Supreme Court Decides Bank of America Corp. v. Miami

On May 1, 2017, the Supreme Court of the United States decided Bank of America Corp. v. City of Miami, No. 15-1111, holding (1) that a city qualifies as an “aggrieved person” able to bring suit under the Fair Housing Act, but (2) in order to establish proximate cause required by the Fair Housing Act, a city must do more than show that its injuries foreseeably flowed from the alleged statutory violation.

In 2013, the City of Miami brought two lawsuits in federal court against two banks—Wells Fargo and Bank of America (the “Banks”). The City claimed that the Banks discriminatorily imposed more onerous, predatory conditions on loans made to minority borrowers than to similarly situated nonminority borrowers, in violation of the Fair Housing Act (FHA). Those predatory practices included excessively high interest rates, unjustified fees, teaser low-rate loans that overstated refinancing opportunities, large pre-payment penalties, and unjustified refusals to refinance or modify the loans. Due to the allegedly discriminatory nature of the Banks’ practices, the City claimed that default and foreclosure rates among minority borrowers were higher than among otherwise similar white borrowers and were concentrated in minority neighborhoods, resulting in lower property values and diminished property tax revenue. The City also claimed that the alleged discrimination led to increased demand for municipal services, such as police, fire, and building and code enforcement services, all needed “to remedy blight and unsafe and dangerous conditions.”

The Banks moved to dismiss the cases, and the district court granted the motions, on the grounds that (1) the harms alleged, being economic and not discriminatory, fell outside the “zone of interests” the Fair Housing Act protects; and (2) the complaints failed to show a sufficient causal connection between the City’s injuries and the Banks’ discriminatory conduct. The United States Court of Appeals for the Eleventh Circuit reversed, holding that the City’s injuries did fall within the “zone of interests” protected by the FHA, and that the complaints adequately alleged a connection between the Banks’ alleged conduct and the City’s alleged injuries.

The Supreme Court granted certiorari, addressing the two lower court holdings separately. The first issue was one of “statutory standing”—in other words, whether the Fair Housing Act granted a city (as opposed to a person) the right to sue to combat racial discrimination in housing. The FHA required that a plaintiff be an “aggrieved person,” which the Court held was satisfied if the City’s interests “fell within the zone of interests protected by” the Fair Housing Act.  And on that question, the Court concluded that the City’s claims of financial injury flowing from the alleged discrimination—specifically, lost tax revenue and extra municipal expenses—satisfied the statutory standing requirement. The Court’s past precedents—which required standing under the Fair Housing Act to be defined as “broadly” as allowed under the Constitution—required that result.

On the separate issue of causation, the Court held that foreseeability alone was not sufficient under the Fair Housing Act. That is, it was not enough for a city to plausibly allege that its financial injuries were foreseeable by a bank that allegedly commits racial discrimination in its lending practices. This is because, the Court reasoned, the housing market “is interconnected with economic and social life,” which could cause FHA violations to “cause ripples of harm” far beyond a defendant’s misconduct. The Court could not identify anything in the FHA suggesting that “Congress intended to provide a remedy wherever those ripples travel.” But rather than define the standard itself, the Court remanded so that the lower federal courts could “define, in the first instance, the contours of proximate cause under the FHA and decide how that standard applies to the City’s claims for lost property-tax revenue and increased municipal expenses.”

Justice Breyer delivered the opinion for the Court, in which Chief Justice Roberts and Justices Ginsburg, Sotomayor, and Kagan joined, and in which Justices Thomas, Kennedy, and Alito concurred in part and dissented in part. Justice Gorsuch took no part in the decision of the case.

Download Opinion of the Court