iain Murray, and Todd J. Zywicki [Federalist Society, earlier]
  • New round of suits against banks based on ATMs’ imperfect wheelchair accessibility [ABA Journal, earlier here]
  • Walgreen’s could save billions in taxes if it moved to Switzerland from U.S. Whose fault if anyone’s is that? [Tax Foundation]
  • “Left unmentioned: how fed regulation and trial lawyers deter banks from protecting themselves with overdraft fees.” [@tedfrank on NYT report about banks' use of databases to turn down business from persons with records of overdrawing accounts, a practice that now itself is being targeted for regulation]
  • Scheme to seize mortgages through eminent domain stalling as cities decline to come on board [Kevin Funnell]

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EEOC roundup

by Walter Olson on March 18, 2014

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Michael Barone has a refresher on its appearance in areas from school discipline to housing to hiring, and how it pressures actors to take more account of race and ethnicity rather than less in their decision making. [Examiner]

My colleague Andrew Coulson:

Over the past several years, University of Rochester professor Joshua Kinsler has explored this question [of racial disparity in school discipline] using uniquely rich datasets. What he finds is that the variation in punishment between the races is largely explained by variation in discipline policies at the school level: black students are more likely to attend very strict schools. …

in order to achieve the administration’s goal of eliminating the racial discipline gap, schools that currently have many disruptive students and strict discipline policies will have to relax those policies.

Which brings us to Kinsler’s most important discovery: easing discipline policies in such schools causes overall student achievement to fall.

Earlier here and here.

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January 17 roundup

by Walter Olson on January 17, 2014

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Caleb Brown interviews me on the very, very bad new federal guidelines demanding that schools avoid disciplinary practices with “disparate impact” — in practice, those that result in more-than-proportional suspensions of minority or special-ed kids. Earlier here.

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The Justice Department and Department of Education have sent out a Dear Colleague letter discouraging schools from pursuing strict discipline policies against student misbehavior, especially against “routine” or “minor” infractions; Education Secretary Arne Duncan cited tardiness and disrespect as examples of the latter. [Christian Science Monitor]

Assuming that the federal government has somehow acquired the legitimate constitutional authority to begin dictating the fine points of disciplinary policy to local schools in the first place — a big if — it might seem at first that much of this is innocuous. Some early coverage, for example, makes it sound as if the letter is mostly aimed at obtaining a reconsideration of zero-tolerance policies, long criticized in this space, as well as the sorts of suspensions and expulsions that are based on far-fetched dangers like finger guns or forbidden hugs.

Unfortunately, there’s much more. The letter represents the culmination of a years-long drive toward imposing tighter Washington oversight on school discipline policies that result in “disparate impact” among racial or other groups. Policies that result in the suspension of differentially more minority kids, or special-ed kids, will now be suspect — even if the rate of underlying behavior is not in fact uniform among every group. (Special-ed kids, for example, include many placed in that category because of emotional and behavioral problems that correlate with a higher likelihood of acting out in misbehavior. Boys misbehave more than girls.)

If the policy helps speed the correction of some overly harsh, mechanical school policies, both under the zero-tolerance rubric and otherwise, it may have some positive side effects. But the disparate-impact premise is a pernicious one that’s sure to create many new problems of its own. [Andrew Coulson, Cato; Scott Johnson, PowerLine]

More: in 2012 Senate testimony, Andrew Coulson pointed out that 1) compared with the alternatives, the use of out-of-school suspensions appears to improve the learning environment for other (non-disciplined) students by protecting them from disruption; 2) zero-tolerance policies were adopted in the first place in part as a defense for administrators against disparate-impact charges. In other words, the new supposed remedy (disparate-impact scrutiny) helped cause the disease to which it is being promoted as the cure. (& welcome Andrew Sullivan, Scott Greenfield, Hans Bader readers; cross-posted at Cato at Liberty)

