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Bank of America Corp. v. City of Miam

United States Supreme Court

May 1, 2017

BANK OF AMERICA CORP. ET AL.
v.
CITY OF MIAMI, FLORIDA

          Argued November 8, 2016

         ON WRITS OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT No. 15-1111.

         The City of Miami filed suit against Bank of America and Wells Fargo (Banks), alleging violations of the Fair Housing Act (FHA or Act). The FHA prohibits, among other things, racial discrimination in connection with real-estate transactions, 42 U.S.C. §§3604(b), 3605(a), and permits any "aggrieved person" to file a civil damages action for a violation of the Act, §§3613(a)(1)(A), (c)(1). The City's complaints charge that the Banks intentionally targeted predatory practices at African-American and Latino neighborhoods and residents, lending to minority borrowers on worse terms than equally creditworthy nonminority borrowers and inducing defaults by failing to extend refinancing and loan modifications to minority borrowers on fair terms. The City alleges that the Banks' discriminatory conduct led to a disproportionate number of foreclosures and vacancies in majority-minority neighborhoods, which impaired the City's effort to assure racial integration, diminished the City's property-tax revenue, and increased demand for police, fire, and other municipal services. The District Court dismissed the complaints on the grounds that (1) the harms alleged fell outside the zone of interests the FHA protects and (2) the complaints failed to show a sufficient causal connection between the City's injuries and the Banks' discriminatory conduct. The Eleventh Circuit reversed.

         Held:

         1. The City is an "aggrieved person" authorized to bring suit under the FHA. In addition to satisfying constitutional standing re quire- ments, see Spokeo, Inc. v. Robins, 578 U.S.__, __, a plaintiff must show that the statute grants the plaintiff the cause of action he or she asserts. It is presumed that a statute ordinarily provides a cause of action "only to plaintiffs whose interests 'fall within the zone of interests protected by the law invoked.'" Lexmark Int'l, Inc. v. Static Control Components, Inc., 572 U.S.__, __.

         The City's claims of financial injury are, at the least, "arguably within the zone of interests" the FHA protects. Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 153. The FHA defines an "aggrieved person" as "any person who" either "claims to have been injured by a discriminatory housing practice" or believes that such an injury "is about to occur, " 8 U.S.C. §3602(i). This Court has said that the definition of "person aggrieved" in the original version of the FHA "showed 'a congressional intention to define standing as broadly as is permitted by Article III of the Constitution, ' " Trafficante v. Metropolitan Life Ins. Co., 409 U.S. 205, 209; and has held that the Act permits suit by parties similarly situated to the City, see, e.g., Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91 (village alleging that it lost tax revenue and had the racial balance of its community undermined by racial-steering practices). Against the backdrop of those decisions, Congress did not materially alter the definition of person "aggrieved" when it reenacted the current version of the Act.

         The Banks nonetheless contend that the definition sets boundaries that fall short of those the Constitution sets. Even assuming that some form of their argument is valid, this Court concludes that the City's financial injuries fall within the zone of interests that the FHA protects. The City's claims are similar in kind to those of the Village of Bellwood, which the Court held in Gladstone, supra, could bring suit under the FHA. The Court explained that the defendants' discriminatory conduct adversely affected the village by, among other things, producing a "significant reduction in property values [that] directly injures a municipality by diminishing its tax base, thus threatening its ability to bear the costs of local government and to provide services." Id., at 110-111. The City's alleged economic injuries thus arguably fall within the FHAs zone of interests, as this Court has previously interpreted that statute. Stare decisis principles compel the Court's adherence to those precedents, and principles of statutory interpretation demand that the Court respect Congress' decision to ratify those precedents when it reenacted the relevant statutory text. Pp. 5-9.

         2. The Eleventh Circuit erred in concluding that the complaints met the FHAs proximate-cause requirement based solely on the finding that the City's alleged financial injuries were foreseeable results of the Banks' misconduct. A claim for damages under the FHA is akin to a "tort action, " Meyer v. Holley, 537 U.S. 280, 285, and is thus subject to the common-law requirement that loss is attributable "'to the proximate cause, and not to any remote cause, '" Lexmark, 572 U.S., at__. The proximate-cause analysis asks "whether the harm alleged has a sufficiently close connection to the conduct the statute prohibits." Id., at__. With respect to the FHA, foreseeability alone does not ensure the required close connection. Nothing in the statute suggests that Congress intended to provide a remedy for any foreseeable result of an FHA violation, which may " 'cause ripples of harm to flow'" far beyond the defendant's misconduct, Associated Gen. Contractors of Cal., Inc. v. Carpenters, 459 U.S. 519, 534; and doing so would risk "massive and complex damages litigation, " id., at 545. Rather, proximate cause under the FHA requires "some direct relation between the injury asserted and the injurious conduct alleged." Holmes v. Securities Investors Protection Corporation, 503 U.S. 258, 268. The Court has repeatedly applied directness principles to statutes with "common-law foundations." Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 457. " 'The general tendency' " in these cases, " 'in regard to damages at least, is not to go beyond the first step.' " Hemi Group, LLC v. City of New York, 559 U.S. 1, 10. What falls within that step depends in part on the "nature of the statutory cause of action, " Lexmark, supra, at__, and an assessment " 'of what is administratively possible and convenient, ' " Holmes, supra, at 268.

