By Lawrence Hurley
WASHINGTON (Reuters) - For the second time in two years, a case before the U.S. Supreme Court that could limit housing discrimination claims might be resolved before the justices have a chance to rule on it.
Last month, the court agreed to consider whether a New Jersey township's plan to demolish lower-income housing and replace it with new units, some available at market rates, violated the 1968 Fair Housing Act because it would be less affordable for minorities. The court will handle the case in its next term, which starts in October.
However, the court might never decide the case because the parties are in settlement talks, according to a June 26 letter filed with the court by a lawyer for the town last week.
In weighing the lawsuit filed by Mount Holly Gardens Citizens in Action against the township of Mount Holly, the court could decide whether the statute allows for so-called "disparate impact" claims based on seemingly neutral practices that have a discriminatory effect.
Conservative activists hope the court will disallow such claims, while civil rights groups and the Obama administration have been keen to keep the case away from the conservative-leaning Supreme Court.
"A settlement would be a victory for fair housing advocates because the disparate impact issue would not be before the Supreme Court," said Jon Greenbaum, an attorney at the Lawyers' Committee for Civil Rights Under Law.
A similar scenario played out two years ago in a case that the court agreed to hear over a dispute between landlords and the city of St. Paul, Minn. On that occasion, the Obama administration and civil rights groups urged the city to drop its appeal.
The city withdrew the appeal in February 2012, just weeks before oral arguments were due to take place.
As it did in the St. Paul case, the Obama administration asked the court not to take the Mount Holly case, but there is no evidence the Justice Department is playing any role in encouraging a settlement. Lawyers involved in the case and civil rights groups declined to comment, as did a Justice Department spokeswoman.
In the Mount Holly case, town attorney James Maley said in the June 26 letter, which asked for more time to file court papers, that the parties "are currently engaged in settlement discussions in an attempt to resolve the matter."
The court agreed on Wednesday to a 25-day extension.
Olga Pomar, a lawyer with South Jersey Legal Services, who represents the residents, confirmed talks were taking place.
"We are hopeful it will lead to settlement, but it's too early to tell," she said.
The Fair Housing Act, passed by Congress to prohibit bias based on race in the sale or rental of housing and related services, does not explicitly allow disparate impact claims. The Supreme Court has never ruled on the issue.
The case could affect other laws the government has interpreted to allow disparate impact claims. For example, the Consumer Finance Protection Bureau has said it could make such claims over lending practices under the Equal Credit Opportunity Act.
The Mount Holly dispute arose in 2002 when the township decided to redevelop the area known as Mount Holly Gardens because of a high crime rate, poor maintenance and other problems. The area had a higher proportion of minority residents than other parts of the town.
The residents filed suit after complaining the new proposed market-rate housing would be financially out of reach for them.
A federal judge dismissed the lawsuit, but in a June 2012 ruling an appeals court in Philadelphia ruled for the residents.
The case is Township of Mount Holly v. Mount Holly Gardens Citizens in Action, U.S. Supreme Court, No.11-1507.
(Reporting by Lawrence Hurley; Editing by Howard Goller and Andre Grenon.)