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  • Still money left in that piggy bank: Justice Department shakes $1.7 billion out of J.P. Morgan because its custody wing kept handling a primary Bernie Madoff account while a distant equity desk grew suspicious of him, in what “looks a bit like a tax on bigness and integration” [Matt Levine, Bloomberg; NPR].
  • Legacy of TARP one of cronyism and lawlessness [Mark Calabria, USA Today]
  • NYT assails a couple of academics as mouthpieces for Wall Street, Felix Salmon has a bit to say about that [Reuters, EconBrowser, Bainbridge, Pirrong] Daniel Fisher on a possible tie-in with Times reporter David Kocieniewski’s earlier piece flaying Goldman Sachs over aluminum warehousing [Forbes]
  • “Court Receptive to Overturning SEC’s Conflict Minerals Disclosure Rule” [Fed Soc Blog]
  • “Target Breach — Are Dodd-Frank ‘Swipe Fee’ Price Controls to Blame?” [John Berlau, CEI "Open Market"] “Volcker Rule Overshoots Wall Street to Hit Utah” [same]
  • “CFPB and Disparate Impact” [Hester Peirce, Point of Law]
  • “It might cost you $39K to crowdfund $100K under the SEC’s new rules” [Sherwood Neiss, VentureBeat via @jerrybrito]
  • Here’s a novel proposal for corporate governance: use the rules agreed upon by the original parties to the transaction [Hodak]

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January 3 roundup

by Walter Olson on January 3, 2014

  • Taxpayers on hook: “N.J. boy left blind and brain-damaged after being beaten by father awarded $166M by jury” [Newark Star-Ledger]
  • “Psychic Love Spell Center stole my money, lawyer alleges in lawsuit” [Houston; ABA Journal]
  • “You can’t win these suits… Move on with your life.” Good advice for someone falsely accused of rape? [Roxanne Jones, CNN]
  • Critical look at California judge’s lead paint ruling [Daniel Fisher/Forbes, earlier here, here]
  • $6 check and apology over “F-word”: “Pub owner’s sarcastic response to Starbucks cease-and-desist letter goes viral” [ABA Journal]
  • Suburb doesn’t want to accept public transit, but feds force its hand by use of controversial disparate impact theory [Dayton Daily News]
  • Randy Barnett: libertarianism as a vehicle for moderation, toleration and social peace [Chapman Law Review/SSRN; one of my favorite academic papers from last year]

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It looks as if someone really doesn’t want the Obama administration’s treasured but shaky “housing disparate impact” theory to come under review by the Supreme Court [Josh Blackman on reports of settlement mooting Mount Holly, N.J. case granted certiorari and pending before the Court; earlier on controversial tactics used to moot St. Paul case through settlement]

More: Piscataway v. Taxman also dropped off the Court’s docket via a mootness tactic. And shorter Doug Kendall/Constitutional Accountability Center: how dare PLF, Cato and IJ take the Court’s word on what the issue is in Mt. Holly? [Ilya Shapiro]

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Under the “disparate impact” theory of housing discrimination, private business decisions or local government policies not motivated by race are deemed unlawful anyway because they have a differential statistical impact on housing transactions by members of a given racial group. A mortgage lender’s policy of lending only to borrowers with high down payments or sterling credit ratings, for example, might be subject to attack on the grounds that it tended to screen out minority borrowers, even if such was not its intention, and was not justified by business necessity. The U.S. Supreme Court has never ruled on this theory; two years ago, in a case called Magner v. Gallagher, it was widely speculated that the Court would disapprove disparate-impact claims, a prospect the Obama administration (which is deeply invested in the theory) managed to dodge only by arranging to moot the case through settlement.

In the new Supreme Court case of Township of Mount Holly v. Mount Holly Gardens Citizens in Action, Inc., plaintiffs claim that it is illegal for a New Jersey township to slate a tract of development land for detached single-family housing because poorer persons are less likely to be able to afford such housing and minority persons are more likely to be poorer. The Obama administration is backing the claim. [earlier] The Cato Institute, along with the Pacific Legal Foundation and several other groups, has filed an amicus brief defending the township. Writes Ilya Shapiro at Cato at Liberty:

The Gardens’ residents can’t afford the new housing not because of their race but because of their poverty. While it’s a harsh truth that a disproportionate number of minorities live in poverty, claiming that making expensive products is racist and that these “racists” have an obligation to compensate the victims of poverty is absurd. The FHA was intended, in the words of Senator Walter Mondale, “to permit people who have the ability to do so to buy any house offered to the public if they can afford to buy it. It would not overcome the economic problem of those who could not afford to purchase the house of their choice.”

