February 15, 2017
On November 8, 2016, the Supreme Court heard oral argument in Bank of America Corp. v. City of Miami, which was consolidated with Wells Fargo & Co. v. City of Miami. In this case, the city of Miami sued Bank of America Corporation and similar defendants under the Fair Housing Act (FHA), arguing that the banks engaged in predatory lending practices that targeted minorities for higher-risk loans, which resulted in high rates of default and caused financial harm to the city. Miami also alleged that the banks unjustly enriched themselves by taking advantage of benefits conferred by the city, thus denying the city expected property and tax revenues.
The district court dismissed the FHA claims and held that Miami did not fall within the “zone of interests” the statute was meant to protect and therefore lacked standing under the statute. The court also held that Miami had not adequately shown that the banks’ conduct was the proximate cause of the harms the city claimed to have suffered. The U.S. Court of Appeals for the Eleventh Circuit reversed, holding that FHA standing extends as broadly as Article III of the Constitution permits, that Miami had established Article III standing here, and that it had sufficiently alleged proximate causation.
There are two questions now before the Supreme Court: (1) whether, by limiting suit to “aggrieved person[s],” Congress required that a Fair Housing Act plaintiff plead more than just Article III injury-in-fact; and (2) whether proximate cause requires more than just the possibility that a defendant could have foreseen that the remote plaintiff might ultimately lose money through some theoretical chain of contingencies.
To discuss the case, we have Thaya Brook Knight, who is Associate Director of Financial Regulation Studies at the Cato Institute.