Golden State Today

California Attorney General Rob Bonta has joined a coalition of 18 attorneys general in filing an amicus brief supporting the U.S. Department of Housing and Urban Development’s (HUD) Discriminatory Effects Rule. This rule, which implements the federal Fair Housing Act (FHA), addresses racial and other forms of prohibited discrimination in housing and related services. The insurance industry is currently challenging the rule, which holds insurers and other parties liable for housing practices that may appear neutral but are discriminatory in effect, causing 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 their amicus brief, Attorney General Bonta and his colleagues argue that despite the FHA's enactment, remnants of residential segregation persist in American social life. They emphasize that the discriminatory effects doctrine, including disparate-impact liability, is essential for combating ongoing housing discrimination—whether intentional or unintentional.

The brief highlights various forms of discrimination in homeowner’s insurance such as offering inferior coverage policies, ignoring interested customers, or imposing different terms based on neighborhood demographics. It cites a recent class action lawsuit against State Farm by Black plaintiffs who alleged that algorithms used by the insurer resulted in significant racial disparities in claim processing times. The court ruled in favor of the plaintiffs under a disparate-impact claim according to FHA guidelines.

Furthermore, state law does not categorically shield homeowner’s insurers from federal disparate-impact liability; rather, federal and state laws work together to prohibit both intentional and disparate-impact discrimination.

The availability of disparate-impact claims 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 being challenged by the insurance industry, HUD's rule received summary judgment from the U.S. District Court for the District of Columbia favoring HUD. The insurance industry has since appealed this decision to the U.S. Court of Appeals for the District of Columbia.

Attorney General Bonta joins attorneys general from Arizona, Colorado, Delaware, Illinois, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina Oregon Pennsylvania Rhode Island Washington and District Columbia filing today’s amicus brief.