Supreme Court Decides Cities Have Standing in Fair Housing Cases

The Supreme Court ruled in a 5-3 decision that cities, not just individuals, may sue for alleged violations of the Fair Housing Act of 1968 (FHA). The Court unanimously ruled, however, that the city must demonstrate a direct relationship between a harm that it claims to have suffered and the alleged fair housing violation.

The City of Miami, FL sued Bank of America and Wells Fargo, alleging that the banks violated the FHA by intentionally using predatory lending practices that targeted African American and Latino neighborhoods and residents. The City claimed that similarly situated nonminority neighborhoods and residents were offered more favorable loan terms. The City argued that the banks’ discriminatory practices led to a disproportionate number of foreclosures and vacancies in neighborhoods that were predominantly occupied by minority households, which in turn diminished the City’s property tax revenue and increased its expenditures to remedy blight and unsafe conditions.

The Supreme Court held that a city has standing to sue, and that Miami’s claimed financial injuries, the lost tax revenue, and extra municipal expenses “fall within the zone of interests that the Fair Housing Act arguably protects. Hence, the City is an ‘aggrieved person’ able to bring suit under the statute.” Justice Stephen Breyer, writing for the majority, noted the Court “has repeatedly written that the FHA’s definition of ‘aggrieved person’ reflects congressional intent to confer standing broadly.”

Although the Court concluded that Miami had standing to sue under the FHA, it decided that the City “must do more than show that its injuries foreseeably flowed from the alleged statutory violation.” The City did not adequately establish that the banks’ discriminatory actions could be foreseen to result in foreclosures, vacancies, and reduced property tax revenues and thus were a “proximate cause” of Miami’s financial injuries. The Supreme Court concluded that the use of the “foreseeability theory” alone is not sufficient to establish proximate cause under the FHA, and therefore sent the issue back to the U.S. Court of Appeals for the Eleventh Circuit to decide what standard of proximate cause applies to Miami’s claims of lost property tax revenue and increased municipal expenses.

The Court declared that “proximate cause under the Fair Housing Act requires some direct relation between the injury asserted and the injurious conduct alleged.” The Court declined to “draw the precise boundaries of proximate cause under the FHA and determine on which side of the line the City’s financial injuries fall.” Instead, “The lower courts should define…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.”

The decision in Bank of America Corp. et al. v. City of Miami, Florida is at: