Obama Administration Creates New Debts to Pay Off Trial Lawyers Even as it Demands Increase in Debt Ceiling

by Hans Bader on July 8, 2011 · 5 comments

in Legal, Politics as Usual, Zeitgeist

The Supreme Court ruled in Alexander v. Sandoval (2001) that outside the employment context, people bringing discrimination lawsuits under the civil-rights laws generally have to show intentional discrimination — not unintentional “disparate impact.” (Disparate impact is when a colorblind selection criterion impacts one racial group more than another — like when blacks and whites take the same test, but don’t pass it in equal rates.) A discriminatory purpose also has to be shown for a race or sex discrimination claim to succeed under the Constitution, under Supreme Court rulings like Personnel Administrator of Massachusetts v. Feeney (1979). For example, a veterans’ preference in employment isn’t unconstitutional sex discrimination even if it results in many more men being hired than women because more men happen to be veterans.

But the Obama administration doesn’t agree with this line of Supreme Court decisions, and is ignoring them, in order to keep paying off people who sue the government under a disparate-impact theory — thus adding to the government’s indebtedness at a time when the federal government is already fast approaching a $14 trillion debt ceiling, and thus running out of money.

Recently, it agreed to pay $62 million to settle a lawsuit that it could easily have won, in which the plaintiffs alleged that race-neutral government criteria for paying out housing assistance to Hurricane Katrina victims ended up benefiting blacks less on average than whites. “The formula for the federally funded Louisiana program awarded rebuilding grants up to $150,00 based on a home’s pre-storm value, rather than the cost of rebuilding from the storm damage. The suit argued that those rules hurt black homeowners, whose properties typically had lower values than whites.”

It did so even though a federal appeals court had already denied the plaintiffs’ request for an injunction against the government, noting that they had little if any chance of succeeding in their lawsuit, in Greater New Orleans Fair Housing Action Center v. U.S. Department of Housing and Urban Development (2011).

Earlier, in the Pigford case, it paid over a billion dollars to thousands of black farmers, their lawyers, and others, to settle dubious claims that the agriculture department discriminated in farm loans. The Pigford settlement was rife with fraudulent claims by people who never farmed a day in their life, and received thousands of dollars anyway. As one commentator asked, “If there are only 39,697 African-American farmers grand total in the entire country, then how can over 86,000 of them claim discrimination at the hands of the USDA? Where did the other 46,303 come from?”

The discrimination claims in Pigford were largely argued along disparate impact lines, relying almost exclusively on statistical disparities. (The consent decree initially called for claimants to demonstrate some evidence that they fared differently than a “similarly situated white farmer.” But that standard had little practical value. Claimants ended up needing only an affidavit from a non-family member indicating that they had attempted to contact the USDA about a loan. As a result, claimants ended up receiving money for “discrimination” even when the decision-makers in their area were of the very same race as they were, and applied race-neutral criteria.)

Lawyers often end up getting more money out of these settlements than the alleged victims of discrimination. The result of the Best Buy employment-discrimination class-action settlement was $200,000 for plaintiffs, $10 million for lawyers. The Tenth Circuit’s Brandau decision awarded $17,000 to a lawyer who only managed to collect $1 for his client in a sex-discrimination case.

Federal agencies like the I.R.S. are conceding attorneys fees even when federal law would otherwise bar them — such as a $250,000 fee award to the liberal advocacy group Gay and Lesbian Advocates and Defenders (“GLAD”), under circumstances when the award would clearly be barred by a provision in the Equal Access to Justice Act.

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