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How Mischievous Obama Administration Officials Scuttled an Important Supreme Court Case

September 2, 2013 in Economics

By Trevor Burrus

Trevor Burrus

How would you feel if you knew the federal government was making secret deals to keep cases harmful to its agenda out of the Supreme Court? Well, it has been.

At the center of this saga are two cases involving St. Paul, Minnesota. One case, Magner v. Gallagher, sat on last term’s Supreme Court docket, the city having brought it to the Court to ask the justices to overrule a darling policy of the Obama administration. The other case was a potential lawsuit against St. Paul that the federal government was considering supporting. A deal was struck where the city would drop their Supreme Court appeal in exchange for the federal government not supporting the lawsuit against the city.

That, at least, was the finding of a report from the House Committee on Oversight and Government Reform. The report described the backroom deal as harming “the rule of law in the United States and the reputation of the Department of Justice as a fair and impartial arbiter of justice.”

To understand the nuances of the story we must first understand why Magner was a potentially landmark case that could have radically changed the administration’s housing policies, as well as its prosecution of big banks for non-intentional, statistical discrimination, the so-called “disparate impact” theory of discrimination.

Disparate impact occurs when a neutral policy, such as using credit scores to determine interest rates, has a disproportionate impact on minorities. No intentional discrimination is alleged, but when a company faces a charge of disparate impact, the burden shifts to it to show that the policy is justified. In reality, demonstrating this is very difficult, and companies often settle to avoid drawn-out litigation.

The Obama administration is a big fan of disparate impact theory. They’ve used it to extract large settlements from big banks, and they even created an entire unit in the Justice Department to pursue claims.

Yet it is not clear that the language of the Fair Housing Act (FHA) allows for disparate impact claims. Although nearly every court of appeals has held that it does, the Supreme Court has not yet weighed-in directly on the issue.

Magner v. Gallagher was the case that would have answered that question, and the administration feared that a majority of justices would confine the law’s prohibitions to intentional, not incidental, discrimination.

Thus a secret deal was struck, and the official doing the dealing was none other …read more

Source: OP-EDS

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