Golden State Today

California Attorney General Rob Bonta has announced his participation in an amicus brief before the U.S. Court of Appeals for the Seventh Circuit, supporting the U.S. Department of Housing and Urban Development's (HUD) Discriminatory Effects Rule. This rule, under the federal Fair Housing Act (FHA), addresses housing practices that appear neutral but are discriminatory, causing a "disparate impact" on certain groups.

The insurance industry, represented by the Property Casualty Insurers Association of America, is contesting this rule and appealing a trial court decision from March 2024 that favored HUD. Attorney General Bonta previously supported this rule in an amicus brief submitted to the trial court on October 17, 2023.

"Housing discrimination has no place in our country. While we have made progress in combatting this problem, there is still more work to do," stated Attorney General Bonta. "My office has previously supported the Biden-Harris Administration’s defense of the Discriminatory Effects Rule in court, and we are continuing to back them today. Individuals should be able to bring disparate-impact claims to remedy ongoing discrimination in the insurance industry."

The coalition argues that despite FHA's enactment, residential segregation persists and that disparate-impact liability is essential for addressing both intentional and unintentional housing discrimination.

Discrimination in homeowner's insurance may manifest as inferior policy coverage or different terms based on neighborhood demographics. Disparate-impact claims have been instrumental in addressing such issues. A recent class action against State Farm alleged racial disparities due to algorithmic processes affecting claim payouts differently for Black claimants compared to white claimants; the court found a valid disparate-impact claim under FHA.

The attorneys general countered the insurance industry's stance that state laws protect insurers from federal disparate-impact liability by emphasizing collaboration between federal law and state laws like California's to prevent all forms of discrimination.

This legal position was reinforced by a 2015 U.S. Supreme Court decision regarding disparate-impact claims under FHA.

A separate challenge from the National Association of Mutual Insurance Companies remains pending before another appeals court. Attorney General Bonta also joined an amicus brief supporting HUD's rule in this case on July 11, 2024.

Joining Attorney General Bonta are attorneys general from Arizona, Colorado, Delaware, District of Columbia, Illinois, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont and Washington.