         The Court declines to draw the precise boundaries of proximate cause under the FHA, particularly where neither the Eleventh Circuit nor other courts of appeals have weighed in on the issue. Instead, the lower courts should 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. Pp. 10-12.

         No. 15-1111, 800 F.3d 1262, and No. 15-1112, 801 F.3d 1258, vacated and remanded.

          BREYER, J., delivered the opinion of the Court, in which ROBERTS, C. J., and GlNSBURG, SOTOMAYOR, and KAGAN, JJ., joined. THOMAS, J., filed an opinion concurring in part and dissenting in part, in which KENNEDY and Alito, JJ., joined. Gorsuch, J., took no part in the consideration or decision of the cases.

          OPINION

          BREYER JUSTICE.

         The Fair Housing Act (FHA or Act) forbids

"discriminating] against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith, because of race . . . ." 42 U.S.C. §3604(b).

         It further makes it unlawful for

"any person or other entity whose business includes engaging in residential real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race . . . ." §3605(a).

         The statute allows any "aggrieved person" to file a civil action seeking damages for a violation of the statute. §§3613(a)(1)(A), 3613(c)(1). And it defines an "aggrieved person" to include "any person who . . . claims to have been injured by a discriminatory housing practice." §3602(i).

         The City of Miami claims that two banks, Bank of America and Wells Fargo, intentionally issued riskier mortgages on less favorable terms to African-American and Latino customers than they issued to similarly situated white, non-Latino customers, in violation of §§3604(b) and 3605(a). App. 185-197, 244-245, 350-362, 428. The City, in amended complaints, alleges that these discriminatory practices have (1) "adversely impacted the racial composition of the City, " id., at 232, 416; (2) "impaired the City's goals to assure racial integration and desegregation, " ibid.; (3) "frustrate[d] the City's longstanding and active interest in promoting fair housing and securing the benefits of an integrated community, " id., at 232-233, 416-417; and (4) disproportionately "cause[d] foreclosures and vacancies in minority communities in Miami, " id., at 229, 413. Those foreclosures and vacancies have harmed the City by decreasing "the property value of the foreclosed home as well as the values of other homes in the neighborhood, " thereby (a) "reduc[ing] property tax revenues to the City, " id., at 234, 418, and (b) forcing the City to spend more on "municipal services that it provided and still must provide to remedy blight and unsafe and dangerous conditions which exist at properties that were foreclosed as a result of [the Banks'] illegal lending practices, " id., at 233-234, 417. The City claims that those practices violate the FHA and that it is entitled to damages for the listed injuries.

         The Banks respond that the complaints do not set forth a cause of action for two basic reasons. First, they contend that the City's claimed harms do not "arguably" fall within the "zone of interests" that the statute seeks to protect, Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 153 (1970); hence, the City is not an "aggrieved person" entitled to sue under the Act, §3602(i). Second, they say that the complaint fails to draw a "proximate-cause" connection between the violation claimed and the harm allegedly suffered. In their view, even if the City proves the violations it charges, the distance between those violations and the harms the City claims to have suffered is simply too great to entitle the City to collect damages.

         We hold that the City's claimed injuries fall within the zone of interests that the FHA arguably protects. Hence, the City is an "aggrieved person" able to bring suit under the statute. We also hold that, to establish proximate cause under the FHA, a plaintiff must do more than show that its injuries foreseeably flowed from the alleged statutory violation. The lower court decided these cases on the theory that foreseeability is all that the statute requires, so we vacate and remand for further proceedings.

         I

         In 2013, the City of Miami brought lawsuits in federal court against two banks, Bank of America and Wells Fargo. The City's complaints charge that the Banks dis-criminatorily imposed more onerous, and indeed "predatory, " conditions on loans made to minority borrowers than to similarly situated nonminority borrowers. App. 185-197, 350-362. Those "predatory" practices included, among others, excessively high interest rates, unjustified fees, teaser low-rate loans that overstated refinancing opportunities, large prepayment penalties, and-when default loomed-unjustified refusals to refinance or modify the loans. Id., at 225, 402. Due to the discriminatory nature of the Banks' practices, default and foreclosure rates among minority borrowers were higher than among otherwise similar white borrowers and were concentrated in minority neighborhoods. Id., at 225-232, 408-415. Higher foreclosure rates lowered property values and diminished property-tax revenue. Id., at 234, 418. Higher foreclosure rates-especially when accompanied by vacancies-also 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" that the foreclosures and vacancies generate. Id., at 238-240, 421-423. The complaints describe statistical analyses that trace the City's financial losses to the Banks' discriminatory practices. Id., at 235-237; 419-420.

         The District Court dismissed the complaints on the grounds that (1) the harms alleged, being economic and not discriminatory, fell outside the zone of interests the FHA protects; (2) the complaints fail to show a sufficient causal connection between the City's injuries and the Banks' discriminatory conduct; and (3) the complaints fail to allege unlawful activity occurring within the Act's 2-year statute of limitations. The City then filed amended complaints (the complaints now before us) and sought reconsideration. The District ...


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