For following the law as it was written and attempting to improve a blighted neighborhood without resorting to eminent domain abuse, Mount Holly was rewarded with a decade’s worth of vexatious litigation — which the Supreme Court should now end once and for all.

More: Hans Bader, Examiner.

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I’ve got a new piece at Reason on the long-running dispute between the federal Department of Housing and Urban Development and the government of Westchester County in suburban NYC. Claiming that Westchester has failed to follow through on promises of attracting more minority homeowners, HUD is suing the county and wielding funding cutoffs to get it to step up a large commitment to subsidized housing, override town zoning rules, and enact an ordinance forbidding private landlords from turning away Section 8 tenants. The WSJ editorialized yesterday on the subject. Further background: ironic that county is being penalized after seeking to cooperate [Gerald McKinstry, Newsday; Joanne Wallenstein, Scarsdale 10583]; former Democratic county legislator backs county executive Rob Astorino on so-called “source of income” legislation [Journal-News]; similar law already in effect in Washington, D.C. [Examiner]; earlier coverage here, here, etc., and my 2009 City Journal account.

P.S. Shortly after our piece, a Second Circuit panel ruled the county out of compliance. ProPublica, the foundation-supported reporting-and-opinion outfit, has been doing a series of reporting-and-opinion pieces taking the plaintiffs’ side, including this latest.

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Title VI of the Civil Rights Act of 1964, which prohibits discrimination by recipients of federal education spending and other programs, does not currently allow private litigants to sue demanding punitive (as distinct from compensatory) damages, nor do the courts entertain private suits complaining of “disparate impact” under it. Some trial lawyers and advocates of expansive discrimination law have long wanted to change that, and now Hans Bader of the Competitive Enterprise Institute is warning that there are efforts afoot to slip an expansion into law by attaching it to some “must-pass” piece of legislation. An effort by Democratic senators to attach it to the Defense Authorization Act appears to have fallen short, but it may be back as a rider on other bills, with serious courtroom consequences, Bader warns, for schools and colleges and also for doctors and hospitals.

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April 23 roundup

by Walter Olson on April 23, 2012

  • Fearful of adverse Supreme Court ruling, Department of Justice said to have exercised pressure on city of St. Paul to buckle in housing-disparate-impact case [Kevin Funnell]
  • Justice Janice Rogers Brown: we can dream, can’t we? [Weigel] The Brown/Sentelle opinion everyone’s talking about, questioning rational basis review of economic regulation [Hettinga v. U.S., milk regulations; Fisher, Kerr]
  • Claim: “The Bachelor” TV franchise discriminates on basis of race [Jon Hyman]
  • Chicago sold off municipal parking garages. Good. It also promised to disallow proposals for private parking nearby. Not good [Urbanophile]
  • Bad day in court for Zimmerman prosecution [Tom Maguire, more, Merritt]
  • “I want some systematic contacts wherever your long arm can reach” — hot-‘n’-heavy CivPro music video satire [ConcurOp, language]
  • Federal judge dismisses charge against man who advocated jury nullification outside courthouse [Lynch, Sullum, earlier]

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Following extensive rumblings of an impending crackdown, the Equal Employment Opportunity Commission has sued Kaplan, the private education company, over its alleged policy of considering applicants’ credit records in making hiring decisions [Baltimore Sun, George Lenard; earlier here and here]

More from Ted Frank: “Somebody should tell the Transportation Security Administration, which also performs credit checks: they reject job applicants if they have more than $5000 in overdue debt.” And from the same link:

But what’s also driving the push to check credit is fear of lawsuits, [employment attorney Manesh] Rath said, especially in businesses where employees have access to customers’ money or possessions, including the banking, property management, hotel and home health care industries.

…”The employer will have a tough time defending itself,” Rath said, “if it didn’t take the simple measure of doing a background check.”

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